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A Retirement Success Story

September 13, 2023

I recently conquered a 20-mile hike that stretched over the course of three days. I lugged my 40-pound backpack ten miles into the Colorado Rocky Mountains and set up camp. Exhausted, I spent Day Two enjoying my destination: Conundrum Hot Springs. I spent the day exploring a little, but mostly relaxing my sore muscles in the warm waters of the hot springs, hopeful that the sulphur-rich springs would be the recovery boost I needed to hike ten miles out the next morning.

As I lounged in the bubbling hot springs and soaked up the scenery, two older gentlemen stepped off the trail and politely asked if they could share the springs with me for an hour. The men, both extremely fit senior citizens, explained that they were actually completing the 20-mile trail as a day hike. They had just hiked up and wanted to rest in the springs for an hour before making their descent. Thoroughly impressed and intrigued, I made room and we began to chat about what brought each of us this far into the wilderness.

The men explained that they were best friends, “just out here, living the retirement dream.” As a CERTIFIED FINANCIAL PLANNER™ professional and an outdoor enthusiast myself, I was tickled to meet two people that reached the pinnacle of retirement and were making the absolute most of it! I had to know what their secret was, and they were eager to share their wisdom.

“Think about what you want retirement to look like, long before you retire. Set goals, make a plan, and stick to it. When you finally do retire, move your body every day and never stop learning new things.”

The men, ages 73 and 76, previously worked as a cardiologist and an attorney. They enjoyed camping together as boys and picked up hiking together as young adults. They both agreed that they never wanted to quit seeking adventure, and decided early in their careers that they wanted to continue being active in retirement. As they launched their careers, they began saving as much as reasonably possible. They admitted that sometimes it was difficult to max out retirement savings and live modestly while their colleagues flaunted successful careers by living in luxury, but that today the sacrifice was totally worth it. As professionals in their own fields, they respected the value of a financial professional and leveraged the expertise of a few over the years. They each had financial advisors that built them retirement plans and they stuck to their plans over the decades. The cardiologist added that because he witnessed cognitive decline rob some patients of the opportunity to travel in retirement, he made a commitment that once he retired, he would move his body every day and keep his brain fit by continuing to learn.

Today, the two men travel the United States in their RVs. They plan their travels around educational conferences and symposiums hosted by state and national parks, conservation groups, and even National Geographic. They learn about the nation’s most delicate landscapes and vulnerable wildlife populations and how they can support conservation efforts. After taking in as much knowledge as they can about their destination, they experience it first-hand by hiking to the most magnificent and remote regions their legs can take them. These men weren’t just retired, they were living their life to the fullest. How intentionally they chose to spend their time inspired me.

After an hour of great conversation, I waved farewell as my new friends set off down the mountain together. These men were enjoying a remarkable life, fueled by a lifetime of making unremarkable choices. I soaked up some wisdom from them that falls right line with what I would tell anyone planning for retirement.

If you don’t have a retirement plan yet, start thinking now about how you want to spend your time in retirement. Set personal and financial goals. Have a retirement plan built with confidence by a CFP® professional. Then work towards your goals by sticking to your plan. And, while my expertise is confined to financial planning, I must agree with my new friends. Don’t stop at retirement – move your body every day and keep learning new things.

You don’t have to climb a mountain to get retirement planning advice, but you can take the first step by going to https://www.letsmakeaplan.org/.

Hannah Gohmert, CFP® is the Chief Compliance Officer of KMH Wealth Management, LLC.

https://kmhwealth.com/wp-content/uploads/2023/09/Mountain.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2023-09-13 01:01:422023-09-13 13:26:31A Retirement Success Story

Retirement Planning for Educators

August 23, 2023

My wife is an economics professor at Victoria College. As her spouse, I get to experience the cadence of school starting back up as educators return to their classrooms to prepare for the fall semester. There is a lot to think about at this time, from forming syllabuses, creating presentations, getting to know students, as well as just getting back in the classroom after being away for three months. While there is a lot to do, it may also be a good time for teachers to evaluate retirement benefits with school back in session. In this article, I’ll delve into the essential aspects of retirement planning for educators from our personal experience.

