This Estimated Tax due date ALWAYS sneaks up on us… and it did again this year…
Why?
Note the short window from April to June – only 60 days…Yikes….
No matter, today is the day for Q 2 ES Tax Payments!
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.
We recommend you do this electronically if at all possible…. the mail is still having issues!
Form 5498 is headed to some of our mailboxes over the next weeks, here are some of the reasons why:
Rollover of a 401k or the like to an IRA – Most frequent
Contribution to an IRA
Contribution to a SEP
One of the most confusing parts of this form is that even though you may have made a qualified contribution for a prior year i.e. 2020, if you made that contribution in 2021, depending on the type of contribution the Form 5498 MAY show your contribution in year 2021.
Not to worry, the IRS knows there are frequently a seemingly miss match of years and accounts for this.
Monday after a long holiday weekend made for the final day of the regular form 1040 Tax filing day… yay
Extenders, which there are many, we will wrap up those as the needed documents arrive, but for the most part all the hard work is complete.
As mentioned earlier, we like the firm date of filing, but it does make for extraordinary busy days… all good of course…
Speaking of taxes, for those that have not, we always like a copy for our records for review and safe keeping… amazing how many threads of light our tax return will shed if needed… Thanks to all of those who have already shared a copy!!
Spring has Sprung
Usually the faithful tree out back makes for a good Spring has Sprung alert…. this year with the holiday and late spring, it came and went before we could make note here…. BUT the mosquito bite is a sure, but much less pleasurable sign Spring has Sprung….
Ahhhhh, but today is a Friday on a Spring has Sprung Weekend… Enjoy and talk next week!
Not to worry it’s not Friday already … with tomorrow being a holiday, Easter, Good Friday, we wanted to remind and share some important ideas today, Thursday rather than our usual Friday Morning chat!
Final Days of Taxes
As mentioned here, in our earlier post “Be Careful What You Ask For” tax season came upon everyone I know in the industry much harder this year than in the prior two due to the delays, but happily we’re just about on the other side of the mountain! Yay
Extension Option
On a related tax filing note, if you have not completed your taxes or do not intend to do so on time, be sure to file an extension. Extensions are easy and give you ample time to complete your returns, but require you to estimate if you owe taxes and you’ll need to pay in that amount or you may face penalties.
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.
Friday Office Closed, Early Exits Today, Tethered for Tax Questions
Tomorrow as mentioned earlier is a national holiday, as such banks, stock exchanges, government offices, and our office will be closed. On that note with some of the family members getting out early we will be out of the office early today as well.
In closing, while we will be out of the office I will personally watch my electronics tomorrow and the weekend for anyone who has last minute forms or tax questions that they may need help!
Monday April 18th is the official last day to file our personal tax returns, notably Form 1040. If at all possible we hope you’ve completed all of your tax information prior to Monday April 18th if at all possible!
Have a Great Day and Easter Weekend, talk next week!
For the past several years … as we all know, tax season was delayed for various reasons, with exceptional confusion last year due to various filing dates depending on your geographic location. As we finished those seasons, which due to the delays were very long, we wished for our tried and true middle of April due date.
In truly be careful what you ask for form, it has been … to say the least … hectic this year! We will get through this together (and except for those extension filers) on the other side of middle/April we will have the great majority of the yearly tax filings completed! Yay
Tax Seasons Findings
Each tax season seems to have its own theme or spirit so to say, and this one is no different!
We are finding an abnormally large amount of missing basis on transactions … especially any unusual transaction. Please double check to make sure your bases is included on your return, just because there’s zero marked on the tax form it’s highly likely you have a basis and it was just not reported. We have seen numerous zero basis reporting by one of the very largest firms that specializes in stock options this year. Don’t miss a basis as this is a mistake to our own disadvantage that the IRS would not catch! Yikes
We are neutral on the automatic download from your financial company to import transactions,. We completely understand it’s a hassle especially for those that are doing it themselves to download all of the transactions, that being said, the automatic downloads are sometimes working perfectly and other times not at all. Similar to your missing bases from before above, check those transactions to make sure they’re in the correct spot of your return…. i.e. Long term or short term
From a very high level we are broadly seeing more taxes due across-the-board than in prior years for various reasons. Not to be a downer but just to set everyone’s expectations as we get closer to completion, there may be extra taxes due!
