Rolling up our sleeves and helping everyone with basis finds, forgotten tax deductions, duplicate Social Security withholdings, long lost medical expenses finds ….
Just like the changing of actual season – Welcoming summer now … by the time it is over, we are ready for the next season!
A Tax Season that Would Not End
So the traditional April 15th deadline was extended to Monday the 16th since the usual day fell on the weekend… only to be extended another day due to a Holiday conflict, only to be extended ANOTHER day due to technical difficulties.
We warned multiple parties NOT to wire or move money on Tax Deadline day because it was the busiest money moving day of the year … We had no idea the US Government website would go down due to all the activity!
Note to self next year, let’s really be sure to stay away from moving money around tax deadline time.
Either way … We made it!
Now time to begin working through all the NEW TAX laws…. bring em on!
Quick Travel Trip
Today the schedule includes a quick turn around trip, only to return early tomorrow in time for a #1 Seed Tennis Tournament that includes a bye in the first round for the 13 year old … giving just enough time to make the match, assuming the flight is on time …. maybe plenty if the 100% chance of Rain holds …
Oh…the Uber driver is here !
Talk to you next week, we have some great items to talk about…but that is next week … Enjoy your weekend!
Several years ago the IRS mandated new rules on FBAR – Foreign Holdings Reports on your US Tax return greatly increasing the number of folks that have to report .. Don’t Forget!
Report of Foreign Bank and Financial Accounts – FBAR
You likely know who you are as the IRS has increased the number of folks that need to report Foreign Holdings by lowering many of the thresh-holds of foreign funds.
What you may have forgotten is the new filing date is also the same as our regular filing date, next week.
Here is the IRS link on the matter, we just wanted to remind you just one more time…. Heads up, don’t forget!
Today is a Friday heading into … you guessed it .. a tennis tournament weekend for the 13 year old. No travels, no rain, perfect weather AND an A Draw match, finally … Looking forward to it!
Life gets in the way, it’s a busy time of the year .. heck, life is busy!
No matter how busy we are, the IRS wants some sort of response.
The Automatic Extension
Here’s how to file your automatic extension for several different types of returns.
While we give you the link and the information to file an automatic extension … it’s pretty easy, be sure to make a rough estimate of your taxes – and if you owe pay an estimate with your extension. The penalties for under paying your taxes are pretty big and grow exponentially the longer you wait.
Assuming you just ran out of time or are missing a document, here are your links to the various automatic extension violence.
Form 4868 – This for automatic extension of your Personal Tax Return aka 1040
Form 7004 – This for automatic extension of your Trust Return – 1041 among others
By filing this extension you get until October 15, 2018 to file – but don’t wait till then let’s get this done sooner rather than later!
In true Groundhog like fashion, Capital Markets, after getting way ahead of themselves early in the quarter, saw their shadow only to turn, run and hide.
Included in the newsletter, which we sent early to give everyone a chance to view and remind of the tax strategies, is an article about the VIX and its reverse brother the XIV. These funny products along with the more recently noted tariff talk has been the recent excuse for capital markets to act like a bashful Groundhog.
The reality is capital markets got way ahead of themselves and needed time to rest. From our perch we would much rather them rest go sideways or even down a little bit, rather than getting WAY ahead of themselves like they did early in the quarter, only to quickly revert and likely overshoot to the downside.
Interest Rate Increase
In this most recent quarter we did just digest another small interest rate increase. Our new Federal Reserve Chairman Powell, looks to continue the gradual increase rates, slowly normalizing short term interest rates, and continuing on the path left by his predecessor Janet Yellen.
Capital Markets have a very unique way of signaling Interest rates have been raised too far called an inverted yield curve. Look for rhetoric about an inverted yield curve soon, as the historic importance and accuracy of this effect are in our crosshairs at this time.
Consumer and Earnings
With an economy that is two thirds driven by the consumer, a happy and spending consumer along with company earnings, which are beginning to digest the new tax reform, lead to a good backdrop.
As we mentioned in our Newsletters and repeatedly at street-cents, this is likely a year we will need patience, we see no change in that view at this time.
Final of FIVE Tax Savings Ideas you can do NOW for LAST Year’s (2017) Taxes
We completed the five part series … Three were let out of the box last month …. Let’s quickly review them and then the two final parts from this month!
HSA or Health Savings Account
Our post here, speaks of the terrific opportunity to set aside Pre-Tax dollars to use now or later for medical expenses.
