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 of 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.
Mike Steigerwald:
Good morning and welcome to this week’s Financial Focus, brought to you each and every Wednesday morning right here on KROS. This is Mike Steigerwald, and I’m filling in for Nate today, so sounds a little bit different to our listeners. I have some great news. I’m lucky enough to be joined today for our show by Andy Ferguson, our tax man. He was generous enough to share some of his time and break away from his desk during the busiest time of year for him. Welcome, Andy.
Andy Fergurson:
Thank you very much. It’s nice to have a little break from some of that stuff.
Mike Steigerwald:
I bet. I bet.
Andy Fergurson:
Maybe not look at the numbers for just a minute.
Mike Steigerwald:
Good to get out of the office, right?
Andy Fergurson:
Yeah.
Mike Steigerwald:
And see… Even though we got some cold weather.
Andy Fergurson:
No, that’s okay. That’s okay. I like it better when it’s cold in the tax season, cold and snowy, because everybody else is inside too. The worst is when it’s 75. This Saturday will be terrible because I’ll be sitting in my office doing tax returns and looking out the window at all the people walking their dog and the sun shining, the birds singing, and I will be still in my office.
Mike Steigerwald:
Yes, yes. Well, there’s light at the end of the tunnel for sure.
Andy Fergurson:
There is. Yeah. We’re on the downhill side. We’re probably 65, 70% of the way through the season.
Mike Steigerwald:
There you go.
Andy Fergurson:
Couple weeks left. Of course, these turn into the more difficult returns or the ones that are a little harder to get the information for. But that’s okay, it’s all part of it. This is what I signed up for when I decided this career path. And it’s really not that bad. I enjoy it. I enjoy seeing the planning come together. I enjoy seeing people. It’s part of it. It’s a hard grind for a little while, but it’s fun to get through it for sure.
Mike Steigerwald:
Well, appreciate you taking the time, certainly today. And I thought it’d be valuable to have you share some things maybe that you’ve seen so far this tax season.
Andy Fergurson:
Sure.
Mike Steigerwald:
Just to give some pointers, maybe for those who haven’t yet filed or have upcoming meetings with their preparers, or if they’re self-prepared, whatever the case may be. But if you can maybe share a few things that you think would be valuable for our listeners to hear.
Andy Fergurson:
Yeah. The first thing I would say, well, when I thought about this, I made a quick list and all of a sudden I’m at 15 things that people need to know.
Mike Steigerwald:
Well, we don’t have that long, Andy.
Andy Fergurson:
I’d say first, the change with the One Big Beautiful Bill is pretty significant. We’ve seen really good returns come back for people because of some of the things that are in there. I would emphasize a couple of things. No tax on overtime is a good one for those people that work overtime. But I think it’s important for you to understand that it’s not required by your employer to put that overtime on your W2 this year. Take a look at your W2, if you haven’t already, and make sure that overtime is on there. If it’s not on there, there’s no way for your tax preparer to know how many hours you worked overtime. There’s no way for you to know, really, unless you were one of those people who tracked it all year long. And I can’t think of anybody who does that.
What we’ve got to figure out is how to get to that number. You can do it with your last paycheck stub, a lot of time it’ll have a year to date number of overtime. Or you can reach out to your HR department, maybe they can provide a number for you. But just know that it’s not required to be on there in 2025. In 2026, we won’t have this problem, it’ll be there. But 2025, you got to find it. You got to get it to your preparer, they’re not going to have it.
I’ve also noticed some things with the no tax on social security. No tax on tips hasn’t been a problem because we’ve always reported tips on our W2. No tax on social security, it really doesn’t have anything to do with social security. It’s really about how old you are, that’s all. If you’re 65 or older, you get this $6,000 deduction. A married couple gets $12,000. But what I’m noticing is that there’s some missed opportunity there. There are people who are doing maybe Roth conversions or realizing gains, or have large interest numbers, and it’s costing them some of that deduction because they’re going up over that income threshold.
Mike Steigerwald:
Yeah. There’s a phase out period with an income threshold on that deduction.
