Tag Archives: Tax Savings

All About Taxes – We know … Most Really Want to Know About ENFORCEMENT ! Great Source Sites

Here are great source sites used for our research and possibly useful as you enter tax season:

As promised last Friday we wanted to share some neat stats and information concerning taxes and the collection of, and the IRS in general.

This is a brief review of the subject matter from our pending 2020 Q2 Newsletter which will hit your mailbox right around tax filing date, and we thought it a good time to share some stats.

We know that when you think of the IRS and taxes you’re mostly concerned with one thing … ENFORCEMENT!

With brevity a concern in this venue, we will drill directly to the enforcement portions of our much deeper and more comprehensive article … again in our Pending Q2 Newsletter.

Enforcement of Tax Collections and IRS Statistics

In dealing with the IRS and tax situations over the past 31 years the one thing that we have found most important is to always respond to the IRS in a timely fashion.

TaxAudit 2018 stats

 

Our general IRS/Client experience over the past three decades has been a very good one. We have found the IRS to almost always be very receptive to information, understanding of mistakes, and even frequently waving penalties and interest …however this last point is not always in stone given certain situations

Amazingly nearly 2/3 of audits, which are almost all done by paper due to the cost of a field audit are not answered, resulting in a claim on the taxpayer. Bottom line, make sure you show the IRS that you’re answering their questions in a timely fashion and expect a paper computer driven notice.

09-18 number of returns audited IRS advocacy

The majority of audits and notifications (AKA CP2000) are created or driven by an income mismatch – said another way, if you earn some income, wages, interest, investments, or some type of capital gains, and you do not get it on your tax return, it’s easy for the IRS to catch, and you WILL get a notification. (CP2000)

Sir Learned Hand, Famous Quote440px-LearnedHand1910a

“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. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

While you hear us talk about tax reducing strategies frequently, (here, here, here ) as we are big believers in not paying any extra taxes, we are also very big believers of being fair and honest with the IRS. Over the years we have been presented with many gray area tax strategies that have almost inevitably not held up against the IRS.

If it sounds too good to be true, it usually is in the end … don’t even think about going there – the IRS will eventually find you, and it will most always be at the most inconvenient time!

Having respect, and mutual admiration for the IRS and its’ enforcers,  but not fearful or conspiracy, is a healthy way to go about your tax responsibility as a United States Taxpayer!

Have a Great “Tax Stats” 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

End of Year Tax Reminders! Tick Tock

While there are a fair amount of tax techniques that can be used next year to reach back to this current year, since this is the last Newsletter of the year we wanted to remind of a few timely tax reminders.

Is your DOB between 7-1-48 to 6-30-49?

Then you turn 70.5 in 2019 and you CAN defer your RMD until 2020, however you will have two RMD’s next year — be careful, large distributions could toss you into an extra tax bracket.

The mandatory commencement date of RMD’s is the year AFTER you turn 70.5 years young, under current tax law. If you accept this first year deferral, you will incur two RMD’s in the year you commence your first RMD.

Depending on the situation, it may be advisable to distribute your first year RMD a year early so as not to clump your taxable distribution.

401k and other Company Retirement Plans Maximization

For 2019 the maximum 401(k) contribution is $19,000, if you are 50 or over you can put an additional $6000 making a total of $25,000.

Now is a good time to check and make sure you’re on schedule to maximize your deferral, especially if your age 50 or over and extra especially if you turned 50 this year, we find that employers sometimes need a nudge to allow us to do that extra $6000 catch up provision.

529 Distributions or Contributions

Contributions and distributions should be made by the end of the year for this fiscal year as there is no look back feature on 529 plans. Distributions for this years education expenses should be made this year, allowing a matching of expenses with distributions in the same year.

Charitable Donations 

Make your donations by year end if you want to take a charitable deduction this year. Charitable donations are not allowed any look back, and as such must be made by the end of the year if you wish to deduct them on this year‘s taxes.

Well there are a fair amount of look back tax deductions, many of which we will discuss in the next newsletter and after the turning of the new year,  these tax deductions have an ironclad ending date, which is the end of this year if you wish to meet the deductibility requirements.

You have plenty of time now, but the clock is ticking!

Have a Great “End Of Year Tax” Reminders 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 3 2018 Newsletter Video Audio Podcast Review By John Kvale

Welcome to our Video and Audio Podcast Review of our Q 3 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

Let’s get going!

Q 3 2018 Newsletter

And here is your review!

Inverted Yield Curve

In this hugely in depth article was originally ran in abbreviated form, here, here, here, here and here on street-cents.com-

Here is the key graph-

2s 10s Spread W Recession sfredgraph

The inverted yield curve has been a good predictor of recessions.

Three Key Tax Items

In our detailed article in the Newsletter, we address the three key tax change items-

  1. Higher Standard Deduction
  2. Lower Tax Rates
  3. Less Deductions

 

Where have all the Stocks Gone?

In this Article we discuss the absence of stocks over the past several decades, leading to possible higher valuations.

2017 Declining Stocks US and World Comparison

Enjoy your summer-

See Ya next Quarter!

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

Q 2 2018 Newsletter (Early Release) Video Audio Podcast Review By John Kvale

Early Release Special Q 2 2018 Newsletter

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

Let’s get going!

 

Q 2 2018 Newsletter

And here is your review!

Five Reach Back NOW Tax Savings Techniques

In this hugely in depth article was originally run in abbreviated form, her on street-cents.com

HSA – The Health Savings Account

In this part of the Newsletter Article we discuss why we like the HSA so much. Here are a few…

  • No phase outs
  • No mandatory end of year usage – use it or lose it
  • Investment Options
  • Pre-Tax contributions
  • Tax Deferred Growth
  • Tax Free Withdrawals for qualified medical costs

Here is the concise post, here on street-cents.

SEP – The Simplified Employee Pension Plan

Here are the high points to this portion of the Newsletter Article …

  • IRA on Steroids
  • Pre-Tax Contribution
  • Super High Income levels if income high enough to offset
  • 1099 Income Offset – even if you have a 401k and if you are in RMD mode
  • Easy to contribute
  • Tons of investment options
  • Procrastinator’s dream with a contribution available upon extension filing

Here is the post, again specific to just to the SEP.

IRA – Vintage original retirement program, but still a goodie

Often forgotten, the good ole IRA makes up the third of our five tax savings techniques.

  • Best for W-2 workers without a retirement plan
  • While maximums are lower, income is not needed to contribute
  • Flexible investments and death benefit options
  • Pre-Tax is best way to fund – not post tax in most cases

Here is our post specific to the IRA.

Sales Tax Deduction

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.

Here is the specific post.

Medical Expense 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 …

3-4-18 VIX Cropped

Oops … it looks like this!

3-4-18 XIV

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 !

See Ya next Quarter!

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