Tax and Financial Implications of COVID 19 and the CARES Act for Travel Nurses
Normally the beginning of the year is punctuated by receiving various tax documents in the mail, and digging through folders and drawers for last years’ receipts and utility bills, and any other variety of things that you planned to use for filing your taxes.
This year January may have started out that way for you, but other parts of the world were already in the thick of the COVID 19 pandemic, and come February we were starting to worry about it, and by March we were in the thick of it.
Typically, the deadline for filing taxes with the state and federal government IRS is April 15. Some of us scramble to meet that deadline, and others of us take care of filing early, but this year has been unlike any other. Our collective headspace has been so preoccupied that for many of you (me) taxes got shoved to the back of the mental list.
Taxes Deadlines Extended
Thankfully, the Treasury Department and Internal Revenue Service anticipated this happening and extended the deadline from April 15 to July 15, 2020. They issued a news release announcing the extension on March 21, 2020. If you missed it, don’t feel bad. On March 11, 2020, WHO declared COVID 19 a global pandemic, and things got hairy here in the states, real fast and right around that time.
According to their news release of the deadline extension, ” Taxpayers can also defer federal income tax payments due on April 15, 2020, to July 15, 2020, without penalties and interest, regardless of the amount owed. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax.
Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief.”
It is important to note, that this news release applied only
to the filing of your federal taxes. Some states followed suit and extended the
deadline for state tax filing to the same July 15th date, as of April 27, 2020
those states are:
- District of Columbia
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- West Virginia
Other states made their own deadlines:
- Hawaii – July 20, 2020
- Idaho – June 15, 2020
- Iowa – July 31, 2020
- Mississippi – May 15, 2020
- New Hampshire – June 15, 2020
- Virginia – May 1, 2020
Alaska, Florida, Nevada, South Dakota, Washington, and Wyoming do not have individual income tax and therefore no deadline information was provided.
Economic Impact Payments
The federal government is now sending out economic impact payments. You do not need to apply for these payments, they are being automatically calculated by the information from your filed taxes from tax year 2018 or 2019. The amount is being calculated as follows:
- AGI (adjusted gross income) up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment.
- AGI above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds.
- Single filers with AGI exceeding $99,000 and $198,000 for joint filers with no children are not eligible.
- If you filed tax returns for either 2019 or 2018 and are eligible, you will automatically receive a payment of up to $1,200 for individuals or $2,400 for married couples and up to $500 for each qualifying child.
- You can even see when and where this economic impact payment will arrive for you by going to this IRS page.
Student Loans Placed on Forbearance
Travel nurses with student loans (and every single other person in the country who has student loans) can breathe a bit easier for a while. No student loan payments are necessary until September 30, and no interest will accrue during this payment suspension.
According to the Federal Student Aid office of the U.S. Department of Education, “ Your payments will automatically stop from March 13, 2020, through Sept. 30, 2020. To provide relief to student loan borrowers during the COVID-19 national emergency, federal student loan borrowers are automatically being placed in an administrative forbearance, which allows you to temporarily stop making your monthly loan payment. This suspension of payments will last until Sept. 30, 2020, but you can still make payments if you choose. “
Follow the link to read the borrower Q&As on their official site for more information.
Retirement Account Rules Suspended
Many benefits have come out of the $2 trillion economic relief plan, and while the economic impact payment and student loan payment suspensions may be getting the most press, you might want to know that some of the rules on retirement accounts have been suspended.
Required minimum distributions are being halted for the entire calendar year of 2020, which benefits anyone above the age of 70. Furthermore, you can withdraw up to $100,000 from your IRA or workplace retirement plan early, without the usually applied 10% penalty, when your reasons for withdrawal are due to the pandemic.
Talk to Your Financial Advisor and Your Tax Preparer
I am not a tax expert, so the purpose of this article is to get you thinking, and nudge you in the direction of your financial planner, and/or tax preparer. Lots of big things are happening and it can be tough to keep track of all that is happening. Taxes are typically a bit of a headache for travel nurses anyway, and right now with big things happening on top of your already busy lives, some of us just need a prompt, or a nudge, or a reminder.