Pennsylvania Trust

Tax and Planning Update

Tax and Planning Update

Tax Payment and Filing Deadlines

On 3/20/20, the U.S. Treasury Department and Internal Revenue Service announced that the federal income tax filing date has been extended from April 15, 2020 to July 15, 2020. This follows the previous announcement that taxpayers can defer federal income and self-employment tax payments to July 15, 2020. The filing and payment extensions apply to all taxpayers, including individuals, trusts and estates, partnerships and corporations. The payment extensions also apply to first quarter 2020 estimated tax payments. Many states, including Pennsylvania, have followed the federal lead.

How This Relief Applies to You

  • Taxpayers do not need to file any additional forms to qualify for the extension.
  • While many states and local municipalities are following the federal lead, be sure to check the applicable filing deadlines for your state and local returns.
  • If you are expecting a refund this year, you are encouraged to file your return as soon as possible.
  • If you know your return was already going to require an extension until October 15th of this year, you should still file your extension request by April 15, 2020, as the IRS has not yet clarified the procedures for extension requests.

Your Pennsylvania Trust Tax Team has been diligently preparing and filing returns for our clients this year. If you have questions about these changes to tax payment and filing deadlines, please contact any member of our tax team at 610-975-4314.

Planning Considerations

In these challenging times, it is more important than ever to make sure your estate planning documents are up to date and accurately reflect your wishes. Use this opportunity when college students have moved home to discuss and get healthcare and financial powers of attorney signed.

Several wealth transfer techniques are particularly effective due to decreased asset values and the reduction in applicable federal interest rates:

  • Grantor Retained Annuity Trusts (GRATs): By placing assets in a GRAT, you can transfer the future growth of the assets above a hurdle rate set by the IRS (1.2% for April) out of your taxable estate.
  • Loans: Consider low-interest rate loans to family members or entities such as a trust, or the refinancing of existing loans.
  • Gifts: Gift assets at depressed values to make efficient use of federal estate, gift and generation-skipping transfer tax exemption amounts.

Please contact any member of your Pennsylvania Trust team to discuss these planning considerations. We are here for you and hope that you and your family remain safe and healthy.

Leslie Gillin Bohner, Esq. is Executive Vice President, Chief Fiduciary Officer and General Counsel of Pennsylvania Trust.