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 representatives, 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. 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, this is Nate Kreinbrink, I have Andy Ferguson with me, third Wednesday of December. Next week-
Andy Fergurson:
Third Wednesday.
Nate Kreinbrink:
Next week is Christmas.
Andy Fergurson:
I know, that blows people’s minds, but one week from today.
Nate Kreinbrink:
It’s actually officially winter this week, and we’re going to get 40s. And last week, when it was still technically fall, we were negative-
Andy Fergurson:
Yeah, but I think we got something crazy, there’s a storm coming tomorrow, it’s going to be rain and then snow and then who knows. Winter won’t disappoint, I’m sure this pattern will-
Nate Kreinbrink:
No. It’s just we’ve been earlier this year, we’ve had everything already mid-December.
Andy Fergurson:
Yeah. And I don’t think it’s over, we’ll see.
Nate Kreinbrink:
It’s not?
Andy Fergurson:
No. I hope it is, but I feel like my luck says that we’re going to have more snow.
Nate Kreinbrink:
No, fun time of the year, obviously, Christmas holidays, Christmas programs, Christmas concerts, Christmas parties, Christmas gatherings, all that fun stuff. Winter sports season, high school sports-
Andy Fergurson:
Love winter sports.
Nate Kreinbrink:
… wrestling, high school basketball, all that stuff is in full swing.
Andy Fergurson:
It truly is the most wonderful time of the year.
Nate Kreinbrink:
Basketball-wise, right?
Andy Fergurson:
Yeah. Everything. It’s just a great time. It’s the calm before the great tax storm that comes in the spring.
Nate Kreinbrink:
That is true.
Andy Fergurson:
It’s a great time of year to be with friends and family, and make memories, enjoy yourself, and then buckle down. Buckle down and get to work.
Nate Kreinbrink:
And get to work. Speaking of getting to work, you have, again, a list of eight bullet points here, and I’m telling you we will not get through them all today, but we will-
Andy Fergurson:
Well, let’s just take 25 minutes today.
Nate Kreinbrink:
Okay, we’ll [inaudible 00:02:19]. But again, a lot of changes coming in, we’ve touched on some of them briefly, but again, just kind of getting a little bit more into them. Again, coming up on this time period, the IRS is closing. Temporarily.
Andy Fergurson:
Yeah, the IRS closes at the end of December. So, on the 26th, they’ll stop accepting e-filing, which means if you have not filed yet, A, you’re late, get it together, lock in, you got to get filed by the 26th, or they won’t accept e-filing, that won’t reopen until the tax season opens, which is usually late January, last week of January, they’ll open the IRS to receive e-files. They use this time to update computer systems and software and stuff like that to make sure they’re ready. And this year they got to make sure, it might take a little bit longer because they got a lot of new stuff to mess with.
Nate Kreinbrink:
Well, and I think anytime you have changes and you have updates and modifications and amendments and all this stuff, there is going to be a little bit more of a delay, and again, [inaudible 00:03:17]. And we’ve seen that with other things in years past and probably will be more of the same, which goes along to your next bullet point, and that’s as we transition into January and those tax documents start coming in, don’t rush to be the first one in.
Andy Fergurson:
Yeah. Don’t get excited. Look at last year’s return, pull out your documents, see what documents you got for last year, don’t rush into your prepare the day you get your Social Security statement, or the day you get your W2, make sure you’ve got everything that you’re looking for because the worst thing is to have to do it twice, right? To get it filed and then realize, oh, I should have got another deduction, and then you got to go pay for an amendment. So, just take your time, make sure you got your stuff. If you’re worried about it and you’re making appointments, call and make your appointment, you don’t have to have your stuff to make your appointment, just make your appointment out a couple weeks so you make sure you get all your stuff.
