Category Archives: Annual Reviewed

Form 5498 … Sneaky late arriving tax form can cause confusion … Reminder of purpose of said sneaky 5498 …

Had a great Post about rates garnered from an updated Graphic from our friends at Visual Capitalist ready… it even is the starting point for a group of articles in our next Newsletter… BUT…this sneaky tax form causes lots of confusion and a late week email reminded….so watch for the Rate Post Wednesday – and a shortened Memorial Day Weekend post Friday with family travels next week! So lets go!

With a reminder email hitting our in box late last week from our back office team….

We wanted to share as this late arriving tax form can be confusing…

Late Arriving Form 5498 About to hit !

Form 5498 is the settlement of contributions to Qualified assets like Rollovers, SEP’s and also an ending balance …. most all of this is for the IRS (Internal Revenue Service) recordkeeping….

Here is why:

The contributions allows the IRS to know we in fact did make the contribution i.e. Did not spend the funds – so no taxes or in other cases a tax write off is A ok on our tax return

IRS needs to know the IRA balance for RMD (Required Minimum Distributions) – Recall mandatory draws are based on age and prior year end balances…

Ohh…one other confusing but important point… contributions to SEP or the like made for the prior year (2022) will show a current year (2023) contribution… no worries the IRS matches it to our tax return!

Have a Great “Sneaky Tax Form Reminder” 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

Proxy Season is Here … Why We Vote For You and What to Do if You are Receiving Proxy Information

Almost all public financial institutions of all shape and form have what is called a Proxy Vote.

The Proxy is an at least Annual Vote for various items such as approval for management salaries, mergers, company stock repurchases and just an annual approval to continue current services.

Break In – The pending fall merger has led to an increase in Schwab related deliveries mostly via email … see below for our easy corrective measures made by use!

Why We Vote Your Proxy

As a regular practice we vote Proxies for all clients. This accomplishes multiple items:

  • Much Greener – We get one statement for literally 100’s of client votes
  • We actually vote – always for management – if we disagreed we would not own the respective asset
  • We keep a permanent record of the vote
  • By voting for you, your mailbox is not stuffed full this time of the year

We try to receive electronic information as much as possible – this is once again green but much of this information is still delivered the old fashion way by snail mail

What to Do If You are Receiving Proxy Information .. Help is Here!

Occasionally Proxy directives for us to vote … for you, falls off the system …

When this occurs your mailbox will begin getting full…

No worry, just reach out and we can easily refresh your directives back to us and stop the pelting of mail.

Given the large number of collective votes, we do not know if you have fallen off the directives list, so please do not hesitate to ask us for a refresh.

Have a Great “Proxy Vote Update” 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

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 remind those 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.

From Wikipedia

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.

Property tax exemption

A homestead exemption is most often on only a fixed monetary amount, such as the first $50,000 of the assessed value. The remainder is taxed at the normal rate. A home valued at $150,000 would then be taxed on only $100,000 and a home valued at $75,000 would then be taxed on only $25,000.

The exemption is generally intended to turn the property tax into a progressive tax. In some places, the exemption is paid for with a local or state (or equivalent unit) sales tax.

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 2019 and 2020, the exemption has been set at $39,300. 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 $7,500 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 2024!

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

Give a Kid a Roth … A Donor’s Heads up/Reminder!

A while back we first came across the neat Tax/Retirement/Donation/Savings technique utilizing low/early career income relatives (think young kids/adults) of basically helping them fund a Roth IRA.

Give a Kid a Roth – Blending Tax Techniques to Accomplish

We all know starting early greatly helps our future retirement planning chances… Marry that to tax free growth AND under CURRENT Tax laws, Tax Free withdraws, and we have a neat plan.

Let’s blend some tax techniques and get this accomplished:

In the year 2023 we can give $17k to basically anyone without causing a Gift tax event…. the max for young earnings is $6500 into a Roth this year!

Have a Child/Grandchild/Relative or special young person in your life? If they have at least $6500 in income this year, consider giving them a Roth IRA to help jump start their retirement…. the earlier the better of course.

Kids working at your or a relatives business? Consider funding a Roth with their income… maybe a well earned bonus goes directly into the Roth?

Make sure the young earner does not over save in their Retirement plans – Max into a 401k is $22,500 this year and that includes a Roth contribution… so do not overfund.

Watch the top end of annual earnings as well… from our Tax Page Right here on our Blog

Lastly…the Sizzle —

Just one $6500 Roth for a 15 year old, growing at 8% annually, will be worth a whopping $300k+ at age 65 … do that three times to get to a million… and that is tax free withdrawals at retirement! NICE!