Be sure to reach out if you have any questions or concerns and we urge you if you have not started your taxes or delivered your information to your tax professional, do so now as the aforementioned normal deadline has everyone shell shocked as we return to the normal super busy season.
Welcome to our Video and Audio Podcast Review of our Q2 2022 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.
BREAK IN – We are trying a new format of articles that are shorter, and hit a very wide variety of topics that should interest all ages and chapters…. Let us know what you think?
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
All about the Stimulus Base Effects and the Coming Comparable (Hurdles)
In our main article, a somewhat follow up article to our Q 1 2022 Newsletter Main Article “Anatomy of a Slowdown” we review the base effects we as an economy are about to have to hurdle.
Sale of many companies exploded higher, similar to the one below, but now must be digested..
Look Back Tax Savings – Spousal IRA – SEP – HSA , These can be done before your filing due date of April 18 to Possible Lower Your 2021 Taxes
With tax season officially underway, actually nearing an end, the official filing date for non-extension regular Form 1040 Filers is April 18th, 2022 (this year) for year 2021 tax filings, just a few weeks out. There are a few tax saving ideas that even with the turn of the calendar can be implemented to possibly help last year’s income taxes.
Self Employed Pension plan-the SEP as it’s commonly called is a great vehicle to offset income that is not of the W2 type, think consulting income.
The Spousal “Qualified IRA” is another handy tool to use if one of the spouses does not have any form of a retirement plan.
The HSA. One of the great parts of the HSA is you only need a high-deductible health insurance plan
Estate and Gift Planning Update – Annual Gifting Amount – Estate Tax Update
Annual Gift amount upped to $16k per person
Estate Tax Stands at $12.06 million per person or $22.12 million per couple
“Last year certainly garnered many headlines of possible changes in much of the estate tax laws. In all fairness we fielded many questions and thankfully once again stuck to our mantra of until it is law, one should be very careful at making preemptive adjustments. There certainly can be changes in the future, but again short of knee jerk reactions, we tend to like for law mandates to be made for reaction, rather than rumors. “
Financial Planning/Retirement Planning Trick for those Early in the Workforce – Roth contribution for young working
Helping a new worker contribute to a Roth and an early age to jumpstart a retirement program…
From the Article…
“Most likely if a young worker is making a very nominal amount, and possibly still living at home, they will not have the cash flow to contribute to any type of retirement plan. But if someway somehow they can make a Roth contribution at least up to their earnings at a very young age the long term positive consequences of this can obviously be fantastic.”
“If a 17 year old was somehow able to get $6000 in a Roth (one time!) and earn 8% a year at age 66 he/she would have about $191,000. If that same 17 year old were somehow able to get $6000 a year until he or she was 23, (five years), and had the same 8% compounding until he or she was 66 there would be a nest egg of just under $1,000,000. That $1,000,000 would not be subject under current tax laws, to mandatory required minimum distributions (RMS;s) nor again under current tax laws would it be taxable income upon distribution.”
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.
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:
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.
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!
Not sure if it is the mail or the processing but for some reason our tax forms have been very spotty in receiving. Using myself as an example yesterday I received another one and several of the forms have been received multiple weeks ago.
If you are missing a form please let us know as we have immediate access electronically and will be glad to email you a form as we don’t want to let the mail stop your tax processing.
On another note … so far we’ve only had one corrected 1099 and that lucky person knows who she is so we are likely good to go and begin processing your taxes!
Snapback Reminder
Not trying to beat us down on this, but once again we had a vicious Snapback mid-week for no apparent reason. While no one is exactly sure why these occur when we’re in a slow down., They do occur, and continue to occur. Just putting a bug in our collective ears to remind all as we go through this slow down Snapbacks are likely to continue to occur. Here is the recent post about the subject matter … below is the chart
Spring Break on the Horizon
With three official school ice closings so far this year, it’s puzzling that today an official ice make up day was not utilized. Seems like when yours truly was in the same situation we ALWAYS made them up. Oh well, for the safety of all those on the streets we will be loosely tethered and out of the office with next week being our collective spring breaks. Tethered with electronics of course as we get ready for the homestretch of tax season
Ahhhhh . but today is a Friday with the office electronically being monitored for the safety of all. Hope you have a great Friday and a super weekend and for the record spring break doesn’t feel too spring Breaky with it being expected to get down to 25° here in the south tonight!
