Year-End Tax Planning

Episode Transcript

Speaker 1 (00:01):
Thirteen ten wib A and ask the experts with Wisconsin
Capital Management online whizcap dot com. That's wiscap dot com.
Website is absolutely fantastic with a ton of great information
about Wisconsin Capital Management. Also, there's a great opportunity for
you to have a complimentary, no pressure conversation with the
folks at Wisconsin Capital Management. Well, I got to do

(00:24):
his head on over to the website whizcap dot com.
That's wis cap dot com. Joining us this morning from
Wisconsin Capital Management our Nate and Tom Plumb. Tom, how
you doing this morning?

Speaker 2 (00:36):
We're doing very good, Sean. It's uh. We had a
little snow this weekend in Wisconsin and now today we
have some sunshine. We'll see it's a fall and winter
starting to show its space.

Speaker 1 (00:51):
Yes it is. Yeah, you never know what you can. Ironically,
I was up in the Twin Cities over the weekend,
no snow. I get back home to Wisconsin and there's
snow on the ground. It's normal, reversed like that. Nate,
how are you doing this week?

Speaker 3 (01:05):
Doing wonderful. We've had a great weekend. I met up
with my dad's old high school friends, so I heard
all the good stories. That is good.

Speaker 1 (01:12):
That is great to hear. We've got a great, great
opportunity a conversation ahead about about as we kind of
look towards. You know, we're already, oh my goodness, a
couple of weeks away from Thanksgiving and the new year
is going to be here in no time. We're going
to be talking about some year end tax preparation and
planning that can be done before we get to that
real quick date. I did want to ask you a
little bit about Wisconsin Capital Management. Of course you work

(01:34):
with your with your dad Tom, who joins us each
week as well. Let's talk a little bit about Wisconsin
Capital Management, what you guys aim to do, and the
type of folks that that you guys are helping out
each and every day.

Speaker 3 (01:46):
Yeah, Wisconsin Capitol is very unique in our field. So
we have Wisconsin Capital Management and we help individual clients
with their their investments and their tax planning. And then
the unique thing about about us is that we have
our own proprietary meetcho fund, so we can help anyone
that has We're our minimums are a thousand dollars, So

(02:09):
if you feel like you just you know, don't have
enough money for some to talk to something like that,
that's usually not the case. And so yeah, we feel
really lucky that we can help someone that just wants
to put a thousand dollars into the wroth I ray,
and we have you know, we can help people that
have forty million dollars. So it's very rare to have
a financial firm has been vertically integrated as we and

(02:31):
we love it because we like helping everybody.

Speaker 1 (02:33):
It's great to hear that. So refreshing to hear that
as well as you think so often and I understand,
like like why some people might say, well, we're only
catering to folks with the portfolio of you know, X
hundred thousand dollars or a million dollars and beyond. I
get why that happens. It's and what I love about
talking with you guys, and we talked about that, you know,

(02:55):
about really being very attainable to start working with you guys.
That was kind and capital management. Is that so refreshing
to hear? Is that is that the threshold is very
able achievable to really get high end service, high end
guidance and and management. That's something that that's very very unique, isn't.

Speaker 3 (03:14):
It yeah, there I field. It's uh, it's very unique.
So usually financial advisor, as you said, they have a
minimums of you know, half a million dollars, a million
dollars or you know, and essentially, you know, they're not
being mean. They had their own cost structure and once
you go below you know, their costs that you know,
they start kind of losing money. So they'll take you

(03:36):
if they like you. But you know, it's our economic
bottle is different. You know, we started are repairing to
metro funds just to help people, you know, the middle class,
and so that's where we sit. You know, that doesn't
say that we can't help people very high network, we
have all those capabilities as well. But you know, yeah,
we were scalable and that makes us special and makes

(03:59):
us unique.