SEP – Simplified Employee Pension
As mentioned in our Post Here, there are very high limits of contribution, and the SEP can be done during mandated RMD’s, as well as in tangent with a 401k program, as long as the upper limits collectively of contribution are not violated.
Pre-Tax Deductible IRA
As the one of the original retirement vehicles and so vintage many forget (We Don’t!) we want to remind here in our post about the IRA – Individual Retirement Account.
Tax Savings reach back reminders from THIS month/March
Maximizing the Sales Tax Deduction
Here in our post this month, we remind everyone to be sure and maximize your Sales Tax Deduction.
From the post …
Here are a few items that may make your standard sales tax deduction drastically inaccurate and woefully low- thereby costing you tax dollars:
Bought a large Asset – Think Car or other similar item
Had more then normal personal taxed expenses – for whatever reason
Large Taxable Asset of any kind purchased
Major expense where you paid sales tax – Think Wedding, Large Party
Be sure to maximize this deduction as it looks like the new tax rules will greatly mitigate it’s use moving forward.
Medical Expense Deduction
We all some type of medical expenses each year. What is a challenge if determining what is and is not deductible.
The IRS does a terrific job with their Publication 502 of reminding and outlining what may be a deduction. In our post here, we remind of a few favorites that we find are frequently missed …
Capital Expenses for home improvements
Transportation Cost
Television
Telephone
Are possible (check to make sure) deductions we find interesting and easily forgotten.
Capital Market Comments
Finding our Footing After Getting Ahead of Ourselves
Another month and our thoughts are the exact same…so much we did not even have to change the title of this part of the review from last month… the chart is updated … looks about the same…
We think patience is needed as this will take time to digest and again find our footing.
Patience will be needed!
Here is where we are now —
For those wondering …. for now, it looks like the 200 Day Moving Average (line below our trend line) is the lower level of support … It may break, which is fine, but for now, looks like someone wants it to hold.
We will keep watch and keep you updated!
Have a Great Day! Talk to you at the end of April!
Earlier in the month we covered the IRS’s first half dozen of the annual Dirty Dozen Tax Scams here, in this post.
Without trying to be too redundant … here are a few reminders with regards to the IRS and the methods of communication, which is frequently violated by scammers, making it easier to spot them!
How Do the Scams Work?
Con artists make unsolicited calls claiming to be IRS officials. They demand that the victim pay a bogus tax bill. They convince the victim to send cash, usually through a wire transfer or a prepaid debit card or gift card. They may also leave “urgent” callback requests through phone “robo-calls,” or send a phishing email.
The IRS Will Never:
Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
Demand that taxes be paid without giving taxpayers the opportunity to question or appeal the amount owed.
Ask for credit or debit card numbers over the phone.
Call you about an unexpected refund.
IRS Dirty Dozen Tax Scams – The Second Half Dozen
Inflated Refund Promises
The IRS is warning tax payers not to sign a blank return on the promise of a big refund. Not only is it a bad idea to sign a blank return for obvious reasons, but not knowing what is on that return could create more problems than a tax payer can imagine.
Don’t do it, warns the IRS.
2018 Padding/Inflating of Deductions
Not only is the IRS warning tax filers to stay straight and not over inflate their deductions, but this year they are also warning Tax preparers NOT to falsely inflate deductions. Of course mistakes occasionally happen, but the tax code is actually pretty liberal, let’s all stay on the straight and narrow.
Don’t Make Up Income – What your kidding? We explain
Making up, or falsifying income sounds like a crazy thing to do … who in their right mind would do such a thing. Well it turns out this is a problem that occurs in order to get Earned Income Tax Credits.
The last thing you want to do is show MORE income than you earned … let’s not be silly here!
Don’t get talked into Frivolous Arguments
If it sounds too good to be true, do not go there. We do not have to look too far to see a fallen celebrity that bought into one of these cult like groups that says you do not have to pay taxes, and you should argue such. ALL and we mean ALL, of those partaking have found that YES, we do have to pay taxes, and rightly so.
Again, as crazy as it seems, according to the IRS, this is still occurring. Don’t bite!
Abusive Tax Shelters
Several decades ago there were a rash of invest one dollar and right off three on your taxes on various weird investments. If the only reason you are making an investment is to save taxes, turn your hat back around frontwards and ask yourself “What the heck am I doing?” Investments should be made for profit … let’s not lose sight of the forest for the trees.
If it sounds too good to be true, it is. Again, the code is relatively liberal in what we are allowed, no need to push the envelope!
