Child Tax Credit Confusion and Clarity … Many Receiving Payment Who Have Never Had Credit Before …

Approximately two and a half months ago, advanced Child Tax Credit funds commenced deposit on the IRS’s estimate of who is deserved (The IRS is juggling a lot of balls right now!)

We have been in contact with folks who have never received a Child Tax Credit that are receiving the advance…. with the note above of how busy the IRS is, it may be a good idea to keep line of sight to these funds until you file your taxes, just in case you need to cough the advance back up at tax time in the form of a higher amount due!

IRS Statement of Child Tax Credit and Thresh Hold Levels of Qualifications

This is the best summary we could find, although a bit deep, here from the IRS :

A1. For tax year 2021, the Child Tax Credit is increased from $2,000 per qualifying child to:

  • $3,600 for children ages 5 and under at the end of 2021; and
  • $3,000 for children ages 6 through 17 at the end of 2021.

Note: The $500 nonrefundable Credit for Other Dependents amount has not changed. For more information about the Credit for Other Dependents, see IRS Publication 972, Child Tax Credit and Credit for Other Dependents.

A2. Yes. The Child Tax Credit phases out in two different steps based on your modified adjusted gross income (AGI) in 2021.

The first phaseout can reduce the Child Tax Credit to $2,000 per child.

  • That is, the first phaseout step can reduce only the $1,600 increase for qualifying children ages 5 and under, and the $1,000 increase for qualifying children ages 6 through 17, at the end of 2021.

The second phaseout can reduce the remaining Child Tax Credit below $2,000 per child.

For additional information on the amounts of modified AGI that reduce the 2021 Child Tax Credit, see Q C4 and Q C5, below.

A3. For purposes of the Child Tax Credit and advance Child Tax Credit payments, your modified AGI is your adjusted gross income (from the 2020 IRS Form 1040, line 11, or the 2019 IRS Form 1040, line 8b), plus the following amounts that may apply to you.

  • Any amount on line 45 or line 50 of the 2020 or 2019 IRS Form 2555, Foreign Earned Income.
  • Any amount excluded from gross income because it was received from sources in Puerto Rico or American Samoa.

If you do not have any of the above, your modified AGI is the same as your AGI.

A4. The Child Tax Credit begins to be reduced to $2,000 per child if your modified AGI in 2021 exceeds:

  • $150,000 if married and filing a joint return or if filing as a qualifying widow or widower;
  • $112,500 if filing as head of household; or
  • $75,000 if you are a single filer or are married and filing a separate return.

The first phaseout reduces the Child Tax Credit by $50 for each $1,000 (or fraction thereof) by which your modified AGI exceeds the income threshold described above that is applicable to you.

A5. The Child Tax Credit won’t begin to be reduced below $2,000 per child until your modified AGI in 2021 exceeds:

  • $400,000 if married and filing a joint return; or
  • $200,000 for all other filing statuses.

The second phaseout reduces the Child Tax Credit by $50 for each $1,000 (or fraction thereof) by which your modified AGI exceeds the income threshold described above that is applicable to you.

Have a Great ” Child Tax Credit Advance Payment Deep Dive” 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

First Full Week of School in the Books … Partial Week Next Week, Labor Day ! Getting Ready for Fall Sports… Child Tax Credit Preview … Late Summer Friday

Whew….. the first full week of school is thankfully almost in the books…..

Always say after the first or second full week “Don’t know how we are going to make it!” But we do!

The Sleep schedule is getting better, up at least 10-15 minutes for the 13 year old before departure time

He even got the choppers brushed four out of five days!

Just when the schedule steadies… next week has an early release late in the week followed by Monday Labor Day Holiday!

As a reminder, Monday week is the official Labor Day Holiday! (Maybe that is for return to school help …haha)

Fall Sports on the Horizon…

As the days get shorter on light, the fall sports calendar starts to get in gear!

