The New RMD Rules

In November 2019, before the Budget Bill was passed, the IRS increased life expectancy tables to more accurately reflect American’s longevity. The adjustment was unrelated to the Budget Bill. Who knows if another change will come (it is under discussion), but there is no direct change as of now from the Budget Bill for the tables. Use Pub. 590-B for life expectancy tables.

The big law change that occurred in the Budget Bill was a change in the required minimum distribution rules from age 70 and ½ to age 72 for people turning 70 and ½ after 12/31/2019. Read on for the explanation.

As to Required Minimum Distributions (RMD), if you were 70 and ½ before 1/1/2020 (born before 7/1/1949) nothing has changed. You must take your RMD for 2019 and 2020 and 2021 just like before the bill. As an example, Ralph turned 70 ½ on December 4, 2019. He was required to take his 1st RMD by 12/31/2019 because he is under the old law. Under a special, one-time rule, he could delay that 1st payment until 4/1/2020, but he would still be required to take his 2019 payment by 4/1/20, AND still required to take his 2020 payment by 12/31/2020, and so on. He is unaffected by the new age rule.

If you were not 70 and ½ by 12/31/2019 then a new era has arrived for you. Your first RMD will not be required until the year you turn 72. And yes, you can delay the first one until April 1 of the year you turn 73, although you would be required to take both the distributions that year. If Ralph was born July 4, 1949, he was just shy of 70 and ½ on 12/31/19, so the new rules would apply to him. He will need to take his 1st RMD in the year he turns 72, or 2021. That first RMD may be delayed until 4/1/2022, but he does still have to take a 2022 distribution by 12/31/2022 as well.

Birth date Normal First Required Payment Date Special extension1st payment option Future payment date requirement Comments
Before July 1, 1949 12/31 of year turning 70, so if turning 70 in 2019, 12/31/19 April 1 of year after turning 70 and ½, so if in 2019, delay until 4/1/2020 The year following 70 and ½, so if turning 70 and ½ in 2019, by 12/31/2020 If using the special extension date, 2020 will require 2 payments: 1 for 2019 and the normal 2020 payment
After June 30, 1949 12/31 of year turning 72, so if born in 1949 by 12/31/2021 April 1 of year after turning 72, so if born in 1949 by 4/1/2022 The year following turning 72, so if born in 1949, by 12/31/2022 If using the special extension date, 2022 will require 2 payments: 1 for 2021 and the normal 2022 payment
  • Anyone turning 70 and ½ in 2020 will not be required to take an RMD in 2020 or until the year they turn 72.
  • If still working for a company with a 401-k at age 72, you may delay your RMD until the year after you stop working there (except for >5% owners of the company).

llinois Taxpayers Are Eligible to Opt-In to the IRS’ Identity Protection PIN Program When 2020 Filing Season Begins

When the IRS begins the 2020 tax filing season, taxpayers in selected locations will be eligible to opt into the online Identity Protection PIN program.

Taxpayers will be eligible for this voluntary program if they filed a federal tax return last year from Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Maryland, Michigan, Nevada, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, Texas, and Washington.

The IP PIN is a 6-digit number that adds another layer of protection for taxpayers’ Social Security numbers and helps protect against tax-related identity theft.

The IRS has issued IP PINs to confirmed identity theft victims since 2011. In recent years, the IRS has been expanding the program to taxpayers who are not confirmed identity theft victims but who may want this additional protection.

Taxpayers opting into the IP PIN program must use the online Get an IP PIN tool at IRS.gov/IPPIN.

The IRS has created a new publication – Publication 5367, Identity Protection PIN Opt-In Program for Taxpayers – to help taxpayers understand the required steps. Please share with clients who are interested in this program. The publication is in English and Spanish. It can be printed and distributed, or the link may be shared.

Here are a few factors taxpayers should consider:

  • The identity verification process is, by design, rigorous. Not everyone will be able to authenticate their identities and obtain an IP PIN.
  • Taxpayers cannot call the IRS to obtain an IP PIN. The IRS is working on alternatives to the online process, but one is not yet in place.
  • A new IP PIN must be obtained each year from the online tool.
  • Taxpayers should never share their IP PIN with anyone but their tax preparer to file their tax return. The IRS will not call or email to request an IP PIN. People should be on guard against identity thieves seeking their IP PINs.

Before making this program available nationwide, the IRS is expanding it in phases to ensure there is no adverse impact on existing systems. After the 2020 filing season, the IRS will decide whether to add additional states or expand nationwide.