Understanding the Unique Landscape

Unlike traditional corporate careers, educators may be part of a pension system like Teacher Retirement System of Texas (TRS). For many Texas teachers, TRS plays a pivotal role in their retirement landscape. My wife, for instance, must meet the “Rule of 80” to receive her retirement benefits. That means her years of service plus her age must equal 80 for her to get full retirement benefits. If she were to retire before that time, benefits could be delayed or reduced by up to 53%! It is important to be familiar with the workings of TRS and how it applies to you, as it often forms a cornerstone of your retirement income.

Leveraging the Power of Tax-Advantaged Accounts

One of the key tools in any teacher’s textbook is the 403(b) plan. The 403(b) plan, akin to the 401(k) in the corporate world, offers teachers an avenue to save for retirement while deferring taxes. This allows you to contribute a portion of your salary pre-tax, which not only lowers your taxable income, but also allows your investments to grow tax-free until withdrawal. As of 2023, the contribution limit stands at $22,500, plus a $7,500 catch-up contribution for those over 50. Some plans may also offer a Roth option that foregoes the tax deduction upfront but allows growth to be tax-free at withdrawal. However, beware one of the potential pitfalls around 403(b) plans – the high-commission annuity! How annuity salespersons formed a foothold in the 403(b) plan market is a mystery to me. Just be aware that there are other options available to you, such as low-cost index funds that can keep growth in your 403(b) and out of annuity commissions!

Double the Savings with a 457(b)

Educators also have an often-overlooked gem of an opportunity that is afforded only to government or non-profit employees. Some may look at this as a tool Congress enacted to give themselves double the tax-deferred savings compared to private sectors employees. I look at it as an opportunity for educators to save! Much like the 403(b), a 457(b) plan provides another tax-advantaged haven for retirement savings. Educators also have the unique ability to simultaneously contribute to both a 403(b) and 457(b) plan, effectively doubling the amount of potential tax-deferred retirement savings available to $45,000 in 2023, plus potential catch-up contributions for those over 50. This benefit shouldn’t be understated for those looking to catch up quickly on retirement savings.

Individual Retirement Accounts (IRAs)

In tandem with a 403(b), educators may be able to harness the benefits of Individual Retirement Accounts (IRAs). Just like their 403(b) and 457(b) plan counterparts, traditional IRAs offer tax deductions upfront, and Roth IRAs forego the deduction to offer tax-free withdrawals during retirement. Educators can contribute a combined amount up to $6,500 annually (plus an additional $1,000 for those above 50) to these accounts. Just be aware that depending on your income, your ability to make tax-deductible contributions may be limited.

Crafting a Comprehensive Strategy

When it comes to retirement, a well-rounded strategy is paramount. Just as you guide your students, seek guidance from a CERTIFIED FINANCIAL PLANNER™ professional. A prudent blend of pension benefits and contributions to tax-advantaged accounts can create a resilient financial foundation that can guide you on your path toward a successful retirement.

Published in the Victoria Advocate

David Faskas is a CFA and CFP® professional with KMH Wealth Management, LLC. He specializes in investments and portfolio management. He is the Chief Investment Officer, Chief Financial Planning Officer, and a managing member of the firm.

https://kmhwealth.com/wp-content/uploads/2023/08/Untitled-500-×-247-px.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2023-08-23 01:01:472023-08-21 20:29:21Retirement Planning for Educators

Lessons From the Garden

August 9, 2023

Somehow we’ve entered the month of August. For many this means the end of summer vacations, the beginning of school, and the kickoff of fall sports. This rings true to me and my family, and additionally brings the planting of our fall garden. Last summer, I began my garden ‘experiment’ as I’ve come to refer it as. I grew up gardening with my dad and remembered it being a ‘fun and easy’ thing that we did together. I thought this would be a great hobby to start with my kids…and maybe talk them into eating a few extra vegetables if they grew them. To my surprise, I’ve realized just how much raising a garden and raising financially savvy kids are alike.

