Understanding the new tax deadline and stimulus package; Tax prep expert offers tips

Posted at 1:26 PM, Mar 30, 2020
and last updated 2020-03-30 20:01:48-04

LEXINGTON, Ky. (LEX 18) — About that 90-day extension you’ve been given to file your 2019 tax returns, if you owe money, that amount will likely be subject to interest charges in Kentucky.

“The state of Kentucky has to charge interest by statute," said Bill Farmer of HTI Tax Services in Lexington. “There won’t be a penalty, but they will be charging whatever the going interest rate is – 6 or 7 percent - for that 90-day period you’re late filing, and paying."

With that in mind, Bill is telling his clients, especially those who may owe money to the state, to get filed before April 15 in order to avoid those interest fees. He did say the state legislature could add some language to eliminate the interest between April 16 and July 15, but until that happens, Kentuckians would be required to cover the amount that accrues. He also wants his clients to file sooner, because if you are expecting a refund, those are still being processed and delivered in a timely manner. Bill says he received his refund within 14-days.

While tens of thousands of Kentuckians await the arrival of those stimulus checks, questions are certainly going to come up about tax liability as it relates to those.

“It won’t be taxable income. Or at least it never has been before,” Bill said while eluding to stimulus checks Americans were given in 2001 and 2008 that weren’t subject to tax.

“If you get too much money you will get to keep it, and if you didn’t get enough, you’re going to get your balance back,” he said. “It would be counterproductive to make this taxable income at this point in time. The idea is to put this money in people's hands so they can keep living as normal a life as possible,” he continued.

It’s also important to note that adjusted gross incomes of $75,000/$150,000 are a threshold for receiving the full stimulus amount ($1,200/$2,400.) If your income as a single, or joint filer exceeds those numbers, you will still receive money, just not as much.

“Your stimulus check will be reduced by 5% for everything you’re over (those numbers)," Farmer noted.

The cap on single filers is $99,000, and $198,000 for those who file jointly. If your most recent tax return, on file with the IRS, reflects income greater than those numbers, then you won’t be eligible to receive a stimulus check at this time.