Announcer:
It’s time now on KROS for Financial Focus, brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker, dealer, member FINRA, SPIC. Investment advisor representative Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now here’s today’s financial focus program.
Nate Kreinbrink:
Good morning and welcome to this week’s Financial Focus brought to you each and every Wednesday morning right here on KROS. Well, it is the third Wednesday of the month, and I was still able to steal away Andy Fergurson with Nelson Corp Tax Solutions. Middle of February, exciting time, high school basketball, state wrestling going to start I think this week. Congratulations to all the local ones that have made it. Best of luck to boys, girls teams on the basketball trail and everything else going out. Crazy time of the year.
Andy Fergurson:
Yeah, one of my daughters is headed to the regional game of Marion tonight, so we’re super excited for them. The Queens are-
Nate Kreinbrink:
Ready to make a tournament run. Right? Put it all together.
Andy Fergurson:
Let’s do it, man. They’ve been playing a lot better lately, so it’s if they’re going to do it, now’s the time.
Nate Kreinbrink:
This is the time where regular season games don’t matter.
Andy Fergurson:
Everybody’s equal now.
Nate Kreinbrink:
It’s a win or go home, and you don’t have to beat him 10 times. You only have to beat them once.
Andy Fergurson:
That’s right. Somebody has a bad night, somebody has a good night on the right combination. They could be spoilers, ruin it for them.
Nate Kreinbrink:
Crazy time of the year too. Weather is playing kind of havoc with us. You might get blown away today. You might have to get that shovel back out. It sounds like tomorrow. Coming off the heels of 45, 50 degree temperatures and then, oh by the way, by the-
Andy Fergurson:
Let’s have six inches of snow.
Nate Kreinbrink:
Yeah. And then let’s warm it back up again, and then let’s have more snow. We were due. It’s a crazy time we all say. It’s winter time in the Midwest in Iowa, February.
Andy Fergurson:
It’s tax time. It’s the most wonderful time of the year.
Nate Kreinbrink:
That’s what everyone always say.
Andy Fergurson:
Everything. All the greatest things happen right now, early spring.
Nate Kreinbrink:
Speaking of that, tax season is well underway. I know meetings with you has become more frequent. I don’t see as much walking around and being able to come over because you’re busy all the time with meetings and appointments and just one after another and getting into tax season. It’s definitely in full swing.
Andy Fergurson:
Yeah, I looked at the calendar yesterday. I think we’re booked well into March. It’s that time of year. There’s now a rush on the resources. There’s a limited number of resources, a limited number of hours in the day. If you want to sit in front of a tax preparer and have a face-to-face meeting with them, that time is short. Get on the phone and get your appointment scheduled because very soon they’re going to be telling you, “You know what? I don’t know that we can make an appointment, but you could drop the stuff off, and we’ll have Andy do it in the middle of the night when everybody else is sleeping.”
Nate Kreinbrink:
Good stuff for you. And I know you were throwing some numbers at me on the way up here, which I thought was staggering. And again, it’s from the date when you can first file up until now. But again, it seems there’s been a trend I think as far as people on the average getting their stuff in earlier so far this year. And again, the IRS is doing their part up until this point as far as getting those turned around on their end on a rather timely manner as well.
Andy Fergurson:
Yeah, it feels like they do this every year a little bit where they tell us, “Hey, it’s going to be two or three weeks.” Or the state of Iowa is always like, it’s going to be eight weeks. Don’t tell anybody less than eight weeks. But then those that get in early and get their stuff going and they them turned over pretty quickly. I was reading an article this morning that the IRS is already issued nearly eight million refunds, which is pretty impressive. The article goes on to say that they expect to be a little more efficient. They expect to be able to process returns more quickly. And what’s interesting about that is first that so many people have put it in so fast. I think that’s an important thing that we should talk about. And I think the reason for that is everybody needs the money, right?
