Jon Dockery

Jon Dockery

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Don’t Miss the Opportunity

I spent last night taking graduation pictures of my son and fellow graduating neighbors in our yard. It was great to be around a small group of people again, but it was much different than the hypothetical plans we had made a year ago before the coronavirus changed our lives. There were no large graduation parties, extravagant trips overseas or even the traditional graduation ceremonies everyone just takes for granted. 

It could easily seem that so much was taken away from us, but I think we got more out of it than we at first realized. For months, we had my now 18-year-old son and his two younger brothers in the house together with no place to go. We played UNO, Wiffle ball, basketball, Monopoly, watched movies, and started a nightly work-out program. I truly believe very little of that would have happened if not given the opportunity to slow down, stay at home, and focus time on what is really important.

At the same time, I was working from home during this pandemic and missed out on so many opportunities. I found myself tied to my makeshift office desk trying to help people with PPP loans and Stimulus checks, and I had a hard time pulling away for lunch or to end the day anywhere near the 5 o’clock whistle. That doesn’t even take into consideration the multiple projects that seemed destined to be completed with all of this “extra time”. Instead, what I have now is stacks of paint cans ready to transition bedrooms into new teenage oases. Where did the time go to complete these projects?

What I’ve come to realize is we didn’t get more time, but it was just different and other things consumed my attention. Today my son selected his college dorm room, so he will soon be out from underneath my roof. He will be making important decisions that impact the rest of his life. I have had 18 years with him, but how many opportunities did I miss to show him the right way or help him figure out how to make difficult decisions? I’ll still have opportunities to be an influence going forward, but we only get one shot at today. If this virus was good for anything, I hope it slowed us down enough to think about the important things in life and to take the opportunity to enjoy or accomplish those things we’ve been putting off.

The “Never-Ending” Tax Season

I woke up this morning and started my work as usual (Except there’s nothing usual about being at home working in a makeshift office).  About noon, a CPA friend of mine texted about how weird today seems. That’s when the light bulb moment happened.  It’s APRIL 15th!  I can’t believe it took me half the day to realize it was April 15th.  That’s what this Coronavirus has done to me and my colleagues around the country. 

While the tax deadline has been extended from April 15th to July 15th, there hasn’t been a lack of excitement around CPA offices.  That’s because the government has initiated ways to get money into American’s hands, and based on the number of phone calls and emails I’ve received, people are making full use of the opportunity.

The first way of getting money to people is the individual Stimulus Checks.  That’s a $1,200 check per adult and $500 per dependent. Well, I wish it was that simple.  The dependent has to be under 17 and the taxpayer has to be below an income phaseout.  These thresholds are:

  • Single Filer: $75,000

  • Head of Household: $112,500

  • Married/Joint Filer: $150,000

If you make more than these amounts, your check is reduced by $5 for every $100 over the threshold.  Therefore, there will be a significant number of people not receiving any check at all.

The Second and more complicated methods of getting money into the economy are the SBA loans for small businesses.  I won’t go into a lot of the details, but these were designed to help business owners pay for payroll, mortgages/rent and utilities during these difficult times.  The difficulty has been getting these loans applied for and approved.


As a financial planner, I didn’t want to let this opportunity go without addressing a couple of investment and tax planning concepts that were also in these bills. The most impactful of those relate to retirement accounts and distributions from these accounts.  Some important things to realize are:

  • Required Minimum Distributions (RMD) are waived in 2020 (In most cases).

  • The 10% penalty for early withdrawal is waived if due to virus related challenges.

  • The taxability of these distributions can be spread over 3 years, and you can make recontributions to the account over those 3 years.

Also, they have established a $300 above the line charitable contribution deduction.  This allows even those that don’t itemize to benefit some from their generosity.  I’m hopeful that this is the beginning of allowing larger charitable deduction for non-itemizers.

Hopefully, some of these items will benefit you and our economy as we go through this strange and challenging time.  If we can be of assistance, we would appreciate the opportunity to help out our neighbors.

