TAX TIPS

Tax Day is Monday, May 17!
If your return has already been prepared, make sure to sign and return your 8879 forms to us authorizing filing. This is the final step for clients to make sure returns are filed with and accepted by the IRS and state authorities.

If you have not yet given us your complete tax documentation, we are recommending filing an extension in most cases. Extensions will extend the final filing deadline to October 15. Please note that if it is estimated that you owe taxes, that payment will still be due by May 17.

If you worked with us to file your 2019 return and have made other arrangements for 2020 tax preparation, please notify our Tax Department as soon as possible.

Tax Update (April 2021)

The new tax deadline for 2020 returns of May 17, 2021 is closing in fast. For all tax clients who have not yet sent us documents, we are requesting that you get your tax information (either in full, or whatever you have available) to us no later than April 15.  

If you are unable to do so, we will most likely be recommending filing an extension with the IRS, which will allow us until October 15 to file the final return. If we find that filing an extension is in your best interest, our team will reach out to let you know more about that process.

In anticipation of questions, we have collected a brief Q&A for you on our website. If you have additional inquiries, please contact our Tax Department at 610-868-9000 or tax@valleynationalgroup.com.

TAX TIP

IRS statement on interest payments
Interest on individual 2019 refunds reflected on returns filed by July 15, 2020 will generally be paid from April 15, 2020 until the date of the refund. Interest payments may be received separately from the refund. READ MORE

Did You Know…?

Employee job related expenses are no longer deductible, effective 1/1/2018, under the new tax law (Tax Reduction and Jobs Act of 2017). That means employees will lose the following types of deductions on 2018 and future Federal income tax returns. Note: some states, such as Pennsylvania, continue to permit many of these deductions.

* Safety equipment, small tools, and supplies needed for your job.

* Meals and entertainment expenses.

* Travel and expenses away from home.

* Vehicle expenses while using your vehicle for employment related activity.

* Uniforms required by your employer that are not suitable for ordinary wear.

* Protective clothing required in your work, such as hard hats, safety shoes, and glasses.

* Physical examinations required by your employer.

* Passport for a business trip.

* Job search expenses in your present occupation.

* Depreciation on a computer your employer requires you to use in your work.

* Dues to professional organizations and chambers of commerce.

* Licenses and regulatory fees.

* Subscriptions to professional journals.

* Occupational taxes.

* Union dues and expenses.

* Fees to employment agencies and other costs to look for a new job in your present occupation, even if you do not get a new job.

* Certain work-related educational expenses.

Pennsylvania Update: What’s New?

ID Validation – Personal
Income Tax Refund Fraud Prevention Efforts


Beginning with the 2014 income tax filing season,
the department instituted new security measures to identify and intercept
fraudulent refund filings.  As part of
this initiative to ensure refunds are issued only to their rightful owners,
taxpayers may be asked to confirm their identities before refunds are issued.



In such cases, the taxpayer will be contacted by the
department by way of a letter sent to the address on the taxpayer’s personal
income tax return. The letter from the department will instruct the taxpayer to
call a designated number, where the taxpayer will speak to a representative of
a company the department has partnered with for its expertise in identity
verification.  The taxpayer will be asked
to provide answers to questions to verify identity. Taxpayers who receive this
identity validation notice will authorize release of their refunds sooner if
they follow the instructions for verifying identity provided in the notice.


Heads Up!

The IRS is at it again.  The IRS changed the format for 1099’s (investment
account transactions) and many 1099 providers discovered the change too late to
make the January 31st deadline for mailing the 1099’s.  Many providers received an extension of time
to provide them until February 15.  You
should be receiving these “late” 1099’s this week. 


Additionally, the IRS was late to release the final
version of several forms needed by tax prep software companies and tax
preparers.  And, the IRS was late in
opening its doors to permit taxpayers to actually file their income tax
returns.



Additionally, many investors have added Master Limited
Partnerships (MLP’s) to their portfolio. 
The investment returns for these MLP’s are NOT reported on the 1099’s.  Instead MLP earnings are reported on Schedule
K-1 which is issued in early March (normally). 
We recommend NOT waiting for your
K-1’s before giving your income tax information to us to prepare your income
tax return.  We prefer to get started
as soon as possible and we will download your K-1 information for you, as soon
as it is available.


IRS Update: What’s New?

The IRS recently created a new application to obtain income tax return transcripts fairly easily.  Any taxpayer can create an account and pull their tax transcripts for the prior three years in real time.  Clients who need copies of past returns for mortgage applications, student loans or other uses can now obtain them from any computer or even a smart phone.