Speaker 1 (04:00):
Love here and then that's a great day talk about
being very special and very unique. It's a great day
to get to know the folks at Wisconsin Capitolmancher to
head on over to the website whizcap dot com. That's
wiscap dot com. You can learn more about Nate, you
can learn more about Tom, you can learn about the
history how they can help you. Also, great opportunity at
the website for that complementary no pressure conversation. You can

(04:21):
do that right at wizcap dot com. That's wis cap
dot com. Be talking this week about some year on
tax planning, and of course it's never too early to
understand and of course plan for things like your tax liability.
But this year we've got the One Big Beautiful Bill Act,
the OLBBBA. I think I got enough b's in there

(04:41):
that alters some of the tax rules that impact twenty
twenty five as well as looking forward to twenty twenty six, Right, Nate.

Speaker 3 (04:49):
Yeah, that's exactly right. So a lot of these things
that were rules that were due to sunset are actually
now permanent, and so yeah, we'd like to go over
those with you, and yeah, I'll a head it over
to Tom.

Speaker 1 (05:04):
Okay, perfect, Then Tom, let's talk a little bit about
some of those some of those things I hear about
terms like tax loss, harvesting and other things. What kind
of in context here? What what do we need to
be thinking about this time of year?

Speaker 2 (05:16):
Well, Sean, one of the key things that you know
as you come up to the end of the year
is how much money am I going to be paying
in taxes? And is there a way to be intelligent
about looking at your tax obligations within the context of
longer term what you want to accomplish. So sometimes those
accomplishments are just simply is there a way to reduce

(05:39):
my taxes? And that's what we often hear a term
called tax loss harvesting, and that means basically, even in
a good year like this year, sometimes there's an investment
that may have been underwater. It's less than what you
paid for or less than your cost basis. So that's
a relatively but one you want to take a look

(06:01):
at it. But as we are talking about how we
are a little bit different as endless, we don't want
the tax tail to wag the dog. So sometimes you'll
look at this, Okay, I see that there's a potential
for tax savings, but how does that fit into our
long term strategy. You don't want to sell something that's

(06:22):
down to us to save taxes because no one's in
one hundred percent tax bracket, So if it goes down,
you don't buy it back, and then it recovers, you'll
feel pretty foolish that you saved a couple dollars on taxes.
But this year, the tax law changes that you were
talking about means that there's different rules for different individuals

(06:46):
depending on their tax basis. We call this line adjusted
gross income. And if you look at your tax return
last year, it's a line eleven on the two twenty
twenty four tax return, and that number that adjusted gross income.
It actually puts you into different considerations for tax planning

(07:10):
because of charitable deductions can be treated differently, of the
ability to deduct other items can be treated differently. So
it's it's really important to take a look at your
whole picture, but also at that adjusted gross income AGI
and see how it affects you.

Speaker 1 (07:30):
I got to ask too, and Nate, I'll bring you
in on this part of the conversation too. As we
talked about this stuff. With kind of having having this
this out there now, it really, I know, one of
the things that sometimes prevents people from from making any
type of decision is things when they're not clear, and
it seems like by extending these these priviations, it really

(07:50):
brings some some very clear guidance and rules and kind
of does away with some of that uncertainty that some
folks may have been facing when it comes to when
it comes to charitable giving strategies.

Speaker 3 (08:02):
Yeah, that's exactly right, and just to kind of level
set everyone. So with the tax code, you can give
as an individual, you can give nineteen thousand dollars away
to pretty much anyone you want. And so like if
you have a child, for example, if you have a child,
and if both partners are both spouses want to give money,

(08:22):
the max to the child. So that so nineteen thousand
times two is thirty eight thousand dollars. And so if
you're a grandparent to want to give some money away,
so you can give nineteen thousand dollars to anyone you want,
don't have to be related. So there's that level set rule.
If you do more than that, you have to file
what's a gift tax return, and that's a Form seven

(08:44):
oh nine. So that just says you're giving away more
money than you're allowed to. And I believe the maximum
set with this new rules almost fourteen million dollars, so
it goes against it fourteen million dollars you could possibly
give away in your lifetime. So if you're lucky to
hit that, you know, goup less here. But anyway, so