Last Minute: Year-End 2019

What can I do last minute to save taxes?

This is a question I hear repeatedly this time of year. I’ve had several people call and drop in the office asking about requirements and options to complete before year-end. Fortunately, the IRS allows us up until December 31st, and in some cases until October 2020, to initiate a transaction to save taxes on your 2019 tax return. 

One of the most important things you can do for the future is to save for retirement. The most common option for most employees is their company 401(k) plan. Contributions to these plans reduce your W-2 wages.  Therefore, you defer taxes on the contribution amount, but they must be deferred from pay before year-end. For those that don’t have a company 401(k), an IRA or SEP IRA could be a good option.  The IRS is generous when it comes to IRAs, and they allow you to make the contributions after the year-end.

We received a call just today asking about harvesting losses. Many of you are probably asking what that is. In years where you have other capital gains, it might be a time to sell something that will result in a loss. You’ll then be able to net the existing gains with these harvested losses to have a smaller net gain to pay tax on.

I’m sure you’ve been receiving charitable mailings for the last several weeks. That’s because a significant amount of charities’ income is given around the holidays and before year-end. With the new standard deduction amount of $24,000 increased for inflation, charitable contributions have become a tax question mark for many people. However, if you still itemize, charitable contributions can be a significant avenue for tax savings.

At the end of every year we spend significant amounts of time helping our clients plan around and take their qualified retirement distributions. That would be distributions from 401Ks, IRAs, SEPs, etc. At 70 1/2, you are forced to start taking out income from these accounts, but should you start taking distributions earlier?  This is an important tax planning conversation that we have with many clients from 59 ½ to 70, so we often have a decade to make good tax decisions before RMDs start.

Are you doing everything you can to save taxes for 2019? If not, let us know how we can assist.  The same considerations will need to be made for 2020, so let’s get started early on those calculations.

Procrastination: Help me get started!

As I’m coming off the October 15th deadline, I’ve given a lot of thought to why so many of us procrastinate. The October 15th deadline is the extended due date for personal tax returns that were originally due April 15th, so at this point we are 9 ½ months into the next year. When the process is delayed and the deadline approaches, the unnecessary stress caused to tax preparers and clients is visible, but it is avoidable. This stress doesn’t even take into account the actual dollars it costs to file and pay your returns late with accumulated interest and penalties.

If we can’t find ways to not procrastinate when there are direct financial penalties from government agencies, how are we going to avoid procrastinating on important decisions and moves in our lives that have no deadlines?

One example I love to reference comes from Dave Ramsey’s Financial Peace class and highlights the negative long-term impact of procrastinating and starting to save later in the game rather than now. Dave’s example references, Jack, a person that starts early and invests $200 a month for 9 years and stops. Jack’s friend, Blake, doesn’t start investing until Jack has stopped. Since he waited, he decides to invest the same $200 a month, but he contributes $200 a month until retirement. Even though Blake invests for 38 years versus Jack’s 9 years, he has accumulated significantly less money than Jack at retirement. The power of time and compounding is too much to overcome.

If we know that we shouldn’t procrastinate, and most of us don’t mean to push off the inevitable to the last minute, how do we avoid it? One of my favorite authors and speakers, James Clear, has an article on the methods to avoid procrastination. Mr. Clear's book Atomic Habits has ideas that helped me put daily steps in place so that I accomplish important tasks on time. Mr. Clear outlines four easy steps to help you avoid procrastination:

  1. Make the Rewards of Taking Action More Immediate
  2. Make the Consequences of Procrastination More Immediate
  3. Design Your Future Actions
  4. Make the Task More Achievable 

One of my favorite points in the article is to use a method called temptation bundling. The basic concept is: 


In the self-employed, small business owner world, a good example would be to:

Only pay yourself for the month while doing the bookkeeping and bank reconciliation.

After a short period of time you associate your reward (“thing you love”) with the required action, and you have a habit that is difficult to break. Ultimately, you’ll have to complete the undesirable task anyway, so why not get rid of the stress of procrastination? 

