Category Archives: Tax Related

BREAK IN- DELAYED IRS REFUNDS (35 million to be exact) … Branson Makes History … Survey Results Preview … Trials of Server Cut Over … British Open Friday …

BREAK IN – After multiple inqueries this week regarding missing or delayed refunds, then a field touch of Tax Professionals and other expected refunders we came to the comfortable conclusion there are delays.

Before we could get this to you, this yahoo finance story breaks, saying as many as 20% of all returns (35 million- yikes) may be delayed… wow- but good detective instincts by us!

So if you have a refund due, and it is late, don’t worry, the IRS is behind but will get to us eventually!

Branson Hits the Skies

Ya ya, a bunch of Billionaires racing to the skies… we get the negative, but you cannot take away the fact that Branson (Musk and Bezos in line too) took to the skies and was the first outer space self funded and self manned traveling vessel.

These things crash and explode… frequently… heck Branson did not even wear a helmet… cavalier, maybe…. ego driven…. maybe, accomplishment, for sure!

Crazy Billionaire…. Maybe!

Survey Results Preview

We have run into a terrific survey that we cannot believe. Over 8000 folks were surveyed across the globe with some startling results….

Planned on having it mid-week this week, but did not get Copyright clearing until later….

Look out next week, we cannot wait to review…. it may even be good enough for a Two Part Series… will see…

Trials and Tribulation of the Summer Tech Update

Literally the day we posted our initial announcement of our summer technology update on Friday…. Our WIFI at the office went out…

Nothing to do with the update, we assure you!”

Ok, fine … Monday of the week found several of us no access to our contact information and email….

Luckily the cell and Ipad were working great UNTIL – Thursday.. Boom, down ….but fixed with a call to said IT folks…

If you happen to send an email to us and not receive a response, please resend, we MAY have not received it!

Next week fingers crossed for a smooth “Cut Over” (Techie term for new services)

Ahhhhhh…. but today is a Friday…. you guys know how much I like the summer sun, yep its hot, but that’s ok, enjoy your day, your weekend, and be sure to spend time with those special in your life if possible – talk next week!

Ohhh, and one more thing… it is a British Open Golf Weekend, where Golf will be available first thing in the AM for those who fancy such!

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

Reminder of Seemingly Odd Late Tax Statement – Form 5498 … FOMC Dot Plot Preview … Newsletter Update … Summer Friday YAY!

Just when we happily said goodbye to a very long tax season due to the various extensions provided by the IRS, in comes a seemingly odd late tax form.

Form 5498 Reminder

Form 5498 is headed to some of our mailboxes over the next two to four weeks, again due to various extensions in the IRS filing due date, 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.

Here is the IRS information if you need further clarity.

FOMC Statement and Dot Plot Preview

Earlier this week the FOMC (Federal Open Market Committee) led by Jerome Powell, released their Economic analysis update along with a interview after a pre-prepared reading by Powell himself.  The release, which also included the “dot plot”, which is an anonymous estimate by all the reserve members, voting and non voting on where they think the economy, is carefully scrutinized by all in the investment community.

We will take a deeper dive next week as there were some interesting cross currents post announcement and interview .. even with summer doldrums dragging along!

Newsletter Update

We are happily putting the final touches on the Newsletter, some of which partial pieces have been reviewed here, on our Blog, but with a longer Newsletter form we go into greater detail in our subject matters that we hope you will enjoy reading as much as we enjoyed creating.

Friday

Ahhhh…. But today is a Friday, for those that have been following… the rain has left us, the steam is subsiding from an abnormally fast early summer, the heat wave is reminding us why there is a saying in Texas:

“If you don’t like the weather, just wait a few it certainly will change!”

Have a great weekend, don’t forget to spend time with those special in your life and we will talk to you next week!

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 Do Not Want to Overfund Your 401k or Other Retirement Plan and How it Can Happen !

The most common type of Retirement Plan, the 401k in 2021 has a maximum deferral amount of $19,500 with a catch up provision for those age 50 or greater of $6.500 for a total of $26,000 again in year 2021.

Why You Do Not Want to Overfund Your Retirement Plan

Should you accidentally over fund your retirement plan … what occurs is a double taxation!