Our summer garden has had a bumper crop of cucumber…as in taking over and trying to suffocate every other plant. We’ve had to rip out the excess more than once this season to let the other plants grow. Just like pruning back in the garden, I prioritize talking to my kids about pruning the excess in our lives and living within our means. Considering they’re still young, this looks like discussing how different choices can affect their ability to do other things. For example, choosing to regularly eat out or buy a small toy adds up which could result in not getting to participate in a fun activity or camp.

We have had our fair share of visitors to the garden over the past year and a half. The deer and birds that we once loved seeing in our backyard have now become an enemy of our bell pepper and tomato plants. Luckily, we’ve installed a fence to keep the larger animals out as a safeguard. Similar to the layer of protection the fence adds to our plants, we’ve already begun to discuss the importance of saving money. Eventually this will develop into conversations of having an emergency fund saved should they ever lose a job or have an unexpected expense come up in adulthood.

As we approach the changing of seasons, we have already begun discussing the preparations needing to be made to the soil to accommodate a new garden and the reasons why. Just like creating a good foundation for a fruitful garden, creating a good financial base for your child takes hard work and lots of dedication. I began discussing money with our children young. This can be as simple as comparing how similar items cost different amounts at the grocery store or allowing them to make money doing chores to work towards a small purchase. As they get older, we’ll discuss different kinds of investment accounts and how compound interest works.

Soon my little gardeners and I will begin planning exactly what want to plant for the fall. I’ll try my best to explain that while H-E-B may have all produce year round, that doesn’t mean we’ll be able to grow it in South Texas. We’ll discuss what items we’d like to grow and approximately how long until harvesting. Then we’ll wait (im)patiently each day as we watch seeds turn into sprouts, sprouts into plants, then finally something we can actually eat. Any good CERTIFIED FINANCIAL PLANNER™ Professional turned gardening enthusiast knows, patience and planning for your goals is key not only in gardening, but for your finances as well. In a world full of instant gratification, I use the opportunity to teach my kids that just as it takes time for our garden to grow, so does your money. We’ll continue to have conversations that different financial goals require different amounts of hard work and focus. For now, it’s a new Hot Wheels track, but I know that today’s discussions will shape their dedication for saving for things like homes and retirement in the future.

Whether your new found hobby is gardening like mine, or it’s something else, I encourage you to look for opportunities in your day-to-day life to relate to your children about finances. Preparation is key to growing good roots. As always, reach out to a CFP® professional if you need more guidance along the way.

Sara Potts is a CFP® Professional and Lead Advisor with KMH Wealth Management, LLC.

 

https://kmhwealth.com/wp-content/uploads/2023/08/gardening-child.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2023-08-09 01:01:492023-08-22 21:45:46Lessons From the Garden

Watching the Sun Set

July 26, 2023

When you hear the term “sunset” you probably envision the beautiful colors of the sun setting beyond the horizon near the end of a day. Well, in a short time from now, a different type of sunset will affect many taxpayers and decisions they need to make. In 2017, the Tax Cuts and Jobs Act (TCJA) was passed and with it brought significant changes to the tax code. Collectively, these changes included a decrease in tax rates, larger lifetime estate and gift tax exemptions, and increased deduction amounts. If Congress does not act before the end of 2025, these provisions will “sunset”, and revert back to pre-TCJA levels. It is imperative that taxpayers are prepared.

Tax Rates
Starting in 2026, marginal tax brackets will increase back to pre-TCJA levels. The 12% bracket will increase to 15% and so on down the line, up to the highest bracket moving from 37% to 39.6%. If you have not already started, a series of Roth conversions over a period of time is a great way to pay less tax now as opposed to withdrawing taxable funds when rates are higher. Accelerating income by taking more than your Required Minimum Distribution (RMD) from traditional retirement accounts is another great way to take advantage of lower tax rates in the short term. If you are charitably inclined, making a tax-free Qualified Charitable Distribution (QCD) from a taxable IRA now is an efficient way to lower required taxable amounts you may be subject to withdraw in the future.