Andy Fergurson:
Absolutely. Another thing, we’ll jump back to overtime. Overtime’s supposed to be limited to 12,500 per taxpayer. But it’s actually 12,500 for a single person, 25,000 for a married couple. If one spouse has $15,000 worth of overtime deduction and the other spouse has less than 10,000, they get the whole amount. That’s an important thing as well.
Another thing that is good from the OB3, or the One Big Beautiful Bill, is vehicle interest on a new vehicle. That’s been really helpful to a couple of people. If you bought a new 2025 American assembled vehicle and you have interest on a loan on that vehicle for ’25, ’26 and ’27, that interest is deductible. But in order to get the deduction, your tax preparer’s going to need your vehicle identification number and how much interest you paid. Those are not things that you’re normally bringing to your tax appointment.
Mike Steigerwald:
Sure.
Andy Fergurson:
You just got to think about that. If you’re not sure if your vehicle qualifies, if you get that vehicle identification number, we can find out if the vehicle qualifies.
Mike Steigerwald:
And correct me if I’m wrong, but because this is new, this is not something that banks or dealers or anyone is forced to give you, right?
Andy Fergurson:
Right.
Mike Steigerwald:
This is not required. So you may be just having to have the understanding that you bought a new car and you may qualify for this is important to know and bring up to your preparer.
Andy Fergurson:
Yeah, absolutely. And banks and dealers are not… Not all of them are passing that information out. I have seen some letters from dealers and banks. Dealers especially look for every angle they can to sell a new car. And so this was an angle that at the second half of the year they were all going, “Hey, this is a new car, and you should buy it because you get this discount.” So they’re going to help you find that out. But it’s important to know that you need the information. And like I said, if you don’t know if it qualifies, we can figure that out.
Another thing that changed with the tax law was the residential energy deduction, so getting a deduction for your new windows, your new doors, furnace, air conditioner, solar panels. All of that stuff that qualifies in the residential energy deduction. One of the things that’s important in there is you got to have what’s called a QMID, a qualified manufacturer identification number. That number is required to get the deduction. If you don’t have it, we can’t get it. And it’s not usually on the window or the door or the invoice, or something. Everyone that I’ve had so far this year, the taxpayers had to go back to the manufacturer or back to the installer to get that number. It’s a four digit alphanumeric number. It’s letter, number, letter, number, right? And you got to have that code in order to get in there.
Mike Steigerwald:
Wow, so they make it nice and easy for you when you get those new windows.
Andy Fergurson:
Well, I don’t know that easy was the intent when they did that. I don’t know that easy was the intent with any of this.
Mike Steigerwald:
Right, right.
Andy Fergurson:
Perfect example is the next thing I had on the list, which is your banking information. First of all, if you’re somebody who regularly gets your refund direct deposited, that’s great. Double check your banking information when you’re signing your papers. It’s very easy to miss a digit or to transpose a number, or something like that. Even if you had your return direct deposit last year, just check that close.
Mike Steigerwald:
Especially with the volume, right? If we’re-
Andy Fergurson:
Oh, my God.
Mike Steigerwald:
… seeing so many, yes, always worth double checking that.
Andy Fergurson:
Check the routing number, check the account number. Just make sure it’s right. That’s your responsibility, make sure it’s right. Because the IRS will not be sending you a check. And so, if there’s something wrong in that number and you file it, what’s going to happen is you’re not going to get a refund. And you’re going to go on, “Where’s my refund?” And say, “What’s happening? Why am I not getting a refund?” And when you type it in the where’s my refund’s going to say bank error. And then you’re going to have to figure out how to get the information to the IRS so that they can correct that banking information and send you your refund. They will not be sending you a check if the bank doesn’t work. Well, they might, but it’ll be eight months from now. It’s not going to be-
Mike Steigerwald:
Yeah, you’d be waiting on it for a while.
