Taxation, Investments and Financial Well-Being during the COVID-19 Crisis

Taxation, Investments and Financial Well-Being during the COVID-19 Crisis

May 12, 2020

I wanted to share my latest family photo to remind us all of what is important, our family and health. I hope all of you are staying strong physically and mentally during this time.

The recent economic challenges and governmental changes remind me why I have a practice that is centered on taxation, investments and financial well-being.

Access to information is easily available…however, it takes a professional with experience to interpret, direct and provide perspective on these changes to provide clarity, calmness and a path to success.
Hopefully, you find my articles of benefit. Here are some current thoughts on a variety of topics.

  1. If you are a business owner or sole proprietor, you can apply for a Payroll Protection Program (PPP) loan. Although the first pot of money has already been committed, I anticipate the SBA Loan Administration will provide future borrowing opportunities. We can prepare your loan applications and guide you through the constantly updated changes in this loan program.
  2. Once you receive your PPP loan amount, pay careful attention to the eight weeks after receipt so you can take the necessary steps for your loan to be partially or fully tax-free and non-reimbursable. More guidance on how to do this will be forthcoming.
  3. If you are forced to access your IRA or pension account, new rules are in place so you can avoid the IRS 10% premature penalty if you are under age 59.5 as a Coronavirus Related Distribution. Pension plan loans have now been increased from a maximum of $50,000 up to the lesser of $100,000 or your plan balance. The 3 year loan payment schedule starts on the day after the distribution was received.
  4. For Sole Proprietors and Business Owners: Contact us to see if we can help you access these pension loans by transferring your IRA accounts into a newly created pension plan account. Remember, a loan might be more beneficial than a taxable IRA distribution especially since you are paying the interest into your own pension account.
  5. Visit the IRS website at www.irs.gov to click on “Get Coronavirus Tax Relief”. Get answers to the Economic Impact Payments ($1,200 for adults and $500 for children) including a link to “Check your payment status”.
  6. Use this idle time to pull your tax information and get it to your CPA who is still hard at work. There are many tax planning opportunities available with the recent tax changes and your CPA can only plan when he/she has your information.
  7. Consider funding tax-deductible IRA and pension contributions for tax year 2019 when you are in a higher tax bracket. You can always distribute these funds via a taxable distribution or a loan at a lower tax bracket, if applicable, in tax year 2020. IRA and H.S.A. contributions must be made by July 15th and pension contributions by the extended deadline for the return.
  8. Individuals with a Required Minimum Distribution (RMD) from their IRA or pension account can skip the distribution for tax year 2020. Additionally, new rules allow individuals who have already taken out their 2020 RMD to roll the money back into the account within 60 days of the distribution to eliminate the taxable event and allow your money a chance to rebound from the recent market decline. If the distribution was made April 1st or later, you now have until July 15th to roll your money back.
  9. The IRS recently decreased the time frame you can stretch out income recognition out of your IRA account. This change, coupled with the strong prospects of increasing tax rates in the future, can alter your tax planning. Consideration should be given to purchasing life insurance to cover the increased tax burden being passed down to future generations.

CALL NOW OR GO ONLINE TO SCHEDULE YOUR TAX Preparation or Planning APPOINTMENT AT (949) 248-9815, Ext. 1.


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Securities and advisory services offered through Independent Financial Group, LLC (IFG), a registered broker-dealer and investment advisor. Member FINRA/SIPC. PTWM and IFG are unaffiliated entities. Peter D. Prescott CA Insurance License #0733213.

For general informational purposes only. This information is not intended to be a substitute for specific individualize tax advice. Please note that individual situations can vary.