/
RSS Feed
In this episode of the Dr. Friday Radio Show, tax expert Dr. Friday discusses various tax-related topics, including extensions for certain counties affected by severe weather, setting up payment plans with the IRS, and handling tax situations involving inherited properties, capital gains, and more.
Topics covered:
- Extension until June 17, 2024, for individuals and businesses in certain Tennessee counties affected by severe weather
- Importance of filing extensions and being in compliance with the IRS
- Setting up realistic payment plans with the IRS and understanding their collection process
- Tax implications of inheriting a rental property and receiving rental income
- Reporting and splitting a charged-off commercial loan with an ex-spouse
- Earned Income Tax Credit for retirees with low income
- Deducting margin interest expense on Schedule A when itemizing deductions
- Capital gains tax on the sale of a primary residence and a rental property
Transcript
No, no, no, she’s not a medical doctor, but she can sure cure your tax
problems or your
problems or your
financial woes.
She’s the how-to girl.
It’s the Dr. Friday Show.
If you have a question for Dr. Friday, call her now, 737-WWTN.
That’s 737-9986.
So here’s your host, financial counselor and tax consultant, Dr. Friday.
G’day, I’m Dr. Friday and the doctor is in the house.
We are here live in studio.
So if you’ve got a question, this will be the time to talk and we’ve got some
good news
good news
for some of those procrastinators out there and even some of my clients
because some people
because some people
never got the memo that if you lived in certain counties, and really the ones
that it’s closest
that it’s closest
to us is Davidson, Robertson, and Sumner, but there are eight counties due to
severe
severe
thunderstorms and actually I think it was tornado warnings.
The FEMA or the IRS ruled as severe thunder and so now they had until June
17th.
17th.
So even if you filed your taxes and you weren’t able to pay them or maybe you
weren’t able
weren’t able
to make your first estimate because you had to pay your taxes or even your
fourth quarter
fourth quarter
estimate on time, it could have been because of financial reasons.
If you had a partnership or corporation that was due on March 15th and you
weren’t able
weren’t able
to file it or regular corporations or fiduciary ones that were due April 15th
or even individuals.
or even individuals.
Also the non-profit, the tax exempt ones that are due May 15th, all of those
estimates,
estimates,
all of those are extended until June 17th.
So that gives you at least people that live in Robertson Weekly, Cheatham,
Gibson, Stewart,
Gibson, Stewart,
Davidson, Dixon, Montgomery, and Sumner.
Those are the counties that have an extension that we’ll have till that time.
So it gives you a little, I mean, again, if you had a tough time and you
weren’t able
weren’t able
to make it, that will be the direction you want to go.
All right, we’ve got Michael on the line.
Hey Michael, what can I do for you, love?
Hey, how are you today?
I am doing awesome.
Yourself?
Not too bad.
Just getting off of work, headed toward the house.
Going to do a little grilling.
Ah, sounds like a good day.
What can I do for you?
Hey, my wife and myself both, we have money taken out of our paychecks, our
bi-weekly,
bi-weekly,
and it’s given, you know, taken out for taxes because we owe about $3,000
roughly every
roughly every
year.
Okay.
So, would it be beneficial to us to not take that money out and invest it
because it’s
because it’s
the same benefit or just keep doing what we’re doing and invest different
money?
money?
Well yeah, because the biggest problem, and I get it, right now interest rates
are really
are really
pretty good, but there is a penalty for not paying in enough taxes every year.
So what you pay in penalty, would it be what you grew the money to be, would
be the question,
be the question,
right?
And even if you just put it in a savings so you couldn’t take the risk of
losing, but
losing, but
at least that it would grow its 5% or something like that.
But the penalty is six.
The bottom line is you’re going to lose whatever you make anyways because the
penalty is going
penalty is going
to be higher unless you can make seven or 8%, then the question may change at
the moment.
the moment.
So my suggestion would be paying enough so you don’t have to worry about, if
it’s $500
it’s $500
or less, there’s no penalty.
So you know, that number is fine.
