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. James joining me today. We are moving right through November. It’s going fast. I know the last program that we were on, it was one of those crossover days where I think you had a game of each of the major sports going on with World Series still going on, NBA going on, football had a game. It was just everything’s crossing over, going to it, but we’re moving right along. We had local elections yesterday in all the areas. I want to wish and congratulations to all the winners from the results of those. But again moving right along, getting hot and heavy into that winter basketball, wrestling season, getting going with it.
James Nelson:
Yeah, no doubt. You and I are busy coaching our teams and that time of the year, it’s busy. But it’s definitely a fun time of the year.
Nate Kreinbrink:
It is a fun time of the year, I mean, to see some of these games and in the college season. I know the Iowa Hawkeyes, Iowa boys had a big win last night. A lot of hype surrounding those two programs. But again getting into that, anytime you start a new season, it’s that excitement. Everybody’s expecting high things and everything with it. So again, high school sports, girls high school basketball kicked off this past week, past Monday. Boys kick off this week. Pretty soon those gyms will be full with games and all that stuff.
James Nelson:
Yeah, yeah, no doubt. Right around the corner here.
Nate Kreinbrink:
And again this time of the year, we talked about it a little bit as far as Medicare open enrollment period started October 15th, running through December 7th. A time where depending on your plan that you have, you may be able to look at different options that are out there, see what changes are maybe going to take effect with pricing coverage, networks, that type of stuff. For 2024, this is a time period where you can take a look at those, make any changes, and have it go into effect before January 1. So that applies to you. Make sure you take a look at that and maybe see what else is out there.
James Nelson:
Yeah, exactly. And we’re actually into that space a little bit now these days. So if there’s questions, anybody has questions on Medicare or want to take a second look at their plan, don’t hesitate a bit to give us a call sometime.
Nate Kreinbrink:
Well, and I think it goes right into that planning aspect that we always talk about. And nowadays, your insurance, your taxes, your investments, your estate planning, all that stuff is so intertwined that knowing what a decision is going to impact the other ones is crucial when making those decisions. And that’s why, again, taking on the Medicare aspect of it, being able to tie that into everything else that people have, understanding your income does play a role in some of that, depending on some of the thresholds that you may be getting close to. And then looking at that from there. So again, why it’s important to understand why all the pieces of the puzzle work together and doing that planning part of it.
James Nelson:
Yeah, no doubt. This is also the time of year where we’re getting pretty close to the end of the year and we’ve got to make some decisions. As far as last minute, tax decisions come to mind. The IRA contributions, most people have an idea where their income’s going to fall. There’s a few more pay periods for people that want to maybe adjust their 401(k) or 403(b) contributions. So this is the time of the year to size that stuff up to look at where you’re at. And again, we can make some changes after the tax year, but those changes are few and far between. Really the planning has to take place for the most part, during the year. And again, we’re running out of time here. But definitely something people should be sitting down with their advisors, their accountants, and really sizing things up and figure out where they’re going to be at for 2023.
Nate Kreinbrink:
Right. And I think you hit it on the head there where people do have a pretty good idea as far as what their income’s going to be like for the year. And again, taking that income and saying, “Okay, where does this fall in the tax brackets? What does this give me any opportunities to look at? Whether it be Roth conversions, whether it be maybe putting a little bit more into my plan at work.” Looking at that to say, “Hey, I’ve got a month and a half yet to make these changes, to have them have some type of impact.” You do this December 20th, you’re really done. There’s not a lot that you can look to do. Obviously Roth contributions, IRA contributions, those do extend up until the tax deadline. But any contributions to your retirement plan at work, any Roth conversions that you’re looking at doing, those have a 12/31 deadline.
And I think people mix those up a little bit and think they have up until the tax deadline with some of those. But in reality is that those have a 12/31 deadline. You want to make sure you get those in. Do that planning, don’t wait until December 28th and think you’re going to be able to push those through. Because again, it’s its best efforts at that time to do it.
But again, there’s a lot of planning that goes into this time of the year. We talk tax planning versus tax preparation. We are still in that tax planning aspect of it. We flipped a calendar to 2024. You’re pretty much switching over to tax prep. There’s not a lot that you can do. You’re basically going to now look at, okay, what was done in 2023? Report it and file your taxes. Now is the time period.
And as James said, to meet with your accountant to see where you’re at. To run some estimates with the new standard deduction numbers, the new tax bracket numbers for 2023. How does that change? What are my withholdings? Am I withholding enough? Am I withholding too much? Looking at that stuff to again, be prepared. We always talk about be proactive not reactive. And this is a time where we are going to continue to be proactive.
