January 13: IRS Free File opens. Taxpayers can begin filing returns through IRS Free File partners; tax returns will be transmitted to the IRS starting January 24. Tax software companies also are accepting tax filings in advance.

January 17: Due date for tax year 2022 fourth quarter estimated tax payment.

January 23: IRS begins tax season. Individual 2022 tax returns begin being accepted and processing begins

March 15: Due date to file 2022 Partnership returns with fiscal year ending 12/31/22 due to IRS. (If your business is organized as a partnership, your income tax return or extension is due by the 15th day of the 3rd month after the end of your tax year).

April 18: Due date to file 2022 tax return or request extension and pay tax owed due to Emancipation Day holiday in Washington, D.C., even for those who live outside the area.

October 16: Due date to file for those requesting an extension on their 2022 tax returns

https://www.irs.gov/newsroom/irs-sets-january-23-as-official-start-to-2023-tax-filing-season-more-help-available-for-taxpayers-this-year

Greg Caramanica, CERTIFIED FINANCIAL PLANNER™
Investment Advisor Representative, COO, and Owner of Arlington Wealth Planning, LLC
Greg@ArlingtonWealthPlanning.com
(703) 300-0448

AWP provides financial planning and tax services.
Ask us about our 401k plans!

One of the first decisions taxpayers must make when completing a tax return is whether to take the standard deduction or itemize their deductions. There are several factors that can influence a taxpayer’s choice, including changes to their tax situation, any changes to the standard deduction amount and recent tax law changes.

Generally, most taxpayers use the option that gives them the lowest overall tax.

As taxpayers begin to think about filing their tax return, here are some things they should know about standard and itemized deductions.

Standard deduction

The standard deduction amount increases slightly every year. The standard deduction amount depends on the taxpayer’s filing status, whether they are 65 or older or blind, and whether another taxpayer can claim them as a dependent. Taxpayers who are age 65 or older on the last day of the year and don’t itemize deductions are entitled to a higher standard deduction.

Most filers who use Form 1040 can find their standard deduction on the first page of the form. The standard deduction for most filers of Form 1040-SR, U.S. Tax Return for Seniors, is on the last page of that form.

According to the Instructions for Form 1040 and 1040-SR, not all taxpayers can take a standard deduction, including:

• A married individual filing as married filing separately whose spouse itemizes deductions – if one spouse itemizes on a separate return, both must itemize.
• An individual who files a tax return for a period of less than 12 months. This is uncommon and could be due to a change in their annual accounting period.
• An individual who was a nonresident alien or a dual-status alien during the year. Nonresident aliens who are married to a U.S. citizen or resident alien, however, can take the standard deduction in certain situations.

Itemized deductions

Taxpayers who choose to itemize deductions may do so by filing Schedule A (Form 1040), Itemized Deductions. Itemized deductions that taxpayers may claim can include:

• State and local income or sales taxes.
• Real estate and personal property taxes.
• Home mortgage interest.
• Personal casualty and theft losses from a federally declared disaster.
• Gifts to a qualified charity.
• Unreimbursed medical and dental expenses that exceed 7.5% of adjusted gross income.

Some itemized deductions, such as the deduction for taxes, may be limited. Taxpayers should review the instructions for Schedule A (Form 1040) for more information on limitations.

Greg Caramanica, CERTIFIED FINANCIAL PLANNER™
Investment Advisor Representative, COO, and Owner of Arlington Wealth Planning, LLC
Greg@ArlingtonWealthPlanning.com
(703) 300-0448

AWP provides financial planning and tax services.
Ask us about our 401k plans!

Arlington Wealth Planning is proud to announce that we have partnered with top-notch, award-winning companies to provide better corporate retirement plans.

Founder, Greg Caramanica, discusses his perspective on how retirement plans can be better:

If your employees don’t understand why they are saving for retirement, will you have good participation in the plan?  Do you have employees asking for advances because they are experiencing financial problems at home?  How focused are they on their career when these issues are occurring?

These issues highlight the value of advisory services – an opportunity to provide a benefit to your employees, who might not have access to financial planning outside the corporate retirement plan.   It’s not only a chance to help them understand the investment lineup and how they can assemble their own portfolio, but also help them evaluate their financial goals and how to achieve them.  It’s an opportunity to help them improve financial habits and improve their wellbeing.

Your retirement plan should bolster your employee wellness program.

Looking back as an employee over my career, every single one of my employers’ 401k programs lacked adequate advisory services.  The plan sponsor would show up maybe once when I joined the plan, but I never saw them again.

