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Tax Insight – January 2020

Tax Insights – January 2020

Tax-Insight-January-2020 – Click to open PDF

The New W-4
The IRS released a new Form W-4, Employee’s Withholding Certificate for 2020. Let’s take a closer look at the new withholding calculation method provided with this form.

Instead of using the personal allowances worksheet, the calculation of whether you need to take additional withholding is now determined in five steps.

Step 1, Enter Personal Information, and Step 5, Sign Here, are required of all taxpayers. Only complete Steps 2–4 if they apply to your situation.

Step 2 is for taxpayers who have more than one job, or who are married filing jointly and both spouses work. There are three options: (1) use the estimator on the IRS site; (2) use the worksheet in Step 2b; and (3) check the box and have the normal amount withheld from each job. This may result in a higher withholding than necessary.

The worksheet to calculate additional withholding amounts is on Page 3 of the form. When completing the form, use the tables on Page 4 to determine the amount that is included on Line 1 of the worksheet. This gives you an amount to divide by the number of pay periods for the job. If you have three jobs on the tax return, the calculation becomes more complex.

Step 3 takes dependents into consideration. Add $2,000 for each qualifying child under 17, and $500 for each dependent who does not qualify for the child tax credit. Step 4, Other Adjustments, is optional and reviews (a) other income; (b) deductions; and (c) extra withholding. Finally, in Step 5, the taxpayer signs the form.

The IRS also has a withholding estimator widget, where you can fine tune your withholding. Use this widget to ensure that you have the best result possible.

We can help guide you through Form W-4 or the widget. Call our office to make an appointment. 

Important Information

  • 2020 Health Savings Account (HSA) contribution limits are $3,550 for individuals and $7,100 for families. If the HSA account beneficiary is age 55 or older at the end of the year, the annual contribution limit is increased by $1,000.
  • The IRA contribution limit for 2020 is $6,000 ($7,000 for taxpayers age 50 or older).
  • Starting in 2020, the age for required minimum distributions is 72.
  • Starting in 2020, new parents can take penalty-free distributions from a 401(k), IRA or another qualified retirement plan within a year after a birth or adoption.

Tax Notes
Worried about a balance due? I can help. If you participate in an HSA, or if you haven’t maxed out your IRA contributions, there are ways to decrease your balance due. Come see me about last minute tax planning for your 2019 taxes.

Did You Know?
January is named after Janus, the Roman god of beginnings and duality. Janus was pictured with two faces. One face looks back on the past year, and the other looks forward to the next year.

Quote Corner
“Every new beginning comes from some other beginning’s end.”        ~ Seneca

2019 Client Questionnaire

Here is our 2019 Client Questionnaire to complete to assist with the preparation of your Individual 2019 Tax Returns. This is a Fill It In questionnaire. If you decide to complete on your computer, make sure you SAVE the PDF after completing the questionnaire to your computer. You can then email it to Cliff, Dana or Matthew and/or print to bring it with you when you bring your tax documents to the office to have your return prepared.

Thank you for allowing our office to serve you with your tax return needs.

2019 Client Questionnaire


2018 Client Questionnaire

Our fillable 2018 Client Questionnaire is now available.  Click the link and download in order to fill it in.  Remember to save the  form to your computer.  If we have already prepared your tax return for 2018, you do not need to complete the updated questionnaire.  When you are ready to bring your tax documents, please complete the Questionnaire and bring this with you to check in.   Please also bring your drivers license with you.  The IRS and South Carolina are asking for this information to prevent identity theft.  Refunds can be delayed without this information.

We look forward to serving you.

Thank you.


2017 Client Questionnaire

Our fillable 2017 Client Questionnaire is now available.  When you are ready to bring your tax documents, please complete the Questionnaire and bring this with you to check in.   Please also bring your drivers license with you.  The IRS and South Carolina are asking for this information to prevent identity theft.  Refunds can be delayed without this information.  Thank you.


Letter to Clients

For our Clients,

A new Tax Bill was introduced in December and we can be sure of at least one thing: future tax rates are going to change. Because this is a year-end 2017 letter, our guidance in this letter is aimed at 2017 tax planning rather than predicting 2018. We will posting our 2018 Client Questionnaire over the next two to three weeks.

Affordable Care Act
Contrary to popular belief, you must still have qualified health insurance for all family members in 2017 or pay a penalty. Many Americans are joining “health care sharing ministries” for health insurance, but there is no tax deduction allowed with these types of plans, even though they keep you from paying a penalty for not having insurance. If you received a Form 1095 from any issuer or agency we MUST have all copies to prepare your tax return.

ALL deductions of any amount must have a receipt. Any individual contribution over $250 must also have an acknowledgement letter from the charity, and the letter must be dated by the date we file your return. The letter should show the date and amount of any individual contribution over $250, and should also state that no goods or services were received in return for the contribution. We will accept a list from you for charitable deductions without further documentation. As always, you are responsible for proper record-keeping.

Mortgage Interest
New rules may change home mortgage interest deductions; so for any refinancing, equity line draws or new loans, we must know if the money was spent to buy, build or improve your personal residence. We also must obtain Form 1098 from you when you pay mortgage interest. Additionally, we must obtain refinancing closing statements.

