Announcer:
It is 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, Inc., a broker/dealer, member of FINRA, SIPC. Investment advisor representative, Cambridge Investment Research Advisors, Inc., 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 Kraayenbrink. I have Andy Ferguson joining with me today. Third Wednesday in May. April showers bring May flowers or is it…
Andy Fergurson:
May showers ruin everybody’s day.
Nate Kreinbrink:
We needed it though. We needed it.
Andy Fergurson:
I’m sure the farmers are happy that it’s raining.
Nate Kreinbrink:
It is. And as much as I don’t want to admit it, the grass was getting a little dry in the yard. It was like a late July, early August mow this last time.
Andy Fergurson:
Yeah, and it waited long enough. We got most of the high school soccer seasons and track seasons and all that stuff in. So we had a pretty dry spring, didn’t have to sit through many rainy soccer games and stuff like that. So yeah, it’s okay.
Nate Kreinbrink:
We’ll get there. We’ll get there.
Andy Fergurson:
I wish it didn’t rain for like three days straight though. Could it rain and then stop?
Nate Kreinbrink:
Just overnight.
Andy Fergurson:
Yeah, rain at night.
Nate Kreinbrink:
Just a soaker overnight.
Andy Fergurson:
And then give us a break, let the sun come out, and then rain again later.
Nate Kreinbrink:
Yes. Fun time of the year. I think you would call it fun time. End of the school year is nearing. Some of the area schools had graduation this past week and obviously, the next week or two for all the other local ones will be coming up very soon. Teachers, students, almost summer vacation.
Andy Fergurson:
It’s almost here.
Nate Kreinbrink:
It is almost here. Exciting time in your household. You’ve got a trip coming up here.
Andy Fergurson:
This week, yeah, two days. We’re going to the state track meet, so my daughter’s throwing shot put at the state meet, so super exciting.
Nate Kreinbrink:
Very cool.
Andy Fergurson:
We’ve never been to state before, so it’s a fun time. We’ll probably buy a lot of T-shirts and spend a lot of money to go watch a 30-minute event over three days.
Nate Kreinbrink:
And it’s all worth it.
Andy Fergurson:
Yeah, it’ll be great.
Nate Kreinbrink:
It’s all worth it. Great. And again, I know there’s a lot of other area athletes, Camanche, Clinton, Northeast, Prince of Peace, DeWitt. I know there’s a lot of local athletes out there too.
Andy Fergurson:
Yeah, good luck to everybody.
Nate Kreinbrink:
Area golf teams, I know still in it. Soccer, like you said, tournaments coming up or in it or whatever. Baseball, softball season underway.
Andy Fergurson:
It’s great.
Nate Kreinbrink:
It’s a great time.
Andy Fergurson:
It’s great. It’s a great part of life. High school sports are awesome.
Nate Kreinbrink:
And you actually get to enjoy it now because tax season is over.
Andy Fergurson:
Yeah, well, regular.
Nate Kreinbrink:
It’s reality now.
Andy Fergurson:
Yeah, regular tax season is over. There’s still stuff to do, but it’s not quite the grind that it’s been for the last, I don’t know, 14 weeks or so. If you call at weird hours, I’m not going to be there. You call during business hours, I may not be there because I got some time to catch up on. But yeah, it’s nice to have that grind be over. But now, we do the other stuff. We got to do amendments, we got to do extensions. There’s always people that need that work through the second season, which the extension season goes till October 15th. So, we’ve got plenty to do. Letters start to come out, we got to send letters back to the IRS, tell them, “Hey, wait a minute, you missed something here,” and help them understand what we were doing. So there’s plenty to do.
Nate Kreinbrink:
Well, and I know and you talk a lot of times, Mike van Geyn when he’s on, when we talk taxes with him, I know it’s tax planning versus tax preparation and I think you look at the different time periods and what your kind of focus is on during those different time periods. Obviously, with tax season, the official tax season just getting done, that was tax preparation, essentially looking backwards and reporting what was already done. Now, we transition into that tax planning period where again you kind of look forward and for a lot of people, if they had a life-changing event or if they didn’t like the way their taxes ended up, now’s the time to make changes with that.
Andy Fergurson:
Yeah, absolutely. I have a big shift in my responsibilities where we go right into planning and planning is the fun part for me. I enjoy making projections and using the software to say, “Hey, this is what we think it’s going to look like.” And then trying to impact how you can use the tax loss. So what if we pull this string or what if we receive this income now or what if we cash in these bonds or receive this money from our IRA or our 401(K)? Can we take advantage of this space in the tax bracket? What if we take some of this inherited money and pull this lever to make it work this way? And taking advantage of the code to make sure that we get the best outcome, that’s a fun thing.