And then yes, I mean, if investing, you know, putting into a 401k or investing
it outside
it outside
of your business investments to give yourself a better leverage later in life,
that’s obviously
that’s obviously
a smart thing to do, in my opinion.
Well, I appreciate the answer because my train of thought was similar to that,
but I was
but I was
scared that if I went to like my financial advisor and said, Hey, I’ve got
this extra
this extra
$500 a month that I’m putting in in taxes, would it be beneficial for you to
invest it
invest it
for me?
Because I’m pretty sure he’s going to say yes, no matter if he’s right or
wrong in the
wrong in the
situation.
So I would honestly hope that your investor guy would say, no, I don’t want to
take the
take the
risk of investing it.
That would be the answer because the last thing we want, I mean, again, if
it’s a sure
it’s a sure
thing, at least the principle doesn’t change.
At least then we know you’ve always gotten the three grand.
You don’t have to worry about maybe the penalties or whatever.
But you know, if you put it into the stock market, it may be the worst time of
the year
the year
to take it out when you actually have to pay Uncle Sam, you know?
And then not only do you not have the full 3000 you put in, but you could be
upside down
upside down
and having to pull the money from other investments that cover it because of
timing.
timing.
So yeah, I would hope that your investment advisor would give the same advice,
Michael.
Michael.
But one never knows with those kinds of situations.
So yeah, I think it’s always safe because the last loan officer you want in
the world,
the world,
as far as I’m concerned, is the Internal Revenue Service.
Okay.
Well, hey, that answers my question.
I appreciate your time.
Y’all have a great weekend.
You too.
Enjoy the grilling.
All right.
We’re going to hit James in Lebanon.
James, what can I do for you, sweetie?
Yes, Dr. Friday, thank you for taking my call.
I appreciate it.
I listen to your show quite often.
You’re always very resourceful and helpful.
I have an LLC with my brother, and we’re fixing to sell the land in that LLC.
And I was wanting to know if I could take my half of the proceeds and do a
1031 exchange
1031 exchange
without him participating in his part in it.
I know there is a way.
I’m not an attorney usually, or at least my friend who does it for me is an
attorney,
attorney,
and he’s a specialist in 1031s.
I know I have sent him individuals that have been in partnerships.
I’m not too sure if it has to be taken out of the name of the partnership for
you to
you to
do that before the time of closing so that you’re an individual, he’s an
individual,
individual,
and then you guys can do your own thing.
At this point, it probably, or the LLC, I should say, but it’s basically a
partnership.
partnership.
It really wouldn’t change anything for tax purposes for him or for you, but it
would
would
give you the authority to do.
Because for some reason, I’m thinking we have to take it out of the name of
the LLC to do
the LLC to do
so you can then have full control of your 50% or whatever percent you own, and
then
then
he will treat it as capital gains, pay his taxes, and do what he wants with
his.
his.
But yes, there is a way around it.
Okay.
So I just need to check with an attorney.
Is that what you’re saying then?
Correct.
If you need someone, just either text my number or call me Monday and I can
give you one that
give you one that
I use.
It’s here local.
Thank you.
I appreciate it.
You have a good day.
You too.
Thanks.
All right.
If you want to join the show, you can at 615-737-9986.
615-737-9986 is the number here in studio.
I got a text actually while I was talking to Michael and this person wanted me
to reiterate
to reiterate
what the deadlines for individuals and businesses that are in the eight
counties, which were
counties, which were
Robertson, Wheatley, Cheatham, Gibson, Stewart, Davidson, Dixon, Montgomery,
and Sumpna.
and Sumpna.
Those are the counties that have an extension on not only fourth quarter 2023,
first quarter
first quarter
2024 for individuals filing your actual tax returns.
Some of you may have already filed extensions, which already gave you some of
that, but if
that, but if
you didn’t make a payment, it also extends the payment date until June 17th,
2024.
2024.
So that is the dates.
And if you’ve got more questions, you can give us a holler.
You can deal with that however you need to do with anyone who needed an
additional tiling
additional tiling
extension beyond June 17th for the 2023 needs to request that electronically
by April 15th.
by April 15th.