(09:05):
those that's the level set right there. And then when
the IRS makes rules, they want more people to do
the standard deduction than do to itemized taxes, right, So
it's more of a hassle for the people to do
itemized taxes. It's more of a hassle VIRS to look
at items taxes. So they try to make rules that
actually make things that make a standard deduction. Right, And

(09:28):
so with that level set, now that you know, they
made some rules with the charitable giving. So now if
you if you make more than two hundred thousand dollars
on the AGI, that kind eleven that my dad mentioned
is that sometimes if you give just a small amounts away,

(09:49):
you don't get the standard deduction. And but for the
standard deduction, they want to make sure that you give
money to your church and different schools and stuff like that,
so they actually kind of include that in the standard deduction.
So so you can give a thousand dollars to you know,
anyone in the standard deduction. So then I started back

(10:11):
to the UH if you make over two hundred thousand,
so they made it that if you give away less
than zero zero point five percent of your AGI that
you can't take the deduction. So in real terms, if
you're making one hundred thousand dollars. You have to make
a a thousand dollars deduction five dollars five hundred dollars

(10:34):
deduction too to make uh make that count.

Speaker 1 (10:38):
So I was I want to ask you too, is
this is some of this? Why I remember back a
few years ago, when I'd go to like Saint Vinnie's
or or Goodwill and I'd make a donation, you know,
drop off some stuff, doing some doing some spring cleaning
or something. My wife always used to say, get a risk.
I think her line was always get a receipt. I
don't know exactly what that was. She doesn't say that
to me anymore. I don't know if is is this

(11:00):
part of it as we see the change in the
standard deduction where you know, some of those maybe for
folks that are a little more charitable or in those
kind of areas where they're you know, making smaller donations
where it may not just it may not be you're
not gonna pass that that number. Is that partially why
my wife is telling me not to grab that receat anymore.

Speaker 3 (11:22):
No, that's exactly right. So you know, as a passle
to get those receipts as pass will attract them keep
them tax time. It's a trouble for the arrest to
look at those two. So yeah, most of those things
that you don't reason why you're here, you're not collected
to know, is as vigilant as you were is that's
pretty much involved in the standard deduction.

Speaker 1 (11:38):
Fantastic stuff. As we talk with Nathan and Tom Plumb
of Wisconsin Capitol Management here on thirteen ten, w U
I b a talking this week about some year on
tax planning. You heard Nathan talk a little bit about
that those itemized charitable deductions. We'll talk a little bit
more about that. We'll also talk about some of those
some of those provisions that were in the big beautiful
bill that have been made permanent in how that haven

(12:00):
We're gonna get to that so much more just a
moment in the meantime. You even't been over to the
website whizcap dot com. That's wi scap dot com. That's
whizcap dot com. It's a great place to learn more
about Wisconsin Capital Management, learn more about Tom. You can
learn more about Nate there as well. Again that's whiz
cap dot com. Also a great feature on the website
as an opportunity to have a complementary no pressure conversation

(12:22):
right on the website whiz cap dot com. That's wis
cap dot com. We're going to continue our conversation with
natean Tom. We will do that next as ask the
Experts with Wisconsin Capital Management continues right here on thirteen
ten double ui b A thirteen ten do w ui

(12:44):
b A and ask the experts. Talking this morning with
the folks from Wisconsin Capital Management. We've got Tom and
Nathan Plum. Of course they do come from to us
from Wisconsin Capital Management online whiz cap dot com. That's
wis cap dot com. Great website to learn more about
wiscons and capital management, learn about that low minimum that
get on in and learn more about Wisconsin Capital Management.

(13:06):
You can schedule that complementary no pressure conversational so right
at whizcap dot com that's w i s c ap
dot com. Talking with the guys this week about some
year and tax planning, never to early to start thinking
this year or next year for that matter. And you know,
as we wrapped up that last segment, we started talking
a little bit about charitable giving and some of the
rules and as we kind of break down those itemized

(13:28):
charitable deductions. Let's kind of get get a little bit
more into that and h and talk a little bit
more about about some of the some of that standard
deduction and some of the information folks need to know. Tom,
let's talk a little bit about looking ahead to twenty
twenty six and uh and the and kind of that
that those numbers there that folks need to be aware of.

