Announcer:
It’s time now on KROS for Financial Focus, brought to you by Nelson Core 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 NelsonCore 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 Kryenbrink. I have Andy Ferguson with me today. It is the third Wednesday, so it is officially tax talk day.
Andy Fergurson:
Tax talk day? Not the unofficial, just give the people what they want day.
Nate Kreinbrink:
No, this is officially official. And third Wednesday of January kind of looks like third Wednesday of January. And I think it’s going to feel like January.
Andy Fergurson:
It’s supposed to get cold. It’s supposed to get serious cold.
Nate Kreinbrink:
Yeah. Friday into Saturday, there’s some low numbers on that extended forecast.
Andy Fergurson:
My favorite thing to do when it gets really, really cold like that is look up the temperature here versus the North Pole. And a lot of times when we’re like sub-zero, it’s colder here than it is in the north pole.
Nate Kreinbrink:
Yeah. When we have these little-
Andy Fergurson:
Those little-
Nate Kreinbrink:
… stretches of polar vortexes that kind of come down for-
Andy Fergurson:
The air masses come and cover us.
Nate Kreinbrink:
Anyways, stay warm. If you’ve got to go out, I guess bundle up. If you don’t have to, probably stay in.
Andy Fergurson:
You know what happens though? Everybody wants to come out and see me. There are people that shouldn’t be out sometimes. It’s amazing to me how many times we have a blowing snow or a blizzard or something and these little old ladies are coming in and I’m like, “You should not even be out of your house.” And they’re like, “Well, I wanted to drop this paper off to you.” And I was like, “Well, it could have waited until the roads were cleared.”
Nate Kreinbrink:
Be careful. Use best judgment, bundle up and just think. Couple months we’ll be in spring, couple months will be summer and complaining it’s too hot.
Andy Fergurson:
Yeah, won’t be long. You know what else today is it’s the last Wednesday before tax season actually starts. So the IRS opens on Monday to receive files. So then we go 12 hot weeks. It’s going to be hot and heavy for 12 weeks. If you want to reach me, your best bets email because I’ll answer that in the middle of the night.
Nate Kreinbrink:
It is here. It is here.
Andy Fergurson:
It’s the most wonderful time of the year.
Nate Kreinbrink:
It’s exciting. So I appreciate you taking time out of your upcoming busy schedule to talk with us today.
Andy Fergurson:
I’m taking time out of the calm before the storm.
Nate Kreinbrink:
Yes. And it’s a good thing. And we’ve talked last week obviously about some tax prep things, getting things ready, have everything ready, open your envelopes, take them out of the envelope, all that type of things. But again, want to hit a few more kind of, I guess, suggestions and I guess just FYI for you as we go into this season. And again, one of them, not necessarily having to do with taxes, but more than likely will impact taxes and it has to do with the post office. And again, if you’re mailing stuff into it, understand that there’s a different way that the post office is processing the mail that they are getting. No longer is it when you drop it off, it’s when they process it is when that date is. So it may be a day or two later, which again, as we start hitting some deadlines coming up in the coming months with filing and those type of things, that’s where it’s going to really come into play.
Andy Fergurson:
Yeah. The post office announced that, I want to say in November, they made a change and said that… It used to be you could drop it off day of and it would get postmarked day of. And now they’ve come and issued the worst nightmare for procrastinators and that is we’re going to postmark it when we do it. And so now you got to build yourself a little cushion. So those of you that like to drop stuff off on the 15th, you need to pretend like tax day is the 10th. Give yourself a little more time and make sure you’re getting it in early enough to get it postmarked. Otherwise, it’s going to get counted as late if you’re mailing stuff in. Now a lot of people don’t mail this stuff in anymore, but there’s always somebody sending something through the mail. Just know that the postmark date’s not going to protect you as much as it used to.
Nate Kreinbrink:
Right. And I think too, I mean, some of the things that the IRS put into place as far as not sending out checks and really not accepting checks is what they say. That’s when that deadline will come into play. If you’ve got to send in the amount that you still owe and you wait till April 14th or whatever to go to the post office and you’re like, “Oh, I dropped it off before the 15th.” Well, that’s not saying that it’s going to get processed by the 15th and that’s what you need to keep in mind. So give it plenty of time as we hit some of those deadlines.
Again, talking about some of the changes heading into this tax filing season for 2025, we’re looking at, and we’ve hit some of the key points, but I think one thing that continues to stick out, and you continue to remind me of this, is that some of these new changes to tax filing, they’re not all-inclusive.
And again, there’s a lot of income limits, there’s some other qualifications. The one thing that kind of gets pushed down a little bit that most people don’t know is that, again, if you file married separately, they do not apply to you.
