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, 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 got- [inaudible 00:00:52]

Nate Kreinbrink:
Andy Ferguson joining me again today. Andy, hard to believe it is the third Wednesday of the month already, of the month of July. This summer is flying by.

Andy Fergurson:
Second to last Wednesday in July, unbelievable. We’re going to turn around and it’s going to be August.

Nate Kreinbrink:
August is rapidly approaching. I know, it’s crazy to think as far as, again, beginning of summer to where we are at now. I always say you get past that July 4th weekend and things just continue to fly, but it seems like that’s been the pace of summer.

Andy Fergurson:
Yeah. For us, it’s a… We feel like we finished tax season and then we look up and it’s November and we’re staring down the barrel of another one.

Nate Kreinbrink:
Yeah, it’s- Time to move in but hey, it’s also exciting times as well. I know you and I were talking yesterday. You’d attended a webinar, I believe. As far as on some learning on it and just some different things, as far as starting to get that prep for the upcoming tax season. One of the things that you had brought up and we briefly mentioned it on previous shows, whether you or Mike Ferguson with NelsonCorp Tax Solutions as well, is just that delay and then you kind of joked on where’s, as far as the pace of play as far as from golf or whatever, but it seems to be appropriate for the tax filing as they’re just bombarded with returns and the other things that are going on, people are still waiting possibly for those returns that they filed.

Andy Fergurson:
Yeah, months and months. It’s interesting because it feels like there’s no rhyme or reason to it. There are some that fly right through the system and everything that goes through the computer and is… Goes right through, has no problem. I mean, I’ve heard of people getting a filing and getting their refunds within six days. Anything that gets flagged for manual review, for some reason, sometimes no fault of the taxpayer, it’s just something sticks out in the algorithm and it gets flagged for manual review, that return may take months and months and months to come back, electronically filed or not. I’ve got clients that have files that were filed last year that they’re waiting on and paper file is even worse. There’s stuff that’s just way, way out.

Nate Kreinbrink:
So, I mean, it’s something too that I think, again, giving them the benefit of the doubt but it’s something you could kind of see us getting to, as far as with a stimulus payments and everything coming out, tax season then coming out. So all these different moving parts that the IRS has going on. And now all of a sudden you throw all these returns on it, is one of the issues as to why this is probably happening.

Andy Fergurson:
Yeah. I listened to a conversation from the director of the IRS yesterday and he mentioned that there was so many millions of returns that were done and he was so excited about how many returns they got done and processed. And when he gave the two numbers, all I could hear was how many returns weren’t processed. And it was more… it was like 9 million returns in the process. So, there’s a lot of stuff out there that, they’re doing the best they can but unfortunately there’s nothing you can even do. I mean, you can’t call the IRS and even if you got to a person they’re not going to have the information if it’s not in the system. And so, unfortunately there’s the answer we’re giving people all the time is just “you got to be patient. You got to wait” if there’s something you can do-

Nate Kreinbrink:
And it’s unfortunate people waiting for their return, but again, it’s kind of the nature of the beast as far as everything that’s going on. One of those contributing factors and I know we’ve kind of briefly brought it up too on previous shows, but again, think it’s important enough to go over, is that Child Tax Credit and that kind of got unveiled everyone that has children under the age of 8… Of 17, excuse me. Probably received that first payment, the middle of July there last week.

Nate Kreinbrink:
The Child Tax Credit is credited to those individuals that have children under the age of 17, who did not opt out. And you feel the questions, we feel the questions that opting out process that you’re supposed to go through in order to opt out, was not quite as streamlined as what they had hoped for. It was kind of burdensome. So again, if you do have children under the age of 17 and you want to opt out, you have to physically go on to the IRS website and physically follow the step by step process of what they need you to do to opt out of that. But again, that will have impact on taxes when people go to file their 20-21 taxes.

Andy Fergurson:
Absolutely. And I want to try and put it in perspective. The Child Tax Credit is normally $2,000. They increased it by $1,000 with the Advanced Child Tax Credit, coming ahead of time, you’re going to get half of that $3,000 per kid-

Nate Kreinbrink:
Per child, yeah-

Andy Fergurson:
On your… if you haven’t opted out. Well, that’s great. And that’s going to help a lot of people. The problem with that is, if you take that $3,000 and cut it in half, it’s $1,500. What you’re used to getting on your tax return to help alleviate your tax liability is $2,000. So you’re only going to get 15 of that on your tax return, if you got the money ahead of time. And so for each kid, that’s a $500 depth deficit. So if you have more than one kid and you’re used to using that money to pay your tax liability and you get a refund that is smaller than the difference, you may be paying taxes at the end of the year. So I think about it, especially for big families. My family has seven kids, that’s a $3,500 deficit from what I’m used to having go into my tax equation.

