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.
Announcer:
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.
Announcer:
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.
Nate Kreinbrink:
Well, this is Nate Kreinbrink, joined this morning, third Wednesday of every month, by Andy Ferguson, NelsonCorp Tax Solutions. Andy, I appreciate you taking a few minutes out of your busy time of the year to come up and spend a little time on the radio this morning.
Andy Fergurson:
Yeah, it’s a nice break. A nice break in between a lot of things.
Nate Kreinbrink:
Get out of your office for a few minutes.
Andy Fergurson:
Yeah, just for a minute.
Nate Kreinbrink:
I know we keep talking tax season and busy, and I know you and I have a little friendly banter back and forth as far as baseball season and coming up. And seeing April 1st is opening day, right around there for everybody it’s an exciting time. During that time everyone starts, “Oh and oh,” and everyone’s going to win the World Series this year, and going back and forth but-
Andy Fergurson:
Yeah, it’s the best time of year. It’s the end of tax season, and baseball starts.
Nate Kreinbrink:
Yeah, yeah, yeah. Baseball season. It’s winding down and you’re hitting that home stretch. So getting into tax season and some of the things that we’re seeing this year, obviously the big news, especially over the weekend, was the passing of the new stimulus package.
Nate Kreinbrink:
And it seems to be drawing on, “When am I going to get it? How’s it going to affect me?” Maybe spend a few minutes and talk about how that is going to impact people and what they should be looking for from that.
Andy Fergurson:
Yeah. So the ARP, I don’t remember what it is, but the stimulus package passed last Friday, I think. And obviously everybody’s looking for their stimulus. But what a lot of people don’t realize is that this recovery package also changed the current tax reporting season. So some of the laws that were passed in that package changed what we’re reporting on your tax return right now.
Andy Fergurson:
And that’s a big deal, because there’s a lot of things in there that touch people as they’re filing right now. So your tax preparer may be telling you, “Hey, we got to wait. We got to look at this. We got to wait for the final regulations.” We still don’t know a lot of the things that are in that package.
Nate Kreinbrink:
In that plan.
Andy Fergurson:
We just know that we have to wait, because it’s going to impact your return.
Nate Kreinbrink:
So I know the last ones, as they had that, and as far as waiting to file from those previous ones, in case the stimulus package did come out. So if that was the case for those individuals and they were waiting, they’ve got a little bit of time now yet to file that return for their 2020 tax return.
Andy Fergurson:
Yeah. Sure, if somebody was waiting to file for the … If they were waiting for the stimulus to come out before they file, once that stimulus hits their bank account, they can file. Unless one of these other things impacts them. I mentioned to you earlier, there’s a couple of things in there that have specifically changed the way that unemployment is treated and the way that premium tax credit is treated.
Andy Fergurson:
One of the things that passed in the bill was that they were going to make $10,200 worth of unemployment not taxable. Well, that’s a big deal. I mean, if your tax rate’s 12% and it’s $10,000, that’s $1,200.
Nate Kreinbrink:
Yeah.
Andy Fergurson:
That’s a lot of money. And so we got to make sure to watch for people that have unemployment. And the thing that’s hard about that, is we’ve got everybody who wants to hurry up and get their money, but we don’t have final regulations. We don’t know how the IRS is going to treat that unemployment, for example, in a split marriage, right. Or for somebody who’s close to getting the premium tax credit, but the unemployment changes things. Or there’s all kinds of variables that we’re not sure about. We’re not sure if there’s an upper phase out to that unemployment or anything like that.
Andy Fergurson:
So if your preparer is telling you, “Hey, we got to hold off on this.” Or if you’ve dropped your return off to a preparer two weeks ago, and you’re wondering what’s taking so long. If it had unemployment on it, the problem is they’re probably holding it.
Nate Kreinbrink:
Right.
Andy Fergurson:
They’re holding it to try and figure out what’s going to happen.
Nate Kreinbrink:
Well, I know every year there’s changes to the tax code obviously. And I know you always go and you come back with this big stack of paperwork. And I was like, “What’s that?” And he’s like, “These are just the changes to the tax code that are on there.”
Nate Kreinbrink:
Obviously this year is no different, and you mentioned unemployment. You mentioned the premium tax credit. Any other big changes that you’re seeing since you’re into it a little bit this year, as far as people to be aware of or just what you’re seeing meeting with people?
Andy Fergurson:
Sure. Yeah. So the difference this year is, yeah, they always change the tax code, but not usually so drastically during the tax season. So there’s been some significant changes. They’re changing the rules of the game while we’re playing it, which makes it a little bit difficult. Some people may have already filed and rules have changed that impact what they’ve already done.