The issue seems to be that retirement plans are not the primary focus of advisory firms.  Many shops seem to focus primarily on individuals, not companies, and might take on a few 401ks, but don’t really think about them as a significant opportunity to provide financial planning in a group environment.  With downward pressure on fees, companies are typically looking for the cheapest retirement plan they can find.  This results in bare bones plans that provide little value to its participants other than investment options, absent advisory services due to the low compensation and lack of interest.

I vow to do better.  Our retirement plans will include touch points with our advisors through financial planning seminars, one-on-one discussions, online educational resources and training, and, of course, more attention on ensuring participants know the individual investments in the plan and how to make sense of them.  You’ll see us frequently and you’ll know that we care about providing great customer service and a top-notch experience for plan participants.

Arlington Wealth Planning has partnered with the following award-winning companies:

Charles Schwab for custodian services.  StockBrokers.com ranks Schwab “Best in Class” Overall in 2019 as well as “Best in Class” in the Customer Service, Research, Platforms & Tools, Education, Offering of Investments, and Banking categories. Schwab was also selected as one of the Top 50 companies on the 2019 “World’s Most Admired Companies®” list, as well as ranked #1 for Innovation in Key Attributes of Reputation within the Securities and Asset Management category.

PCS Retirement for recordkeeping and third-party administration.  PCS is recognized as “Best in Class” by PlanAdviser Magazine in: Participant Call Center, Service Responsiveness, and Staff Consistency.  PCS is one of fewer than 50 companies that holds a Centre for Fiduciary Excellence (CEFEX) certification by the American Society of Pension Professionals & Actuaries (ASPPA). Additionally, PCS has received the highest rating by Roland|Criss for retirement plan service providers – “AAA” for Superior Quality.

MillenniuM for investment policy management.  MillenniuM is an unaffiliated ERISA defined independent fiduciary to 401(k) and other defined contribution plans. They are a fee-only, codified investment fiduciary as defined by ERISA section 3(38).  MillenniuM serves as an unconflicted “independent fiduciary” under DOL.§ 2509.95-1(c)(6).

There are multiple opportunities at the end of the year to make sure you close out 2019 right. Since most year-end planning opportunities have firm deadlines—often December 31st—acting now can help ensure you don’t leave money on the table. It’s not all upside though: Failing to take certain actions can mean penalties in some cases.

401k Contributions – The maximum you can put into your company’s 401k plan for 2019 is $19,000 and it has to be before the end of the year.  So, December is your last chance to contribute if you haven’t reached your maximum.  Check your last paystub to see what your contributions year-to-date have been.  Also take a look at your contributions per paycheck.  Add the remaining contributions to the year-to-date amount and that will be your expected annual contribution.  If it’s less than $19,000 and you want to make additional contributions, log into your company’s 401k website and add a contribution.  If you need help, contact your company’s Human Resources department.

529 Contributions – If you have a Virginia 529 College Savings Plan, you can deduct up to $4,000 per year in contributions against your Virginia State taxes.  So, if you have contributed less than $4,000 this year and would like to get the full tax benefit, you will need to make your contribution before the end of the year.

In addition to contributions, there is also an end-of-year note about distributions.  If you are taking distributions from a 529 plan to pay for qualified educational expenses, be careful not to draw from the account in December for January expenses.  You must wait until January to make those distributions, or else they will be considered nonqualified distributions and subject to taxes and fees.

Required Minimum Distributions – If you are over 70.5 years old, you are required to take a certain amount of money out of your tax-sheltered retirement accounts each year.  These are called Required Minimum Distributions (RMDs).  If you don’t take out enough, you will be subject to penalties.  So, before the end of the year, you should check your retirement accounts to see if your RMDs have been distributed.  If necessary, contact your financial planner, broker, or bank to discuss the calculation.  If you haven’t taken the full amount, arrange for it to be withdrawn before the end of the year.  It can go into your bank account, into another (non-retirement) investment account, or wherever you want it to go – it just has to be withdrawn from the retirement account (e.g. you don’t have to spend it!).

Medical Expenses – If you have a deductible and a maximum out-of-pocket limit on your health care insurance, then you may save money by going to the doctor in December instead of waiting until the -new year.  If you have met your maximum out-of-pocket limit, then you will pay less for those necessary medical appointments in December.  If you wait until January, the limit resets and you start over again.  So, review your deductible situation and determine whether you should take the chance to move any necessary medical appointments.

