Part 7 – The CARES Act and State Income Tax Reporting

The CARES Act enacted a number of business and individual tax modifications affecting businesses and individuals impacted by COVID-19. Taxpayers should expect this to complicate their 2019 state tax reporting.

As our previous emails have laid out, some of the most important changes enacted were:

  • Changes to business interest limitations.
  • Net operating loss carryback opportunities.
  • Changes to limitations on nonbusiness losses.
  • Allowing qualified improvement property placed in service after December 31, 2017 to be treated as 15 year property eligible for federal 100% bonus depreciation.

All these changes have the important consequences on state income tax reporting. Is it reasonable to expect that states will conform to the CARES Act proposals? Given the impact that COVID-19 will have on most state budgets we believe that conformity will be slow and selective. Whether the federal tax  benefits of the CARES Act will be realized at the state level will vary from state to state.

As of April 15, 2020, below are the State by State due dates for 2019 and the due dates for the 1st and 2nd quarter estimated tax payments with some important considerations for States not waiving interest:

Please contact your BKM Sowan Horan team member with any questions.