Procrastination can derail many of your immediate and long-term goals, so contact us when you are ready to move forward with your important financial plans.

But I don’t want to live on a budget!

Why do budgets have such a negative connotation?  It seems like any time you start to talk about budgets, people put up the defenses and fight to avoid it. 


I’ve had several different scenarios lately where the client needed a budget to dig out of a financial hole from a job change or needed a retirement budget to allow for making the final projections on their ability to retire.  Yet, it always seems that starting a budget is a monumental mental hurdle for people regardless of how important it is to solve the problem or finalize a retirement picture. 

But a budget is not designed to be something feared and loathed, but a tool that allows you to manage your finances.  I also like to think of a budget as a spending plan instead of some cruel device that controls me and doesn’t allow me to spend money.  I’m currently facilitating Dave Ramsey’s Financial Peace class as a Wednesday night study through my church.  This is an awesome class that teaches some important financial skills that many people have never been taught and wouldn’t be taught without this class, but its teachings revolve around a budget.  Why is that so important?  Dave’s opinion is that you have to give every dollar a name and purpose.  Without every dollar being dedicated to a purpose, money seems to disappear and not accomplish the goals you desire and work so hard to achieve.  

The skill of budgeting is not something that you learn over night, so it will take time.  I feel it takes at least 3 months to get your monthly budget under control and probably a full year to build out a reliable budget.  It takes a year to capture all the annual expenses that people forget about like vacations, Christmas, annual insurance premiums, birthday presents, etc.  While individually, some of these items don’t seem too big, collectively they can be 10% of an annual budget.  That’s enough to derail anyone’s plan.  

Most people want to retire as soon as they are financially secure enough to retire.  How do you know if you will be financially secure without a spending plan?  That requires us to project your annual budget out into retirement.  A small miss or overspending can be amplified over an average 18-year retirement that is only getting longer with increases in medical treatments and healthier living.  I was recently approached to help a young client plan to semi-retire at an extremely early age.  In his case, we will have to project his retirement for probably close to 50 years.  If we don’t have a good conservative budget for his yearly spending, how can we be sure he’s saved enough to make it that far while living the lifestyle he is accustomed to?

My advice is to start now and use technology to help you take back the control of your money.  We provide our clients with an easy budgeting tool.  It’s amazing how simple the process can be.  You set your initial budget and connect your spending sources (bank accounts, credit cards, etc.)  With some time and learning, the system starts assigning transactions to the budget categories.  You can then monitor monthly spending and have a reference for spending over time.  With this knowledge, you have the power to make needed changes and live with the assurance that your money is going towards its intended goal. 


What Will That Cost Me In Taxes

This is the question asked to me so many times every week. Sometimes we are talking about a current matter, and I can answer that question fairly easily. However, there are questions like the one I received recently about a future inheritance that is worth millions of dollars and includes various assets like IRA’s and highly appreciated stock. That answer gets a lot more complex and uncertain.

Why is it so difficult to respond to these questions with confidence? The Tax Cuts and Jobs Act (TCJA) passed in December 2017 was a fairly sweeping change to the tax system for both individuals and corporations. The law lowered individual and corporate tax rates, increased the standard deduction, eliminated personal exemptions, made more people eligible for the child tax credits along with many other changes. But, the law was only put in place through the year 2025 and we have a highly contested political situation right now that could result in changes before 2025.

So, what happens if we make it to 2026 with no changes? If nothing changes, the laws would go back to those in place before the new law took effect. We’ve seen these sunsetting laws before. When the sunset date approaches, the political discussions start as to whether the law should be extended.
If we have a political change at the next election, what will it cost me? Kiplinger has an interesting article that outlines each Democratic candidate’s tax plan. Each one has some specifics that make it their plan, but they also have a lot of similarities.