So this means that you have to, the extensions were not extended for the
deadline.
deadline.
According to this, the IRS urges anyone that needs additional filing beyond 17
to file
to file
their federal extension by April 15th.
Otherwise you have to file your taxes by June 17th.
There’s no extension at that point.
You have to file the taxes by June 17th or you’ve missed your extension
window.
window.
That’s why, you know, people, I mean, I’ve been doing, this was our 28th tax
season.
season.
And the one thing I sometimes I have people it’s like, well, did you already
file an extension
file an extension
on me?
I have become a bit over, over cautious on that, I guess, because the
penalties are so
penalties are so
high and things happen in life that we don’t always expect.
Sometimes you always, you know, have people I’ve always filed by April.
You don’t need to ever file an extension on me.
But then what if something happened to me is always my fear.
What if I’m not able this year, I did have a situation where I had, I was out
playing
playing
and I burned my hand and, you know, just you know, making sure that you had
the situation,
the situation,
you know, where I was, you know, out of the office for almost a week.
And that put me behind for the entire rest of the tax season.
So it was just something I didn’t have to worry about.
Yes.
But, you know, but again, you never know, right.
And as a tax professional or any professional, if you’re helping clients, you
want to always
want to always
make sure your client is best protected as you have the ability to do.
But I will tell anyone, if you, you know, even if you’ve got a good tax person
like
like
myself or whatever, you want to make sure that there is an extension filed.
So you should always follow up with your tax person to make sure that
happened.
happened.
But in the situation with some of these people and I guess I should have
pushed this a little
pushed this a little
earlier because some people may have delayed certain situations.
But I do want to make sure because I have a number of people that
procrastinate, but
procrastinate, but
maybe this year instead of waiting until October and paying the penalties and
everything, maybe
everything, maybe
in your situation this year, you could do something until June and get it
filed and
filed and
not have to worry about penalties.
That would be a blessing.
Now, again, this is only for those counties.
So if you’re in Williamson County or if you’re in Murray County, those aren’t
going to help
going to help
you at all in those situations.
You are late if you have not filed and it’s time to move forward on that
situation.
situation.
But meanwhile, if you’ve got a question and you want to join the show, we’ll
be taking
be taking
a quick break here.
After the break, we’ll get to more of your questions.
Maybe you’ve got a situation where you are, the biggest questions usually I
get is if
get is if
you’re selling your home or if you inherit something.
A lot of times people get very confused on how all of that works.
So again, very important to understand that if you need to know that
information before
information before
things are sold.
I had a situation this last year where they were under the impression that
anything they
anything they
inherited was tax free.
Everything was tax free.
And that’s just not always the case.
There’s interest, there’s dividends.
And in the case of the one I’m thinking of or the one I’m talking about, they
inherited
inherited
a rental in which they received rental income every month from.
Rental income is not tax free if you inherit it as an ongoing payment.
Common sense in my world sometimes feels like that should be understood, but
it isn’t always
it isn’t always
understood.
I mean, it’d be like me trying to figure out what’s under the hood of my car
to be quite
to be quite
honest.
So if you’ve got questions, there’s really no silly or stupid questions.
It really is just a matter of all of us understanding what we should or should
not have to worry
not have to worry
about.
So again, we’re going to take a quick break, but you can join us 615-737-9986.
615-737-9986.
When we get back, we’re going to take your phone calls or you can also email
friday@drfriday.com.
friday@drfriday.com.
Sometimes people don’t want to come on the radio.
I really do understand.
It’s not a natural thing to just pick up the phone.
Some people are great at it, but it’s not natural for many of us to just pick
up the
up the
phone and talk to someone on the radio.
But if you want to email me a question, you can friday@drfriday.com.
We’re going to take our first break.
We’ll be right back with the Dr. Friday show.
All right, we’re back here live in studio.
And if you want to join the show, you can at 615-737-9986.
For any of you that have not heard this show before, I am Dr. Friday, an
enrolled agent
enrolled agent
licensed by the Internal Revenue Service to do taxes and representation.
