Category Archives: Tax Related

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

Tax Time Reminders … Friday

It is hard to believe but YES it is already tax time again….. Couple of reminders here

1099’s – think big tax packet that shows all the interest, gains and losses and basis information is generally due February 15, 2023 – This is on a best effort basis and given mail services and reporting by the respective investment companies delivery, can be delayed…

Ahhhh… here is the big date, First Corrected 1099’s are scheduled on March 9, 2023 with the second corrected March 16, 2023….

We would generally ask everyone (you guys know who you are the early filers) to wait until after the Second corrected before filing that return!

Ahhhh,,,today is a Friday and feeling a bit under the weather so will keep this one short! Enjoy your Friday and 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

ES Payment Reminder … Confirming another “NEW” RMD (Required Minimum Distribution) age of 73 … First Week in the Books … Was a busy but good one!

Attention all ES IRS payment filers….January 17th is our due date this year for our Q4 2022 Estimated taxes!

With continued slow mail, we still like to direct everyone to the electronic filings of your state and the Federal payments system.

Tax Due Dates

Payment Due Dates


You can pay all of your estimated tax by April 18, 2022, or
in four equal amounts by the dates shown below.
1st payment . . . . . . . . . . . . . . . . . April 18, 2022
2nd payment . . . . . . . . . . . . . . . . June 15, 2022
3rd payment . . . . . . . . . . . . . . . . . Sept. 15, 2022
4th payment . . . . . . . . . . . . . . . . . Jan. 17, 2023*

  • You don’t have to make the payment due January 17,
    2023, if you file your 2022 tax return by January 31, 2023,
    and pay the entire balance due with your return.

Electronic Payment of ES Taxes

Here is the IRS tax website link, which is very easy to make electronic estimated taxes. Be sure to follow the instructions carefully as there are a lot of different options for making payments to taxes, and be sure to carefully enter your personal information so the IRS knows it’s you.

RMD Changed (again) this time to 73

As mentioned earlier, those turning 72 in the year of 2023, your new RMD age starting time is now 73! yay…. boy do they keep moving this target… at least farther out!

Hope you had a Great first week of the year… we were busy as expected, thanks for your patience on any delays!

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

Q1 2023 J.K. Financial, Inc. Newsletter … Estate Tax Law change Heads Up …. Higher Rates for Longer from Stubborn Lagging CPI Inputs … Personal Reflection … By John Kvale CFA, CFP …

Welcome to our Video and Audio Podcast Review of our Q1 2023 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 the Download button below, for a 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! We hope you enjoy!

Q1 2023 Newsletter

(YouTube)

Personal Reflections –

Entering the 36 year in the Financial and Capital Markets world, a lesson was learned this year (see below) we want to thank everyone for their well wishes, patience and confidence as we went through a unique “Changing of the Tiger Stripes” event this year!

Higher Rates – Longer – CPI Stubbornly High

CPI Causes Tiger Stripes to Change?

Very Lagging Rent and Shelter Numbers keep pushing CPI

Estate Tax Laws Set to Change – Heads Up

At the end of 2025, putting January 1, 2026 into play, without any tax law adjustments the Estate Tax level will adjust back down to somewhere between a $7 to $8 million or $14 to $16 million for couples level. 

While Estate Tax is not a huge revenue earner for the IRS, in our opinion Estate tax is in purpose is to affect the very largest of the states think  $100 million and up. 

Additionally the IRS is having trouble completing regular federal tax returns, by some estimates some 15 to 20 thousand taxpayers are still waiting on their regular federal returns to be blessed by the IRS from 2020 to present.  Lowering the Estate Tax level to an extreme low, while may sound good in the headlines, impracticality, it will likely create a huge bottleneck and more trouble than money earned. 

Bottom Line – We are on this in advance!

Happy New Years and a Great Start to 2023!

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

YEAR END REPLAY REMINDERS – 8.7% Social Security COLA, Peripheral Effects, Pension COLA Reminder, SSA Neat Fact Sheet …

Last year we penned the following … in this post

HUGE Social Security COLA … 5.9% to Be Exact, Wow…. COLA Pension Recipients Check Your Benchmark

Looks like that was just the dress rehearsal… here is this years release…

Dall – E

With much talk of Inflation costs this year, the SSA (Social Security Administration) release this week of an 8.7% COLA (Cost of Living Adjustment) was not a huge surprise..