Some common themes of the Democratic Plans are:
  •  Increased tax rates - The increased taxes vary slightly in form, but effectively go back to rates pre -TCJA rates or even higher.
  • Increase the payroll tax wage base – Currently wages above $132,900 are excluded from Social Security, so several plans eliminate that cap. That’s an additional 12.4% (6.2% employee/6.2% employer) tax.
  • Increase or eliminate capital gains rates – The current law provides beneficial tax rates to investments that you hold for longer than a year. Several proposals would tax these gains as ordinary income or at a rate higher than the current top rate of 20%.
  • Estate tax- The estate tax exemption is currently $11.4 million. That means an individual can pass $11.4 million on to heirs without paying an estate tax. The heirs then get a step-up in basis to the fair market value on that date. Most of the plans want to lower that exemption significantly. Several reference returning to 2009 levels of $3.5 million and some even want to eliminate the step-up in basis on certain assets.
  • Wealth Tax – This is a common term among several plans that want to tax the net worth of the richest Americans. This is an annual tax at 2%-3% on accumulated wealth above an established level.
  • Tax Credits – Most of the plans try to provide tax credits to help with the costs of caregiving, adoption, and for low income earning families.
So, what will that cost you in taxes? We don’t know for sure right now, but I’m confident it will cost most people more in the future than it does right now. We just don’t know when that change will occur. If any of these changes might impact you, we should schedule some time to discuss.

Where's My Refund?

That’s a question I was asked many times over the past few months when I had to deliver some unusual tax results to several unsuspecting clients. However, my clients were not the only ones asking this simple question. During the 2018 filing season, there was much discussion about disappearing refunds and people owing money for the first time ever. Many stories contained complaints about the Trump tax cuts, but acknowledged people were paying less in taxes. At first, I was angered by the bias of these stories, but quickly remembered that many people have an emotional attachment to their refund, and they were looking for answers.

So that raises some interesting questions to explore:

  • How can you pay less in taxes yet see your refund disappear? -If you lived in Tennessee, where we are based, the simple answer is that your tax liability was likely less for 2018, but you most likely didn’t withhold enough federal income tax from your paycheck.

  • How could I not have withheld enough if my taxes went down? - The IRS changed the withholding tables starting in March to reflect the new tax law. The design was to give people the new tax cut in their monthly check instead of having to wait until year end to get a larger refund. Unfortunately, these tables didn’t work correctly for many taxpayers.

  • What happened to my refund? - The surprise came when people started filing their 2018 tax returns. The withholding tables resulted in many people receiving more than the Trump tax cuts in their monthly pay. This additional amount either reduced taxpayers’ refunds or caused them to have to pay some of the money back. There’s no doubt that people were not prepared to write a check when they were expecting a refund.

What do I do now? – 

The best next step is to work with your CPA to evaluate your 2019 situation and make the appropriate adjustments. If left alone, 2019 may have a worse result than 2018. Remember, the new withholding tables didn’t go into effect until March, so the 2019 results will be for a full 12 months.

When you and your tax professional figure out your tax situation, you should:
  • Work with your HR department to complete a new Form W-4
  • Withhold a new amount for the remainder of 2019. At this point, you have almost 6 months of paychecks left to get your withholdings where you need them.
  • Reset your withholdings for 2020. The adjustments you make in July, for the rest of 2019, have a catch-up aspect to them, so you’ll have to establish a new set for the full year of 2020.

Next Steps-

This would be a good time to evaluate with your CPA and/or financial planner the appropriate amount of refund to receive each year. There’s no reason to give good ole Uncle Sam an interest free loan when you could take that money and invest it! If you need guidance with this situation for 2019 or beyond, please let us know how we can assist you.

Do you have an extra $250,000 to pay for healthcare in retirement?

A recent CNBC article asks the question whether $245,000 is enough to cover healthcare costs in retirement. Let that number sink in for a second. Especially, when you consider the article goes on to project those same healthcare costs up to $367,000 using the Medicare Board of Trustee’s estimate of inflation. That’s even before considering that “high-income beneficiaries” have to pay a higher percentage of the total cost of Medicare premiums. High-income beneficiaries are considered to be individuals with Modified Adjusted Gross Income of greater than $85,000 and married couples above $170,000. Currently, beneficiaries pay about 25% of the cost, but high-income beneficiaries will pay 35, 50, 65 or 80% of the cost depending on their level of income.

