Announcer:
4 Your Money is brought to you by NelsonCorp Wealth Management.
Brandy Auterson-Hurst:
It’s now time for 4 Your Money. We’re joined by Nate Kreinbrink, financial planner at NelsonCorp Wealth Management. Welcome back, Nate.
Nate Kreinbrink:
Thanks again for having me.
Brandy Auterson-Hurst:
So with tax filing season now behind us, is there anything that stood out to you about this year?
Nate Kreinbrink:
Well, as the case with most years, there’s always a few things that seem to stand out each year. One of these is a continuation of a trend that we’ve seen over the past seven years or so, and it’s just the number of changes that the tax provisions provide from year to year. This doesn’t just apply to the federal income tax, but to the state levels as well. So, for example, if you live in the state of Iowa, you’ve seen a massive overhaul on how your income tax is calculated each year. Now, for the most part, this is positive for retirees, but it is something that you need to be aware of.
Another noteworthy difference is just looking at the federal income tax refunds, which I think we have a chart here that goes into this a little bit more. So this chart is showing the federal income tax refunds over the past five years. And you can see in 2024 that we’re considerably higher than what we have been in the last year or two. We’re more in par with what we’ve seen several years ago when we had a lot of government programs in place to counter the effects of the pandemic.
Brandy Auterson-Hurst:
Okay, so what could this mean for viewers?
Nate Kreinbrink:
So it’s important to realize that this is just looking at federal refunds, not overall tax paid. So one keynote for viewers to keep in mind is just looking at their overall income, whether that’s W2 wages, pensions, or IRA distributions, and understanding what you are withholding from each of these income sources. So essentially when you’re getting a refund, you’ve overpaid tax for the year. The IRS is holding onto that and then is paying it back to you in the course of a refund. With interest rates currently high, there’s a number of investment options that viewers may want to take advantage of.
Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal.
Indices mentioned are unmanaged and cannot be invested into directly.