Offshore Tax Cheating
Certainly we live in a more global, small, quick money moving world. This may lend itself to a thought of and Offshore Tax account. Again, not worth the trouble for the vast majority of the population.
If you do not have a need for an offshore account, savings taxes by opening one, is likely not a good idea. Earnings carry a tax liability, just the way it is.
Judge Learned Hand Closing Thoughts
“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. public duty to pay more than the law demands.”
Given all the above, it is not our duty to pay one cent more in taxes than we owe, as can be gleamed from the judge.
We make every effort to pay as little taxes as possible, always between the line though!
This Newsletter was so full of tax related information, especially reach back to last year NOW savings ideas, that we published and sent paper copies early in the Quarter to beat the regular tax filing deadline.
Welcome to our Video and Audio Podcast Review of our Q 2 2018 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 here for 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
In likely the last year of this deduction due to changing tax laws, this deduction is given to most in a standard amount, but can be further enhanced under the appropriate situations.
If you had a big ticket item of any type that had sales tax, you likely will be above the standard given amount. Think back of when you purchased that car or other item. If it was last year, add all of your sales tax up as there is no limit to this deduction. (Phase outs may limit)
Note: Those in state income tax states are likely not a user of this deduction.
Forgotten frequently, we reminded recently in this post of the Medical Expense Deduction. In our Newsletter we really roll up the sleeves and attempt to remind everyone of the possible Medical Expenses you may have forgotten.
Publication 502, located here at the IRS website does a fantastic job of numbering the various deductions.
Home Improvements
Transportation
Television
Telephone
These are our favorite possibly forgotten Medical Expense Related Deductions.
If you are in doubt be sure to check the link to Publication 502 as we really can’t emphasize enough just how comprehensive their list is.
VIX and the XIV
In our detailed article in the Newsletter, we gest of the silliness of too aggressive investments.
When you pick up Penny’s in front of a giant steam roller … When the giant awakens …
Oops … it looks like this!
Much of the Volatility in the Capital Markets were sturred up by this event.
It may take some time to clear this completely. Patience!
Roth Versus IRA – AKA Pre-tax or After Tax
This is a super article that speaks to those who wonder if it is better to do a Roth or another type of Pre-Tax plan such as a 401k, IRA or SEP.
The answer to this question as mentioned in great detail in the Newsletter article is actually not that complicated.
The vast majority of people are in a higher tax bracket while working and lower while retired. If you are one of those people, Pre-Tax is better.
If you find yourself in a low income year/early earning, and expect your income to be higher in the future, a Roth might be better.
On word of caution that is included in our Newsletter .. Roth’s are often overused, so be careful.
Hope you enjoyed this slightly longer than normal summary and detailed review of our Newsletter – Podcast – Video, Review !
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.
First Quarter 2018 Cover Letter Review
In true Groundhog like fashion, Capital Markets, after getting way ahead of themselves early in the quarter, saw their shadow only to turn, run and hide.
Included in the newsletter, which we sent early to give everyone a chance to view and remind of the tax strategies, is an article about the VIX and its reverse brother the XIV. These funny products along with the more recently noted tariff talk has been the recent excuse for capital markets to act like a bashful Groundhog.
The reality is capital markets got way ahead of themselves and needed time to rest. From our perch we would much rather them rest go sideways or even down a little bit, rather than getting WAY ahead of themselves like they did early in the quarter, only to quickly revert and likely overshoot to the downside.
Interest Rate Increase
In this most recent quarter we did just digest another small interest rate increase. Our new Federal Reserve Chairman Powell, looks to continue the gradual increase rates, slowly normalizing short term interest rates, and continuing on the path left by his predecessor Janet Yellen.
Capital Markets have a very unique way of signaling Interest rates have been raised too far called an inverted yield curve. Look for rhetoric about an inverted yield curve soon, as the historic importance and accuracy of this effect are in our crosshairs at this time.
Consumer and Earnings
With an economy that is two thirds driven by the consumer, a happy and spending consumer along with company earnings, which are beginning to digest the new tax reform, lead to a good backdrop.
As we mentioned in our Newsletters and repeatedly at street-cents, this is likely a year we will need patience, we see no change in that view at this time.
Have a great spring, talk to you in the summer!
Sincerely,
John A. Kvale CFA, CFP
Share this:
Like this:
Leave a comment
Posted in Interest Rates, Investing/Financial Planning, Market Comments, Performance Report Cover Letter, Political, Tax Related
Tagged Consumer, Cover Letter, Earnings, Interest Rates, Inverted Yield Curve, Janet Yellen, Performance Report, Powell