Local 'taxman' talks effects of pandemic on taxes and retirement account withdrawals
FARGO — Kent Busek, known locally as “the taxman,” said he’s never seen a crazier time than during the coronavirus pandemic. Changes, and how they affect taxpayers, are coming in almost daily.
“I’ve been doing this for 28 or 29 years, and I don't recall a crazier day than today,” Busek said Tuesday, March 31.
Busek, a partner at Busek Olson & Associates, advises businesses on tax matters, and he’s also an owner of Taxman, which prepares individual tax returns.
“What they did is loosened up things quite a bit on the retirement side,” Busek said.
For example, the federal 10% early withdrawal penalty from a retirement account has been waived on amounts up to $100,000. Repayment now may take place any time over three years, he said, or the taxes can be paid over three years.
“I don’t think that one has sunk in as much right now,” he said.
Another big change, he said, is that the required minimum distribution out of an IRA has been waived.
“So, let’s say you’re 75-years-old, and you’re taking a required distribution out of your retirement account,” he said, “you don’t have to take it this year.”
With people worried about their livelihoods, Busek said, he’s getting flooded with questions about the $2 trillion CARES Act, which is set to inject economic impact payments into individual bank accounts over the next three to four weeks.
Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples, according to the IRS. Parents also receive $500 for each qualifying child.
The payments are not taxable, he said, and will be based on either the 2018 or 2019 tax return, whichever was filed most recently.
“They want to do direct deposits into the accounts,” Busek said.
Confusion arises, he said, because a lot of people don’t do direct deposits for their refunds. There are also people, such as those who don’t earn enough or are on fixed incomes, who don’t file a return or get a refund, but who will be eligible for the stimulus payment. For those people, he said, the IRS is saying “file a return.”
“The service says they’re going to want you to go online and enter an account where you want them to send the money,” Busek said, “versus sending [paper] checks. But, they don’t have that worked out yet.”
Fact sheets are being updated regularly from the U.S. Treasury Department, he said, so much of the confusion could be cleared up in the days to come.
Both the filing of tax returns, as well as any tax payments, have been extended until July 15, he said.
“That changed, as well,” Busek said.
The blossoming of programs on the business side, such as the payroll protection program and U.S. Small Business Administration disaster loans and economic grant programs, have caused a lot of questions from his clients, too.
“There’s just a lot of moving parts going on,” Busek said. “It’s changing so fast.”
For more information on economic impact payments, part of the federal government’s $2 trillion COVI-19 stimulus bill, also known also as the CARES Act, visit www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know