Child Credit Confusion

We have run into repeated Child Tax Credit Confusion and are planning an early next week longer post with the IRS notes for clarity…. we really have had a lot of questions and have been somewhat confused ourselves …

It’s a Friday and most of that was last week, but we are heading into a late Summer Friday on the weekend before a shortened week…

Enjoy, talk next week and have a Great 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

2020 Form 1040 Tax Return Extension Filers … Important Reminder: September 1, 2021 Important Tax Filing Look Back Reminder …. $1400 On the Line!

This is your formal reminder, if you are close to a phase out or did not receive the Part 3 Stimulus of $1400 AND you filed an extension, AND your return may get you qualified for the $1400 stimulus, GET THOSE TAXES FILED!

Third Stimulus Look Back Reminder IMPORTANT Tax Filing Date Those Close To Phase Out

As mentioned here in great detail and in our Q 2 2021 Newsletter, one week from today, the IRS will look back on those who were phased out by their incomes on their 2019 Returns and did not receive phase III stimulus of $1400 …

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.

Bottom Line: If you are close to the phase out and have not filed your Tax return, do so before September 1, 2021!

Have a Great “Phase III Stimulus 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

The US Dollar, Trading Pairs, Exchanges, Foreign Holdings …. Very Dominate!

This chart popped into our in box earlier this month and is a great example for those that may wonder just how dominant the US Dollar is around the world.

It is easy to find folks that worry about the US dollar and it’s reign as the world currency….

Of course, anything can happen, but the following Chart shows is dominance at this time.

US Dollar Usage, Trading Pairs, Exchanges, Foreign Holdings

From our Friends at Visual Capitalist

Have a Great “US Dollar 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

False Unemployment Fraud Warning… First Partial Week of School Completed…Whew!

In the last two weeks we have observed two false unemployment claims and wanted to give everyone a heads up on what is going on and the actions you can take.

Unemployment Fraud Alert – Action Items

Over the past several years I personally have had two fraudulent unemployment claims made in my name oddly to my own company and Donald the Brain, has had it happen once to him as well. In the last two weeks we’ve had two instances of false unemployment claims being attempted and wanted to give everybody a heads up!

What happens is a Social Security number is obtained and a place of Employment then a false Unemployment claim is made to the employer. In all cases mentioned all persons were of course still employed and much to the surprise of the employer the unemployment claim was certainly a fraud and quickly detected.

The best and most appropriate action is to immediately send a note to the appropriate workforce commission, (in the state of Texas it is the Texas Workforce Commission) that the employee is still gainfully employed … this can be done by in most cases the employer or HR director.

The employee that is falsely having unemployment compensation filed for them will likely receive nothing at their home address as the fraudster wants the money to go to his or her address there by having a different address from the employee’s home address. Said another way it’s very likely that only the employer will receive the false filing.

We are happy to report in all cases so far there has been no further damage leading us to believe a Social Security number and Employment information we’re obtained illegitimately, and a swing was made at the unemployment payments with a miss being an indication to move on to the next person in line. Bottom line invasive but not destructive in all the cases so far.

Do keep your head on a financial swivel for other items in your financial world as it’s always a good idea to keep your eyes peeled on all credit and bank accounts post having fraud attempted with your Social Security number.

Partial School Week Over- Whew

The first partial week of school is over it’s funny how they’re not near as happy to go back to school as they were to get out of school… but it’s all good!

Have a great weekend 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

Thoughts and Forecasts From Kyle Bass … Oil $100/Barrel By Year End 2021 ?

The summer garnered a new found passion towards Podcasts…. While we do our Monthly reviews and Newsletters in an Audio, Video, Podcast like format…. Most podcasts are an hour or longer, making for interesting deep dives into the discussion, especially if the person(s) talking are very intelligent in the specific material….

Hat tip JP for the shove in sharing your favorites…. I have taken the ball and run with it!

In another crossing with this interesting investor, Kyle Bass, on a paid podcast platform, specifically for professional investors…. we highlight Mr. Bass’ current thoughts…

Six years ago, we highlighted his thoughts here in our post and in reviewing his comments, his bets were very correct!