Have a Great “Give a Kid Roth” 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

The Time of Year to Clear those Unwanted Repeated Emails … “Unsubscribe” Time … Have a good Holiday Season Weekend … Friday Closer to Holiday Season

While it is not only the Holiday Season… Can you tell we are pretty excited? Ok, Ok Digressing

It’s also Clean Up those messy unwanted constant emails time! yay – We can celebrate this !

“Unsubscribe Time”

We sure enjoyed the first group event as mentioned here…. a whirlwind trip to a higher altitude to share and visit with peers, back office folks…. BUT a requirement of attendance was the delivery of our contact information to the MASSIVE amount of vendors attending the event….

Lots of unfamiliar emails continue to build in the inbox daily…. about a week ago the annual “Unsubscribe” response commenced and already the inbox is feeling less full and less stressed….. Yep sometimes you have to really squint those eyes at the very end of the email, and yep sometimes a frog is kissed and the link goes nowhere….. but keep trying and you will get all of them cleared…..

Nice to have a clear inbox for those New Years Resolutions to commence!

Happy Friday and Happy “Clean Inbox” 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

Why you need to know your Credit Score and where to get your Annual Free Credit Report – Annual Reminder

Knowing your credit score and your credit report has become increasingly important. With updates in technology and increases of consumer related fraud, we all need to keep an eye on our credit and our credit score for protection.

Why Do I need to Know or protect my score?

credit-40673__340

While you may not owe anyone, anything i.e. have a loan with anyone … well done by the way….. A bad credit score can still affect items such as your automobile and your homeowners premiums… no kidding (see this  Forbes article.) We cannot blame them, there is data to check and it is their responsibility and ability to review it.

Bottom line a bad credit score or report may be costing you more money.

How do I get a copy of my credit report?

After you get your score, you may want to get a detailed copy of your credit report. Go to www.annualcreditreport.com, which is a free service offered for your own protection by the three agencies. There are tons of sites out there that are not free and try to seduce you into paying an unnecessary monthly fee, this site has been checked and is safe.

You may request all three services or just use one and keep the other two available at a later time. This may be handy as you only get one free report per agency per year. If you stagger the reports you can inquire at different times, keep later dates open for inquiry.

If your report is good, there is likely no reason to get more than one agency report.  If your report has deficiencies you may protest from the site as it is reported.

Taking time to review your credit and credit score is easy and may save you angst and money!

Have a great “Safe Credit” 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

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 remind those 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 2023!

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

Why NOT to add AFTER tax funds to your IRA!

With several conversations around this topic of late, we thought this post worth a re-run, freshened up of course… hope you enjoy the reminder!

Every penny we save is great. On a daily basis we are bombarded with buy now pay later, so while it may sound contradicting, there are less complicated ways to save and more difficult ways in the end to save.

Perils of After Tax Dollars in an IRA

After tax dollars as opposed to PRE-TAX (deductible from your income taxes) funds in and IRA are not your friend.

  • Upon eventual distribution you must calculate a distribution basis which will be different from your actual distribution – Easy for the IRS to confuse
  • You must carry the basis on your tax return- forever- IRS Form 8606 must be filed to keep up with your basis
  • Your heirs may also have to deal with this basis upon your death
  • From a really high level, it is confusing
  • IRS Audit Possibility – The IRS will receive a distribution amount of greater than you will be reporting on your tax return, making a paper letter or audit inquiry much more possible upon eventual distribution of assets

How Do After Tax Funds get into an IRA?

There are two basis ways after tax funds enter or get added to an IRA:

  • After-Tax – Non-Deductible IRA contribution: (Very popular about 15 years ago)- Please save the money, but look for a better way to save it and avoid this method
  • 401k or other Corporate Pre-Tax retirement plan is rolled into an IRA along with the after tax funds- Easy fix- Look to take the after tax distribution directly thereby separating the PRE and AFTER tax funds-
  • Watch rollovers that contain a Roth contributions as these are after tax and may be directed to their own separate account, once again simplifying the process

It’s not the end of the world if you have after tax funds in your IRA, great work for saving the funds … But if you have the choice, avoiding comingling after and pre-tax funds in your IRA or other similar retirement account may save complications later!

Have a Great “KISS- keep it simple” 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

Important: Annual Reminder to Take a Few Moments and Review Your Social Security Statement … Just Take 5 Minutes and Quickly Review Most Importantly Your Earnings Record!

if you are already drawing your Social Security, you get a hall pass today … watch for posts coming in two days as this is not applicable to you.

ANYONE who is not drawing Social Security please take a moment to review our annual reminder of your Social Security statement. We have some great new findings and the statement has been completely updated, finally!

In true “practice what you preach”  fashion yesterday morning in less than 5 minutes time a quick review of the Social Security statement was completed. Being 100% certain the filing was made since it was done in-house … but not trusting that the mail could have possibly not been delivered, this annual review is worth every bit of the five minutes it takes!