Stock Gifts and Losses
We find many clients that have stock they purchased many years ago in companies that have gone bankrupt. Go through your records and memory and let us know if you have any “worthless” stock so that we can deduct the losses now. Furthermore, if you have a stock whose value has increased, you may wish to donate it to a charity by the end of the year instead of donating cash in order to obtain much better tax treatment.

Roth IRA Conversions 
You will continue to hear from lots of “experts” this year that you need to convert your retirement accounts to Roth IRAs. While there are a number of advantages to conversions, there are an equal number of disadvantages that carry some major tax consequences. Please do not convert your accounts in 2017 without coming in to see us to discuss both the positives and negatives. All conversions for 2017 must be completed by December 31, 2017.

Other Income
If you have any income from BitCoin, AirBNB, Turo, Etsy, EBay or similar consumer-to-consumer programs, please let us know. Many income tax rules are affected and few of these sites provide you with adequate tax information.

Tax Planning
The simplest and most effective tax planning tool for all Americans of all income levels is full participation in retirement plans. Make sure you maximize your 401-k deferral if available and contribute to tax-deductible IRAs.

Check your employee handbook and see what other fringe benefits are available at work and call us if you aren’t sure if it will benefit you. Some of the best fringe benefits provided by employers include cafeteria (or 125) plans, as well as child care plans and wellness programs. Many taxpayers have unused amounts left in pre-tax healthcare flex spending (cafeteria/125 plans). If this includes you; get your check-ups, dental work, or new glasses taken care of before the end of the year.

Security and Identity Theft
The IRS has determined that one of the prime targets of data theft is tax preparation companies. This year we attended courses designed to improve the protection of our firm and your confidential data. One of the mandatory changes we are implementing immediately is our new “no-click” policy combined with a new information transfer policy. Because so many electronic intruders get in via email attachments, our firm has instituted our national tax professional security advisor’s recommendations and implemented a “no-click” e-mail policy. This means we will not open any documents that you have sent us via email– a mandatory solution. This practice, combined with our latest security software and other steps, will make it extremely difficult for electronic intruders to get through our defenses. This brings the question about how you will transfer data to us, and vice versa. We now will accept data from you in 4 ways: surface mail, drop-off, fax, or mandatory upload to our web portal. We know these changes will cause some extra hassle, but it is the best way to protect confidentiality overall.

Future Income Tax Rates & Other
We highly recommend that when you are getting your information to us for your 2017 Federal tax return that you set an appointment for an after tax season “Tax Tune Up” to examine tax and estate planning strategies. Because of the new tax bill, if your family income is over $100,000 it is almost mandatory that we meet for future tax planning because of surtaxes.

There are literally hundreds of other changes, extensions, and deletions that we will consider this year while preparing your return. Because of these changes we are requesting everyone to try to have their tax information in to us at least two weeks earlier than normal, and no later than March 31, 2018. Please rest assured that we will utilize our best resources to once again provide you with timely, complete and accurate service, while keeping your tax burden to the lowest legal amount. Thank you again for your continued support.

Clifford W. Stumbo, CPA


2016 Client Questionnaire

To get a head start on ‘check in’ in our office to start the process of your 2016 tax return preparation, please click the link below to download the fill it in PDF version of our Client Questionnaire and Health Coverage Questionnaire.  The two questionnaires are four pages total.  Please deliver the completed questionnaires to our office at the same time you submit all of your tax documents.

2016 Fill It In Client Questionnaire Link

Thank you,
Cliff Stumbo

2015 Client Questionnaire

To get a head start on ‘check in’ in our office to start the process of your 2015 tax return preparation, please click the image link below to download the PDF version of our Client Questionnaire and Health Coverage Questionnaire.  The two questionnaires are four pages total.  Please deliver the completed questionnaires to our office at the same time you submit all of your tax documents.

Thank you,
Cliff Stumbo

South Carolina to Delay 2015 Refunds

Where is my refund?

Refunds for returns filed prior to 3/1/16 are expected to be issued within two to three weeks of 3/1/16. For returns filed on or after 3/1/16, the SCDOR expects to issue refunds within two to three weeks of the date the return was submitted.  We request your patience in this process. You can check the status of your refund here. Refund status becomes available when your refund is processing not necessarily when the SCDOR receives your return. 


A nationwide scam targeting taxpayers continues to grow. In a new effort to take money from unsuspecting victims, fraudsters are sending out phony tax bills on what purports to be official IRS letterhead. They are also sending out e-mails from false websites that contain “IRS” in the Web address.  In addition, scammers claiming to be IRS employees continue to call taxpayers, telling them they owe taxes and must pay fast. Please keep your guard up and don’t fall victim to any of these scams.

2014 Standard Mileage Rates Announced

2014 Standard Mileage Rates for Business, Medical and Moving Announced

The Internal Revenue Service today issued the 2014 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2014, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 56      cents per mile for business miles driven
  • 23.5  cents per mile driven for medical or moving purposes
  • 14      cents per mile driven in service of charitable organizations