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 reminders 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 2021!

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

Quarterly (Q 4 2019 1040 ES) Estimated Tax Reminder … Payment Due This Coming Wednesday –

For those of you that need to pay in estimated taxes, this is your friendly reminder…

Payment Due Dates:

4th payment …………….. Jan. 15, 2020*

* You don’t have to make the payment due January 15,
2020, if you file your 2019 tax return by January 31, 2020,
and pay the entire balance due with your return.

Quarterly Estimated Tax Payment Reminder

Here is the link to IRS Publication 1040 ES  – which has EVERYTHING you need to file your ES payment!

Here is the ES payment coupon due Wednesday January 15, 2020:

Q 4 2019 ES Payment Voucher

 

 

Here is where to send the ES Payments:

2019 Where to File ES Payments

 

State Income Tax filers, you may also need to file a similar report as the above is for Federal Only Income Tax filers…

Talk to you next week – thanks for your time!

Have a Great “Quarterly ES 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

 

Q 1 2020 Extended (12 Page) Newsletter Video Audio Podcast Review By John Kvale

Welcome to our Video and Audio Podcast Review of our Q 1 2020 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

Let’s get going!

All New Pictures, Intro and Exit Music !

Q 1 2020 Newsletter

Click for PDF/Printable Version

 

Is Inheritance Taxable ?

This, our lead financial planning article for the newsletter-  With the subject of inheritance and the taxability of it occurring multiple times in the most recent quarter, the idea for this article spawned.

After completing the initial article, a continuation article idea also occurred which made the second part of the inheritance subject matter about being separate property.

We hope you enjoyed both articles and this was our lead financial planning articles.

All about the Car

In another fun personal financial planning two – part article, long desired, but fearful of writing …this article discusses the car, should you buy or lease and how to do so. Again, a second article occurred at a chance meeting in an airplane with a former law officer watching me finish the first article on the airplane!

In doing the research for these articles we ran across a really cool car research site, and mentioned some great buying resources as well.

Recession Thwarted – Capital Market Thoughts

To ignore new evidence in our minds is silly even if it goes against the grain of what you may have been saying!

In this article we review a CFA speaker’s slide about lowering rates during a recession and his conclusion. Bottom line, we’ve not been a big fan of lowering rates during economic growth, but an inverted yield curve which is highly predictive of a coming recession, along with lowering of rates, according to the speaker and the enclosed chart leads to a thwarting of the recession.

We hope we are wrong on this one and the speaker is correct!



Reach back to last year’s taxes in savings you can do now

In this article we discuss the remaining tax savings ideas that we can do this year, that will help last year’s taxes-

  • The SEP – Simplified Employee Pension
  • HSA – for the Health Savings Account
  • IRA – An oldie but a Goodie if it’s available to you
  • Roth – While not a tax saver you can do it now for last year’s taxes
  • Itemized itemize itemize – With today’s high standard deductions you may not be able to itemize but we remind that it’s a good idea to stay in shape as it’s likely these itemize deductions may come back in the future

We hope you enjoy … talk to you in the Spring !!!

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

New 2020 Tax, Contribution Rates … Handy Resources

Here are the new 2020 Tax Rates, Retirement Contribution Rates and a few other Handy reminders to start the year…

A Great Resource for all your tax needs is none other… www.irs.gov… we all pay for it, and it has abundant information…not to worry, they will not know if we are reviewing the site (no increased chance of audit..haha)

The first two from Tax Foundation:

2020 Federal Tax Brackets

2020 Federal Tax Standard Deductions

2020 Comp and Contribution Limits

2020 Comp and Retirement Contribution Limits

Wish there was a way for us to track our own internal referencing of this post … it will be many!

Have a Great “2020 Tax Resource” 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

 

 

 

December 2019 Podcast Video, Financial Planning and Capital Market Update – By John Kvale

Hello and Welcome to our December 2019 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!

December – 2019 Video

Financial Planning Tip (s) –

12-31-19 Secure Act House Ways and Means

SECURE Act is Signed at the Finish Line of the Year

As mentioned here in our preview post, with a stroke of a pen on the Saturday before the Christmas week, the SECURE ACT (Setting Every Community Up for Retirement Enhancement) – Wow that is a mouthful!