Andy Fergurson:
Yes. Yes. And if you’re somebody who normally gets a check, you may need to change your habits, because you’re not going to get a check for a long, long time. I know not everybody wants to do direct deposit, but it’s time. It’s time to let go of that and you got to get direct deposit. You already do it with your cable company. You already do it with the electric company.
Mike Steigerwald:
Yeah, a lot of bills. Yeah.
Andy Fergurson:
You already do it with Netflix and Disney+. Almost everything you pay monthly-
Mike Steigerwald:
Social Security, right?
Andy Fergurson:
Social Security does direct deposit. Everything you do monthly is happening direct deposit. And so, it’s time to believe that the IRS is going to protect your information enough to give you direct deposit. If you trust Social Security, you should be able to trust the IRS with that number. You’re going to need to get direct deposit.
The other thing, I’m going to skip this one, Mike, and I’m going to jump to these three because I want to make sure we get this.
Mike Steigerwald:
Sure. Sure.
Andy Fergurson:
We’re getting to the back end of the season, you’re going to see some documents that come late. 1095C, that’s the insurance document that comes from your employer. 5498, that’s an informational document about contributions and fair market value of your IRAs, Roth IRAs, traditional IRAs. And K-1s. K-1s are the pass-through document when you have a partnership or an S corporation, or a trust or an estate that closed. Those documents come later. Partnerships and S corps are not their… K-1s are not required… Their filing deadline is March 15th. That was like three days ago.
Mike Steigerwald:
Right.
Andy Fergurson:
And so, you may not have the K-1 yet, but you’re going to need it. If you have a trust or an estate, that filing deadline is April 15th. You may not get the K-1 until after the deadline, but it’s important to make sure that you have that K-1. A lot of people are afraid of an extension. They say, “Well, I don’t want to draw any red flags to my account, and so I don’t want to extend my return.” Well, if you don’t have those documents, you’re actually putting a red flag on your account by filing without a document, as opposed to extending. Millions of people every year extend their returns.
Mike Steigerwald:
It’s very common.
Andy Fergurson:
Extensions are not a red flag. Filing without a document is a red flag. Everybody’s had a bad experience with the mail in the past two years. And I’ll tell you, the mail is not as reliable as it used to be. If you did not get a document, that does not absolve you of the responsibility to get that document.
Mike Steigerwald:
Not a valid excuse.
Andy Fergurson:
Yeah. You got to go find it. You got to call where it’s originating from. You got to call the bank. You got to call your pension provider. You got to call somebody and get that document. Filing without the document is a big red flag. Just because the mail is not as reliable as it used to be, doesn’t mean you get out of that responsibility.
Along those lines, I told you the IRS doesn’t send checks, they will still take checks. I would encourage everybody not to send a check though. Because again, how many times have you sent a check to your credit card company and they didn’t get it? I would say, if you’re going to pay, pay online. You can see it transact right there in front of you. You can then, the next day, see it come out of your bank account. You know it’s done and it’s taken care of. Those are the things that I’ve seen so far. I know we’re out of time, so I’ll stop talking.
Mike Steigerwald:
No, no, you’re good. You’re good. I appreciate all that info, Andy. Yeah, that was a lot. Bottom line, the mail is not the IRS’s problem.
Andy Fergurson:
No, it’s not.
Mike Steigerwald:
Figure out a way to get them the info if you need to.
Andy Fergurson:
Absolutely. Absolutely. Just make sure that you’re taking responsibility and ownership for every part of that. Remember that your preparer’s preparing hundreds of returns, and so they don’t remember the details. I can’t remember my kids’ names during tax season. For me to remember a conversation that we had in March about you maybe buying a new car is not going to be enough.
Mike Steigerwald:
Right. Well, good stuff, Andy. Thanks so much for joining today. Just want to mention quickly before we run out of time, that every month NelsonCorp Wealth Management is featuring a charity of the month. And for March, we are looking at the Little Bellies Big Love program at the YWCA right here in Clinton. Again, this is Mike Steigerwald bringing you this week’s Financial Focus, joined by Andy. Thanks again, Andy, and 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 of 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.