Author Archives: John Kvale CFA, CFP

Tax Forms (1099) ABC’s, Expected Receipt Date and Possible Corrected Form Explanation …. Friday

Several conversations this week involved discussions of the Tax Forms that we are expecting to receive…

Thanks for a Great Timely Post Subject!

The key to tax forms is focusing on the last letter or letters… they are basically all 1099 – but the last letter or letters drives the type of form and reporting!

Tax Form ABC

Here are the forms coming our way, with a quick explanation…

R- Stands for Retirement (fun word association)

1099-R’s are rarely corrected, as the reporting is super easy … whatever was taken out of the account is reported for tax purposes!

1099-R
Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, etc.
Distributions from qualified retirement plans—for example, individual 401(k), profit-sharing, or money-purchase plan—or any IRAs or IRA recharacterizations, conversions, or removals of excess January 17, 2020
By close of business

Next up the consolidated form…

Think of this one as the Whole Enchilada….(bunches of 1099 s on this one form!)

These are the main forms within the Whole Enchilada….

Form 1099-B, Form-DIV, Form 1099-INT, Form 1099-MISC (Dividends, Interest, Miscellaneous other stuff)

This form may have multiple corrections….

Consolidated Form 1099 All reportable income and transactions for the year

If a client received at least $10 in either dividends or interest during the tax year or had an equity sale in a taxable account, they will receive an Internal Revenue Service (IRS) Form 1099

If applicable to the account, Consolidated Form 1099s may include: Form 1099-B, Form-DIV, Form 1099-INT, Form 1099-MISC, and Form 1099-OID

February 12, 2020
By close of business
May be available earlier, depending on the activity and holdings in your client’s account

Many ask, why the corrections…

“Why can they not get it correct the first time?”

Let’s exaggerate to make our point… hang with me; If you have an account with 50 investment holdings, there are 50 chances to have a correction as EACH ONE of these investments will have their own tax reporting…. said another way, if any one of these 50 holdings has an issue/correction, there will be a Whole Enchilada corrected form…

Hmmmm… now that we think about it….surprised we do not have more corrected forms!

During the fall, Donald “The Brain” went to great extensive efforts to get all basis information correct… that does not mean that there will be no Corrected forms, but we expect much fewer, if any!

Happy Friday…

Tennis Player is six hours away with the better half … still in Texas… fulfilling the goal once again…maybe by accident… but that is ok!

Have a Great “ABC Tax form” Day!

John A. Kvale CFA, CFP

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

All About Taxes – We know … Most Really Want to Know About ENFORCEMENT ! Great Source Sites

Here are great source sites used for our research and possibly useful as you enter tax season:

As promised last Friday we wanted to share some neat stats and information concerning taxes and the collection of, and the IRS in general.

This is a brief review of the subject matter from our pending 2020 Q2 Newsletter which will hit your mailbox right around tax filing date, and we thought it a good time to share some stats.

We know that when you think of the IRS and taxes you’re mostly concerned with one thing … ENFORCEMENT!

With brevity a concern in this venue, we will drill directly to the enforcement portions of our much deeper and more comprehensive article … again in our Pending Q2 Newsletter.

Enforcement of Tax Collections and IRS Statistics

In dealing with the IRS and tax situations over the past 31 years the one thing that we have found most important is to always respond to the IRS in a timely fashion.

TaxAudit 2018 stats

 

Our general IRS/Client experience over the past three decades has been a very good one. We have found the IRS to almost always be very receptive to information, understanding of mistakes, and even frequently waving penalties and interest …however this last point is not always in stone given certain situations

Amazingly nearly 2/3 of audits, which are almost all done by paper due to the cost of a field audit are not answered, resulting in a claim on the taxpayer. Bottom line, make sure you show the IRS that you’re answering their questions in a timely fashion and expect a paper computer driven notice.