I mean, money’s never been tighter. Inflation’s hurting everybody, and so everybody’s like, “I could sure use a boost of a thousand or a couple thousand dollars. See if I can’t get some of these bills caught up or maybe pay for that needed repair,” or whatever it is. And so I’m sure that’s got a lot to do with it, so everybody’s pushing real hard to get it in on the front end. And then on the other side, the IRS doesn’t have quite the same rulings that they have to deal with as they have in the past. I mean, if you think about the last two years have been bananas, right?
Nate Kreinbrink:
Absolutely.
Andy Fergurson:
I mean, in the last two years there’s been stimulus payments, additional child tax credits, additional letters coming from the IRS that everybody’s watching for. And so when the article compares the percentages year over year, of course it’s going to look better this year because they took out all that extra stuff.
We went back to, I’m going to air quotes, “normal,” which isn’t really normal because we’re still in this Tax Cuts and Jobs Act era where there’s some slight advantages in the tax code. But yeah, it’s going to be better. It’s going to be faster. It’s going to be more efficient right now because we don’t have to deal with that other stuff. On the other side of that because we don’t have that other stuff, guess what happens to returns? Right? I mean, most people are experiencing smaller refunds than they have in years past, and there’s a lot of things that caused that.
I mean, last year and in 2020 refunds were propped up by stimulus money or additional child tax credit or expanded earned income credit regulations. All those things that allowed people to get a little bit extra money, which we were grateful for at the time. Nobody scoffed at that money that was coming because everybody could use it. Well, now we’re back to just plain Jane, this is the regular code, and we see refunds going down.
Nate Kreinbrink:
Right. And I think along those lines, I know we had talked numerous times on the show as far as the changes are, I wouldn’t necessarily say changes, just a lack of renewal of some of those credits and extensions that didn’t get passed on for 2022 and again, how it would impact those people’s returns. And I know we had talked a lot too as far as changes to Iowa tax laws and federal tax laws starting in ’23, but again, that doesn’t come into effect until next year’s tax return. So again, that normal so-called tax return is back. People are seeing that. Again with all the returns that you’ve done already, the meetings that you’ve had with individuals, and again, ones that you’re working on right now, anything in general pop up?
I know you had also mentioned as far as, hey, just another reminder, make sure you have all your documents. Make sure you have everything like that. But again, getting into tax season, we still have time yet for those individuals that haven’t filed. So again, what are you seeing and maybe some trends as far as happening so far this year when you started getting into it?
Andy Fergurson:
Yeah, so I think I would go back to the idea that your refund is changing. I think that’s probably the biggest thing that I’ve seen. I mean, think about the impact of the child tax credit. A young family that had two or three kids sub-kindergarten age, they’re talking about losing $1,600 per kid on their refund. So if that refund was, I don’t know, $2,500, $3,000, they may be flipping all the way to a balanced due this year. And so there’s definitely some impact from that. You mentioned getting all your stuff. Yeah, it’s nice to get in there early and get that refund real fast, but it sucks when you have to turn around and up here comes another document and now you got to send them a check because you got too much refund, and so you got to pay some of it back.
And that’s no fun. That’s no fun for you. It’s no fun to face your tax preparer when you come in with your tail between your legs and go, “Oh, yeah, I did get that form you were looking for.” And so yeah, make sure you’ve got your stuff. Pull out last year’s return, take a look at it. Make sure that the documents that you had this year are either there to do or the ones you had in ’21 are there, or there’s a reason they’re not there. If you took a distribution from your IRA in ’21, but you didn’t take it in ’22, yeah, you’re not going to get a document for that. But try and find all those things ahead of time, and have that ready to go. Otherwise, you’re going to have to do it over. You either make time to do it right or you make time to do it over. That’s the saying. Right?
Nate Kreinbrink:
Right. Have all the documents. And you also mentioned, I think at one time, open up envelopes, right?
Andy Fergurson:
I love that.
Nate Kreinbrink:
Something as simple as that as far as this time of year-
Andy Fergurson:
That’s my favorite.
Nate Kreinbrink:
… really comes into crucial, and I’m sure that’s a big time saving for you as well.