Also, consider your total medical expenses in 2019.  Did you have a major illness in 2019?  Did you pay for braces for multiple children in 2019? If your medical expenses in 2019 were over 10% of your adjusted gross income, then you qualify for medical expense deductions on your 2019 tax return.  This could be another reason to arrange for necessary medical appointments or expenses to occur in December rather than waiting until the new year.

Flexible Spending Accounts – There are two types of flexible spending accounts (FSAs) your employer can sponsor: Medical and Dependent Care. Unlike Health Savings Accounts (HSAs), which don’t expire at the end of the year, FSAs are considered “use or lose,” except for small amounts (e.g. $500, depending on the plan) that may be allowed to roll over to the next year for medical FSA.  This means that in most cases your 2019 FSA can ONLY be used for qualified expenses that happened in 2019.  If your qualified expenses in 2019 haven’t added up to your full FSA contribution, you may want to expedite any qualified expenses that can be expended in 2019.  With FSAs being funded by deductions from your paycheck every month, if you don’t spend it all then it’ll be like throwing your money away.  Check your medical plan for details on rollover allowances.

Tax Withholdings – Yes, the IRS tables are inaccurate again this year for most.  This means that the withholdings from your paychecks (that are sent to the IRS every month to prepay your 2019 federal taxes) might not be enough.  Take the time to review your most recent paystub.  Look at the amount withheld to-date and the amount withheld per paycheck.  Based on these amounts, calculate how much you will have withheld by the end of the year (last paychecks before January 15 count).  To avoid an underpayment penalty, individuals must pay either 100% of last year’s tax or 90% of this year’s tax, by combining estimated and withholding taxes (with a few exceptions).  If you haven’t withheld enough, you can either send a check directly to the IRS or you can arrange for a higher amount to be withheld from your December paycheck(s).

Charitable Giving – Charitable donations of money or goods are deductible on your taxes for the tax year they are incurred.  So, if you want to get the deduction on your 2019 taxes, you must make the donation before the end of the year.  Remember to document what you have donated and the fair market value of the donation, then get a receipt from the qualified charitable organization.  There are rules that could limit your deduction to 50% of your adjusted gross income (AGI) for certain donations or 30% of AGI for other donations, as well as rules about gifts of long-term capital gain property. If you are unsure of whether your donation will qualify and how much of a deduction you can get, speak to your tax advisor.

The end of the year can be hectic, but if you consider these financial planning opportunities and make your moves before the end of the year, you will thank yourself come tax time.

Greg Caramanica, CERTIFIED FINANCIAL PLANNER™
Investment Advisor Representative, COO, and Founder of Arlington Wealth Planning, LLC
Greg@ArlingtonWealthPlanning.com
(703) 300-0448

AWP provides financial planning and tax services.
Ask us about our 401k plans!

2017 tax returns are Due April 17th, 2018.  Should you file before then?

Remember that massive data breach in 2017?  This could have a significant impact on your decision to file early.  If you don’t remember, in 2017 there was a huge security breach at the credit reporting company Equifax that exposed sensitive information, such as Social Security numbers and addresses, of up to 143 million Americans (CNN article).

Criminals have been known to file false tax returns in the attempt to get their hands on a person’s tax refund.  Even if you don’t think you are entitled to a refund, these bad actors could easily falsify a tax return to show a tax refund.  Using your name, social security number, address, and other information (stolen from Equifax), they file the tax return and collect a tax refund in your name – all without you knowing. Then when you go to file your tax return, there is a problem.

The moral of the story is that you should file as soon as you can.

It’s a balance of filing too early and filing too late.  If you file too early, you could continue getting tax forms in the mail that you should have included in your return, forcing you to file an amended return later.  But if you file too late, you could expose yourself to tax return fraud.

Look at your previous year’s tax return and the forms you received in support of that tax return.  If your situation is similar to last year and have received everything you received forms from all the same institutions you received last year, then you are good to go.  If you are expecting more, wait.

If you need help preparing and filing your tax returns, schedule an appointment with Arlington Wealth Planning, LLC – a provider of financial planning and tax preparation services.

Phone: 1 (571) 263-1178 or Book an appointment here

About the Author:

Greg Caramanica is the managing member and COO of Arlington Wealth Planning, LLC, a Registered Investment Advisor located in Arlington, Virginia.  Mr. Caramanica is a CERTIFIED FINANCIAL PLANNER™, providing financial planning , insurance, and tax services.