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!
During last year’s extended Tax Return season it was discovered that for various reasons the IRS was greatly backlogged in completing returns. Given that some 2/3 or more tax returns have refunds one can imagine the disappointment in a delayed return of one’s hard earned work.
At the time it was believed there were about 26 million tax returns that were behind … we even wrote about it here, this recent Washington Post article gave updated numbers just as of late that the IRS is some 24 million tax returns behind STILL ! Yikes…
Given this fact with a small sample size of folks that have filed their returns already it has been about a two week turn around for electronically filed returns to get their refund.
We will keep you posted on this but for those of us that are getting a refund we will watch closely on the corrected 1099’s and may error in allowing everyone to file their returns sooner rather than later so as not to get into the great delay!
Interesting Technology Discovered During Internet Repair
Those of you with good memories may recall that last week before the long weekend the Casa was without Internet.
Similar Technology
Upon return to the home from being out of town over the weekend the Internet was still absent. An hour and a half later the repair was complete and the most interesting discovery of technology occurred. During the call the technician rather than scheduling someone to come out to the house in a day, a week, or two weeks, he asked me to download a quick app on my cell phone click on a text that he sent … turn on my camera and my phone became a live lens back to the technician.
Yes 90 minutes is a long time to be on the phone with a technician … not unexpectedly, but what a terrific quick repair was made especially given the nasty weather we have had here in the South this week!
Sure love that technology when it works, not so much when it doesn’t!
Ahhhhhh today is a Friday, and you guessed it, the wireless Mic was in action again and a failure of keeping this post short was again the result!
Will try to do better, enjoy your weekend, talk next week!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments may be appropriate for you, please consult your financial advisor prior to investing!
Background
The is the vocal portion of J.K. Financial, Inc. a Dallas Texas Based Fee Only Total Wealth Financial Planning Firm. Founded by John Kvale, a Dallas Texas Fee only Financial Planner and Total Wealth Manager.
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Q2 2022 J.K. Financial, Inc. Newsletter … Video Audio Podcast Review ! By John Kvale CFA, CFP
Welcome to our Video and Audio Podcast Review of our Q2 2022 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.
BREAK IN – We are trying a new format of articles that are shorter, and hit a very wide variety of topics that should interest all ages and chapters…. Let us know what you think?
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!
Q 2 2022 Newsletter
(YouTube)
All about the Stimulus Base Effects and the Coming Comparable (Hurdles)
In our main article, a somewhat follow up article to our Q 1 2022 Newsletter Main Article “Anatomy of a Slowdown” we review the base effects we as an economy are about to have to hurdle.
Sale of many companies exploded higher, similar to the one below, but now must be digested..
Look Back Tax Savings – Spousal IRA – SEP – HSA , These can be done before your filing due date of April 18 to Possible Lower Your 2021 Taxes
With tax season officially underway, actually nearing an end, the official filing date for non-extension regular Form 1040 Filers is April 18th, 2022 (this year) for year 2021 tax filings, just a few weeks out. There are a few tax saving ideas that even with the turn of the calendar can be implemented to possibly help last year’s income taxes.
Self Employed Pension plan-the SEP as it’s commonly called is a great vehicle to offset income that is not of the W2 type, think consulting income.
The Spousal “Qualified IRA” is another handy tool to use if one of the spouses does not have any form of a retirement plan.
The HSA. One of the great parts of the HSA is you only need a high-deductible health insurance plan
Estate and Gift Planning Update – Annual Gifting Amount – Estate Tax Update
Annual Gift amount upped to $16k per person
Estate Tax Stands at $12.06 million per person or $22.12 million per couple
Financial Planning/Retirement Planning Trick for those Early in the Workforce – Roth contribution for young working
Helping a new worker contribute to a Roth and an early age to jumpstart a retirement program…
From the Article…
We hope you enjoy … talk to you in the summer!
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
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Posted in Economy, General Financial Planning, Interest Rates, Investing/Financial Planning, Market Comments, Newsletters, Podcast, Retirement Planning, Tax Related, Video
Tagged 401k, CPI, Interest Rates, Newsletter, Recession, Retirement Planning, Roth, SEP, Slowdown