Q 2 2018 Newsletter (Early Release) Video Audio Podcast Review By John Kvale

Early Release Special Q 2 2018 Newsletter

This Newsletter was so full of tax related information, especially reach back to last year NOW savings ideas, that we published and sent paper copies early in the Quarter to beat the regular tax filing deadline.

Welcome to our Video and Audio Podcast Review of our Q 2 2018 Newsletter. For those on the road or just unable to grab the time to read, our podcast type review gives you the behind the scenes insight to our thoughts, observations and deep views of the entire Newsletter.

Click here for direct link to an electronic version (an early peek-good ole fashion paper versions are on their way to you shortly) and here for our Newsletter page

Let’s get going!


Q 2 2018 Newsletter

And here is your review!

Five Reach Back NOW Tax Savings Techniques

In this hugely in depth article was originally run in abbreviated form, her on street-cents.com

HSA – The Health Savings Account

In this part of the Newsletter Article we discuss why we like the HSA so much. Here are a few…

  • No phase outs
  • No mandatory end of year usage – use it or lose it
  • Investment Options
  • Pre-Tax contributions
  • Tax Deferred Growth
  • Tax Free Withdrawals for qualified medical costs

Here is the concise post, here on street-cents.

SEP – The Simplified Employee Pension Plan

Here are the high points to this portion of the Newsletter Article …

  • IRA on Steroids
  • Pre-Tax Contribution
  • Super High Income levels if income high enough to offset
  • 1099 Income Offset – even if you have a 401k and if you are in RMD mode
  • Easy to contribute
  • Tons of investment options
  • Procrastinator’s dream with a contribution available upon extension filing

Here is the post, again specific to just to the SEP.

IRA – Vintage original retirement program, but still a goodie

Often forgotten, the good ole IRA makes up the third of our five tax savings techniques.

  • Best for W-2 workers without a retirement plan
  • While maximums are lower, income is not needed to contribute
  • Flexible investments and death benefit options
  • Pre-Tax is best way to fund – not post tax in most cases

Here is our post specific to the IRA.

Sales Tax Deduction

In likely the last year of this deduction due to changing tax laws, this deduction is given to most in a standard amount, but can be further enhanced under the appropriate situations.

If you had a big ticket item of any type that had sales tax, you likely will be above the standard given amount. Think back of when you purchased that car or other item. If it was last year, add all of your sales tax up as there is no limit to this deduction. (Phase outs may limit)

Note: Those in state income tax states are likely not a user of this deduction.

Here is the specific post.

Medical Expense Deduction

Forgotten frequently, we reminded recently in this post of the Medical Expense Deduction. In our Newsletter we really roll up the sleeves and attempt to remind everyone of the possible Medical Expenses you may have forgotten.

Publication 502, located here at the IRS website does a fantastic job of numbering the various deductions.

  • Home Improvements
  • Transportation
  • Television
  • Telephone

These are our favorite possibly forgotten Medical Expense Related Deductions.

If you are in doubt be sure to check the link to Publication 502 as we really can’t emphasize enough just how comprehensive their list is.

VIX and the XIV

In our detailed article in the Newsletter, we gest of the silliness of too aggressive investments.

When you pick up Penny’s in front of a giant steam roller … When the giant awakens …

3-4-18 VIX Cropped

Oops … it looks like this!

3-4-18 XIV

Much of the Volatility in the Capital Markets were sturred up by this event.

It may take some time to clear this completely. Patience!

Roth Versus IRA – AKA Pre-tax or After Tax

This is a super article that speaks to those who wonder if it is better to do a Roth or another type of Pre-Tax plan such as a 401k, IRA or SEP.

The answer to this question as mentioned in great detail in the Newsletter article is actually not that complicated.

The vast majority of people are in a higher tax bracket while working and lower while retired. If you are one of those people, Pre-Tax is better.

If you find yourself in a low income year/early earning, and expect your income to be higher in the future, a Roth might be better.

On word of caution that is included in our Newsletter .. Roth’s are often overused, so be careful.

Hope you enjoyed this slightly longer than normal summary and detailed review of our Newsletter – Podcast – Video, Review !

See Ya next Quarter!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

Part 5 of our Reach Back NOW to last Year’s Tax savings – The Forgotten Medical Expense (s)

Medical expenses greater than 7.5% of your Adjusted Gross Income (AGI) can be deducted in many cases. This is not new news to most. What is news is just what can be deducted or worse yet, forgotten to be deducted — read on!

The Forgotten Medical ExpenseMedical -checklist-3222079__340

A Qualified Medical expense can be deducted on your income taxes for last year 2017. Our goal on this subject is to remind you just what can be a Qualified Medical expense.

