All you need to know about State-specific Tax deadlines and COVID-19

by Mounica Kota | May 5, 2020 | COVID - 19, tax deadline, tax return, US Government

All you need to know about State-specific Tax deadlines and COVID-19

The pandemic COVID-19 has affected the economic lives of the Americans in a very adverse manner. The Federal Government and the State Government have taken initiatives to reduce the stress of the Americans by bringing up numerous changes in the tax laws.

The Federal Government has extended the deadline for filing tax returns and also payment of taxes to 15th July 2020. There are some states which have aligned to the changes in the Federal tax laws and have extended their deadlines as well. However, there are some other states which are still charging interest on the non-payment of taxes on time.

Let us know about the changes in some of the State-specific tax deadlines made due to the outbreak of COVID-19.

a.Alabama

1.Alabama has postponed the tax returns filing and payment date from 15th April 2020 to 15th July 2020 for the below-mentioned categories of taxes.

Individual Income Tax
Excise Tax for financial institutions
Corporate Income Tax
Business privilege Tax

2.These tax reforms include relief on the payment of tax on self-employment income and the estimated income tax for the year 2020.

3.Penalties for the late payment of Sales and Use tax have been waived for small businesses.

b.Alaska

The Alaska Legislation has extended all tax returns and payments administered by the Alaska Revenue Tax Division due for 15th April 2020 until 15th July 2020.
No penalties or interest would be charged for the late payment of the taxes during this period.

c.Arizona

In Arizona, the deadline for the filing of tax returns and payment of State Income Tax due on 15th April 2020 has been extended to 15th July 2020.
This extension in the deadline is applicable for individuals, corporations, and fiduciaries.

d.Hawaii

In Hawaii, the taxpayers who are due to file their State Income Tax returns or pay the State taxes from 20th April 2020 to 20th June 2020 can do that by 20th July 2020.
This extension is applicable only for the Hawaii income tax return filing and payment; and not applicable for estimated income tax payment, franchise tax, withholding tax, general excise tax or public service company tax.

e.Georgia

The Governor of Georgia has announced that there would be an extension in the deadline for filing of Georgia’s income tax returns.
The new deadline has been determined as 15th July 2020 which is per that of the federal deadline.

f.Idaho

The deadline for filing Idaho’s Income Tax returns has been extended till 15th June 2020.
In this case, it is advisable to complete both Federal and State tax return filing by 15th June 2020 so that the returns can also be obtained on time.

g.North Carolina

In North Carolina, the deadline for filing state tax return has been extended to 15th July 2020.
But, interest would be charged on any tax payment which is made after 15th April 2020. So, taxpayers should pay their tax soon to avoid being charged with interest.

h.Virginia

The Virginian State Government has extended the State Income Tax return filing date to 1st May 2020.
However, interest would be levied on any late payment of State Income Tax which is due within 1st April to 1st June 2020. It is advisable to file the returns and even pay the taxes soon.

i.New Jersey

In New Jersey, the timeline to file and pay the individual gross income tax, corporation business tax, and partnership tax for the year 2019 has been extended until 15th July 2020.
This extension of the deadline is also applicable for the 1st quarter estimated tax payments.

However, all other payments of tax and filing of returns remain de on their original date which also includes the 2nd quarter estimated tax payments.

j.New Hampshire

According to the New Hampshire Department of Revenue Administration, there would be no changes in the deadlines for payment and returns of business profits tax, business enterprise tax or any other tax which is administered by the Department.
The interests on non-payment of taxes would be charged from 15th April 2020 onwards.

k.Montana

Montana has made an extension in the deadline for the filing of tax returns and for the payment of individual State income tax to 15th July 2020.
There has also been an extension in the deadline for making the payment of the 1st quarter estimated tax payments to 15th July 2020.

Hence, these are some of the States which have made certain changes in their tax laws for bringing some relief to the Americans. However, for detailed information on the State tax law changes the State tax Consultant must be consulted.

References

Can pandemic COVID-19 affect your house mortgage rate and your deduction?

by Mounica Kota | Apr 7, 2020 | federal government, Standard Deduction

Can pandemic COVID-19 affect your house mortgage rate and your deduction?

Currently, the world is fighting against the huge economic disruptions caused due to the spread of the dreadful coronavirus. The US has been highly impacted by this pandemic causing loss of many lives and the livelihoods of people. COVID 19 The Federal Government has been taking up several measures to reduce the financial stress on the common people. Amongst these, one of the announcements made by the Federal Reserve is related to the cutting of the interest rates and also making unlimited quantitative easing.

According to the Federal Reserve, unlimited quantitative easing would help to calm down the markets. The Federal Reserve has declared that there would be continuity in its asset-purchasing program in amounts which would help in supporting the smooth functioning of the share market and broadening of the financial conditions.

Some of the major reasons why the Federal Reserve uses Quantitative Easing can be mentioned below.

According to the Federal Reserve, the money printed by Quantitative Easing can be used to create more employment opportunities in the country.
Quantitative Easing can encourage both lending and borrowing as the interest rates would be low.
As per Federal Reserve, this would also encourage spending as there would be more money which enters the economy so more money to be spent. It would increase company profits and stimulate the stock market.

If you are a homeowner, then the Unlimited Quantitative Easing and cutting of interest rate would have an impact on you. When there is a drop in the rates of the Federal Reserve, then it would put pressure on the mortgage lending rates.

Mortgage lending rates would be affected directly as the adjustable-rate mortgages are often parallel to the rates of the Federal Reserve.
There would be an indirect impact on the Mortgage lending rate as the borrowers would be allowed to refinance at a low rate of interest.

Moreover, the interest rates on the Home Equity Lines of Credit (HELOCS) have also fallen down due to the drop in the rates of the Federal Reserve.

Higher Equity and Lower payments

Due to the lower rate of interest the borrowers would be able to avail several benefits such as lower payments to be done in a month or the capability of building up of equity quite faster.
But, as you know mortgage interest is tax-deductible and lower mortgage interest rate would result in reducing your deductions. This would ultimately result in an increase in your taxes to be paid.

Major points to be considered

You would have to refinance for locking in the lower rate of interest if you have a fixed mortgage or your Adjustable Rate Mortgage i.e. ARM is in its fixed-rate period.
It has been noticed that usually in the beginning many ARMs have a fixed-rate period which is then followed by an adjustable period.
Refinancing for locking in the lower rate of interest means paying of some loan-originating points.
These loan-originating points are deductible but you would have to spread that deduction over the life period of the loan which would be difficult and impractical.
So, it is quite simple if you stick to your current mortgage even though it would be an expensive option.

Additional thoughts

Usually, the taxpayers in the US would prefer to opt for Standard Deduction. However, there are some taxpayers who prefer itemizing and they must think about refinancing. If you are planning for refinancing at a lower rate, then you must consider the advantages and disadvantages of doing the same.

You must consider in detail how much the reduced monthly payment would help you in saving for each month, for a year and the entire life of the loan.
You should compare the savings you make with the new additions that would come up at the time of tax payment.
You must analyze and calculate any other changes that might come. These changes can be associated with your income or the deductions that you make while filing taxes.
You must ensure that you take into consideration other aspects such as the birth of a baby, change in your household income, increase or decrease in charity for the year or if your adult child has moved out, etc.

Hence, you must be educated about the changes that are being made in tax laws and be aware of the implementation of these changes.