Here is the link to the newly updated Social Security log in web page…. Please take 5 minutes out of your day to log in and confirm … most importantly … that your earnings have been recorded for at least years 2020 and prior!

Annual Reminder to Review Your Social Security Statement

With a cup of Java in hand and early morning peace and quiet, in less than five minutes time a quick review of the Social Security statement due to an inbound email reminder was completed.

This year’s review was happily surprised at a complete update, (finally) of the statement. The new statement has neat bar graphs cascading from left to right showing early retirement benefits all the way to the full age 70 late retirement benefits, actually have to compliment the Social Security Association for integrating some technology, well done guys!

This year’s login which had a silly username from last year’s loss of password required email confirmation of a passcode, so just a heads up to be prepared for that.

The most important reason to review your annual Social Security statement is to make sure your years Earnings Income have been credited to your account.

In my case not surprisingly year 2021 credits had not been added as of this date … as a reminder January 31st is the deadline for employers to send the W3’s for all employees to the Social Security Administration, which is why it was not a surprise that a mid to early February review garnered no credits as of yet. Prior year credits work confirmed and again most importantly this is what you are looking for to make sure your credits were added to your Social Security statement.

From the Social Security Website:

If the earnings missing from your Social Security record are for the current year or last year, you don’t need to worry. Because these earnings are recent, we may not have recorded them yet. They should appear on a later Statement.

However, earnings could be missing from your record for earlier years for one of the following reasons:

  • Your employer reported your earnings using the wrong name or Social Security number.
  • Your employer reported your earnings incorrectly.
  • You got married or divorced and changed your name, but never reported the change to Social Security.
  • You worked using a Social Security number that didn’t belong to you.

See something that doesn’t match with your records? If there’s a mismatch between your records and the earnings listed, contact us to request a correction.

The contact us link from the Social Security Administration is purposefully hot so feel free to click on that link for contact information should you find your earnings record missing data.

Fancy new features of the Social Security website:

Scrolling just marginally down on the splash page immediately gives you a hot link to your earnings records. Again no matter what your age if you are not taking Social Security and have earnings please confirm that those earnings are being credited.

Scrolling down even further there is a fancy new graph that can be downloaded separately from your statement showing your estimated earnings benefits, cool stuff!

Wanda Worker Sample Benefit Statement

Farther down once again on the splash page is a quick calculator for a spouse or former spouse benefit based on your Social Security estimate, again cool stuff!

A hand clap applaud for the Social Security Administration for finally adding some neat tech functionality that makes the statement so much easier to read and interactive, well done guys!

Yes we can all debate whether Social Security will be there or not, but no matter the end result it’s worth 5 minutes of your time to log in take a look at the new fancy statement and confirm your earnings credits are being added to your records!

By the way this complete post has been done with a new wireless mic that is working like a charm, hat tip to the 14 year old technology son!  Can’t wait to do a video with it, constantly trying to improve!

Have a wonderful “Annual Social Security Earnings Credit Review Reminder” 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

March 2021 Financial Planning and Capital Market Review – By John Kvale

Hello and Welcome to our March 2021 Financial Planning and Capital Market Update!

If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast audio format as well as Video!

Newbies –

We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!

Hope you enjoy!

March 2021 Video

YouTube

Financial Planning Tips

Two Handy Reminder Posts – Credit Report and Social Security Earnings Credits

We had not one but two really good reminder posts over the last four weeks, on which is featured in the Newsletter in great detail and one that is a handy annual reminder – hat tip DK!

Here in this post we highlight why and how you can check your credit report. This is a really good thing to do at least annually to see if there are any barnacles attached to your credit, thereby lowering it and possibly causing other costs in your life to increase i.e. as mentioned in the insurance.

Here in this second post and again also featured in the Newsletter, why you should check to make sure you are getting credit for those hard earned tax dollars being sent to the Social Security Administration AND very importantly a reminder to look for missing credits in your history!

Stimulus Check Update

In this post, we detailed the planning techniques associated with the third round of $1400 stimulus checks and what to watch out for as well as the new cliff thresholds of phase outs… further detailed with the following chart:

March 2020 Review, Annual Reminders Credit Report and Social Security Eearn

Capital Market Comments

Maximum Macro Economics Coming Soon

Not every trying to be a trend setter or first into the pool – we accidentally beat most of the regular commentators here in this post to the fact that there are likely some VERY HOT ECONOMIC numbers coming our way.

These will occur due to easy comparisons associated with the drop in Economic activity about a year ago as well as continued lift off as we open up for business once again.

There will be interesting dialogue in the Headlines – Be for warned much of this may be skewed by the afore mentioned!

Have a Great Day, Talk to You at the End of April!

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