Speaker 2 (13:49):
Sean, the text spot changes over the last few times,
and the government has done that. They've had what we
call sunset provisions, so they were in a spot or
they unless they were extended, they would revert back to
previous areas. So that caused a significant amount of challenges

(14:09):
were planning because you may have a tax bracket this
year that stays this rate will change. The charitable gift
laws would change, the estate tax, gift transfer rules might
change if they didn't extend them. The big change with
the One Big Beautiful Bill is that the permanent that

(14:35):
changes are made permanent unless, of course permanent in terms
of what our government does. But they're permanent unless they're changed.
So instead of waiting for something and will they extend it,
will they extend it? You may still be concerned will
they change it? Will they change it, but it takes
a specific act well before, if they did nothing, it

(14:59):
would revert. And some of that is very important. So
the tax brackets, for example, are permanent. That's a big thing.
If you're making charitable gifts and you look at how
much I can deduct, you can deduct them up to
sixty percent of your adjusting gross income. That historically was

(15:21):
fifty percent, but again it had to be extended. So
now you can make some plans in the future, look
at what your income's going to be, understand whether or
not you can deduct something, and whether or not if
you don't use it, can I use it for the
following years? So if I didn't meet that limit. And

(15:43):
then one of the keys for gift tax and estate
planning again is this permanent fifteen million dollars restriction or
excuse me, the limitation on gifts before they become tax ball.
So anytime we call it transfer, it's a gift during

(16:06):
your lifetime or in your state, but they're added up
for your whole lifetime fifteen million dollars per person, adjusting
for inflation in the future, so that's thirty million dollars
per couples, and they also have included something called portability,
so if you don't use the entire fifteen million dollars,

(16:28):
your spouse can use what's remaining on their tax return. Obviously,
that doesn't affect a lot of people, but those that do,
especially with the inflation we've had it, maybe small business
people and maybe even some farms. Some businesses have built

(16:49):
up some value, and it's nice to know that the
rules won't revert to a million dollars or six hundred
thousand dollars like you were always threatened with past.

Speaker 1 (17:00):
It's interesting, Tom, when you mentioned, you know, we think
about some of these numbers and people are like, all
the millions, thirteen, ten, fifteen million, at however, a million,
I'll never achieve that. And then you start looking at
you know, property values and real estate values, and you know,
I'm just a farmer. I'll never And then they suddenly realize, yeah,
that may be. That may be something that is definitely

(17:21):
in your wheelhouse. Something I got to ask you too, Tom,
is you mentioned that, you know, with sunset provisions and
doing away with them. I know what what you and
Nathan are doing day in and day out is planning,
and a lot of it has to do with with
you know, with really kind of forecasting, understanding things. I've
got a guess for for everybody, but especially people in

(17:42):
your line of work, having permanence, having some type of
things saying in order to do away with this stuff,
it's going to it would require a separate act. That's
got to really help things out. Really got to help
things when it comes to planning, is doing away with
those sunset provisions.

Speaker 2 (17:58):
Right and Sean, as we talked about in the past,
the required minimum distributions, for example, from retirement accounts when
you inherit those, there was a lot of questions even
after they passed the bill, the Secure Act, that when
they were going to force it, how it was going
to be. But now you know that, for example, you

(18:19):
inherit an IRA from a relative not your spouse, that
you basically have a ten year time frame that you
have to take that money out. There was a lot
of questions before and there's a lot of changes and
things like that, but it really does help people in
understanding how they can transfer assets to their children, to

(18:41):
their grandchildren, et cetera, and having some permanency where the
rules aren't going to revert. So again that fifteen million
dollars sounds like a lot of money, But until they
had this big, beautiful bill, it always was threatened that
it was going to revert down to three million dollars,

(19:01):
for example, or a million dollars in the past, and
that did affect a lot of people and put them
in an uncertain situation where some people actually had to
have complex estate plans because they were afraid that if
this reverted back to a million dollars, I would be
affected by that. Now you can simplify some of your

(19:24):
planning because most people or many people are not going
to be looking at that fifteen million dollars as a threat,
but they might have had to look at a million
dollars as a threat. For a state tax. I love it,
and we haven't talked about it in the past, but
the estate tax it runs forty some percentage, a big bite.