09-18 number of returns audited IRS advocacy

The majority of audits and notifications (AKA CP2000) are created or driven by an income mismatch – said another way, if you earn some income, wages, interest, investments, or some type of capital gains, and you do not get it on your tax return, it’s easy for the IRS to catch, and you WILL get a notification. (CP2000)

Sir Learned Hand, Famous Quote440px-LearnedHand1910a

“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

While you hear us talk about tax reducing strategies frequently, (here, here, here ) as we are big believers in not paying any extra taxes, we are also very big believers of being fair and honest with the IRS. Over the years we have been presented with many gray area tax strategies that have almost inevitably not held up against the IRS.

If it sounds too good to be true, it usually is in the end … don’t even think about going there – the IRS will eventually find you, and it will most always be at the most inconvenient time!

Having respect, and mutual admiration for the IRS and its’ enforcers,  but not fearful or conspiracy, is a healthy way to go about your tax responsibility as a United States Taxpayer!

Have a Great “Tax Stats” Day!

John A. Kvale CFA, CFP

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

Top Countries By Electrical Power Consumption (Per Capita) – You Will be Surprised – Animated Chart

In order for this Animation to make sense, remember this is Per Capita…

The results will still, most likely surprise you!

From our Friends at Animated Stats:

Have a Great “Electrical Consumption Informed” Day!

John A. Kvale CFA, CFP

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

 

Fast January, Tax Audit Pre-View, “AO” … Friday

Not sure about you guys, but in several conversations this week, as well as a few reflection times, it was super hard to believe January is almost gone… Wow!

Speaking of Fast January, how about already another Friday… with a short week and turn around travels next week, looks like we are in full stride….

Tax Time Commeth

Given the mailbox (and inbox) is likely beginning to fill with those pesky tax forms, we have a few neat stats on Tax/Audits/IRS reviews to share soon… We actually attempted to get them into the Q1 2020 Newsletter to no avail… a good problem (too much content) … We think you may find some of the statistics very interesting, but of course never push the gray when dealing with Uncle Sam!

Here is a Teaser:

TaxAudit 2018 stats

AO – Australian Open

Regular readers know sports … and especially Tennis (Australian Open) is big at the homestead…. between a 17 hour + time zone change and the 15 year old deciding to do 6 am — YES … 6 am tennis practice, the candle has been burning a bit at both ends…. maybe the reason for the Fast January… all good!

Ahhh….but as mentioned early, today is a Friday…maybe a Fast Friday in January, but still a Friday … enjoy your weekend and get ready for some fun Tax Facts Next Week!

Have a Great “Fast Friday” Day!

John A. Kvale CFA, CFP

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

Questions from Relatives, Kids, Parents or Close Friends and Others …. Please Ask!

Recently, once again from the field … you guys have given us a great topic!

Glad to Answer Questions for Family, Kids, Parents or Close Friends

We have had multiple … almost apologetic, requests for some type of financial planning advice needed for a parent, family member, relative or child … we are glad to help!Helping hand adventure-1807524__480.

Not only do we consider it a part of our service to take care of you, but also family, relatives, and other very close friends as well.

We are honored that you may ask!

If someone stumped you with a financial planning question, relay it back to us … with almost five decades of collective experience we likely have crossed the bridge before. If we don’t know the answer we have a close contact to tons of professional contacts (Attorney, CPA or the like) in the related fields that do not mind giving us the answer!

We will leave it up to you to author yourself if you want,  or give us credit, either way is fine and certainly situational.

In an odd way, if we don’t know an answer it’s a learning experience for us for future reference and once again we are glad to help and gain the knowledge.

Most importantly, do not hesitate to ask us a question, we are here to help, and as mentioned above, have many years of experience as well as ample resources to tap on the shoulder … no question is too simple or too hard!

Have a Great “Reminding to Ask” Day!

John A. Kvale CFA, CFP

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

First Travels of the Year, Keeping Goals – Friday – Office Hours

Wow…. Thanks for all the feedback on the Homestead Post earlier this week… with such positive feedback, we plan on making it a reminder in the future… much like we have been doing with the ES Tax Payments

First Travels Of the YearIMG_1250

Tons of travels with the Tennis Player Daughter last year, a goal to spend more time with the frequently left out Wanna be Guitar player, and avid snowboarder Son was established and shared with the team during our beginning of the year goals sessions…

Time to keep those goals… which leads us to the next update…

Office Hours

Monday is a Government, Capital Market and National Holiday… with the kiddos out early today and off Monday, our office will be closed early today and all of Monday in honor of Martin Luther King Day!

martin-luther-king-jr-2028448__340

Have a Great Friday and Super Weekend!