  1. You do not get the deduction for the contribution
  2. You will likely pay taxes on the eventual distribution

This is not the end of the world, especially if a very small dollar amount, but you still do not want this to happen…

How Does Overfunding a 401k Occur ? – Job Change

While it may seem puzzling at first, upon second thought the most common reason for overfunding a retirement plan is a job change.

It is impossible for your new employer to know your prior contributions, so an accidental overzealous withholding that throws you over the annual maximum will not be allowed from a IRS tax standpoint.

If you change jobs mid year, be sure to carefully determine your prior withholdings and monitor you new withholdings throughout the year as the burden is on us the employee to keep ourselves in check with the maximum.

For those gainfully employed at the same employer we have not seen an accidental over allowance in a very long time, so most employers have systems set up to automatically stop your contribution once the maximum is achieved. Should your employer merge with another company or change administrators, it is a good idea to make sure they pick up your prior contributions, which can be achieved by checking your paycheck’s ytd retirement plan withholdings after the change.

The good news is there are ways in certain cases to unwind this overpayment, but they are frequently very complicated, may create a tax issue for the IRS to review, and in some cases just not available.

Have a Great “No Overfunded 401k” 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

Extended Tax Season Finish Line, New Neat Tracking Site Found … Friday

With an original Mid-March Corporate Tax Deadline, a regular estimated tax (ES 2021) April deadline … a most states extend 1040 to May deadline and then a June Taxes deadline for Texas and a few other states this could have been the longest tax season ever!

Next week marks the final full finish line of this most confusing and marathon like tax filing year. Thank you very much for your collective patience as it was very confusing to all across the country.

Possible New Economic Tracker

Next week we hope to preview another newly found very cool website that can monitor indirectly the economy, this one … unlike our TSA tracker… does not involving airplanes but boats! With a little luck we will get copyright privileges and can show you directly.

Ahhh … but that is next week, today is a Friday heading into an almost summer weekend. As mentioned near Memorial Day, a hope for an Ark …the rain has stopped …it’s still very wet here but slowly drying …some monster mosquitos that can carry small pets away …. But all good!

Have a great Friday a Super Weekend and talk to you next week!

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

Stimulus Funds Further Explained, Rounds 1-3, Those Near Phase Out Likely Very Important Information For You Here!

Last Friday here in this post we mentioned that we had accidentally stumbled onto an explanation of the stimulus checks and especially with regards to those folks near the phaseout area.

If you have received all of your and your family’s stimulus checks or if you have received no stimulus checks and your income is the same or higher please carry on this article is not for you but feel free to share with a friend or colleague who might be in this situation.

Round One Stimulus $1200 adult, $500 Qualifying kids

Stimulus Rounds Reminder From Our Q 2 2020 Newsletter

Round 1 : $1200 adult, $500 qualifying kids

Checks Being Sent to Over 90% of the population 

Each person to receive $1200, kids UNDER age 17 credited to parents at $500 each, no limit in headcount. 

This Rebate is NOT TAXABLE! 

The payout is likely to be sent out end of April or early May! 

There is a phase out: 

The applicable AGI phase out threshold amounts are as follows: 

  • Married Joint: $150,000 
  • Head of Household: $112,500 
  • All Other Filers: $75,000 

This phase out is based on either your 2018 or 2019 tax return, whichever is most recent. If your income exceeds the threshold and you are phased out completely, and your 2020 income is below the threshold when you file your 2020 tax return, you will receive your Recovery Rebate at the time of your 2020 filing. 

If you did not originally receive round 1 or were partially phased out the key is this last underlined sentence. If your 2020 Income drops into the threshold of receiving some or all of the prior stimulus assuming your 2019 income was higher and you did not receive any or all of your 2020 rebate, it is showing up on the new sneaky Line 30 of the 1040!

But hold on that’s not all  January 2021 – Round 2 $600 Stimulus

Another new phase out:

For every $100 of Adjusted Gross Income (AGI) a taxpayer exceeds their applicable threshold, $5 of Additional Recovery Rebate will be phased out. Thus, the phaseout range varies from taxpayer to taxpayer, depending upon the size of their ‘base’ Additional Recovery Rebate in the first place (i.e., the more eligible individuals, the larger the dollar amount to be phased out at $5 per $100 of AGI, and the more income it will take to fully phase out the rebate check!