That’s what we do year around.
So, you know, when the love letter does come in June or July, we’re actually
open on like
open on like
some different tax offices because we do this year round, but also we help
those individuals
those individuals
that are behind on taxes that don’t know how they’re going to pay the taxes.
Maybe you have a unique situation where, you know, you, you’ve divorced, which
I’m not
I’m not
going to say is very unique because a large number is one of the reasons
people get behind
people get behind
on taxes is because of situations like that.
So if you need help doing that, we’ve been, like I said, we just celebrate our
28th year.
28th year.
We’ve been dealing a lot with these issues for years and we’ve always, always
learning
learning
and finding new ways to be able to do what we need to do.
And of course I enjoy this part of the business.
So if you’ve got a situation where you have either, you can’t pay the IRS, but
they’re
they’re
sending you the love letters, there’s liens, levies, seizures coming down the
line, or
line, or
you know, you, you know, something’s going to be coming down.
You need to understand why you hear on the news a lot of times, Oh, this
person settled
person settled
their taxes for 10 cents on the dollar and we’ve done it.
You know, it’s not that it doesn’t happen, but those same individuals are not
homeowners,
homeowners,
don’t have 401ks.
Those same individuals don’t have access to anything.
They’re living paycheck to paycheck.
And yes, then you can actually make a pretty good deal with the IRS, assuming
that your
that your
paycheck to paycheck is within what the IRS would consider a livable wage, not
making
making
a decent, I had a gentleman pretty much doing it, but he was making $85,000 a
year and you
year and you
know, his lifestyle, because the IRS can tell you what your lifestyle is.
They, you may be out there paying $3,500 a month in rent, but they’re not
going to allow
going to allow
that if you’re going to make a deal with the IRS.
That’s excessive.
That’s what they say.
Not to say it is, but that’s what, you know, you need to know the game.
You need to know the rules so you understand how this is going to work and how
you can
you can
get settlement.
And if I, if, if I haven’t said it in the past, definitely need to say, if
this is something
this is something
that you have an issue with the IRS, make sure you deal with that before, if
you can,
you can,
before you get married or before you entwine your life with the significant
other, because
other, because
even though that person is not going to be responsible for paying your taxes,
the IRS
the IRS
can’t say, Hey, you’re living in the same house now you’re fully responsible.
No, but what they can say is if both of you work and the limit to how much
money can be
money can be
earned and they will add that individual’s income to yours to settle the
situation.
situation.
So maybe you’re the one that’s always paid the rent and utilities and the
other one has
other one has
had the money to do other things.
Those other things could be considered excessive.
They can’t take the money from your person, but they can add it in.
So it looks like you have a lot more disposable income than you might if you
were single and
were single and
not having someone else help support you.
So it is very important to, again, understand before you make these decisions
sometimes
sometimes
and I get it.
Um, actually I can’t say I do.
I can’t imagine marrying someone and then finding out after you get married
that this
that this
person owed the IRS or has huge credit card debts or huge debts somehow.
Because I mean, I’ve had him walk in my office for years.
So I mean it does happen every single day, but I don’t understand how you
haven’t had
haven’t had
the conversation at least before you’re actually going to get married.
So I’m learning curve on my side.
Apparently that being said, if you want to join the show, you can
615-737-9986, 615-737-9986.
615-737-9986, 615-737-9986.
Taking your calls, talking about my favorite subject.
And I realized guys, this is the first weekend after the end of tax season.
And I am going to say I have not turned on my computers until this show.
Um, well I work Thursday and Friday, but on the weekend up until now,
obviously every
obviously every
weekend, every day, you know, we’re, we’re working here this first week and
our computers
our computers
were not on until I got ready to do my radio show.
That was fairly nice to be quite honest.
Um, it was a long tax season, but if you have questions, maybe you did file
and now you’re,
and now you’re,
you’re going to have to set up a payment plan.