James Nelson:
No doubt. That also gives you a baseline. So if you do go through that process and you do a good job for one year, that’s the baseline then looking forward. You can use those same projections at least to some degree going forward. And that’s really valuable stuff and something that is definitely worthwhile.
Now we do have some tax law expiring here in a few years, so we want to keep that in mind too. And Nate and I talk about this all the time with clients as far as Roth conversions, those also have an end of the year deadline. And trying to size that up with the current tax law versus looking down the road here, those tax rates all likelihood will probably go up a little bit. So again, it’s not just planning for one year.
Once you have done that planning for one year, you’ve got the baseline then moving forward. And again, a little proactive planning could save people a few dollars on the tax front, especially with these changes coming down the pike here in a couple of years.
Nate Kreinbrink:
And again, another thing to look at is if you’ve had a life-changing event throughout this year, whether you’ve gotten married, gotten separated. Okay, you’re getting married, you’re probably going to have a little bit bigger of a benefit when it comes to your tax filing because you’re married, filing jointly now. If you’ve got divorced, you’re going to have a little bit of a change to your tax filing status, going from married filing jointly to single. Obviously those tax brackets come down than if you’re filing as a single taxpayer. So again, you want to make sure that you take advantage of that.
If you had the unfortunate circumstance of a death of a spouse in this year, there’s some things you want to look at to be able to again, look at your tax filing status as is this year. Because again, then the following year it’s going to drastically change and there’s some things you maybe want to take advantage of yet this year while you still maybe have that a little bit more favorably tax filing before you go to that way. If you had a child, if you’re able to claim another child with it, if you have a kid that maybe had a birthday where you’re no longer being able to claim then.
Okay. There’s a lot of changes sometimes that happen that people don’t realize and don’t factor into the equation until they get their taxes done and they’re like, “Oh, we forgot about that. We could have done something if we would’ve looked at it a little ahead of time.” So again, all those changes continue to evolve. It’s something, again, you want to continue to stay on top of, making sure you’re in the right position.
As James said, laws change from year to year to year. And over the last couple of years, it seems like every year there’s been these changes or laws that haven’t got extended, or that you thought you had last year, but you’re not having this year. You want to be prepared for those.
James Nelson:
And it’s always amazing to us how tax filing is sometimes a surprise for people. Oh geez, where am I going to fall? Am I going to get a refund? Am I going to owe money? It really shouldn’t be that way.
If you’ve done a little planning and it’s not even extensive planning, a little planning could go a long way. And it shouldn’t be a surprise come tax time if you owe or if you’re getting money back. So keep that in mind. That’s something that, again, your accountant, your financial advisors, we can pull some numbers together. We can put things together to give you a pretty good idea of where you’re going to be. And then we can make some adjustments or make some decisions based knowing where you’re at. But that’s the starting spot. You got to know where you’re at before we can start making some hard decisions. And again, it should be worthwhile planning. And again come tax time, there really shouldn’t be any surprises.
Nate Kreinbrink:
Right. And I think getting your taxes done has that negative connotation around it, like going to the dentist or something along those lines.
James Nelson:
Yeah, exactly.
Nate Kreinbrink:
But when technically, it doesn’t have to be. I know Andy Fergurson, Mike Van Zuiden with NelsonCorp Tax Solutions, we’re having a lot of joint meetings now with the joint clients that we work with as far as where we’re actually running the projections now. So again, they have a pretty good idea by the time they leave this meeting right now, what their tax return is going to look like when they file in March or April when they go into there. And I joke with them all the time, it’s basically like having the answers to the test when they’re going to file their return at that point. Because we’ve done all the planning ahead of time. And more often than not, unless something changes or we had a number that was a little different or something that unexpected came up, they’re pretty much right within the amount that we projected is what their actual return looks like.
So when they’re coming in March and April to do their taxes, they’re basically coming in to say, “Hey, everything looked like we thought it was. Yep. Sign in, turn it in.” It’s that taking that uneasiness that people often have with doing your taxes, making it something that you’re prepared for. And I think when people are prepared, they don’t have that negative connotation when it looks like taxes. They’re just like, “Oh, yep, they’ve got it taken care of, done. Let’s get it done for another year and move on.”
James Nelson:
Yep. A little planning goes a long way.
Nate Kreinbrink:
So again, got questions, give us a call. I did want to mention 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 November, excuse me, will be donated to the First Presbyterian Church in Davenport. Again, James Nelson, NelsonCorp Wealth Management, Nate Kreinbrink, 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. 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. 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.