Gift and Estate Tax
For those with larger estates, tightening up your estate plan prior to the sunset in 2025 is a must. The TCJA doubled the lifetime estate and gift tax exemption which is currently at $12.92 million for individuals or $25.84 million for married couples. In January 2026, adjusted for inflation, these numbers will be in the neighborhood of $7 million for individuals and $14 million for couples. The IRS has made it clear that gifts made in excess of future reduced exemption amounts will not be taxed. With that being said, taking advantage of record high exemption levels may be a great way to avoid future estate tax.

Deductions
The enactment of the TCJA has allowed taxpayers to utilize many favorable deductions to offset taxable income. Perhaps the most common being the standard deduction which for 2023 is $13,850 for single filers and $27,700 for those who are married and file jointly. These amounts will continue to adjust for inflation until 2026 where they will, you guessed it, revert back to pre-TCJA levels which will be roughly half of their respective 2025 amounts. Now is the time to get into the habit of keeping up with items that may qualify as itemized deductions to provide to your tax preparer come filing season. These might include a certain percentage of unreimbursed medical and dental expenses, property and sales tax paid, mortgage interest paid, casualty losses, and charitable deductions.

Business owners need to set their sights on the sunset as well. The Qualified Business Income (QBI) deduction was created with the TCJA. This allows those with certain self-employment income, as well as income from an S-Corporation or LLC to deduct up to 20% of business income, barring certain thresholds. This has provided a great benefit to small business owners and is too set to expire in 2025.

It is difficult to predict what Congress may propose or enact, but it is critical to prepare for what is currently on the docket with the reversal of the TCJA. Tax planning is no one’s favorite pastime, but it is a critical component of a well put together financial plan. Contact your trusted Certified Public Accountant, CERTIFIED FINANCIAL PLANNER™ professional, or attorney if you feel you need advice on planning for the upcoming changes. Don’t let the sun set on your plan!

Published in the Victoria Advocate

Hayden Schilling, CPA is a staff accountant for Keller & Associates CPAs, PLLC.

https://kmhwealth.com/wp-content/uploads/2023/07/sunset.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2023-07-26 01:01:142023-07-26 14:22:38Watching the Sun Set

Insurance Tips and Tricks

July 12, 2023

My coworker often says “insurance is the one thing you buy not wanting to use”. How true is that? Think of all the insurance you pay (an extraordinary amount of money) for…auto, home, personal property, health, long-term care, vacation…life. None have claims that I would be happy to file, but all offer insurance coverage I would be happy to have in the event of a casualty.

Each May I go through the process of reviewing my own insurance renewal documents. A task that I don’t entirely enjoy and I am sure my insurance agent even more so. I ask questions. I look at the details. I compare not only the cost, but the coverage from prior years. Once I get through the tedious task with a dozen emails and/or a 45-minute phone call with my agent, I feel empowered with knowledge and am comforted by knowing what exactly my family is covered for and to what extent. Then I file these document away, hoping not to use, until next year’s process.

I work in the industry. Insurance planning and risk management is one of the core components of financial planning. One of the reasons I entered the field of study at Texas A&M was knowing that the topics learned would eventually help me in my own life. Selfish? No, I knew I could make a career out of helping people too. So, let’s get to it…below are 10 insurance tips and tricks:

  1. Make it a process to actually review your coverage annually, not just the cost.
  2. Find a reputable agent that can independently shop a variety of highly rated insurance carriers.
  3. Ask agent (from tip #2) for a list of discounts that you may be eligible for. Also know that some companies offer additional membership benefits and discounts for things like travel, vehicles, services and products.
  4. Know your deductible amounts for each of your insurance policies. Keep your emergency fund fluid to cover these deductibles.
  5. Review the policy riders (aka “insurance add-ons”). Do these add value to you? If you experience a health-related change such as cancer diagnosis, certain insurance riders may be triggered for your benefit. It pays to know what riders exist on each policy.
  6. Be cautious filing a claim. This tip hurts to say, but know that a claim may raise the cost of your renewal in the future. So, filing a claim for a window chip on your comprehensive auto coverage should be used sparingly and consider paying for replacement out of pocket.
  7. Inventory documentation. The better documentation or proof you have, the easier a future claim will be. For personal property, I was advised to use a smart phone to periodically record a walkthrough of my home, then save to the cloud or electronically.
  8. Not too little, not too much, make sure your coverage is just right. Know the replacement value of your insured items, coverage should align. Calculate an appropriate amount of life insurance coverage for each spouse.
  9. Know what’s NOT covered. Understand where coverage ends. Consider other types of endorsements or policies to extend your coverage. Decide on the cost vs. benefit to each.
  10. Read and understand the definitions in your policy. Ask questions and gain clarification. A CFP® professional can help. The Texas Department of Insurance also is a great resource for fellow Texans.

Published in the Victoria Advocate

Beth Koonce is a CFP® Professional and Lead Advisor with KMH Wealth Management, LLC. She is licensed by Texas Department of Insurance as a Texas General Lines Agent for life, accident, and health.

https://kmhwealth.com/wp-content/uploads/2023/07/insurance.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2023-07-12 01:01:142023-07-06 17:02:42Insurance Tips and Tricks

The Unexpected

June 28, 2023

You might think that the title to this article indicates something ominous. Actually it is very happy and joyous, I just had not planned for it financially and that bothered me.

The Christmas of 2021, our whole family gathered together alongside the family of our son’s girlfriend. Our son and their daughter live and work in Washington DC and are both financially independent. He works for the Department of Commerce and is in the Army Reserve. She works for the Office of Management and Budget.

The day after Christmas, with each of their families gathered in our kitchen they announced their engagement. A very joyous occasion!

We have three daughters and one son. Since traditionally the groom’s parents only focus on the rehearsal dinner, supporting a son’s wedding is less of a stretch. After our son and future daughter-in-law announced their engagement I made a toast, “Here’s to one wedding we do not have to pay for,” thinking we would only pay for a dinner and hotel rooms for the children. The unexpected was when they informed us they were getting married in Germany. We had not planned for extra expenses for overseas airfare for the entire family, nor an extended stay from traveling several days in advance to avoid any travel issues. After I thought through it, we had indeed planned for his wedding, we just had to make some tweaks for a wedding in Germany.

Article after article submitted to the financial column of the newspaper by members and employees of our firms stress the importance of having a financial plan. Phyllis and I have a plan and it is reviewed on an annual basis. In the grand scheme of life, this was really just a happy blip on our financial planning screen.

Part of the planning process is thinking about the unexpected events of life that could challenge or wreck your plan. Having reserve liquid funds in place for things you are not expecting help to smooth over those events. No one can foresee the future or plan for everything, but having a plan, a budget, and knowing where your money is being spent goes a long way to realizing your life goals and protecting your family. Having eighteen months to plan for our son’s wedding gave us (in reality Phyllis) time to consider all the many things that have to come together and be paid for the special event.

Our oldest daughter has been married six years. She had a traditional pre-COVID wedding. Our oldest triplet daughter had the traditional wedding planned, but COVID hit and she eventually was married with just them, us, his parents and his grandparents. It was a fantastic and special wedding. After COVID ended, we offered to have a party for them, but being the practical engineer, she took the check instead. We have one single left and look forward to the day, whenever it may come, for her special event.

Let’s get back to how important financial planning is. Whether you are just entering the job market, raising and educating a family, thinking about retirement or in retirement; it is never too late to plan. Understanding where you are financially and where you need to be, at whatever stage of life you are in, is very important. Seriously consider contacting a CERTIFIED FINANCIAL PLANNER™ professional. Make sure you have a qualified CPA and attorney on your team that work well together and get going.

