One of the few tax choices left … Clump or Pay those Property Taxes?

This is the time of year that most municipalities ask for their property tax payment… In many cases you have the option to pay in the current year (December 2016) or next year (January 2017).

To Clump or Not to Clumpirs

Big or Small Income Year

Before just paying those property taxes as you usually do, think for a moment if you have had an extremely good (high income) or low income year. If either of these fit your situation it may make sense to defer your property taxes and clump them into one year.

Standard Deduction

If your standard deduction is greater than your tax write offs, check to see if pushing two property tax payments into one year will get you over the standard deduction.

Heavy or Light Charitable Year

Just as a high or low income year, some years we may find that we have given more to charity than others. Step back a moment and see how your property tax payment will affect your total tax write offs. It may make sense to clump.

This is by no means a recommendation to clump or not as there are a lot of moving parts with this strategy. We are only asking you to think about your situation and if any may apply. See your tax professional before making a move!

Contact us if you have any questions!

Have a Great Friday and weekend… sorry for the heavy post on a Friday but the year is almost gone and we wanted to get our tax strategies to you!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

 

New Retirement Limits – Same as before … well almost !

The IRS recently released the updates for the 2017 Limitations on retirement benefits.

It was pretty easy… THE SAME as 2016!

From the IRS Release:

Highlights of limitations that remain unchanged from 2016irs

  • The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $18,000.
  • The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $6,000.
  • The limit on annual contributions to an IRA remains unchanged at $5,500.  The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

 

There were a few changes that were long on words, but short on substance… here they are.. again from the IRS release..  Print – Click this link to Print this page

Highlights of changes for 2017

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs, and to claim the saver’s credit all increased for 2017.

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions.  If during the year either the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor their spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.)    Here are the phase-out ranges for 2017:

  • For single taxpayers covered by a workplace retirement plan, the phase-out range is $62,000 to $72,000, up from $61,000 to $71,000.
  • For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $99,000 to $119,000, up from $98,000 to $118,000.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $186,000 and $196,000, up from $184,000 and $194,000.
  • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income phase-out range for taxpayers making contributions to a Roth IRA is $118,000 to $133,000 for singles and heads of household, up from $117,000 to $132,000.  For married couples filing jointly, the income phase-out range is $186,000 to $196,000, up from $184,000 to $194,000.  The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income limit for the saver’s credit (also known as the retirement savings contributions credit) for low- and moderate-income workers is $62,000 for married couples filing jointly, up from $61,500; $46,500 for heads of household, up from $46,125; and $31,000 for singles and married individuals filing separately, up from $30,750.

 

Pat yourself on the back if you are still awake at this point… my apologies if you fell over… Bottom line, not a lot of changes!

Have a Great Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

Should I spend my HSA Account ? (Part 2)

As a reminder, we like the HSA ALOT. If you have a high deductible health plan, funding the HSA is a good idea.medical

While you can fund an HSA next year (2017) for this year’s taxes (2016) we would recommend you not, as the recordkeeping is not always great and can cause tax return issues.

Should I spend my HSA?

So you put your HSA funds in pre-tax, they grow tax deferred and you draw them out without taxes as long as you use them for medical expenses.

We like deferring some of the HSA for later use. If you are in a bind and have a large medical expense, certainly use it. DO NOT feel bad for not using the funds as it is a very good bet you will need them for medical expenses in the future and the tax deferred growth is a big advantage.

Many plans, including our favorite the HSA Bank, allows you to invest the funds easily. Let us know if you have any questions !

Have a Great “Pre-tax Medical Savings” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

Welcome to a FAST December – Friday

Have you taken a look at how the calendar falls this year ?calendar-1192688

If not, take a minute to look, it requires extra planning as it will be a FAST month… As planners we are attempting to determine what days will be the holiday honored?

Looks like New Years will be honored on Monday, January 2, 2017!

All else is up for grabs….

Today is a Friday and after a heavy week of posts, we wanted you to glide into your weekend…. Enjoy and watch out, it will be the end of the year before we know it!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

November 2016 Video, Financial Planning Tip and Economic Review- By John Kvale

Here is our November 2016, Financial Planning Tip and Monthly Economic Review, along with a Video for your viewing and listening pleasure. Hope you enjoy!

November 2016 Video

 

Financial Planning Tip –

Check that 401k or other retirement plan for maximum contribution

  • $18k is the maximum deferral for most 401k and other similar plans, especially in the corporate arena
  • Those at age 50 or greater get another $6k- added to above is $24k total!
  • Without regard to the company match, max this total amount if possible
  • Taking a peek at your YTD paystub will confirm your deferral amount
  • If you are not there, turn the jets on and up your withholdings
  • When January comes, be sure to lower the deferral rate

Capital Market Movement

Stunning Move in Interest Rates

We have crowed for months (maybe longer) that too low of rates could be a hamper on the Economy, doing more harm than good. We are not changing our tune now!

This from our Mid-Year 2016 Newsletter and JPMorgan:

jpmorgan-rates-too-low-graph

Initial headwinds, may occur but eventual greater fixed income returns may be around the corner.

When rates first go up, bond prices drop…the longer the term (i.e. 30 year) the more they drop. Eventually as bonds mature and re-invest at higher rates, the net result is bigger income …. ignore the top line for a while, just enjoy soon higher income may be advisable.

5 Year (Shorter) Rates Move

 

11-29-16-5-year-treasury

This is the 5 year treasury…. yea the 5 year, that is a short time frame. It was under 1% just a bit back in our rear view mirror. Today, near 1.8%, which is where the 10 year was recently.

Barring some type of crisis, a rate increase in the super short fed funds rate (think checking accounts) should be on the docket for December. 

Oh, did we mention there was election this month?

Have a Great Day!

See you in 2017 !

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com
JK Street Cents Logo

 

Consumers are Happy!

With a business cycle that is very long in the tooth… We are closely watching the biggest part of the economy, the consumer.

Michigan Consumer Sentiment Jumps

11-25-16-consuemr-sentiment

As the economic cycle ages, sentiment may wane .. looking at this chart going back the last several years, sentiment appears to be gaining steam.

Could the 07-09 cycle have been so deep and so slow to recover that we are just now picking up steam? Time will tell !

Have a Great “Good Sentiment” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

Our Most Popular Video Ever – Happy Thanksgiving – Giving Thanks

Sometimes the best efforts turn out bad, and sometimes they just turn out darn funny. A few Thanksgivings ago, the latter occurred.

For a guaranteed chuckle …2 minutes of fun….the 1.45 minute mark is where patience is lost….

HAPPY THANKSGIVING

 

Giving Thanks

As mentioned in our Monday post, I have a special reason to be thankful. Last year an injury in my neck made the Holiday season less than spectacular.  Not only was the conference mentioned, tough to make for the day, the 20th Annual Holiday Party, just a few days later – same as last year, ended with extreme pain in my arm from just shaking hands. With major surgery an option, a full recovery without, is more reason for Thanks!

This year, a special Thanks, and with a vivid memory of last…. Thanks for just being 100% Healthy and Happy! (Sometimes it is easy to forget how just feeling normal is good!)

Happy Thanksgiving and start to the Holidays !

20161120_002239800_ios

 

J.K. Financial, Inc.

John, Cathy and Donald