If you were phased out based on 2019 return and qualify based on your 2020 return, this will also show up on the sneaky Line 30 of your 1040!

But hold on that’s still not all- Round 3 the $1400 check -Sept 1, 2021 Lookback

Another More Cliff (Fast) Phase Out

Individuals earning $75k will be phased out at $80k and JT $150k phased out at $160k

Individuals/Families who had a higher 2019 income that knocked them out of some or all of the stimulus original money but a lower 2020 income assuming this person would have qualified for the $1400 per person stimulus based on year 2020 … what the IRS is going to do concerning this matter is on September 1st 2021 they’re going to review all of the 2020 tax returns for folks who had not received the $1400 credit for them and their family and if they meet that threshold they will then receive the $1400 credit period remember this is the much faster phaseout of only $160k and $80k Joint and for an individual.

But Hold on that’s still not all – Not Kidding! Tax Return Year 2021 Look Back!

Assuming you were not below the thresh hold for 2019 or 2020 return, If a person’s income in 2021 were to drop below the new thresholds .. think next year around this time… you will still qualify for the $1400 credit . They are using the same play book as the original March 2020 rebate look back to give an extra year of the $1400 being credited and it would then show up on sneaky line 30 form 1040 tax return for 2021!.

It’s very likely that this will cause great confusion next year … even more than it is causing this year because it will be so much farther in the future .

Important planning technique for this year for people who have failed the 2019 and 2020 income tax level. Should you be able to control your income in some way form or fashion it may be worth you keeping an eye on your total income this year tax year 2021 and attempting to keep it below the current quick phaseout levels in order to receive the $1400 per person benefit next year. Just a thought  

To Summarize Round 1, 2 and 3

A lower 2020 income may bring some or all of the Round 1 and 2 onto Line 30 of your 1040 at the time of fling your 2020 Form 1040 income tax return.

The IRS will look at all returns who did not already receive the Round 3 $1400 stimulus on September 1, 2021 and if you qualify, sometime shortly there will be another $1400/person sent. If you fall into this category, or think you may, DO NOT FILE AN EXTENDED EXTENSION – If you file after September 1, 2021 you will have missed the look back window!

If you fail all of these tests, there will be one last check this time next year for your 2021 return, and if that is lower you will receive the $1400 at that time.

Wow…. Clear as we could be, but it is confusing!

We will have a more detailed article in the coming Newsletter as well as reminders here as we hit deadline dates!

Have a Great “Round 1-3 Stimulus 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

Preview Update on Stimulus Catch Up Plans for Those on the Edge of Phase Outs … Friday

After a week of very confusing information regarding how the Rebates are showing up in our return, we have figured it out….

Complete Stimulus Explanation Preview

Earlier in the month, here in this post, we correctly pointed out that in fact the stimulus is jumping onto a sneaky new line item on our Tax Returns ….. Line 30 of the 1040

But what we missed were exactly what stimulus was jumping onto Line 30!

This week we finally figured it out!

Friday

Ahhhh, today is a Friday and next week we will expand on this subject (Weekend Work) as it is complicated and needs more time to appropriately explain!

Have a Great Weekend and Friday!

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

Another Good Experience with IRS.Gov Payments … Friday

Hey… we do not like clients having to pay taxes, BUT there is not much worse than making a payment and not getting confirmation of that payment for months and even in one case two quarters…. Yikes…

IRS.Gov Filing Site Working Well

This week we had an unusually large number of Q1 ES 2021 Filings as reminded here….

They all went off without a hitch… no kidding…

We could make a joke about that Uncle Sam has figured out how to take our money, but that would be a little bit of salt in the would…. so we will pass…

We will remind again next month and continue to encourage all to forget the checks and mailing system, for the safety and timely credit, the IRS.gov payment system is the way to go…

Speaking of Taxes, we are finding some interesting things to talk about shortly, specifically on the Returns….

We of course closely watched the Capital Markets against our better wishes stretch and stretch some more … more on this too soon!

