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 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. 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. I got third Wednesday of the month, so I have Andy Ferguson with NelsonCorp tax solutions joining me today to talk a little taxes. It’s always fun when I know you’re coming on because this show is going to go really quick because of the topics that we’re going to cover today.
Andy Fergurson:
Well, and this is the best third Wednesday of the month because-
Nate Kreinbrink:
I knew you would say that.
Andy Fergurson:
… ever because it’s the first third Wednesday after tax day.
Nate Kreinbrink:
You mention the tax deadline. Okay. The 2021 that deadline was extended a month-
Andy Fergurson:
Right.
Nate Kreinbrink:
… because of the recent legislation that came out that extended it to May 17th. That was this past Monday. You got through it again, maybe go over some things that you saw kind of as you closed out this tax season maybe that was-
Andy Fergurson:
Sure.
Nate Kreinbrink:
… maybe a little different than what you’ve experienced in years past.
Andy Fergurson:
Well, yeah, so the IRS never fails to surprise me. It didn’t always used to be this way. Used to be you could count on two things, death and taxes. And now it seems like every year the IRS throws something different at us during tax season. So yep, it ended on May 17th. That’s the original filing deadline. There’s still an extension deadline-
Nate Kreinbrink:
Right.
Andy Fergurson:
… which is October 15th still. So if you applied for an extension or if you didn’t turn your stuff into your tax repair, it’s possible your preparer applied for that extension for you. But so now those people who haven’t gotten done got to make sure they don’t wait until the very last deadline.
Nate Kreinbrink:
Mm-hmm (affirmative).
Andy Fergurson:
We always have some that come in there on the 12th hour or the 24th hour to finish things up. But yeah, so we saw a lot of changes this year. The IRS made changes to the unemployment compensation. They made changes to the premium tax credit and those changes they made mid-season. And so there’s some definitely everybody had some things to look at this year.
Nate Kreinbrink:
So I know we kind of got into it a little bit and I know some of the changes we talked on previous shows as far as some of the unemployment taxes that were changed, the child tax credits that were changed and some of those things going into it. Maybe talk a little bit about some of those changes specifically and some of the amendments that you had had that kind of filed for-
Andy Fergurson:
Sure.
Nate Kreinbrink:
… this year.
Andy Fergurson:
Sure. Yeah. So the specific change with the unemployment compensation was the IRS reduced unemployment tax ability by $10,200 for-
Nate Kreinbrink:
Mm-hmm (affirmative).
Andy Fergurson:
… anybody who had an unemployment this year. And then the premium tax credit change was the IRS made a blanket sweeping change to that credit this year where no one would have to pay back the premium tax credit.
Nate Kreinbrink:
Right.
Andy Fergurson:
The other change is the child tax credit, the unemployment credit, those changes have income thresholds, which means if a married couple made or had more than $150,000 in adjusted gross income there, they may not qualify for those changes. And so there’s just a lot of moving pieces to that. And you mentioned amendments, one of the things that’s really difficult, or not difficult, different this year is the IRS has said specifically regarding those changes that were enacted March 15th with the cares act, the specific changes are not to generate amendments.
Andy Fergurson:
So the IRS and several of the states have said if this is part of the thing that changed, the unemployment credit, then, or the unemployment compensation, then don’t file an amendment. The IRS and the states are going to take care of that behind the scenes and just send people whatever they’re owed. That always makes me nervous.
Nate Kreinbrink:
Exactly.
Andy Fergurson:
And the other thing that happens with that is we don’t know when they’re going to send that corrected refund to people. So we’re just going to have to be a little more patient this year. A lot of times you find things that you want to change on a tax return and you amend those returns immediately to get the ball rolling. Well, this year the IRS has told us to not do amendments on certain things. And so consequently we’ll have to wait to see what they do and see if there’s other changes. And everybody’s tax situation is different, so there may be amendments for other reasons and it’s just going to be a difficult off season-
Nate Kreinbrink:
Mm-hmm (affirmative).
Andy Fergurson:
… because we won’t have the regular protocol. We’ll have to take each situation and make decisions and see what we’re going to do.
Nate Kreinbrink:
So, and I know another topic that we’ve kind of mentioned the last time that we were on, but I again wanted to maybe touch a little bit on that this year is RMDs and that’s the required minimum distribution from these tax deferred accounts and individuals have. They get to age 72, they have to start taking a little bit out of that. That is important this year because you have to start taking those again, you get a one-year reprieve last year where you didn’t necessarily have to take it if you didn’t need to. We need to make sure that people are looking at those type of accounts and making sure that if we need to take something out that we are taking it out and getting it this year.
Andy Fergurson:
Yeah. And not only that, the RMD is probably going to be bigger than it’s been-
Nate Kreinbrink:
Right.
Andy Fergurson:
… before because you went a whole year without taking anything. So yeah, there’s definitely some planning that goes into your tax return. And now that we’re through the tax season and we’re through looking at what happened last year, we should be spending some time now looking at what we’re going to do this year. I’ve always told people that there’s a lot of things, especially in retirement, that you can’t control, but taxes is one that you can control. There’s things that you-
Nate Kreinbrink:
Absolutely.
Andy Fergurson:
… can do to control that tax number, but you can’t do it after the year ends usually, you need to do it before. And so now’s the time to get in and talk about what those numbers are going to look at, talk about your RMDs, talk about your charitable contributions, talk about those things that are going to have tax implications. Coordinate with your wealth advisor, coordinate with your tax advisor, make sure that there’s some planning. And those people that will do that, that will go through and make a plan generally have a better tax day because they’re not surprised when taxes come.
Nate Kreinbrink:
Absolutely. And I think that’s that big topic that we always talk about, tax preparation versus tax planning. And again, you’ve got past that deadline, now we’re moving into the tax planning portion of it. And those meetings are fun for you.
Andy Fergurson:
Yeah. A lot more fun.
Nate Kreinbrink:
Where from now to the end of the year where you sit down with individual situations, go over it and say, “Hey, this is what your tax liability was last year. This is what we can do to maybe impact it moving forward.” And that’s the type of discussions, the type of meetings that need to happen from now to December 31st.
Andy Fergurson:
Yeah. And, you throw in there things like Roth conversions and donor advised funds and opportunities to reduce tax by paying it now as opposed to paying it later. A lot of people believe that they can get out of tax. And I like to tell people, you can’t get out of it, but you can control it. You can determine how much you’re going to pay and when you’re going to pay. You’re going to have to pay, but if you pay it today versus paying it tomorrow, it might be better. Or vice versa. It might be better to wait and pay taxes later. But definitely it’s time to plan. It’s time to get in there and make a plan and see what your options are and start working towards your goals instead of reacting to what the government tells you.
Nate Kreinbrink:
All great stuff has always, Andy. And I know we get moving on some of this stuff and time just flies. But if you have any questions sitting down with somebody, give him a call. I did want to mention real quick though before we do run out of time that every Friday NelsonCorp Wealth Management is wearing jeans for charity. Money raised in the month of may, will be donated to the Hometown Heroes banner program. Andy, as always, appreciate you joining me. Andy Ferguson with NelsonCorp Tax Solutions. Nate [Trianbrink00:00:09:03] with NelsonCorp Wealth Management bringing you this week’s Financial Focus. Thanks again 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.