Forecasts and Future Expectations from Kyle Bass

Once again, like we did six years ago, in our public Diary of sorts, we outline Kyle’s thoughts for future reference …. so here we go:

  • The Federal Reserve will continue to support the markets with continued purchases.
  • Federal Reserve feels responsible for Capital Markets … i.e. Every Federal Reserve member has a Bloomberg Investment terminal on their desk and post public talks, Fed members go back to their office to check the markets reactions to their comments.
  • Much more inflation than actually as printed by CPI – (Consumer Price Index) Example of car price increases up 300% over last thirty years, but CPI auto costs increased 5% over that period.
  • Cost of Food increases may cause social inequity problems.
  • Oil hits $100 per barrel this year … due to mal investment over the last 7 years.
  • Short term interest rates not to go higher than 1.5% and long term (10 year) rates will not go higher than 2.5%. i.e. Bernanke Helicopter speech outlines the difficulty in raising rates a lot once they are at a lowered level for some time.
  • We push through the Delta Variant and there is a REAL re-opening effect that works its way through the economy (Hope this is correct!)

These were actually done in order of the Podcast (basically taking notes while listening) but the most interesting in our opinion are the last three points…

Marked as Forecast, which we have had a lot of lately…will review for accuracy in the future!

Have a Great “Kyle Bass” Forecasting 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

JOLTS – Job Openings and Labor Turnover – Continued Openings – Very Tight Hiring Currently

Back in May of this year, we first took note (for this Economic Cycle) of the JOLTS data , a measure of Job Openings in the US Economy….At that time an all time high had been hit as measured by this chart again back from May 2021!

As an interesting side note, take notice of the yellow shaded area- this is the NBER Recession tracking (National Bureau of Economic Research) date of a recession… in May of 2021 we were still waiting for the NBER to state if the recession was over and the exact length…. NOT A GOOD measurement for investment as this was way old news even back in May of 2021! Ok digressing a little but thought it worth it…

JOLT Release as of August 13, 2021

Back in May we noted :

  • Tons of Jobs Available
  • Job Seekers Market
  • Tough on Employers
  • Could lead to higher wages (Inflation?)

Here is last weeks reading…

Another 20% higher print…extrapolating our comments above, 20% harder on all points!

Note once again the yellow bar is gone and the tiny little recession call made by the NBER- again certainly NOT a timing issue i.e. If you wait for them to tell you the recession is over you will likely be left in the dust!

For all those hiring …. patience, this will like cure its self much like our Lumber clearing post here…. but not in as fast of time….

Looking for a job, you are in the drivers seat… remember, burn no bridges it’s a VERY small world, but you are in a great place… enjoy and best of luck!

Have a Great “Jolts” Updated 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

Home Sweet Home, Saw Sharpened, A lot of Guests! One for Eight in New Years Resolution … Last Friday Before School!

As mentioned a while back, here, at last … a working remote time in a cooler location was pulled off. Today we ready for the journey back to Home Sweet Home!

It was somewhat emotional as we just happened to step into the same place that we stayed two years ago and were very excited to be back again.

The trip was broken up by a quick turn around flight with the ailing tennis player who had multiple MRIs and a Doctors appointment that could only be set in the middle of our trip. It’s all good … and hopefully the tennis player is on the way to recovery.

Not surprisingly .. as the trip carried on even with the super weak Wi-Fi, research, reading, education and getting to those projects both professional and personal that have been pushed off, we’re brought to the forefront of the laptop screen. Saw Sharpened and Batteries Recharged … thankfully!

We were happy to have relatives, friends, and even a fellow professional and his family who were staying nearby all up over the time of our trip. Looking back at the trip, maybe we had just a little too many folks – nah!  Considering the prior years events, it may be impossible to have too many friends and family over!

Those with great memories may also recall the New Years resolution for a whopping one round of golf a month was failed miserably with none prior to the trip… Happily thanks to the fellow professionals pushing we did get ONE round in…. gotta start somewhere..

Sadly for the aforementioned tennis player and the 13-year-old soon to be eighth grader this is the last Friday before school starts which occurs next week. A dash to finish the summer reading project which as of this writing has not been started is on for the 13 year old …. Audiobook on the way home anyone?