Nate Kreinbrink:
Right.

Andy Fergurson:
And so, we have to plan and like you said, it’s very difficult to go through the IRS process and opt out of those payments. If you haven’t done it yet, you’ve already gotten your first payment so we’re looking at the August payment to opt out. Another thing that you can do is hang on to that money, right? If you’re not going to opt out, make sure that you’ve got the resources to make up that $500 deficit per kid, come tax day.

Nate Kreinbrink:
And I think that’s important too. And again, I don’t know if we mentioned too but that is if you qualify from the income limit as well. I mean, there’s $150,000 income limit, as far as if you’re under it, you apply for that or you qualify for that $3,000 increased credit, as far as the Child Tax Credit with it. And again, I think it’s important to hit too, as far as when I was going onto the IRS website to look at it, that is, if you’re married and you have kids, each one of those spouses [crosstalk 00:07:25] would need to physically go through and do the process individually. If only one does, then you are essentially opting out for only half of what the credit would be-

Andy Fergurson:
Correct.

Nate Kreinbrink:
To you. So if you fully 100% want to opt out, both spouses would need to go on, create their own account, follow the steps individually to opt out of that process.

Andy Fergurson:
Yeah, absolutely. And then it goes the other way too. If you’re a parent that shares a dependency and it’s not your year, should’ve been your year or there’s all kinds of complications to that issue, it will be made right on your tax return. I mean, you will… If you are entitled to that money and you didn’t get it because of one of those dependency issues, you will get it on your tax return. And if you got that money and you weren’t entitled to it or you shouldn’t have gotten it, it’ll be made right. There will be some clawback or some payback in there. So, it’s something that is individual, there’s a million different scenarios with it. And it’s just something you need to plan for. You can’t just let it happen to you.

Nate Kreinbrink:
And it seems like whenever there’s a new program like this or something different as far as changes, unfortunately, scams always seem to rise their head as far as different ones that are out there. And you and I were talking again on the way up here today is, that they will… The IRS will never text you. The IRS will never do things like that, as far as the contact are you having to respond to it, but again, they’re out there and people need to be aware of them.

Andy Fergurson:
Yeah. So, we should remember this is an automatic program that you have to opt out of, right? So if you receive a text or an email or even a phone call that says “Hey, we need you to verify your identity so we can give you this credit” that’s not what’s happening. The IRS will contact you by letter and only by phone, if you’ve approved that or if you’ve sought them out. So, your main contact is going to come through letter. They’re not going to send you an email, they will never send you a text message. So, don’t go to those links and put in your information, that is a scam. If you’re ever not sure or if you ever have even an inkling of whether or not something’s a scam, call somebody. Call your accountant, call your financial advisor, ask somebody that may have seen this already so that you don’t get stuck giving somebody information and costing yourself a lot of money.

Nate Kreinbrink:
Right? I think a lot of times, I mean, you’ve had people that have called up and you’ve heard of other people that have, maybe gotten that same phishing scam or whatever the case it may be. And usually… again, if you take a step back and don’t just quickly react to something like that, if it seems fishy, it probably is.

Andy Fergurson:
It probably is fishy.

Nate Kreinbrink:
And that’s where people just need to be aware of. And again, like you said, if you have questions, give one of your tax preparers a call.

Andy Fergurson:
Yep, absolutely.

Nate Kreinbrink:
So again, Andy, we kind of keep going with some of these topics, but again, we’re getting close on time here. This is, as we always say, a great planning time. So if they have people have questions, how has this impacted me? Give you guys a call, this is a great time to talk to you guys.

Andy Fergurson:
Yeah, let’s sit down and talk about it and get ready for what’s coming in tax season instead of just reacting to what happens.

Nate Kreinbrink:
Absolutely. Again, Nate Kreinbrink with NelsonCorp Wealth Management. Andy Ferguson, NelsonCorp Tax Solutions. Did want to mention real quick that every Friday, NelsonCorp Wealth Management is wearing jeans for charity. Money raised in the month of July will be donated to the Clinton YWCA Half-marathon event. Thanks again, Andy. Again, Nate. Andy NelsonCorp Tax Solutions, NelsonCorp Wealth Management, 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 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 NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice, for more information visit our website at www.nelsoncorp.com.