Should you amend your 2018’s tax return?Articles
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 as part of a $2.2 trillion aid package.
Some parts of the bill do not require you to take any action such as the ‘stimulus check’ for eligible individuals ($2,400 for joint filers, $500 per qualifying child). However, there are several provisions that apply retroactively, that would require actions such as amending previous tax returns, which could result in significant tax refunds for some taxpayers.
Here are two of the retroactively applicable provisions under the CARES Act that we want to bring to your attention:
- The bill temporarily repeals the 80% income limitation for net operating loss deductions for years beginning before 2021. For losses arising in 2018, 2019, and 2020, a five-year carryback is allowed.
- The bill also makes technical corrections regarding qualified improvement property (QIP) applying retroactively to 2018. QIP is now eligible for 100% bonus depreciation. If your business incurred costs on improving a business property and did not deduct all of the costs in 2018, consult with your tax advisor about this provision. Click here to see the full bill.