Andy Fergurson:
Yeah. Remember that anytime the government puts an income limit on a new tax benefit, if you file separately, you usually lose that benefit because they don’t want families reporting all their income on one side and low income on the other side to take advantage of the benefit. The good news is this tax law seems like it’s going to have something in it for most everybody. I think high earners are probably the ones left out a little bit here, but most everybody else is going to get some advantage from this new tax law. There’s all kinds of things. One thing that I want to kind of point out, I’ve noticed already, I’ve only done a couple two, three, five returns maybe, but I’ve seen some W2s and one of the things to think about is if you’re somebody who gets overtime and you think you have qualified overtime, if that number is not listed in box 14 on your W-2, you need to do something to document it.
You need to do something, go to your employer and say, “Hey, give me this number. How much overtime or how much qualified overtime do I have so that you can claim that deduction?” Because there may not be anything on your W2 that says where the overtime is or how much you had. I have seen a couple where the bigger companies are putting it in box 14 and that’ll help, but if you work for a smaller company and you had overtime, you’re going to want to research that number and make sure you have it. Otherwise, what’s going to happen is you’re going to get to your tax preparer. He’s going to say, “What about this number?” And you’re going to say, “I don’t know what it is.” And they’re going to say, “Okay, we got to wait.” And so it’s going to be sit and wait.
But the good news is I do think most people are going to benefit. We should see bigger returns this year because all of the benefits were installed halfway through the year. So our withholding was created based on a 2024 assumption of what our 2025 taxes would be and then the 2025 tax law changed. And so you could see some benefit from that. We talked about no tax on Social Security and how that kind of works. Child tax credit goes up, the SALT limitation goes up, the benefit on tax on overtime. There’s just a lot of things in there that you need to be aware of to make sure you can take advantage of them. And I think the biggest one is ask questions if you’re not sure. There’s no way for your preparer to know that you had overtime. So if you are due qualified overtime deduction and you just drop your stuff off to your preparer and there’s not something in that documentation that says you had overtime, how am I going to know?
Nate Kreinbrink:
Right. And I think when you start looking at that, I mean, it all goes down to, as you said, ask questions. And again, not that you need to know exactly everything that is going on in the tax return as far as these numbers, but it’s probably a good idea for you to have a good understanding as to if you’re owing, why you are owing or if you’re getting a big refund back, why you are getting that big refund back. And like you said, it’s going to change from when you filed 12 months ago to where you’re going to file for this year.
And we talk a lot of times about tax planning versus tax preparation and not that you are going to have time to sit down and have a full-blown tax planning meeting during tax season here, but that one little simple question as you’re getting your tax return done to say, “Hey, I’m having to owe a bunch this year. What do I have to do now to kind of start the process so I don’t do that 12 months from now?” Or, “If these changes are going to really impact you and the withholding that you have is way more than what you need to, do you want to maybe change that now so it’s a gradual change for nine, 10 months of this year rather than waiting until the last minute and trying to do something drastic to make up for that?”
Andy Fergurson:
Yeah. And I think this year more than any other years, it’s a good year to be diligent. It’s a good year to make sure you’re communicating everything you need to communicate and just remember that your preparer didn’t stand next to you all year long. So they don’t know if your daughter moved out and got married. They don’t know if you changed jobs. They don’t know necessarily if there’s a divorce or a new baby or anything like that. Just be diligent in communicating the information. I would also say this is a year that if you were somebody who prepared your own taxes last year and you’re kind of on the edge of whether you want to continue to do that, maybe your taxes are getting a little more complicated. This is a good year to make a new friend because it’s getting complicated and there’s some stuff that you’re not going to want to miss out on.
And like I said, there’s some benefits in there for a lot of people. I had a client that I did the other day who had childcare, but they forgot to give me the childcare information. Well, I reached out to them and asked them to do that, but some preparers may not. I could tell by the age of the child that they were now in school and I was like, “Well, maybe there wasn’t any childcare.” But that’s something that you want to be diligent in passing on the information and assume that your taxpayer knows nothing. Assume that they don’t know anything about your personal life, that it’s your first year and give them everything you can. I have a lot of people walk in every year and go, “Oh, all this stuff is the same as last year.” And then three weeks after I file their return, they’re like, “Oh, but I changed my bank account.” So that’s significant.
Just make sure you put the effort in and you’ll be happy with the result. It’s going to be an interesting year. We’ll see. We don’t know how fast returns will come. We don’t know how any of that stuff’s going to work yet. We just know that there were a lot of changes and there’s a lot of reason to be diligent. So if you’re not sure, ask.
Nate Kreinbrink:
All great stuff. And again, get those in. Don’t wait till the last minute. I did want to mention here real quick that every month, Nelson Corp Wealth Management is picking a charity of the month. This month’s charity is the Heine’s Heroes program out of the Quad Cities. Andy, thanks again.
Andy Fergurson:
All right.
Nate Kreinbrink:
Good luck.
Andy Fergurson:
See you on the backside.
Nate Kreinbrink:
See you on the backside. Nate and Andy, 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 Nelson Corp Wealth Management in Clinton and Davenport. The opinions voiced in the 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 Nelson Corp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com.