Nate Kreinbrink:
Well, and I think too, sometimes they’re supposed to be sent out at a certain time, everyone has that end of January deadline that they have to have it in their hands, it’s not necessarily true with all the tax documents. They get it out in a timely manner, as long as it’s in the mail by a certain date, which doesn’t mean you’re going to receive it by a certain date, so-
Andy Fergurson:
Yeah. And they don’t really police that very well.
Nate Kreinbrink:
No.
Andy Fergurson:
Right? So, there’ve been times people get their W2s in the middle of February and they’re like, I’m supposed to have this by the 31st of January, well, who’s writing tickets for that? Who’s policing that? Nobody. So, just don’t get too excited, even though there are standards that are put in place, not all the standards are always met. So, just because you didn’t get a form doesn’t mean you’re not going to get a form. It doesn’t mean that you might not have to go out and find a form. So, just make sure you have your stuff, otherwise you’re going to get there, your tax preparer’s going to go, hey, what about this W2 from this job that you had last year? And you’re going to be like, well, they didn’t send me one, well, you still need to go get it. You got to figure it out.
Nate Kreinbrink:
And then that’s when you have piles of papers on your desk, just waiting and-
Andy Fergurson:
Yeah, that’s the hardest thing is when you start and stop and start and stop. So, just do your due diligence, look at last year, look at what you had and make sure that if you had a job last year, you had a W2 for that job. Just because they didn’t send it doesn’t mean you’re not going to get one. If you worked for a company, they owe you a W2. So, the IRS is not going to forget about that, just make sure that you got the documents that are due to you.
Nate Kreinbrink:
And I think as we go, and we’ve touched on this, I think last month a little bit, but again, just rehashing some of that, the one Big, Beautiful Bill act, which you refer to it as OB3, and that’s a lot more smoother to come out. The big three points of those are the overtime tax, the so called Social Security tax, and then the tech tax, those are the three big points of that bill, that was, again, promoted during the campaign, promoted during the thing, and that which again will more than likely affect a lot of people, but not necessarily everybody, or to the extent that they think it may.
Andy Fergurson:
Yeah. I do think people will get bigger refunds this year because of those things, but it may not be as big as you’re thinking. One thing to remember, all three of those, the overtime, the Social Security, and the tip deductions have income limitations, which means you can’t file separately. If you’re married, you got to file jointly to get it or you’re not going to get it because of those income limitations. I’ll remind you that the no tax on Social Security, that’s not a real rule, what it is it’s a senior deduction. It doesn’t matter if you have Social Security or not, it’s based on your age. If you’re over 65, you’re going to get the deduction, and under a certain income limitation, you’re going to get the deduction, if you’re under 65, you’re not going to get it. So, it doesn’t matter whether you’re on Social Security or not.
No tax on overtime, remember that overtime is considered time and a half, when you do get that deduction, it’s going to be related to the half, not the regular part of that overtime. So, if you make $10 an hour and you get paid $15 for overtime, you’re only going to get the deduction on the $5 part, right? You’re still going to pay tax on the regular time part. Tax on tips, there’s income limitations there, there’s a maximum deduction. Just make sure that you know that information as far as what your tips are, it’s voluntary tips, it’s not required tips. So, your employer should be making some kind of reference to that on your W2. If you are reporting cash tips, that’ll be something that you have to document, and provide to your tax preparer.
Nate Kreinbrink:
And I think when you said that, there are a lot of if, if, if restrictions to see if you even qualify for that. The one big part of that that I think is overlooked and doesn’t get mentioned is, is the status of how you file. If you’re a married couple, the majority of married couples file married, filing jointly, but there are instances where they file married separately, and that is going to impact it.
Andy Fergurson:
Absolutely.
Nate Kreinbrink:
So, make sure you look at the benefits of why you’re filing that way versus maybe some of these new tax laws that may impact you or may not impact you depending on how you file.
Andy Fergurson:
Yeah, absolutely. Married filing separately or jointly, that’s an election you make each year, you don’t have to do the same thing every time. Just know that all these income-based deductions, all these ones that have income limits, if you file separately, you’re giving up all those deductions. And so, that may be something you want to do still for other reasons, just be advised that you’re going to lose those deductions because you cannot get them if you file separately.