Speaker 1 (19:47):
You got to love this the permanent as they love
as well. Getting that perspective as we talked this morning
with Tom and Ad. Of course, tominate Plum comes to
us from Wisconsin Capital Management. The website wiz cap dot com.
That's wis cap do com. Great place to get to know.
Both Nate and Tom also learn about everything that they
can do at Wisconsin Capital Management. Really cool feature as well,
if you head on over to wizcap dot com, you

(20:09):
can set up a complimentary no pressure conversation right from
the Website's a little pop up bubble right on the
website that you can do that from. Again, just head
on over to whizcap dot com. That's w I S
c A p dot com. Of course, as we we've
talked about all this, all this good news and all
this great information, Uh, what can folks be doing right now? Nathan,
what are some of the some of the tips that

(20:31):
that people need to be aware of for for the
present day, for for this day exactly?

Speaker 3 (20:36):
Yeah, I think this is a time and year when
people are starting to think about Christmas shopping. Financial advice
is not wait until Black Friday, try to get a
who little bit before so uh so when you're all
trying to find that last minute was it demon Hunters
franchise toys? Yeah, so you know, if you're you have
in trouble with that, I would recommend something, you know,

(20:57):
something for you know, something that's immediately grad find like
that even Hunters example, but something have a little bit
to teach a little bit of delay graptification to so
you know, if you just open up, you know, just
for a minimum a thousand dollars in an equity fund
for someone young, you know, that has an incredible gift,
they'll see you kind of go grow and grow. And
if the person's working, you could do that in what's

(21:20):
called a roth iray. That's even better because then the
growth will never be taxed. And so you know, that's
the kind of things that you really should be thinking about. So, like,
what practical things can I do this year? What would
be a gift that would be fun for you know,
you know, a toy that'd be fun this year? What's
a hot toy this year? Or you know, and combine

(21:40):
that with something that you know, kind of leave a
legacy and you know, just you know, show people how
that power of compounding works. That's see eighth Warner of
the World. And you know, essentially every if you if
it's you could expect a ten percent return every year,
your money will literally double every seven point two years.
So every seven point years it will double, then another

(22:02):
seven point years it will also double, and then undo
some point years and that will also double. And that's
you know, that's the secret and the key to that
is actually starting now, so that's their time element of that.
And just you know, you know, sometimes you just put
money in and just literally don't touch it.

Speaker 1 (22:17):
So yeah, you think and and Nate, I love that
that perspective as well as you think about gift giving
and other things. And I give what a great learning
tool as well as you know, you get this for
for the kiddo or the grand kid, and I'm getting
them involved in investing and understanding that stuff and them
learning about you mentioned compounding and just seeing those numbers
and what they're able to do. No better thing you

(22:39):
can do for a kid is to really get them
engaged in that stuff financial security and their financial future
as well. And as we talk about financial security and
your financial future, it's a really great opportunity today to
head on over to the website whiz cap dot com.
That's wi s cap dot com. Not only can you
learn more about Tom Nate and the whole team at
Wisconsin Capital Management, you can set up a compliment entering

(23:00):
no pressure conversation right from wiz cap dot com. You
scroll down a little bit, you'll see that little pop
up there and you can do that right online. Again,
the website whizcap dot com. That's Wi s c ap
dot com. Tom Nate, it's always great seeing both of
you guys, and enjoy this beautiful day.

Speaker 2 (23:18):
You too, John.

Speaker 1 (23:19):
And again, yeah, it's always great hanging out with you guys.
And again the website for Wisconsin Capital Management that's wizcap
dot com. News comes your way next right here on
thirteen ten wu I b a