Um, and you’re not too sure how, and Oh, if you’re going to call the IRS and
set up a
set up a
payment plan, do not set up a payment plan that you can’t afford to pay.
I mean this last week, two different people came in, the IRS called them,
right?
right?
Which is very scary.
Um, and if you don’t do something, we’re going to go against your job.
We’re going to, you know, we’re going to put a lien against your house, which
I understand
I understand
no one wants a lien against their house, but think about it.
What can the IRS do besides put a lien?
It’s not like they can take your house, you know, they can’t touch your
income.
income.
And in this other situation, the person was self employed, so there really
wasn’t an employer
wasn’t an employer
they could easily go back to.
Now, again, not to, to not say the IRS has the ability for self employed
people.
people.
If you have the same vendors that you go to all the time, they can obtain that
vendor
vendor
list based on 10 99s issued and they can go to those vendors and say, send us
a hundred
a hundred
percent of what you owe this person because they’re avoiding taxes.
And yes, those kinds of things can happen, but you can have a lot of steps
before that
before that
usually happens, but don’t because then the IRS, when we go and try to set up
an actual
an actual
payment plan that needs to be established, you’ve now got inside your records
that you
that you
set up a payment plan that you didn’t live up to, which makes it harder.
The next time we try to negotiate an actual payment plan because you know, you
agreed
agreed
to something because you were scad because the revenue officer was
intimidating.
intimidating.
You know, you, you, you have rights.
Um, and those rights are important.
So you want to make sure that if you’re following through, you’ve gotten a
love letter or maybe
love letter or maybe
they’ve sent something to your employer and you’re like, Oh my God, I’ve just
got to,
got to,
I got to get something down.
You know, make sure you, you understand what you’re agreeing to make sure you
can do it.
can do it.
Um, you know, I’m not going to say it’s going to be easy because the IRS is
not going to
not going to
take an account, your credit card bill.
That’s your problem, not theirs.
They’re not going to take an account.
You know, you, you’re going out for Starbucks or eating out or any of those
kinds of things.
kinds of things.
It’s going to be more, you know, what is the essential and they’re going to
ask you how
ask you how
much do you pay in your mortgage or rent?
How much your utilities, what’s your health insurance?
Do you have any medical bills that you have to pay?
Anything that’s court ordered, et cetera, et cetera.
They’re going to get down to the basics, but you know, other than the
essentials, sometimes,
essentials, sometimes,
you know, it’s hard to live without doing certain things and they’re not going
to give
to give
you much breathing room on that.
So if you’re at that situation, you really do need to give our office a call
and let
and let
us help you set up a payment plan that is reasonable.
Again, not everybody’s going to see the same number because I have had over
the years,
the years,
I’ve had people that have, you know, kids in private school and I know I’ve
said this
said this
many, many times, but the fact is private school is, is a luxury.
The IRS does not see that as an essential.
Um, you know, if you have three cars and all of them have car payments or if
they don’t,
they don’t,
you, you’ve got two of them paid off and you got one car payment.
They may look at the other two as cars that they don’t, um, that, that you
could afford
could afford
to sell to pay them.
So, um, you know, if you own extra real estate, um, if you’re looking to, you
know, to make
know, to make
a settlement or if they feel that the payment you’re making is not high
enough, they can
enough, they can
request for you to sell your rental or investment real estate.
It’s not your primary home.
The only thing we have safe is our primary homes.
Only car we have is one primary car for each adult.
So you and your wife can each have a primary car.
Um, if you have children, um, in some cases I have had one revenue officer
that did not
that did not
consider that essential.
Um, but you know, there are ways of, of, of at least bringing that back to the
table.
table.
Um, but, but you, you have to look at life through what is essential and what
is a luxury
is a luxury
and those numbers again, aren’t always going to be the same because some
people consider
people consider
different things, but it’s important to not make a deal with the IRS that you
can’t follow
can’t follow
through with because the next time they may not accept the next deal and they
do have
do have
the right to say no.
Everyone always acts like it was, it’s an automatic.