Published in the Victoria Advocate

Lane Keller CPA/CFP® is a managing member of Keller & Associates CPAs, PLLC and KMH Wealth Management, LLC.

https://kmhwealth.com/wp-content/uploads/2023/06/toast.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2023-06-28 01:01:142023-07-06 13:39:15The Unexpected

Preparing for Recession

June 14, 2023

Market volatility, debt ceiling default and impending financial doom continue to dominate the headlines of major news outlets as they have for the past year. Most so called “experts” predict at some point in 2023, the United States economy will dip in to a recession. The general definition of a recession is a fall in Gross Domestic Product (“GDP”) in two successive quarters, but there are also other factors that economists look to before officially declaring a recession.

The timing of a recession is difficult to predict so it is best to be prepared for one before it hits. Below are a handful of tips to help you prepare your finances for the next recession, whether that be in 2023 or in the future.

  1. Inspect your budget. Personal financial planning does not have to be complex or complicated. One of the easiest methods to ensure long-term financial success is to craft your budget with cash inflows exceeding cash outflows. Realizing positive discretionary cash flow will allow you to increase your savings, pay off debt and invest for the future. If pen and paper or an Excel spreadsheet do not work for you, there are many smart phone apps or online budget tools such as Quicken or Mint that will help you prepare a budget. Analyze your spending for a few months to determine where your money is being spent and if any changes are necessary.
  2. Beef up your emergency savings. Your budget is crafted, your spending has been adjusted and you are now cash flow positive. It is time to beef up your emergency savings. The general rule of thumb is to maintain 3 to 6 months’ worth of living expenses in savings. Like most rules of thumb, this really serves as a good starting point. The appropriate balance for your savings account will depend on factors that are unique to you such as your budget, other streams of income and number of dependents. Your budget and financial plan serve as two great resources that will help determine the right amount that you should keep in savings.
  3. Pay off high interest debt. By paying off your debt, you will be increasing the amount of positive cash flow for your monthly budget. I am reminded of a young couple who became clients of our firm about 5 years ago. They were both young pharmacists who had just graduated from college and were looking to get rid of the large debt burden they had, mostly in the form of student loan debt. One of our advisors worked with them to prepare a budget and identified that they had strong, positive cash flow. She worked with them to increase their emergency fund and then to aggressively pay down their debt. The end result was a plan for the clients to pay off over $100,000 of student loan debt in just under two years. Talk about huge lifetime savings by not paying decades worth of interest!

This is just one of many stories I could share about the impacts of the three simple tips shared above. These are the same initial steps our firm takes with almost all new clients who hire us for financial planning services. While we do not know when the next recession or economic downturn will hit, it is never too late to work to prepare your finances to weather the next storm.

Published in the Victoria Advocate

Kyle W. Noack CPA/CFP® is Chief Executive Officer of Keller & Associates CPAs, PLLC and KMH Wealth Management, LLC.

https://kmhwealth.com/wp-content/uploads/2023/06/weather-the-storm.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2023-06-14 01:01:232023-06-08 19:21:52Preparing for Recession

Save Green by “Going Green”

May 24, 2023

If you are considering funding improvements that will enhance the energy efficiency of your home, you may be able to save money on your upcoming projects under the Inflation Reduction Act (IRA). The IRA was signed into law in 2022, and the bill’s main goal is to combat climate change by enticing businesses to adopt environmentally friendly protocols and promote the use of clean energy across America. Also included in the IRA are tax credits for individuals who modernize their homes by implementing “green” updates. The IRA extends and amends two tax credits—The Energy Efficient Home Improvement Credit and The Residential Clean Energy Credit.

