Why do I need to complete a tax questionnaire each year before my CPA can file my return?
The tax questionnaire helps to ensure that your preparer has pertinent information and data for preparation of your tax return(s). It will also assist them with referencing your return information for future tax planning and/or tax questions that might arise after the return is submitted.

The ‘Tax Questionnaire’ contains a series of ‘yes’ or ‘no’ questions about the prior year with regard to personal information, dependents, education, healthcare, income, investments, retirement, itemized deductions and credits, and miscellaneous items related to tax law changes or special situations.

In addition, our VNFA questionnaire will ask you to indicate delivery preferences for both (i) the supporting source documents you will provide to us and (ii) how you would like your tax return(s) delivered to you for review and completion.

If we prepare your taxes and you have not already completed our tax questionnaire, please click here to complete it digitally or click here to access a printable PDF. You can access these links and other resources on our website at valleynationalgroup.com/tax. If you have any questions, you may contact our team at tax@valleynationalgroup.com

Mid-February Tax Reminders
We need each of our tax clients to complete a questionnaire every year as part of our return preparation process. Our team has either sent you a paper copy or a link. Please make sure you complete this and deliver it to us, in addition to your tax documents. Click here to access the online questionnaire.

S Corporation and Partnership returns with a December 31 year-end are due March 16! Send us your information as soon as you have all or most of it together so that we can get ahead of this deadline.

VNFA has a refreshed website!

What’s new?
You can find us at valleynationalgroup.com but also via valleynationalfinancialadvisors.com.

You can search all of our content, visit our video gallery, and learn more about our VNFA values.

You can navigate the site with ease on any mobile device and access your eVault on the go.

What’s the same?
You can still access The Weekly Commentary posts.

You can login to your secure client portal and other third-party financial account websites.

For our tax clients, you can visit valleynationalgroup.com/tax to find tax preparation resources.

by Christopher Popp, CPA, MST
The IRS has launched a new and improved Tax Withholding Estimator which can be found here https://www.irs.gov/individuals/tax-withholding-estimator. The new estimator incorporates the changes from the redesigned Form W-4. The IRS urges everyone to see if they need to adjust their withholding by using the Tax Withholding Estimator to perform a Paycheck Checkup. If an adjustment is needed, the Tax Withholding Estimator gives specific recommendations on how to fill out their employer’s online Form W-4 or provides the PDF form with key parts filled out.

Beginning in 2020, income tax withholding is no longer based on an employee’s marital status and withholding allowances, tied to the value of the personal exemption. Instead, income tax withholding is generally based on the worker’s expected filing status and standard deduction for the year. In addition, workers can choose to have itemized deductions, the Child Tax Credit and other tax benefits reflected in their withholding for the year.

The estimator allows users to choose the refund amount they prefer from a range of different refund amounts to help workers more effectively adjust their withholding. The exact refund range displayed is customized based on the tax information entered by that user. Based on the refund amount selected, the Tax Withholding Estimator will give the worker specific recommendations on how to fill out their W-4. This new option allows users who seek either larger refunds at the end of the year or more money on their paychecks throughout the year to have just the right amount withheld to meet their preference.

The new Tax Withholding Estimator also features numerous other enhancements, including one allowing someone who expects to receive a bonus to indicate whether tax will be withheld. Other improvements added, include mobile-friendly design, handling of pension income, Social Security benefits and self-employment tax.

Form 1099-MISC Filing Requirements
As a general rule, you must issue a Form 1099-MISC to each individual, partnership, Limited Liability Company (“LLC”), Limited Partnership (“LP”), or Estate you have paid at least $600 during the calendar year in services, rents, or legal fees. Note that personal payments are not reportable. 

Form 1099-MISC is also required if you withheld any federal income tax under the backup withholding rules regardless of the amount of the payment.   

Some payments do not have to be reported on Form 1099-MISC, although they may be taxable to the recipient. The most common exceptions are payments to a corporation (including an LLC that is treated as a C or S corporation), payments of rent to real estate agents or property managers, and payments made with a credit card or payment card and certain other types of payments, including third-party network transactions. 

