A guide to Tax Relief in the United States

One area through which the United States has been supporting citizens throughout the Coronavirus pandemic is tax relief, with the IRS shifting the deadlines for filing and payment of federal income taxes back by three months – to July 15th 2020.

This is possible thanks to the $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act, which came into play shortly after the initial Families First Coronavirus Relief Bill was launched.

The tax relief decision was announced following the declaration by President Trump on 13 March, which cited the Coronavirus as a national emergency across the United States – with the Internal Revenue Services (IRS) working in partnership with the Department of Treasury to quickly enact the changes.

Who is eligible for the federal income tax relief?

Any individual who has a federal tax payment due on or after 1st April 2020, now has until 15th July 2020 to make the payment.

The Notice 2020-2023 tax relief applies to the following:

  • Individuals with a tax return due on or after 1st April 2020, either owed from a 2019 Form 1040 or an estimated 2020 tax payment.
  • Federal income tax returns and payments for corporations, businesses, foreign trusts, gift and estate taxes.

Any individual with a specified time-sensitive act, which is due to be performed within the same timeframe is also eligible for the relief. These acts include filing a petition with the United States Tax Court, filing for the review of a decision from the Tax Court, and filing a credit claim or refund of any tax paid. A full and comprehensive list of the activities eligible for relief can be found here.

Is it possible to apply for the tax relief on an already-extended payment or return?

The IRS confirmed that individuals who had already filed for an extension to their payment, are still eligible for the tax relief in Notice 2020-2023.

Interest and penalties will not be accrued on the pending payment, provided it is settled by 15th July 2020, and there are no limits on the amount of tax payments that can be deferred.

Exploring the Families First Coronavirus Relief Bill

Launched towards the end of March as an initial response to the virus – before the CARES Act got involved with trillions of dollars’ worth of grants – the Families First Coronavirus Relief Bill was put in place to support paid leave for employees of small businesses, including tax relief benefits for employers.

This initial Coronavirus relief bill, signed by President Trump on 25th March 2020, required that employers provide a limited amount of paid leave to any employees affected by Coronavirus. To pay for these benefits, employers were given tax credits and payroll-tax relief.

The sick leave and family support leave payments as required by the Act were relieved from the Social Security tax component of an employer’s federal payroll tax bill, until the date 30th December 2020. Businesses are then required to pay the deferred tax relief payment in two instalments: one by the end of 2021, and the second by the end of 2022.  

In addition, small employers were able to immediately apply for a tax credit payment to cover sick leave payments under the Act – equalling 100% of any qualifying sick leave payments they are required to make.

New tax relief and other support announcements are being made regularly by the United States – keep up to date on the official IRS website.

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