Yes, there are certain ones that are automatic, but also if you break up and
you know, don’t
you know, don’t
follow through enough times, they can just say, we’re not going to set up
another payment
another payment
plan.
We’re just not updating the money and you don’t want to be the person that’s
at the
at the
other end of that phone call because most people don’t have access to the
money.
money.
They’re going to get much more aggressive and they’re, you know, you want to
keep that
keep that
communication going in the right direction.
That’s all.
I mean, you want to make sure you understand what the IRS is giving you as an
option and
option and
how that’s going to work best for you.
All right.
So we’re going to gear up for a second, um, um, break here in a second.
And if you want to join the show and I get it, it’s gorgeous outside.
It’s a day that I would be outside right now or we’ll be going back outside
before you
before you
know it.
Um, the number here is six one, uh, six one five seven three seven nine nine
eight six
eight six
six one five seven three seven nine nine eight six is the number here in
studio.
studio.
If you want to join the show and you can also email Friday at dr Friday.com
again, Friday
again, Friday
at dr Friday.com is the number that you can email that you can send to.
And as an enrolled agent, um, we are a shield between you and the IRS, right?
Is what we do as representation.
The tax law says that you’re entitled to representation and that we can help
be that go between, between
be that go between, between
the IRS and you.
Because again, they’re not, I know a lot of people will disagree with this.
The people I know and that I work with at the IRS, not there to intimidate,
they’re
they’re
there to do collections.
I mean, that’s the, the most aggressive ones are the collection side.
Their job is to collect.
They’re not there to do resolution.
They’re not there to, to make life easy.
They’re there to collect money.
And that’s the ones that most of us deal with on a day to day basis.
I will say there’s a division of the IRS that many of you guys don’t do much
with.
with.
And of course that is the tax advocate office.
I am an advocate for the tax advocate office because they have helped in the
last number
last number
of years to resolve probably 20 cases, um, you know, with their assistance in
doing things.
doing things.
So, um, it’s just important to be able to give credit where credit is due.
There is a division that is there to help with resolution.
Um, all right, so we’re going to actually take the break and then we’ll come
back to
back to
David.
It’ll be easier that way.
I’ve got plenty of time to talk to him cause we’re right on top of the clock
here.
here.
If anyone else would like to join the show, 615-737-9986, 615-737-9986.
We’re going to be taking a quick break and we get back, we’ll go to David and
anyone
anyone
else that comes on the lines.
We’ll be right back with the Dr. Friday show.
Alrighty.
We are back live in studio and this is the Dr. Friday show and why don’t we
hit right
hit right
to the phones with David and we can see if I can help him with his question.
Hey David, what can I do for you?
Yeah.
Hi, Dr. Friday.
I went ahead and did my taxes through a, um, a user software and I was going
through it
through it
and doing it and I thought I was doing such a good job, but when I put
everything together
everything together
and got excited and sent it off, I’d forgotten about my wife’s social security
and we had
and we had
a 1099 on that.
So I tried to do an extension.
There’s naturally a, I waited till the last minute, but they rejected my
extension.
extension.
So at this point I know I’m probably going to end up owing a little bit of
money as opposed
money as opposed
to getting money back, but that’s what was originally on the original one that
I sent
I sent
in.
So now where am I at and what do I need to do?
You have two options to be quite honest with you.
One is I would, I would go back into the software, find out how much money you
owe and then just
owe and then just
send a, you can go to irs.gov, click on pay, then do it as a balance due to
the tax year.
the tax year.
So the money is in there, right?
Cause I think what’s going to happen is IRS is going to do a match.
They do it for all of us, you know, see if all your forms match up and they’re
going
going
to discover that you understated income.
But if the money’s sitting there, then the penalty is minimal, right?
Because you’ve already accounted for it.
And when you get that letter, it’s going to say, Oh, we’re going to change
your taxes
your taxes
and this is how much money you owe.
Or you can do an amended tax return, a 1040 X and add it in and then send the
money in.
money in.
That’s your two, two options.
I mean, either way, the most important part of that whole conversation is
getting the
getting the
money paid in.
