Plague and taxes: your questions

I’ve had dozens of questions relating to a variety of tax and economic topics. Here are the most common ones.

I’m self-employed, a sole proprietor (or in some cases a freelancer or gig worker). Can I apply for unemployment?

Yes, you may. In normal circumstances, you would not be able to because you haven’t paid into the system. But these are different times and allowances are being made to help us all. To file go to: Edd.ca.gov/unemployment/filing_a_claim.

I did not file a tax return for 2018 or 2019 because I was on Social Security and had no other income. Will I get a stimulus check automatically or do I have to file a return to get the check?

Yes, you will get the check automatically. There is no need to file an abbreviated tax return. At first, this was a requirement but the IRS realized that it can pick up your bank account info from the roles at SSA. So that’s what they are doing. They will provide you with a direct deposit of the stimulus check into your bank account.

What if I didn’t have a filing requirement and I wasn’t collecting social security? How will they know to send me a check?

Right now nothing is in place to help you. As soon as the IRS releases information about how people can go online to make sure they receive their EIP, they will let you know. Info on this should be coming out this week. Go to: Irs.gov/coronavirus to check on recent developments. I understand they will be setting up a portal to deal with individuals in these situations.You may also file an EIP tax return. Most tax pros are equipped to handle this. Irs.gov and file it yourself. Click on the Free File button on the home page.

Do I have to do anything, file any forms, to get the new extension to July 15? When must I pay my taxes?

No additional paperwork required; no extension need be filed. It’s automatic for both federal and CA. The extension includes time to pay your 2019 tax liability free of penalty and interest. July 15 is also the new due date for your first two installments of your estimated tax payments for 2020, normally due April 15 and June 15.

I got a call from the IRS saying they don’t have my direct deposit information. Is it okay to provide them with that information over the phone or was that a scam? I hung up on them.

Yes, hanging up was the right thing to do because indeed it was a SCAM! Beware, the scammers are out there taking advantage of you during this trying time. Remember: the IRS will NEVER call you or email you. They always deal through snail mail correspondence.

I tried to call the IRS this week to set up an installment agreement for the taxes I owe but no one answered the phones. Are they overwhelmed right now?

As a matter of fact, there are no phone operators on duty, so forget about calling them. They have also suspended collection activity for the duration. And the Practitioner Hotline is closed as well. Many tax matters, such as setting up installment agreements can be dealt with online. Go to: Irs.gov to set up your payment plan. You can also do many other things: apply for an EIN, get transcripts of your account, and check the status of your refund, among others. Their website has become a handy tool.

My business needs help! I don’t know which loan to apply for: the Disaster Assistance, or the Payroll Protection Loan.

The disaster assistance loan caps at $10,000 and may be forgiven if you use the funds for operating expenses. You may apply for it directly with the Small Business Administration (SBA) The payroll protection loan can be for much higher amounts and in addition to operating expenses, it covers eight weeks of payroll for your employees. You must apply for this loan through your bank. Go to: Sba.gov and click on the golden ruler bar at the top “Coronavirus (COVID-19): Relief options and Additional Resources.”

Please note that on April 9 the IRS announced that Individuals, trusts, estates, corporations and other non-corporate tax filers qualify for the extra time to file and pay their 2019 taxes to July 15, 2020. Initially, only individuals were allowed this automatic extension.

If additional time is needed to file and pay, you may file an extension to October 15,2020. This extension must be filed by July 15, 2020. Also, any tax due (you may need to estimate) must be paid by July 15. There is no further extension granted of time to pay.

Bonnie Lee, E.A. is the owner of Taxpertise at 450 2nd St West, Sonoma. Her firm offers tax preparation and representation services, bookkeeping and payroll services. If you have a tax question, please write to [email protected]