Form 1099-MISC are due by January 31, 2020. You can submit Form 1099-MISC to the IRS by mail or online, using the Filing Information Returns Electronically (FIRE) system. Please note that if you issue more than 250 information returns, you are required to file electronically and may be penalized if you fail to do so.  The IRS operates a centralized call site to answer questions about reporting on Form 1099 and other information returns. If you have questions related to reporting on information returns, the IRS centralized call site can be reached at (866) 455-7438. 

by Michael Roper CPA, Assistant Vice President
Help Protect Your Documents from Scammers
Be careful when writing the date 2020 on checks or other legal documents. Someone could potentially alter the date if you abbreviate the year to two digits; ‘20’. For example, the date 1/7/20 written on a check could be changed to 1/7/2021 next year and present it for payment next year. The date 1/7/20 on a debt agreement could be altered to 1/7/2018 with a demand for back payments.

The easiest way to avoid these problems? Write or type the date completely – 1/7/2020.

The SECURE Act was signed into law on December 20. SECURE stands for Setting Every Community Up for Retirement Enhancement. The Act changes a number of rules related to tax-advantaged retirement accounts. Investopedia.com provided this overview of the major provisions:

• Make it easier for small businesses to set up 401(k)s by increasing the cap under which they can automatically enroll workers in “safe harbor” retirement plans, from 10% of wages to 15%.
• Provide a maximum tax credit of $500 per year to employers who create a 401(k) or SIMPLE IRA plan with automatic enrollment.
• Enable businesses to sign up part-time employees who work either 1,000 hours throughout the year or have three consecutive years with 500 hours of service.
• Encourage plan sponsors to include annuities as an option in workplace plans by reducing their liability if the insurer cannot meet its financial obligations.
• Push back the age at which retirement plan participants need to take required minimum distributions (RMDs), from 70½ to 72, for those who are not 70½ by the end of 2019.
• Allow the use of tax-advantaged 529 accounts for qualified student loan repayments (up to $10,000 annually).
• Permit penalty-free withdrawals of $5,000 from 401(k) accounts to defray the costs of having or adopting a child.
• Encourage employers to include more annuities in 401(k) plans by removing their fear of legal liability if the annuity provider fails to provide and also not requiring them to choose the lowest-cost plan. (This could be something of a double-edged sword. Employees will need to look extra-carefully as these options.)

One other key change in the new bill is paying for all this: the removal of a provision known as the stretch IRA, which has allowed non-spouses inheriting retirement accounts to stretch out disbursements over their lifetimes. The new rules will require a full payout from the inherited IRA within 10 years of the death of the original account holder, raising an estimated $15.7 billion in additional tax revenue. (This will apply only to heirs of account holders who die starting in 2020.)

If you have questions or concerns about how the SECURE Act may affect your retirement planning and outlook, contact your service team for more information.

OUR VNFA STORY
Valley National Financial Advisors will celebrate 35 years in business in 2020. Our founder, Thomas M. Riddle, CPA, CFP^® created the Valley National Group of companies with a mission to help his clients make the right financial choices in pursuit of their goals and dreams. His vision was to create a place where clients could address as many areas of their financial life as possible all in one place, under the supervision of one trusted advisor.

Since 1985, Tom has brought together a trusted team around him to expand the resources available to clients and ensure that his original mission is sustained for generations to come. Tom continues to work with clients as a Financial Advisor, in addition to serving as Chairman of the Board.

Today, our business is run under the leadership of Matthew Petrozelli. Matt has been a part of the team since 2011, serving as a Financial Advisor and Chief Operating Officer before taking on the role of CEO at the beginning of 2018. Over the years, our team has grown to just about 40 employees who are all devoted to our original mission to help our clients with our personalized, one-stop service model.

Throughout 2020, we will be celebrating our past, highlighting the journey to where we are today, and sharing more with you about our future as a VNFA family.

People lose millions of dollars a year due to IRS scams. Don’t be one of them. NerdWallet.com recently published a list of 10 trending IRS scams and 10 ways to spot them. When in doubt, contact your VNFA tax team before offering a response or taking any action. https://www.nerdwallet.com/blog/taxes/avoid-irs-scams/

Today is Giving Tuesday!
#GivingTuesday is a global generosity movement created in 2012 as a simple way to encourage people to do good.

What will you give? Visit givingtuesday.org to search for organizations in our Lehigh Valley community who are in need of your time, voice, dollars, goods, kindness, talent.