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2020 tax season recap and highlightsBy: National Association of Tax Professionals
July 15, 2020

The 2020 tax season brought a lot of change, anxiety, headaches and research. You worked through a pandemic, learned new tax law and how to apply it to your clients’ returns, and acted as a financial sounding board, all while meeting deadlines and taking care of your clients. To say it’s been tough would be an understatement, but here we are, at the official end of the 2020 tax season (minus extensions).

Let’s recap the highlights of the 2020 tax season:

CARES Act implementation

The Coronavirus Aid, Relief, And Economic Security Act was signed into law on March 27, 2020. The $2 trillion package included a lot of provisions to provide economic assistance for American workers, families and small businesses through stimulus payments, business loans and payments to state and local governments.

The CARES act enabled any taxpayer with an RMD due in 2020 from a defined-contribution retirement plan to skip those RMDs this year. This includes anyone who turned age 70-1/2 in 2019 and would have had to take the first RMD by April 1, 2020. This waiver does not apply to defined-benefit plans.

The CARES act also made a technical correction to the class life to QIP property retroactive to 2018, which allows for bonus depreciation. Other provisions of the CARES act include NOL limitations suspended until 2021 and NOLs from years 2018-2020 have a five-year carryback period.

There were a number of other provisions included in the CARES act. Your clients likely had lots of questions about this act and its impact. If you’re still looking for guidance on this topic, we have education that covers a variety of topics related to the coronavirus and its tax impacts.

Secure Act

While this act was technically passed before the 2020 tax season began, its implementation applied to this tax season. The Setting Every Community Up for Retirement Enhancement Act pushes back the age a retirement plan participant needs to take required minimum distributions (RMDs) and allows traditional IRA owners to keep making contributions indefinitely. Under this act, small business owners may find it easier to set up safe harbor retirement plans that are less expensive and easier to administer. Our 1040 workshop this fall covers this act and more.

Tax Day was pushed back

Partly as a result of the coronavirus’s economic effects on you and your clients, and also health and safety measures, Tax Day 2020 was moved from April 15 to July 15 without any official extension needed. At this time, extensions are still due Oct. 15.

First and second quarterly estimated tax payment pushed back

Also due to the economic and health impact of the coronavirus, the deadline for the first quarterly estimated tax payment for businesses was pushed to July 15. In 2020, both the first and second quarter tax payments are due July 15.

PPP loan

To maintain America’s workforce and prevent an economic catastrophe, Congress passed a small business loan called the Paycheck Protection Plan loan as a part of the CARES Act. Small businesses that were having trouble with payroll could apply for this low-interest private loan to help with payroll and certain other costs. The original application deadline was June 30, 2020, but was extended to Aug. 8, 2020.

Standard deduction inflation adjustment

For the 2020 tax year, the standard deduction amount is increased to $12,400 from $12,200 for singles in 2019. Additionally, the standard deduction for clients who are married filing jointly was increased to $24,800 from $24,400 in 2019. The additional standard deduction for older taxpayers and those who are blind is still available in 2020.

HSA

The amount you can save in an HSA if you’re an individual with self-only health coverage increased to $3,550 from $3,500 in 2019. HSA account holders with family plans can save an additional $100, up to $7,100. This increased from $7,000 in 2019.

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penAbout National Association of Tax Professionals

The National Association of Tax Professionals (NATP) is the largest association dedicated to equipping tax professionals with the resources, connections and education they need to provide the highest level of service to their clients. NATP is comprised of over 23,000 leading tax professionals who believe in a superior standard of ethics and exemplify professional excellence. Members rely on NATP to deliver professional connections, content expertise and advocacy that provides them with the support they need to best serve their clients. The organization welcomes all tax professionals in their quest to continually meet the needs of the public, no matter where they are in their careers.

The NATP headquarters is located in Appleton, WI. To learn more, visit www.natptax.com.

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