Ahhh … but today is a Friday heading into the last free Friday according to the kiddos before school starts again!

Have a Great 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

A “New to Us” Term, that at First Made Us Giggle, but Due to Repetition and Personal Experience is Worth Discussing…. ShrinkFlation !

Over the past few quarters we have heard an interesting term that at first gave us a giggle, but upon repeated appearances, and a recent up close and personal experience, gave us the gumption to visit in greater detail here, and also set you guys out on the detective path in your own world as well.

Hearing the term repeated from different different sources it’s hard for us to give authorship correctly … but it’s certainly been added to our repertoire and likely yours after reading the following post … enjoy!

The Rise of ShrinkFlation

Burgers are a favorite, however the waist line does not like them as much as the taste buds.

With a favorite joint very close to our office, but not visited for well over a year, maybe closer to two, a recent startling visit brought our new aforementioned term into full view, and the experience gave us the go ahead to talk about it here.

The price was exactly the same, excellent news … but when the burger arrived it was about 2/3rds two maybe 3/4ths as big as the prior burger.

While this is likely good for our intake and good for our waist line … it’s a subtle way of inflation reaching into our pocketbooks or in this case our stomach but eventually our pocketbook anyway!

OK we get it … either the price is going up by 25% to 33% or the burger has to get smaller to accommodate rising prices. There certainly was no note of this change, which is fine but upon experiencing it was a bit eye/stomach opening.

For the record the prior burger easily kept one tied over until dinner … the new likely more healthy burger due to a smaller size needed a snack to go with it to make it to dinner, again probably better in the long term but interesting from an observation standpoint.

Long-term inflation rates as measured by the CPI – Consumer Price Index (the most blunt and popular Inflation Index) have been elevated in recent reports but likely to return to lower norms soon (a full talk for another time ….one which we have discussed in great deal….ok digressing.) The reports are certainly not garnering ShrinkFlation of 25 to 33%! Tried to get a before and after picture of the burger, but nada of course!

OK fellow detectives, we challenge you to keep an eye on any of your purchases especially ones that may have not occurred in quite some time and see if it’s just us or you may have experienced the same?

Break In – We ran across this neat chart, which is a bit dated from Wikipedia showing our ShrinkFlation has been going on for some time!

Any and all comments are welcome but we bet we’re not the only ones experiencing this!

It’s all good … but worth take a note and monitoring it for our collective long-term inflation/ShrinkFlation experiences!

Have a Great “ShrinkFlation/Inflation” all good Wonderful 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

Continued Improvement in the US Economy … Monthly BLS Employment Report .. Unemployment Rate, Interest Rate Reaction

On Friday, August 6, 2021 the BLS (Bureau of Labor Statistics) released the prior monthly (July 2021) employment related report. It is worth noting these are preliminary and will be adjusted in future months, but usually major adjustments are not in the picture….

Bottom Line:

943k hires in the month of July … NICE

5.4% Unemployment Rate as of July …Getting there (lower is better of course)

10 Year Treasuries Took note

BLS Unemployment Report for July 2021

The following Chart from the BLS may look unenthusiastic at first glance….. but hold on!

With the DRAMATIC volatility from the past year, the longer term chart does not give a true recent view…. Let’s look a little closer …. Much Better!

In much the same vein as above, the year view of the Unemployment rate does not look like a big deal as can be seen by the next chart!

On second thought, again with a closer view….. NICE! (We want a downward trending chart when measuring Unemployment)

10 Year Treasuries Wake Up

A measure of future expected growth, after some wrong sided players (shorting the 10 year in expectation of much higher rates faster) blew up pushing yields possibly incorrectly lower….

From Business Insider here

A hedge fund reportedly lost $1.5 billion in a bond market short-squeeze as bets on rising rates turned sour

These Good Economic Numbers put yields on the move higher (far right of chart)!

Continued improvement would likely force the FOMC to slow asset purchases…. as discussed here much desired by many !

Have a Great “Good Economic News” and analysis Monday!


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