Nate Kreinbrink:
And with that, I think, again, when you look at some of these additional deductions, the senior deduction, anybody 65 or older making $150,000 or less, getting that $6,000 deduction, some of these other ones, but understanding the difference of, again, whether it’s Social Security earnings [inaudible 00:09:21], whether it’s Medicare, whether it’s some of these other income limits, understand your income total that they’re basing those qualifications off of.
Andy Fergurson:
Yeah. We call it MAGI, she’s a mean little lady. MAGI is your modified adjusted gross income, and that’s something to consider. You may get several deductions, but it may not impact your modified adjusted gross income. And that modified adjusted gross income is different for different parts of the tax code. I did a case yesterday where I was working with a family that they were only going to have $60,000 of taxable income, but they had over $100,000 of modified adjusted gross income when it came to considerations for the Affordable Care Act.
So, it’s just important that if there’s a MAGI consideration for something that you’re working on, maybe it’s Obamacare, maybe it’s Social Security, maybe it’s some other benefit, like a school credit or a child tax credit or something like that, just know that the modified adjusted gross income number from that may not be the same number as what you pay tax on.
Nate Kreinbrink:
Right. And I think that’s a misconception, and people, again, don’t know what they don’t know, and they don’t know that there is a difference as far as those two numbers when you’re looking at things. So, again, understanding that one, we are getting pretty close, Andy, but there’s one more point that you want to meet for sure, you have it highlighted, start, whatever, and that is that there are no more checks that the IRS is going to send out to you.
Andy Fergurson:
Absolutely.
Nate Kreinbrink:
Everything is going to be pushed direct deposits.
Andy Fergurson:
Yeah, this one kind of sneaks in because it wasn’t part of the OB3 act, it happened before OB3, but the IRS is no longer accepting or issuing checks, right? So, when you pay your taxes, you’ve got to find a way to pay them electronically. When you receive a refund… That’s really the big one. I have a feeling they’re going to still take your check. If you send a check to the IRS to pay your tax, I don’t see them sending that check back to you, and being like, oh, we don’t want your money, because that isn’t their style. But you will not be issued a check, right?
So, if you are due a refund or a credit or something like that, it’s not coming back to you unless you set it up to come electronically. So, that’s an important thing to consider. Don’t get mad at the receptionist at the tax office when she says you have to get direct deposit, it’s not her law. Write your senator mad, but just comply with them because if you’re not, you’re not going to get your refund.
Nate Kreinbrink:
They’re just following the rules that are put in place. And again, it’s a change, but again, I think we all have automatic debits coming out or coming in some way, shape or form, it’s the way we’re going. So, to see them transition this way is no surprise.
Andy Fergurson:
No.
Nate Kreinbrink:
So, we did hit every single bullet point-
Andy Fergurson:
That’s pretty good.
Nate Kreinbrink:
… although… Pretty quickly, but we covered a lot of topics, which is good.
Andy Fergurson:
Rapid fire.
Nate Kreinbrink:
Throw them off. Throw them off. So, again, another great year, again, hard to say that we are already at the end of the year like this-
Andy Fergurson:
Yeah-
Nate Kreinbrink:
… but this is our last show before Christmas.
Andy Fergurson:
Yeah, next time we talk it will be 2026.
Nate Kreinbrink:
Yes. So, Merry Christmas to everybody.
Andy Fergurson:
Merry Christmas. Happy New Year.
Nate Kreinbrink:
Have a great one. See you on the flip side. Enjoy your Christmas.
Again, this is Nate and Andy bringing you this week’s Financial Focus. Thanks again for tuning in. Have a great rest of your week, a great holiday, a great rest of your year, and we will talk to you later.
Andy Fergurson:
See you.
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 representatives, 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.