Did You Know… TAX TIPS

At the end of last year, Congress passed the Tax Cuts and Jobs Act, the largest reform in the past 30 years.  Proactive year-end tax planning may help reduce your overall tax burden for 2018 or alert you to taxes due.

A few tips and items you may want to consider:

  1. Tax brackets have been reduced and the withholding tables have been adjusted. As a result, less tax is being withheld from each paycheck. We recommend that you review your current paystub to confirm if you are having adequate amounts withheld so that you have enough paid in to avoid underpayment penalties.
  2. The Tax Act also made a number of changes related to deductions. The standard deduction was increased to $24,000 for taxpayers filing jointly and $12,000 for single filers. In addition, some of the itemized deductions have been reduced or eliminated. Real Estate and State and Local taxes now have a $10,000 limit and miscellaneous deductions such as investment expenses and unreimbursed business expenses have been eliminated. As a result, you may no longer itemize your deductions. Personal exemptions for yourself and dependents have also been eliminated. We recommend reviewing your deductions to see how you will be impacted by these changes.
  3. Now is also a good time to review your taxable investment portfolio to understand the tax consequences of this year’s market activity. Now may be a good time to harvest unrealized losses or realize gains if you are in a low tax bracket as it could be taxed at 0%.
  4. If you are age 70 ½, subject to Required Minimum Distributions (RMD) from your IRA and are charitably inclined, you may still be able to take advantage of the Qualified Charitable Distribution rules in using some of your RMD for your charitable giving. Especially if you don’t itemize, this provides a tax benefit you would not have received.

Did You Know…?

Senior Vice President Laurie A. Siebert CPA, CFP®, AEP® authored an article for the Pennsylvania Institute of Certified Public Accountants (PICPA) CPA Now Blog regarding Unclaimed and Abandoned U.S. Savings Bonds for PA residents.

A recent notice to Pennsylvania residents regarding U.S. savings bonds appeared in local publications. The alert informed bond owners of a suit Pennsylvania was filing to take title to abandoned, unclaimed, and matured savings bonds. READ THE FULL ARTICLE

Did You Know…?

Did you know that you can change your mind about collecting social security even if you have already started.

There are two main scenarios that are available from the Social Security Administration.

1) Withdraw your application and re-apply at a future date.

If you have not reached full retirement age and you are within 12 months of when your benefits started, you can submit the Social Security Form SSA-521 explaining why you want to withdraw your application. Keep in mind, if your request is approved you will be required to pay back all the benefits you and your family received to that point. Be aware that you are limited to one withdrawal per lifetime.

2) Suspend our retirement benefit payments.

If you have reached full retirement age, but are not yet age 70, you can request to have your retirement benefit payments suspended. This will allow the benefits to accumulate 8% annual delayed credits, albeit on the reduced amount. This type of request does not require an official form – you can make it orally or in writing. Carefully consider some rules the SSA outlines as well, made effective in 2016.

It is important that you consult with your financial advisor before making these types of decisions to be sure that you understand all the ramifications of your financial choices. You can read more about these options on the Social Security Administration website at ssa.gov.

Did You Know…?

by Mae Gerhart, Tax / Financial Planning Professional
Investment and charity scams occur often after a natural disaster. In the aftermath of Hurricane Florence, it is important that well-meaning individuals looking to support the relief effort do some due diligence. Before you make an investment or charitable contribution, you should verify that the opportunity is legitimate and that your money is going to have the desired result.

FINRA provided a warning last week with some details about how to avoid investment scams promising huge gains around stocks associated with clean-up, rebuilding, and breakthroughs in science and technology that purport to address current and future flood-related issues. They may pressure you to invest and reaching out to you directly. Do your research even if they have a familiar sounding or respectable name. Read the alert here.

Charity scams follow similar tactics and tend to stick around longer. In these cases, the money you may intend to benefit the charitable cause, can end up being used for other purposes. In 2012, a watchdog group found that one charity failed to spend $56 million it had raised on actual services and instead spent nearly all of it on marketing costs.

Sites like GoFundMe or YouCaring provide crowdfunding for various causes, many of which are not registered charities. These sites also collect fees from a percentage of your contributions – sometimes upward of 10% or more – to support their business model.

By researching various charities through charity rating sites such as give.org, charitywatch.org, or guidestar.org, you will be able to look at individual charity’s most recent reports and ratings. These sites can show you how much of your actual contribution will go towards the end goal versus how much will be used for administration expenses.

Finally, keep in mind, that due to the Tax Cuts and Jobs Act of 2017, not everyone will receive a tax benefit from making a charitable donation. Advance tax planning with your financial advisor will help you figure out if the donations you desire to give also aligns with your financial plans.

Did You Know…?

Starting on September 21, 2018 the Federal Trade Commission (FTC) will be putting a new credit file protection layers in place that will allow consumers to contact any of the three major credit reporting agencies and request a freeze on their credit files free or charge.

The Economic Growth, Regulatory Relief, and Consumer Protection Act stipulates that the reporting agencies – Equifax, Experian, and TransUnion – have until the next business day to put the requested freeze in place. Consumers can also request to lift that freeze at any time and the agencies will have to comply within an hour.

To fully freeze your credit, you must do so with all three credit reporting agencies. When freezing your credit, you will create a pin or passcode. Should you unfreeze your credit report, you will need that pin or passcode to prove your identity.

For more information about the new law and Credit Freeze FAQs, visit the FTC website at consumer.ftc.gov.

Did You Know…? VIDEO

In February this year federal regulators introduced the “Trusted Contact” person as a form of protection for the investing public. The trusted contact person is someone our advisors can reach out to if he/she suspects diminished capacity and the possibility of fraud. Our CEO offers an overview of the trusted contact person and an update on what to expect from your VNFA financial advisory team on this topic. WATCH THE VIDEO | READ MORE

Did You Know…?

Tax returns that were extended for partnership and S-Corps are due on September 15 and for individuals on October 15.

The first income tax in America was created in 1861 during the Civil War as a mechanism to finance the war effort. It was repealed 10 years later. In 1913, Wyoming ratified the 16th Amendment, providing the three-quarter majority of states necessary to amend the Constitution. The 16th Amendment gave Congress the authority to enact an income tax. In 1914 The Bureau of Internal Revenue (know as the IRS today) released the first Form 1040.

Valley National Services was incorporated on October 27, 1988 – 30 years ago – adding to the one-stop suite of services you know today as Valley National Financial Advisors.

Did You Know…?

Valley National Financial Advisors and the Certified Financial Planner (CFP®) Board of Standards were both founded in 1985. VNFA as a local, independent firm with the mission to help people achieve their long-term financial goals by providing solutions in as many areas as possible. The CFP Board as a 501(c)(3) non-profit organization that serves the public interest by promoting the value of professional, competent and ethical financial planning services.

In 1995, the National Commission for Certifying Agencies (NCCA) accredited the CFP Board’s certification program, the first such accreditation for a non-health related certification in the U.S. Individuals who have passed the tests of the CFP Board are known as Certified Financial Planner ProfessionalsTM – Valley National currently has eight Financial Advisors with CFP® certifications.

Why does this matter? It matters to us and to our clients that we uphold the fiduciary standard of care requiring a financial adviser act solely in the client’s best interest when offering personalized financial advice. It is at the very core of our team’s values and one of the reasons we maintain our independence.

Currently, several states are considering legislation that would bar professionals of any type from using the word “certified” or “registered” in their titles unless the title has been conveyed by a state-sanctioned board or agency. What would this mean for the CFP? We will follow that closely and keep you informed. We are certain that no matter what may happen with the titles in the future, our commitment will always be to our clients first.