The Energy Efficient Home Improvement Credit

The Energy Efficient Home Improvement credit was set to expire in 2021 but was revitalized by the IRA. Prior to 2023, the credit had a lifetime limit of $500, meaning amounts taken in prior years counted towards a taxpayer’s credit limit. The new credit is now worth 30% (up from 10%) of the costs paid for qualified energy improvements, and the lifetime limit has been replaced with a $1,200 annual limit (or $2,000 per year for appliances like heat pumps and water heaters). This means you can invest in your home over time and potentially receive a tax credit for qualified improvements each year, or as your budget allows.

To qualify, home improvements must be new, not previously completed, and meet stringent energy efficiency standards, such as the Energy Star rating. Qualified eco-friendly upgrades include new exterior doors, windows and skylights, insulation materials and home appliances that improve heating and cooling efficiency. The credit is allowed for qualified property placed in service through 2032.

It is important to note that labor costs for installing some of the items listed above do not qualify for the credit. Homeowners should ask their contractors for an itemized statement that differentiates the cost of materials from the cost of labor and consult with their tax advisor. The home improvement credit is nonrefundable, meaning taxpayers can utilize the credit to reduce their tax bill to zero, but the excess credit amount will not generate a refund. Taxpayers are not able to carry the credit forward to reduce their tax bill in the future and should consider this when budgeting and planning for home upgrades.

The Residential Clean Energy Credit

If you’re looking to make a drastic change to your home by installing solar panels or systems that use wind or geothermal power to produce energy, you should be eyeing the Residential Clean Energy Credit. This credit was set to expire in in 2024 but has now been extended through 2034. The IRA increased the credit amount from 26% of the cost to install qualified property to 30%. Unlike the home improvement credit, the clean energy credit includes labor as a qualifying expense and allows taxpayers to carry forward unused credit amounts to offset their tax owed in future years.

Recently, I had a client install solar panels on their primary residence, and the total system price was roughly $42,000. This purchase occurred before 2023, so they received a tax credit equal to 26% of the purchase price, or $10,920. They were then able to offset their tax liability dollar-for-dollar by this amount.

My clients were excited to save green by “going green.” As you can see from my example above, investing in sustainable improvements for your home can be costly. That’s why you should consult your tax advisor to help you navigate the various energy incentives that are available to you to maximize your tax saving opportunities.

Published in the Victoria Advocate

Carlee H. Gibbs, CPA is a staff accountant for Keller & Associates CPAs, PLLC.

https://kmhwealth.com/wp-content/uploads/2023/05/solarpanel.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2023-05-24 01:01:562023-05-30 14:38:24Save Green by “Going Green”

Drafting Your Team

May 10, 2023

The annual NFL draft recently took place. As a Houston Texans fan, it has been a bleak few years of fandom. I closely monitored the draft in hopes the Texans would acquire some much needed support toward building the foundation for a winning team. If you have never watched the NFL draft, it is quite the spectacle. Teams are feverishly negotiating trades of their designated picks, up or down, to better position their chance to win the elusive Super Bowl. Months of analysis go into the decisions of what positions the team should draft based on weaknesses within the team. Just like in football, it takes all the right people to put together a winning team for your financial success. This same due diligence should be used in drafting your team of professionals to win your own financial Super Bowl. The three key professionals you should have on your financial planning team are a Certified Public Accountant (CPA), a CERTIFIED FINANCIAL PLANNER™ and an attorney.

Accountants and tax preparers can be found anywhere you look. Consider locating a professional who has earned their Certified Public Accountant (CPA) designation to be on your team. For many people, this teammate should be providing more than just tax preparation. Make sure this draft pick will provide you with guidance and recommendations on your taxes. They should also be working with the rest of your team to help ensure that your financial plan is successful. Find someone who is annually reviewing items such as retirement contribution options and ensuring your financial plan is carried out most tax efficiently.

Similarly, if you perform an internet search for financial planner, the volume of results are overwhelming. Narrow your searches by finding a CERTIFIED FINANCIAL PLANNER™ to be on your lineup. This professional has a fiduciary responsibility and is required to act in the best interest of their clients. This teammate should not only keep up with your investments, but also prepare a plan for your financial goals and estate planning. They are an integral part of the team.