Important Items Associated with this Adjustment

Pensions – Folks with Pensions that have COLA adjustments should also watch for a similar increase – Your benchmark and adjustment will likely differ from SSA as they use the CPI-W three month average as noted here in our pre-post last year

Pre-Retirees – Those nearing Social Security, according to this neat fact sheet,

Maximum Social Security Benefit: Worker Retiring at Full Retirement Age goes from $3,345/mo. to $3,627/mo.

New Social Security Tax Base – Those still working, understand this COLA also filters into the SSA base income tax rate, again as mentioned in the press release

“Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $160,200 from $147,000.”

Have a Great “COLA 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

Year End NON-RMD (Required Minimum Distributions) Donations Reminder …. Check Your Standard Deductions Level …

With year end barreling down on us, and our last post about next years tax rates garnering some really great comments… thank all of you for taking time to read, and especially to comment…. very honored… A Tax Savings Reminder was in order!

The following does not apply to those making charitable donations with their RMD’s (Required Minimum Donations)…

Donations and Standard Deduction Reminder

If you have made a few donations (again Not applicable to RMD Donations) and you are not sure if you are over your standard deduction – take a moment to tally up your donations as they are related to your standard deduction. If you are just shy, consider adding to something you may want to do next year…. If you are way shy of your standard, consider waiting until next year….

Oh the disclaimer, not tax advice see your tax professional!

This is your respective level for 2022:

Standard deduction for married couples filing jointly for tax year 2022 is $25,900

Single taxpayers and married individuals filing separately, the standard deduction is $12,950 for 2022

Per IRS website

Have a Great “Donations and Standard Deduction” Reminder!

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

2023 Tax Tables – We found a good one ! Sorted in our Personal Most Used …

Our first post here, on the new extra large inflation adjustments were …. well not in a good format…

Patience is a virtue…. we chopped this up and reordered in our personal most used… we will also have this pasted on a special tab here in our blog…;. Enjoy!

Annual Gift Amount              $17,000

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

RMD’s not taken can be taxed at 50% … Nope not kidding … Yikes … More IRS agents hired … And if missed you have to file special tax forms … Yikes X 2 … Many Financial Institutions are Mandating a December 1 Completion … Take them Now Before the Rush!

Many of you may be wondering why we are so firm of completing RMD’s in what may seem like “Early” Calendar Fashion…

This year marks the first year of full force RMD’s since the new age 72 (recall it was 70.5 a couple of years ago)

Let’s not forget the following headline from just a few months ago too!

From the IRS statement on RMD’s here:

Consequence for failing to take required minimum distributions

If you do not take any distributions, or if the distributions are not large enough, you may have to pay a 50% excise tax on the amount not distributed as required.

Financial Institutions are Mandating an Early Completion or Going Best Efforts

In addition to the full force of participants … Many institutions are Mandating a December 1 completion or it will be “A Best Efforts Basis” …

Bottom line, the consequences are too large in delaying your RMD – if you have not, take them NOW before the rush ….

Have a Great “RMD’s taken now” 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

New 2023 Contribution Limits, 401k, IRA, Roth, SEP

Once again not surprising with the afore mentioned COLA adjustment on Social Security…. Retirement contribution limits were also adjusted by a large amount….

We find ourselves reviewing this amount so frequently and getting confused as the calendar turns as well as being in the next tax year but making contributions for the prior…. we are going to have a special tab here on our blog moving forward that will have two years data. The IRS Release.

So here we go!

Retirement Contribution Limits

  • 401(k), 403(b), most 457 plans, increased to $22,500 (2023), up from $20,500 (2022)
  • Catch up for those over 50 is increased to $7,500 (2023), up from $6,500 (2022)
  • Total max 401(k), 403(b), most 457 plans including catch up is $30,000 (2023) up from $27,000 (2022)
  • limit on annual contributions to an IRA increased to $6,500 (2023), up from $6,000 (2022)
  • IRA catch up for those age 50 and greater remains $1000
  • Annual Gift Exclusion amount increased to $17,000 (2023) from $16,000 (2022)

This takes care of the great majority of retirement plans…but for the record we do not like the formatting and will wait to post the new page once a more comprehensive and better formatted list is completed….

Have a “Fresh of the Presses IRS Retirement Increased Limit” 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