How much do you have saved for retirement? In your plans, have you allocated more than $250,000 to the cost of health insurance?

If not, what impact will an expense of this level have on your retirement? If the projections are correct, a quarter of a million dollar expense in retirement could derail any plan that’s not properly accounting for such expenses. As the article states, this expense could cause a detrimental impact to your yearly income at a point when going back to work is no longer a viable option. Don’t let this be your retirement picture.

If healthcare is going to be such an impact on your retirement, what other major expenses are not covered in your retirement plan? One of the core pieces of our financial planning process is to identify the specific expenses that your retirement could hold. We help you evaluate your current situation, your goals and desires, and your retirement years to create a financial plan than can hopefully withstand whatever life throws at us.

We can help you make sense of these complicated issues. Do you have questions about your retirement plans or need help figuring out how much healthcare will cost for you? Get an answer by sending us a question:

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Which Tax Payer Are You?

Taxes = Fear, I don’t know where to start.

Taxes = Worry, I hope this software works!

Taxes = No big deal, my people have this under control.

Within the next few weeks, you will have most of your information to file your 2015 tax return, and some of you will rely on me or another CPA to help you through that process.  Hopefully, when the process is complete, you will feel a sense of calm about filing your tax return.

The IRS and Congress don’t make it easy to feel that sense of calm.  As has become the norm lately, Congress waited until December to pass a tax deal that was retroactive for all of 2015.  However, this deal did make some breaks permanent, which will allow us to plan for future years. 

Some of the tax breaks that have been made permanent are:

  1. Tax-Free direct payments from your IRA to a charity of up to $100,000.
  2. The itemized deduction of state sales tax for those in states without an income tax.
  3. The write-off of $250 for teacher classroom supplies

On an almost daily basis, I see the fear and worry that many people harbor deep inside them related to taxes and the IRS.  Those feelings come from the abundance of difficult tax codes and horror stories circulated through social media.  If you are tired of the anxiety that taxes bring, I’d love to assist you in a transition to quality professional tax preparation. 

The transition can be easier and less expensive than you may think.  At Leconte Wealth Management, our clients have tax preparation included as part of our comprehensive wealth management package.  If this sounds like an appealing option to you, please give us a call.

Where does the year go?

With the Thanksgiving holiday upon us, 2015 is quickly coming to an end. What an exciting year it has been for me with joining the LeConte Wealth Management team and transitioning my accounting practice. With our hectic lives, we have many important responsibilities that can get forgotten until they become an emergency.

With 2015 wrapping up, what should be taken care of before year-end? There are numerous options to save taxes depending on your situation, but some major things to consider will be:


Harvest Losses-

If you’ve recognized some capital gains throughout the year, offset those by selling some of your loss positions. If you really like those stocks for the long-term, you can repurchase after 30 days without worry of wash-sale rules.


Pay 0% Tax on Gains-

If you are in the 10% or 15% tax-bracket, the long-term capital gains rate is 0%. This could have other impacts, so we need to discuss the overall impact on things like Social Security.


Defer Taxes & Save for Retirement -

If you are eligible for a 401(k) or other retirement plan, contributing to these accounts will save taxes this year and get you that much closer to financial independence down the road.


Find a Worthy Charity –

If you have appreciated stocks, a great option is to give it to your favorite charity. You can get a charitable deduction for the full fair market value and avoid having to pay taxes on the appreciation.


Take Distributions-

Several accounts have yearly requirements for distributions or spending. If you are 70 ½ or older, you likely have Required Minimum Distributions that need to be taken from your retirement accounts. For those younger, you may have deferred money into a Flexible Spending Account that needs to be spent before you lose it.

Have you taken care of everything you need to for 2015?  If you are unsure, we need to get together and review your situation before it becomes a financial crisis.

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