Publication 502 by our friend at the IRS (yes, I said that – friends- check out the publication and you will see why they are our friends) gives you a mind jarring reminder of just what, and what not is a Qualified Medical Expense.

If you have ANY possibilities that you may be above the 7.5% deduction for medical expenses, Publication 502 is worth a read as it has TONS of ideas you may have forgotten or did not even know were a deduction.

  • Capital Expenses for home improvements
  • Transportation Cost
  • Television
  • Telephone

Are possible (check to make sure) deductions we find interesting and easily forgotten.

Don’t let that medical expense deduction go away as it looks like the new tax laws are going to greatly diminish this deductible expense.

Have a Great “Found Medical Expense deduction” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

Cognitive Biases – 18 to be exact

No matter if we like it or not, we all have our own biases … some through our upbringing, some from our experiences, some just from our current state of mind given our mood.

Some are great and can be really helpful. Some can create risk inadvertently.

We try internally to monitor and measure these biases constantly.

Our friends at Visual Capitalist have laid a collection of 18 biases out very well.

Take a look – How many do you have?

18-cognitive-bias-examples (1)HR

At least a few? We do too …  awareness is super helpful!

Have a Great “Self Bias Awareness” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.




First Half Dozen of IRS Annual Dirty Dozen Tax Scams

Shhhh … At least I made it half way through Spring Break … The gang is asleep, so they will not even know this post was created!

Saw the first half of the IRS annual Dirty Dozen Tax Scams, two of which we have already seen occur this year… Had to share!

Stay vigilant and shhhh … talk to you next week!

How Do the Scams Work?

Con artists make unsolicited calls claiming to be IRS officials. They demand that the victim pay a bogus tax bill. They convince the victim to send cash, usually through a wire transfer or a prepaid debit card or gift card. They may also leave “urgent” callback requests through phone “robo-calls,” or send a phishing email.

The IRS Will Never:thief

Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.

  • Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
  • Demand that taxes be paid without giving taxpayers the opportunity to question or appeal the amount owed.
  • Ask for credit or debit card numbers over the phone.
  • Call you about an unexpected refund.


IRS Dirty Dozen Tax Scams – The First Half Dozen

2018 Sees New Phishing Schemes

In a recent twist to a phishing scam, the IRS has seen thousands of taxpayers victimized by an unusual scheme that involves their own bank accounts. After stealing client data from tax professionals and filing fraudulent tax returns, the criminals use taxpayers’ real bank accounts to direct deposit refunds


Tax Pro Alert

Numerous data breaches in the past year mean the entire tax preparation community must be on high alert during filing season to any unusual activity. Criminals increasingly target tax professionals, deploying various types of phishing emails in an attempt to access client data. Thieves may use this data to impersonate taxpayers and file fraudulent tax returns for refunds.


Impersonation of charitable organizations

Another long-standing type of abuse or fraud involves scams that occur in the wake of significant natural disasters.

The IRS encourages taxpayers to donate to recognized charities established to help disaster victims. Following major disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers.

Scam artists can use a variety of tactics following a disaster. Some scammers operating bogus charities may contact people by telephone or email to solicit money or financial information. They may even directly contact disaster victims and claim to be working for or on behalf of the IRS to help the victims file casualty loss claims and get tax refunds.


Falsely Claiming Zero Wages, Filing Phony Forms W-2, 1099

For years, the IRS has seen a series of contorted and creative efforts by scam artists who try to avoid taxes.

Filing a phony information return, such as a Form 1099 or W-2, is an illegal way to lower the amount of taxes owed. The use of self-prepared, “corrected” or otherwise bogus forms that improperly report taxable income as zero is illegal. So is an attempt to submit a statement rebutting wages and taxes reported by a third-party payer to the IRS.


Research Credit Scams

Section 41 of the Internal Revenue Code provides a credit for increasing research activities, commonly known as the “research credit.” Congress enacted the research credit in 1981 to provide an incentive for American private industry to invest in research and experimentation.

The IRS continues to see significant misuse of the research credit. Improper claims for this credit generally involve a failure to participate in or substantiate qualified research activities and/or a failure to satisfy the requirements related to qualified research expenses.


Fuel Tax Credit Scams

Fraud involving the fuel tax credit is considered a frivolous tax claim and can result in a penalty of $5,000. Furthermore, illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice to shutdown scams and prosecute the criminals behind them.

The fuel tax credit is generally limited to off-highway business use or use in farming.  Consequently, the credit is not available to most taxpayers. Still, the IRS routinely finds unscrupulous tax return preparers who have enticed sizable groups of taxpayers to erroneously claim the credit to inflate their refunds.