Andy Fergurson:
Yeah, that’s my favorite thing to tell people. Could you just open the envelopes for me? Well, here’s the reason why for that. First of all, opening an envelope only takes, what, 30 seconds or 10 seconds to open an envelope. But if I got to open 12 envelopes for you, that’s-
Nate Kreinbrink:
Times how many …
Andy Fergurson:
Times 800 returns. Right?
Nate Kreinbrink:
Yes.
Andy Fergurson:
Or the other thing is there’s information inside those envelopes. Right? Not just open the envelope but open the envelope and look at the paper that’s inside. There’s something in there that you might need to know. And if you don’t know what it is, put it in the pile and we’ll make sure that we look at it. But we are a society that doesn’t really know a lot about taxes. There’s a lot of people that are just very, very uncomfortable. They don’t know what it means. They don’t know what it is. You can start to educate yourself a little bit just by reading the documents and then ask questions. Right? I love it when people come in to me and I’m working on their return and they go, “Hey, what does this mean? What are they talking about when I see this thing here?” Or, “Why is box one on my W2 different than box three? And why is it lower? That doesn’t seem right. They told me I was going to make X dollars and box one only has Y dollars. Why is that different?”
And let your tax repair explain some of that stuff so you can start to see the mechanics of it. Because if you can understand a little bit about how taxes work, you can control them. You can control what happens to you on tax day. It’s not a surprise. I tell people all the time, if you have enough information, we can make your tax refund whatever you want. You just have to do this stuff to lead up to that because again, what are we doing on our tax refund? We’re reconciling what our tax is with what we’ve paid in, and so we can control one of those variables. We can’t necessarily control what our tax is, but we can control what we pay in.
Nate Kreinbrink:
Exactly.
Andy Fergurson:
And so if we can control one of the variables, we can control the outcome.
Nate Kreinbrink:
Right. And I think too you hit, we talked before as far as tax preparation versus tax planning. Obviously now as tax preparation time. But again, if you don’t necessarily like as far as where your outcome is for this tax filing period, wait until after the tax deadline. And again, that’s the time when you talk all the time as far as that next step, as far as tax planning. Let’s take a look at it and let’s see what we can do to make the changes so that 12 months from now when we do file taxes for 2023, it’s more of an outcome as far as what people want.
Andy Fergurson:
Yeah. It’s taking control of your situation. Right? I mean, how many of us use budget billing with our utilities? Right? We try and control what that output is each month so that we’re not hit with a big bill in the winter months or in the summer months. And so you can control your taxes the same way. You change your withholding to make it to where whatever that number is at the end of the year on tax day is a number you’re comfortable with. Some people like big refunds. Some people want to be close to zero. Both of those have risk and reward involved in them, and it’s just a matter of knowing your situation, learning, educating yourself on things that are important to you, and then taking control, and your tax preparer can help you do it. They’re more than willing to help you do it. They would love for you to come in knowing what the number is before you get to the end so that they can meet your expectations.
Nate Kreinbrink:
If you still have not got your taxes done, Andy, Mike, TJ, the rest of the team at Nelson Corp Tax Solutions, be happy to get you taken care of. But again, don’t wait until the last minute.
Andy Fergurson:
Don’t wait. There’s not going to be any spots in the last minute.
Nate Kreinbrink:
Did want to mention before we run out of time here, that every Friday, Nelson Corp Wealth Management and Nelson Corp Tax Solutions are wearing jeans for charity. Money raised in the month of February will be donated to the Children’s Discovery Center here in Clinton. Andy, appreciate you taking time-
Andy Fergurson:
You bet.
Nate Kreinbrink:
… and joining me today. Andy Ferguson, Nelson Corp Tax Solutions. Nate Kreinbrink, Nelson Corp Wealth Management, bringing you this week’s Financial Focus. Thanks for tuning in and have a great rest of your week.
Announcer:
Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer member FINRA, SIPC, investment advisor representative. Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com.