Per the IRS, Return Transcripts (2013 back to 2010) will meet the requirements of lending institutions offering mortgages and student loans.



To obtain, use the link “Order a Return or AccountTranscript” under “Tools” link on the IRS.gov homepage.

Heads Up!

For those folks who have your
tax returns prepared through Valley National Services, you should have received
your annual tax disclosures and questionnaires in the mail or via an email to
complete electronically.  For those who would like to complete them online
or missed the email, please go through our website www.valleynationalgroup.com , click “Tax Services” on the home page and then follow
the link to “Complete
your Tax Preparation forms online: GET STARTED HERE” in the middle of the page. 
And to that group of people who prepare your returns yourselves or use another
service, we welcome you to try us out this year.  Understanding your tax
options is an integral part of informed financial choices.

Heads Up!

2013 Tax Planning – Don’t be surprised,
be prepared.

As January 1, 2014 gets closer, you need to finalize your year-end tax planning.  

 

While new tax legislation has brought greater certainty, it also created new challenges. The number of changes made to the Tax Code and the opportunities these changes bring may seem overwhelming. However, engaging us to help with tax planning will help you to maximize your potential tax savings and minimize your tax liability.

 

Without planning, you may be surprised that you owe additional taxes in 2013, even with the extension of the previous decade of tax brackets. Three new taxes are in effect for 2013: the Net Investment Income surtax, the Additional Medicare Tax and a revived 39.6 percent tax bracket for higher income individuals. The 3.8-percent Net Investment Income surtax very broadly applies to individuals, estates and trusts that have certain investment income above set threshold amounts. The Additional Medicare Tax applies to wages and self-employment income above threshold amounts. Please click the link here to review our Changes in Tax Rates chart summarizing the new taxes and revived brackets and phaseouts.

With these new taxes in place, make sure you don’t lose the benefit of some generous but temporary tax incentives that are available in 2013, but may not be in 2014. Please click the link here to review our 2013 Tax Planning Checklist to help you get started on your tax planning. If your situation has changed or you need more detailed planning, please contact me for more information.


The Economy and The Markets: *Mid-Year Review*

What happened in mid-May to the economy’s momentum?  What events or series of events derailed the promising economic rebound then underway?  The answer to these two questions is less important than the implication.  The economy no longer appears to have enough “escape momentum” to jump over the economic hurdles in the foreseeable future.  Those hurdles are:  (1) housing remaining in the doldrums, (2) unemployment remaining distressingly high, (3) the wind-down of economic stimulus, (4) spending cuts by state and local jurisdictions.

 

Looming on the time horizon is the huge income tax increase scheduled to begin January 1, 2011.  Unless something changes, we are going to implement the largest tax increase in US history. And we are going to do it at a time when new economic research suggests that growth may be in the 1% range and unemployment will still be in the 9-10% range. Extended unemployment benefits will be long gone for many people. Housing will still be in the doldrums. Much of what passed for growth was inventory rebuilding and stimulus. The underlying economy may be weaker than the headline number reveals. And by the 4th quarter, there is very little stimulus. 

 

Let me be clear about something.  In theory, the US economy SHOULD not dip back into recession next year. Double-dip recessions are rare. The last one we had was in 1980-82, and then it was Volker with his foot on the inflation brake that caused it. I certainly think the data tells us it will slow down as the stimulus starts to go away, but a slow “Muddle Through” Economy is not a recession.

 

Given the above, I think we have to increase the odds of a 2011 recession and those odds will rise and fall based on the economic performance of the next two calendar quarters AND a growing concern in Congress and the White House that the 1/1/2011 income tax increases cannot be permitted to be implemented in their entirety without upsetting the economy. 

 

But, the stock markets have already dropped in anticipation of the economic slowdown.  There are indications the forecasted downturn is now fully factored into stock prices.  If true, this would not be the time to sell.  On the other hand, the economic downturn could be turn out to be much more long-lasting and severe than the market experts are forecasting.  It is very difficult to predict its severity.  Due to the lack of clarity in my crystal ball, I recommend the following for investors:

1. Investors who do not intend to touch their investments for 5 years or longer – continue to hold the current allocation of investments and continue to monitor.

2. Investors who are withdrawing income from their portfolios for their living expenses – keep 5 years’ worth of income in a short-term bond fund.

3. Investors who anticipate withdrawing lump sums from their portfolios for special purchases e.g., new car or home renovation – “park” any amounts you expect to withdraw within the next 5 years in a short term bond fund.