Until then, the IRS is seeking assistance from tax professionals and others to help inform taxpayers in the 20 locations of their eligibility. Your help in spreading the word is greatly appreciated. Again, the Get an IP PIN tool will be available at the start of the 2020 filing season.

PRESS RELEASE

FOR IMMEDIATE RELEASE

Weiss & Thompson, P.C., C.P.A.’S Receives 2019 Best of Arlington Heights Award

Arlington Heights Award Program Honors the Achievement

ARLINGTON HEIGHTS November 13, 2019 — Weiss & Thompson, P.C., C.P.a.’S has been selected for the 2019 Best of Arlington Heights Award in the Certified Public Accountant category by the Arlington Heights Award Program.

Each year, the Arlington Heights Award Program identifies companies that we believe have achieved exceptional marketing success in their local community and business category. These are local companies that enhance the positive image of small business through service to their customers and our community. These exceptional companies help make the Arlington Heights area a great place to live, work and play.

Various sources of information were gathered and analyzed to choose the winners in each category. The 2019 Arlington Heights Award Program focuses on quality, not quantity. Winners are determined based on the information gathered both internally by the Arlington Heights Award Program and data provided by third parties.

About Arlington Heights Award Program

The Arlington Heights Award Program is an annual awards program honoring the achievements and accomplishments of local businesses throughout the Arlington Heights area. Recognition is given to those companies that have shown the ability to use their best practices and implemented programs to generate competitive advantages and long-term value.

The Arlington Heights Award Program was established to recognize the best of local businesses in our community. Our organization works exclusively with local business owners, trade groups, professional associations and other business advertising and marketing groups. Our mission is to recognize the small business community’s contributions to the U.S. economy.

SOURCE: Arlington Heights Award Program

CONTACT:
Arlington Heights Award Program
Email: PublicRelations@townranking-decision-2019.com
URL: http://www.townranking-decision-2019.com

FIVE MINUTE TAX BRIEFING

PPC

Five-Minute Tax Briefing®
October 22, 2019
No. 2019-20

Social Security Wage Base Increases for 2020:  The Social Security Administration (SSA) has announced that the maximum earnings subject to the Social Security component of the FICA tax will increase from $132,900 to $137,700 for 2020. This means that for 2020, the maximum Social Security tax that employers and employees will each pay is $8,537.40 ($137,700 x 6.2%). A self-employed person with at least $137,700 in net self-employment earnings will pay $17,074.80 ($137,700 x 12.4%) for the Social Security part of the self-employment tax. The Medicare component remains 1.45% of all earnings, and individuals with earned income of more than $200,000 ($250,000 for married couples filing jointly, $125,000 for married filing separately) will pay an additional 0.9% in Medicare taxes. Other 2020 cost-of-living adjustments announced by the SSA are available at www.ssa.gov/policy/docs/quickfacts/prog_highlights/RatesLimits2020.html . SSA Release 10/10/19.

IRS Expands and Finalizes Section 199A Safe Harbor for Rental Real Estate

The IRS finalized a safe harbor revenue procedure under which a rental real estate enterprise will be treated as a trade or business for purposes of Code Sec. 199A. The procedure includes several changes from a proposed revenue procedure previously issued in Notice 2019-7, such as (1) allowing taxpayers to treat their interests in residential or commercial properties as separate rental real estate enterprises in one year and then treating their interests in all similar residential or all similar commercial properties as a single rental real estate enterprise in a future year; (2) allowing taxpayers with rental real estate enterprises that have been in existence for four or more years to qualify immediately under the 250-hour rental services test if the rental services have been provided in three of the five consecutive tax years ending with the tax year at issue; and (3) allowing an interest in mixed-use property to be treated as a single rental real estate enterprise or bifurcated into separate residential and commercial interests. Rev. Proc. 2019-38.

Five-Minute Tax Briefing


IRS Unveils New Tax Withholding Estimator: The IRS has unveiled its latest online tool, the “Tax Withholding Estimator.” The estimator, which replaces the “Withholding Calculator,” assists workers, retirees, self-employed individuals, and other taxpayers in determining how much income tax should be withheld from wages and pension payments. Among other things, the estimator features (1) plain language to improve user comprehension; (2) a mobile-friendly design; (3) enhanced tips and links on various tax credits and deductions; and (4) an automatic calculation of the taxable portion of any Social Security benefits. In addition, the tool makes it easier to enter wages and withholding for each job held by the taxpayer and his or her spouse. The IRS encourages all taxpayers to use the tool to do a “Paycheck Checkup” and review their withholding for 2019. The new estimator is available at www.irs.gov/individuals/irs-tax-withholding-estimator . News Release IR 2019-139.