Ahhh… today is a Friday, heading into a early spring Weekend… Wet here, but that’s ok, grow grass grow!

Enjoy your day and your 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

Sneaky Line 30 of Form 1040 – This is New and Where the Stimulus May Show if You Did Not Receive a Direct Stimulus Payment

Attention all folks that may have not received stimulus checks/deposits/cards in any prior rounds, but think they may be close or due given their 2020 earnings!

Sneaky Line 30 Of Form 1040

A new line has been added to our 1040’s – this line will act as an increase to your payments to Uncle Sam if you qualify, thereby effectively increasing your refund, making the stimulus tax free to you and flowing through your tax return…

Here is a copy of the 2020 Form 1040

Now over on the second page (see below) if you have funds in line 30, That’s your stimulus !

If there, it will again be added to your payments, INCREASING your payments and making your refund bigger while at the same time delivering your stimulus…

Take a look if you are in doubt on your return – we are finding many Surprised Happy Folks!

Have a Great “Found My Stimulus” 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

BREAK IN: Confusing Tax Due Dates – Q1 2021 ES Payments Due Next Week – A Few Clean Up Corrections … You Guys are Tough … Masters Weekend … Friday

BREAK IN – Q1 2021 ES Tax Payments are Due Next Week

Oh boy, let the confusion begin … Just when you thought the tax due dates could not get more confusing… The following hit my inbox this week!

What this means is that Quarterly Q 1 ES 2021 (Income, interest, wages – anything you need to make a tax payment for) are due Next Thursday!

So, if you are scheduled to make ES payments for one reason or another, while Fed and State returns have been delayed, that ES Payment is still due next week!

As a reminder, use the mail at your own risk, we STRONGLY suggest you upload a payment at this IRS website https://www.irs.gov/payments!

Now back to our regular scheduled funny Friday Post!

Thanks so much for reading our posts…. we really do work hard on them…

Confession time for those who may have glanced over the father’s name of the Beverly Hillbillies in our Mineral Reminder Post… Jed, not Jud…. thanks to the MANY and counting who happily pointed out my mistake, you were really paying attention and also took time to humorously rib me – Well Done to you all!

I now know how to get a rise from you guys!

Secondly and more importantly, one of the links to the Social Security Website in our Social Security Post had a typo sending you to the Military service not Social Security… oops…

www.ssa.gov is the correct site.

It has been corrected in the post, but in order for you to receive it in your inbox/phone/device, I wanted to repeat here!

Ahh… Today is a Friday, heading into a Masters Weekend… ya ya the whole family are Tennis Players, but Golf Scholarships help get this one through College!

Enjoy your early Spring, Masters 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

Why You May Want to Accept that Seemingly Lowball Offer for that Small Royalty Interest You Have Acquired Some Time Ago …

While we all envy the person on television like Jud Clampett that receives some great news on a royalty interest, (or misses a rabbit only to hit oil) …in real life frequently this can be more trouble than gift.

Living in Texas a state that produces oil and natural gas royalty rights are very popular and frequently handed down from one generation to the next.

Continued Disposition Problems

We are continuing to run into an ever increasing number of need to dispose of seemingly small mineral right properties that maybe had an offer at one time or another that actually cost more to dispose of them the offer.

Photo by Albert Hyseni on Unsplash

Please don’t run out and dump that long ago relative’s income producing oil or gas property that has been in the family for years producing a nice monthly check … but the hundred dollar or seemingly worthless offer for that very small parcel of land that has a very small mineral right may be a good offer not only from a small tax reporting over the years that you may have to do but also from an organization standpoint in your estate.

While there are exceptions and of course when oil prices were in the mid 100s there were extreme cases of payments, it is very likely if you are receiving a very nominal amount of money from your mineral interest over the past decade that that mineral interest likely has very little value and maybe more of a burden to you from a tax standpoint and especially to your heirs from an estate cleaning standpoint than it’s worth.

No Need to Be Reckless – Do some Research

This is once again not an endorsement to go recklessly sell the mass form of income property but rather a recommendation to maybe think twice and do a little research when receiving a seemingly low offer by a professional mineral person who wants to consolidate his portfolio and take that interest off of your hands!

Have a Great “Cleaner Estate” 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