Have a Great “Less Tax Scam” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

Spring Break Schedule Travels – Spring has Sprung – Time Change/March Madness – Friday … Spring Pictures

Next week is our school spring break. Each year we try as a family to take time from the rigid schedules of Tennis, travels, school and late arrival to home time. This year we will be out of town attempting to do the same. While last year we even tried not to have posts here – unsuccessfully… we are going to try even harder this year to be absent for the week … without a post as well.

No promises as we will be tethered lightly electronically as always!

Luckily the office Spring Breaks are staggered, leaving you in the capable hands of Donald the Brain and Cathy.

Spring has Sprung-

Speaking of spring … the all knowing Tree in our back yard has begun blooming, signaling the official start to spring. While not Punxsutawney Pennsylvania it’s record is perfect for the last 17 years …


Time Change

Remember this is the time of year we gladly give up that extra hour of sleep in order to have extra light at the end of the day.

Don’t forget to happily roll that clock forward on this Sunday – yaya, most clocks do it automatically.

Let the sunlight evenings begin and a little March Madness too!


Today is a Friday, heading into a Spring has Sprung, Spring Break Week along with a much welcomed Time change.

Enjoy your day, your weekend and talk to you …. fingers crossed, not until the follow week.. no promises!

Here are a few more Spring Pictures from the family favorite jogging and walking trail near the house.

Have a happy “Spring Has Sprung” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

Schedule A, 5 B – Part 4 of our Tax Savings Reach Back Series – Maximizing the Sales Tax Deduction!

While we waive good bye to this deduction moving forward, our Reach Back and Save Taxes for 2017 theme continues with the current Sales tax deduction.

Sales Tax Deduction Maximizationsales tax - credit card -pexels-photo-259200

This deduction is most applicable in states that do not have a state levied income tax. Those states with a state income tax may tend to offset this deduction. Check with your professional or software before electing this if you live in a state with taxes.

Sales tax deduction is the standard deduction that you receive based on your geographic area and your income. This deduction flowing into your itemized deductions (you must itemize to claim) shows up on Schedule A, number 5 B.

Here are a few items that may make your standard sales tax deduction drastically inaccurate and woefully low- thereby costing you tax dollars:

  • Bought a large Asset – Think Car or other similar item
  • Had more then normal personal taxed expenses – for whatever reason
  • Large Taxable Asset of any kind purchased
  • Major expense where you paid sales tax – Think Wedding, Large Party

If you review your standard deduction and you find that one or two of your larger ticket items gets you above your standard, begin adding all of the items you paid sales tax on during the year. There is no limit to this amount of deduction, but you must be able to prove you actually spent this amount.

Handy tricks include getting an itemized statement from your credit card company or bank so as to easily calculate your sales tax total paid on these items.

Have a happy “Sales Tax Maximized Deduction” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

Update: Sleepy VIX no more and the XIV – The Opposite

In our last Newsletter (Q1 2018) we ranted at length on the record breaking sleepiness of 49 times the VIX (Fear Gauge – low reading means no fear) had closed under 10 in the year 2017 after only closing below 10 a total of nine times prior to 2017 since the inception in 1990.

While we were warning of more normal times to come, money poured into a product that made money by a continued sleepy VIX or XIV.

We had no idea just how fast a return to normal would occur. Good timing or lucky, either way …. capital market returned to more NORMAL ways!

VIX versus the XIV

Just like in any other parts of life, fear goes up WAY faster than it goes down, or subsides.

Here is our chart, literally from our Newsletter – A very Sleepy VIX – fear gauge.

Vix 10 year w dates

Looking back at the chart above one can easily see the VIX does not always sleep.

Fast forward to late January early February … the VIX awakened … like a sleeping giant, but not happy.

3-4-18 VIX Cropped

While we knew of Wall Street products that bet the VIX would remain asleep. We had no idea several billion dollars had found their way into these products.

We liken these money making, if sleepy VIX, products to picking up nickels in front of a steam roller … all good UNTIL!

Here’s what UNTIL looks like:

3-4-18 XIV

With several billion dollars (not any more) in these type of assets, when the VIX awakend and the opposite drop occurred, synthetic products became mandatory buyers and sellers of our fear index, the VIX … exaggerating capital market movement.

Just like in a traffic accident, this was not the only item that occurred, but this was another straw that helped awaken the sleeping giant!


  • Earnings are good ….
  • Consumers are happy ….
  • Global recovery is finally happening …

Have a Great “Sleeping Giant” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.