Lastly, make sure to have an attorney on the roster. Find an attorney who practices estate planning and administration. These professionals have a specialized focus on the nuances within the world of financial planning. Have the attorney draft and/or regularly review your already existing will and Power of Attorney documents. This teammate should consult with both your CPA and CFP® professionals to make sure current legislation and estate tax considerations are taken into consideration.

Just as the teams do in the NFL draft year over year, review your team to make sure you have strong teammates in all three positions. If any of the positions on your financial planning team are currently vacant, consider drafting the positions as soon as possible to better your chances of financial success. Last, but certainly not least, GO TEXANS!

Published in the Victoria Advocate

Christopher Laughhunn CPA/CFP® is the Tax & Accounting Principal for Keller & Associates CPAs, PLLC and an Associate Advisor for KMH Wealth Management, LLC.

https://kmhwealth.com/wp-content/uploads/2023/05/football.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2023-05-10 01:01:342023-05-30 14:42:02Drafting Your Team

Are Credit Cards Yin or Yang?

April 26, 2023

Nearly two decades ago I had a conversation with a friend that elicited a memory that circles around often in my mind. Nancy and I were driving back from Kerrville. We had ridden together to drop our children off at church camp. We had engaged in typical conversation about our children, school, church and other commonalities. Somehow credit cards entered our discussion. It was so bizarre but at the same time we both said “I think credit cards are evil.”

I had thought about the title of this article being “Are Credit Cards Good or Evil,” but felt those terms were too finite. Instead, I felt Yin and Yang were more appropriate. Yin and Yang is an ancient Chinese philosophy that illustrates how opposite forces may be complementary or interconnected. The forces come together which makes the whole better than the separate parts.

Let us apply the yang, which is associated with the sun and positivity, to credit cards. Some of the bright aspects are they provide convenience by eliminating carrying cash. They can help build your credit score which can impact your borrowing ability. Credit cards can offer rewards such as points or miles related to your spending. These points and miles can save on hotels, flights and rental cars to name a few. Credit cards can provide travel insurance for cancelled trips and trip delays. Credit cards can also be more secure than a debit card by limiting your liability from potential fraudulent charges.

Now let us apply the yin, which is associated with the moon and negativity. Credit cards can give us a false sense of wealth. A purchase is made. Next month the credit card bill arrives. It cannot be paid in full. This can connote a person is spending more than they can afford. Having an unpaid balance kicks in the credit card’s borrowing fee or annual percentage rate (APR). According to Forbes Advisor’s weekly credit card rates report, 24.15% was the average APR the last week of March. If you have a credit card balance of $7,500 with a 20% APR, it could take you 106 months, while making smaller payments, to pay off your balance while paying interest of $8,254. Incredible!

The Yin and Yang is when you use your credit cards for purchases and pay your balance off in full each month. You are benefiting from the convenience and rewards while living within your means and not overspending. Choose credit cards that support your lifestyle. There are cash back cards and travel cards. Check out the Forbes Advisor website and click on “Best Credit Cards” link.

My husband, Lane, and I prefer a traditional card that we can transfer points to participating hotel groups and airlines. We also have credit cards issued by airlines that offer rewards in miles. Our son is getting married in May which has involved numerous flights and hotels for the entire family. We purchased and upgraded European flights with reward miles. A huge savings that will be spent on the wedding.

So, yes I still believe credit cards can be evil but prefer to believe there is a Yin and Yang concept where they can work in harmony to benefit lifestyles.

Published in the Victoria Advocate

Phyllis Keller, MBA is the Special Projects Coordinator for KMH Wealth Management, LLC and Keller & Associates CPAs, PLLC.

https://kmhwealth.com/wp-content/uploads/2023/04/yinyang.png 247 500 KMH Wealth http://kmhwealth.com/wp-content/uploads/2018/10/KMH-logo-color2-300x88.png KMH Wealth2023-04-26 01:01:472023-05-30 14:44:37Are Credit Cards Yin or Yang?
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