The Biggies:

  1. Age 72 RMD, up from the confusing 70.5
  2. Non-Spouse 10 Year Mandatory distributions of Inherited IRA – Mandating taxes by beneficiary

Tons of planning techniques and lots more to the law, but these again are the biggies!

Capital Market Comments –

FED Pauses and Markets Yawn… Finally

The FOMC (Federal Open Market Committee) led by Jerome Powell and company, FINALLY were able to not lower rates and market participants accepted it… Shhh, lets keep it our secret..haha

12-16-19 Fed Funds Rate

 

Happy 2020!

Have a Great Day – Talk to you at the end of January!

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
street-cents

Break In: SECURE ACT – (New Retirement Plan Rules) a Breath Away from Law – Friday – Office Hours Over Next Holidays – Happy Holidays

Break In:

SECURE ACT looks to be passed at the last minute amid year end legislation…

We rarely comment on items that are not law, but the SECURE ACT (Setting Every Community Up for Retirement) is just a pen stroke by the President away from law, as both the House and Senate have approved.

Two Biggest Items of Secure Act (Many Others, but the following are the elephants):

  1. Delayed mandatory RMD until age 72 – Nice
  2. Non-Spousal Beneficiaries to IRA’s will only have 10 years to empty the account – Tax Acceleration here – will require planning

These laws, if passed will commence for actions occurring after 1-1-2020…

 Back to our Regularly Scheduled Program….

Today is a Friday and with local schools only a half day, we will be adhering to the same schedule to help keep the streets safe…haha

Office Hours Over the Holidays

Each of us are taking time off over the next two weeks, but an attempt to not all be gone at the same time is always made…. there will be several days where we will all be out.

I always make myself available via the technology tether to let the others disconnect…

That being said, there are travels in the schedule as well!

So if a delayed response, it may be due to bad WiFi flight times….

Fun Pre-Scheduled Posts

Over the year, a few neat comments have caught the eye and will be shared over the Holidays!

Have a Great Holiday Season and talk to you in 2020!

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 an Inheritance is usually NOT Taxable !

Several times in the most recent quarter we were asked, and discussed in detail, if an inheritance is taxable? Because of this repeated subject we thought it appropriate to broach the subject here.

So is an inheritance taxable?inheritance

For the most part no. There are of course exceptions (certain states have silly inheritance laws, but these are slowly being repealed due to state resident desire). Under current tax law, upon death after tax investments receive a step up in basis, which means they are marked as the value of the deceased as fair value. This means that if an asset was purchased for just pennies decades ago, it’s new basis for the inheritor is the fair market value at the date of death.

As a side note for those thinking of gifting appreciated assets (to non charitable recipient) one might want to consider this step up in basis. If you gift a highly appreciated asset it will carry your basis and the recipient will then have Taxes upon sale.  All things considered equal, upon death that same asset under current tax law will transfer to the recipient with little or no taxes.

Once the assets are transferred into the beneficiaries account, the interest, dividend and capital gain clock will begin and moving forward, taxes will be due on this amount as the beneficiary becomes the owner of the asset, but the initial transfer will not be taxable, a very fair tax situation.

Receiving an IRA as Inheritance?  There are taxes, but not Immediately

Under current tax laws an IRA will pass to a spouse, child, sibling or other direct heir with no mandatory complete distribution necessary-there will be possible minimum distributions.

If a spouse is in the age range of RMD (Required Minimum Distributions) the receiving beneficiary spouse will pick up mandatory distributions based on his or her age. If a child is the recipient of an IRA the child’s age blended with the original decedent and will be computed to mandate a non-penalty but much smaller required minimum distribution even if the beneficiary is very young.

If the inheritor wanted to distribute the entire IRA, she/he has that option with no penalty, however this would bring full taxable income for the entire amount of the distribution, a decision that would need to be carefully considered before commencement.

So in summary, the immediate transfer of assets carries very little tax burden to the inheritor. Moving forward interest, dividends, future capital gains in after-tax accounts would be taxable, and in the case of an IRA the beneficiary, the RMD amount will be required and taxable, but in almost all cases these are the only taxes mandates.

Have a Great “No Inheritance Tax” 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