John A. Kvale CFA, CFP

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

Did You Buy a New Primary Residence Last Year? – Homesteading Your Property – Most States are January 1st Residence Requirement – Possible Property Tax Savings –

Because of the various state rules and regulations, we want to remind you that this post is not meant as a guide, but only as a reminder, if you are in the appropriate state, and in the appropriate situation, you may be able to Homestead your home, saving your property taxes (property tax exemption.)

If you hit up Homestead on your favorite search engine you’re likely going to get an article about moving to the country somewhere and building a log cabin home to retire.

That’s not what this is about.

landscape-3417201__480 homestead

We want to reminders especially that live in Texas who may have moved into a new home on last year on or before January 1st to be sure in Homestead their home in order to have a significant savings on your taxes.

Those living in other states should check their central appraisal district website to see the rules and regulations – this is likely a timely reminder as most just paid the property tax … or are about to pay them.

Not all states offer Homestead exemptions and many states do offer them but do no good because of the tax structure of their states, thereby making it important that you check each situation.

All of the above being said, using our home state of Texas as an example, there is a significant tax savings by homesteading your home.

In many states, including Texas once again, there are very special exemptions for those age 65 and it’s likely the January 1 residence date may not apply for those turning age 65. Special tax considerations are given for those 65 and older to school, property, other taxes with frequently freezes in escalations as part of the exemption … In order to qualify, you most likely will need to raise your hand (fill out another form) …notifying your taxing authority of your new tax saving age.

In educating ourselves on the various state homestead tax savings, we found the following information the best coverage:

This From Wilkipedia

Examples

  • California exempts the first $7,000 of residential homestead from property taxes.
  • Colorado allows a 50% deduction for up to the first $200,000 (equivalent to a $100,000 exemption if the property is valued at $200,000 or above) for seniors (over age 65) who have lived in their property for ten consecutive years.
  • Georgia allows a 1% HEST only in a few counties.
  • Florida‘s homestead exemption allows an exemption of 160 acres outside of a municipality and one-half an acre inside a municipality.[5]
  • Kentucky, for 2013 and 2014, the exemption has been set at $36,000. Once it is approved, homeowners who are 65 or older do not need to reapply for the homestead exemption each year.[6]
  • Louisiana exempts the first $75,000 of residential homestead from local property taxes.[7]
  • Michigan exempts the homeowner from paying the operating millage of local school districts.
  • Mississippi exemption from all ad valorem taxes assessed to property; this is limited to the first $7,500 of the assessed value or $300 of the actual exempted tax dollars.[8]
  • New York‘s School Tax Relief (STAR) program exempts the first $30,000 of a primary home’s assessed value from school district taxes; the exemption is limited to owners with incomes under $500,000. Additional exemptions are available for people over 65 with a limited income. The STAR program applies only to school taxes; no homestead exemption exists for taxes levied by other municipal entities. New York prevents a New York resident claiming this exemption if the New York resident owns property in another state and claims a similar exemption in that other state.
  • Oklahoma allows a $1000 deduction of the assessed valuation, about $75 to $125 of savings per year, if owners file for homestead exemption with the local county clerk.
  • Rhode Island exempts the first 20% of the home value from property taxes.
  • Texas allows a deduction, with additional exemptions available for county taxes, people over 65 and people who are disabled. It also requires school districts to offer a $25,000 exemption (but not other taxing districts, such as cities and counties).[9] Texas further limits the assessment increase on a homestead to 10% of the prior year’s value.

In most cases, there is a deadline for filing your Homestead Exemption, so do not dilly dally around or you may lose that tax savings at the end of this year or early 2021!

Just a friendly reminder to jog your memory, and maybe give you a nice tax savings!

Have a Great “Homesteaded Tax 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.
jkfinancialinc
street-cents