Nate Kreinbrink:
Right.
Andy Fergurson:
And so there’s definitely some things like that, that make it unique. One thing to remember is if you’re in that situation where you’ve already filed but you need to make a change now because the law changed, you’ll have to file an amendment to do that. But you have time to file an amendment. The amendment does not have to be done by April 15th.
Andy Fergurson:
And so you don’t need to call your tax preparer and say, :Hey, I got to hurry up and do this amendment.” Because the amendment, you have three years to file the amendment if you need to. Obviously nobody wants to wait that long for their money, but just understand that they compacted the tax season at the beginning of the season for us by starting it late. And so there’s a lot of complexity to this year’s season for tax preparers. So just understand that you don’t have to go and change everything right now.
Andy Fergurson:
The premium tax credit is another one. This is the credit that you get if you have Obamacare. If you have insurance through the marketplace, they give you a premium tax credit as you pay your monthly premiums. And then at the end of the year, you have to reconcile that credit that they gave you against your income. And sometimes your income is higher than you reported at the beginning of the year, and that causes a repayment of the premium tax credit.
Andy Fergurson:
Well, with the additional unemployment that came through these COVID relief packages, there have been a lot of taxpayers that have experienced a higher than normal income. And that has caused them to get into significant trouble with the repayment of the premium tax credit. And so there’s some regulations coming out about forgiveness against that change to the premium tax credit. Again, those haven’t been made final, so we don’t know exactly how that’s going to look.
Nate Kreinbrink:
Exactly how it’s …
Andy Fergurson:
It’s just something to be aware of, if that applies to your situation.
Nate Kreinbrink:
Yeah. And I mean, you, you start going through these and start listing these changes off or whatever, and it just seems that all these amendments and changes, it just gets to a point where if you’re not keeping up with it, you’re falling behind.
Nate Kreinbrink:
In the old day, as far as just taking your taxes, getting a pencil out and writing your number in and turning it in, it’s becoming a little bit more complicated from that. And you really need to understand what is all out there and how it really impacts you.
Andy Fergurson:
Yeah, and there’s strategy that’s involved. Especially when you see things come like the stimulus payments. Well, the stimulus payments come to people, a married couple up to $150,000 of adjusted gross income. And they’re completely phased out at 160,000. So that’s a very small window, the difference between a lot of money and no money.
Nate Kreinbrink:
Right.
Andy Fergurson:
Right. And there’s things that can be done on your tax return to adjust your adjusted gross income. And so there’s some strategy that might be involved there. There’s strategy in how you deal with your businesses and how you go about reporting all these things. And whether or not you file right now, or whether you wait until you get your stimulus. Whether you file unemployment return right now, and file an amended later, or whether you wait to file. I mean, there’s just strategy that impacts all these things. And it’s important to talk to your tax preparer.
Andy Fergurson:
And I’ll remind you that it’s time. I mean, if you’re used to waiting until the last week of the season to get into your tax preparer, be prepared to extend your return. Because that last week of the season may already be booked at your preparers place of business.
Nate Kreinbrink:
Yeah.
Andy Fergurson:
So if you haven’t made your appointment, make it now, because you got to get in and get out.
Nate Kreinbrink:
I know you guys have been having people, steady flow in, but you’re still taking people on-
Andy Fergurson:
Yeah.
Nate Kreinbrink:
… as far as down there at the office. And it’s good to see people getting in there a little bit earlier from your end.
Andy Fergurson:
Yeah, it’s been busy.
Nate Kreinbrink:
But there’s still some availability left in there between you, yourself and Mike, as far as meeting with people.
Andy Fergurson:
Yep, yep. We’ve got a little bit of capacity. We’ve had a lot of new businesses here, a lot of new people coming in. And so we’re excited for them. And we are still taking new clients, just be patient because it’s starting to get crazy.
Nate Kreinbrink:
As always, Andy, I appreciate you joining me these mornings, talking a little bit of taxes. Next month when you come on, as far as the third Wednesday, we’ll see where we’re at with things and see if you’re still as chipper as what you are right now.
Andy Fergurson:
We’lle be talking about vacations and what we’re going to do this summer.
Nate Kreinbrink:
I do want to mention though real quick before we run out of time, that every Friday NelsonCorp Wealth Management and NelsonCorp Tax Solutions are wearing jeans for charity. Money raised in the month of March will be donated to The Arch of Clinton.
Nate Kreinbrink:
Andy, thanks again for joining me. Nate Kreinbrink with 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.
Announcer:
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. For more information visit our website at www.nelsoncorp.com.