And this year will be an interesting year again. It seems like we’ve gone a couple of years without a major change to the tax code and it seems like maybe there’s one coming. They’re starting to talk about it. And so we have to plan with what we know right now, but it’s entirely likely that there’s going to be a change. That change is probably not going to impact 2025, but it’s going, to more than likely, impact 2026. And so what that’s going to do is either create an advantage or a disadvantage for 2025. If the law changes in 2026, that means it’s either going to get better or worse for certain scenarios. And so maybe there’s an opportunity to do something in 2025 that we won’t be able to do in 2026, or maybe the opportunity is to not do something in 2025 and wait until 2026 when things get different. We don’t know if they’re going to be better. We don’t know if they’re going to be worse. We just know they’re going to get different.
Nate Kreinbrink:
Right. And I think that’s where the importance of working with somebody and understanding where some of those pockets are that people need to really focus on. I know, again one of them that we know is sun-setting here at the end of 2025 is the advanced premium tax credit that we’re going to look at, applying to those individuals on marketplace insurance and how that fixes into it.
Andy Fergurson:
And that’s under current law.
Nate Kreinbrink:
That’s current law, yes.
Andy Fergurson:
And so we don’t know really what’s going to happen. We assume it’s going to sunset because it wasn’t the current administration’s baby, so to speak. And so we think they’ll let that sun-set and that’s going to be a big deal because the last couple of years, that advanced premium tax credit has had a repayment plan in it, but it’s been graduated. So if you went over the income level restrictions, you maybe paid back a little bit of the premium tax credit, but there were also limits put on what you could pay back. Well, before that, that graduated repayment was in place, it was a cliff, and if you went over by $1, you paid everything back. And so if it sun-sets and it goes back to that, that’s going to be a significant planning feature for anybody who has that marketplace insurance because that’s going to be significant. You think about just a couple hundred bucks of advanced premium tax credit adds up to thousands of dollars when you multiply it times 12. So having a repayment or a payback that is $4,000, $5,000, $6,000, $7,000 is significant on anybody’s tax return.
So it just is going to be something to be aware of, something you got to make sure if you are in that situation where you are receiving advanced premium tax credit through the marketplace insurance, you need to be aware of what’s coming, what is happening, what your situation is, what your income is. make sure that you’re not doing other planning that offsets the benefit of the advanced premium tax credit. I’ve seen it before where people, they’ll have marketplace insurance and then somebody will coach them into a Roth conversion, say, and they’ll receive income by converting money from a traditional to a Roth. And then all of a sudden now they’ve got to pay back their advanced premium tax credit and that’s something that they didn’t see coming. So just make sure that you’re aware of it, make sure your provider’s aware of it, make sure that you know what the rules are if you’re in that situation.
Nate Kreinbrink:
Right, and I think that’s, like I said, it just goes into that planning thing. That was one that’s already in place that we’re looking to kind of end and transition back to the way it was. Again, looking at anything on the horizon in the near future, again, we don’t know. Again, some of the things that have been floated around as far as with the new tax bill coming out here, hopefully in a couple of weeks we’ll know a little bit more on that. So maybe next month, the third Wednesday of June already, which will be here very, very quickly, we may have a little better understanding as to what is all included in that bill, to what extent is all included with that and when that does take effect. Because like you said, it may make sense to hold off on doing a few of these things until down the road when that new laws come into play or do we need to get everything done before that law goes into effect.
I know there’s a lot of additional deductions or credits that are being floated around and knowing if you apply for them or if you qualify for them based off of age, based off of income, based off of whatever the case it may be, it could be a big change in what your taxes are going to look like. So again, what adjustments can be made to that point.
Andy Fergurson:
And we should know some things. The good news is I’ve heard some dates floated, Memorial Days, a date that they want some of this to pass through the House. And then I’ve also heard 4th of July. So the good news is both of those days give us a lot of time as opposed to a law passing at the end of December, like we’ve done in the past. So hopefully, we have some time to do some planning. But keep your ear open and listen so that you’re at least somewhat informed. And then get involved, talk to your preparer or your advisor and ask the question does this impact me, do I need to worry about this? Do you need any information? Because there may be a short window to make the plans.
Nate Kreinbrink:
And as we continue, we’ll continue to digest those, comb through them and see where the key sticking points are that apply to the masses of people that it’s probably going to affect. Obviously, pass that on and see where those things are. But again, if you’ve got any questions, give Andy a call. He’d be more than happy to take the call.
Andy Fergurson:
It might be tomorrow when I return your call, especially if you call late in the afternoon, I might not be there.
Nate Kreinbrink:
But did want to mention real quick here that every Friday, NelsonCorp Wealth Management and NelsonCorp Tax Solutions are wearing jeans for charity. Money raised in the month of May will be donated to the Tapestry Farms Program in Davenport.
Again, best of luck this weekend.
Andy Fergurson:
Yeah, thanks.
Nate Kreinbrink:
Throw far, is that what it’s called?
Andy Fergurson:
I guess. I don’t know. Yeah, you don’t say break a leg, but yeah.
Nate Kreinbrink:
Best of luck.
Andy Fergurson:
Yeah, best of luck. Thanks.
Nate Kreinbrink:
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 NelsonCorp 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 Inc., a broker/dealer member of FINRA, SIPC. Investment advisor representative, Cambridge Investment Research Advisors, Inc., 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.