The 1040 X is probably the most efficient because that way you’re telling
them, cause
them, cause
it could take them a year to figure out maybe, you know, what’s going on.
But other than that, that would be my way of going.
Is David still there?
I’m still here.
Can you hear me?
Okay.
Sorry.
I couldn’t hear you.
What was, so what, that would be the direction I would go.
No problem.
I was just saying, thanks.
I appreciate all that you do.
No problem.
Thanks for calling.
I appreciate that.
All right.
Let’s hit Jason.
Hey, Jace, what’s happening?
How are you doing today?
Thank you for taking the call.
I am doing awesome.
Thanks for calling.
Okay.
So what I have is about, I gotta be, I don’t even know the exact date.
It’s been, it’s been about 14 years where I lost a business and a commercial
loan.
loan.
Since then got divorced all of a sudden.
And I didn’t find out about it until in 2022 that in 2021 they charged it off
on me after
on me after
it had to have been a good nine, 10 years.
They sent a letter.
I finally got it from the IRS.
I’d never got the letter from the bank when they did the 1099 saying that I
owed X amount
owed X amount
of dollars.
My ex-wife got the same letter for the same amount.
So they basically tried to charge both of us.
How do I get it split in half?
Because I tried, the IRS told me I had to get another 1099 issued for just
half of it.
half of it.
And it’s been an act of God.
It’s not going to happen.
That’s not going to happen because they’re considering it a joint situation.
What you’re both going to do in essence is, or one of you basically, but
anyways, whoever’s
anyways, whoever’s
doing your taxes, whatever, I would actually issue the ex-wife a 1099 for her
share.
share.
And then she’s going to, I mean, or write it off and put in the memo probably
that,
that,
no, forget the 1099.
I just put in the memo that this is a 50/50 and then you would report 50% of
it and expense
it and expense
the other 50% to your ex-wife.
She’s going to be picking that same dollar amount up on her return, the 50%
and she’ll
and she’ll
be expensing the other 50% under your social security.
So basically on both returns, what you would have is the other person’s social
security
security
with the other 50%.
So when the IRS looks at both returns, they would see 100% reported.
And it would start with the full number.
She got one also, a letter.
Right.
A hundred percent.
Both of you got a hundred percent.
So you need to correct the tax return that that happened.
Yeah.
She doesn’t make the money I do.
I make six figures.
She’s much less.
So they were able to get what they basically said she couldn’t afford it.
And the IRS said that she didn’t have to pay it.
Okay.
Well, then she made an offer in compromise.
So all you’re going to do is correct yours and write off the other to her
social security
social security
number, which is the other half.
And then you’re going to pay tax on the 50% that is truly yours, but you have
to start
to start
out with a hundred percent.
I’m willing to pay half.
I just didn’t think I should pay whole.
All right.
Well, let me let me clarify.
This isn’t what the I mean, you need to first report.
You need to file a tax return with your share on it.
Right.
Because it sounds like the IRS has already assessed you and they’ve assessed
you for
you for
a hundred percent.
OK, let me I’m just saying.
So you need to go back and actually amend the tax return to show that dollar
amount
amount
and to show how much you actually owe, because otherwise she got a waiver and
you’re going
you’re going
to be responsible for 100 percent, because if she got a waiver and is during
the time
the time
that you’re married, you’re not going to qualify for an offer in compromise.
And of course, she doesn’t care, but she she got a waiver for all hundred
percent because
percent because
that’s what happened.
So you got left holding the whole bag.
So you need to amend the tax return to show what you were truly responsible
for, not the
for, not the
50, not the 100 percent.
Otherwise they’re going to come after you for all 100 percent.
There’s no way around it.
That’s easy enough.
I will get that taken care of here in the next couple of days.
Thank you.
Cool.
Thanks, buddy.
All right.
Appreciate it.
Yeah, sure.
Bill in Nashville.
What’s it, Bill?
In Nashville?
Yes, ma’am.
Bill, what’s happening, bud?
Well, I had some trust shares that were granted to me by my insurance company
in the year
in the year
2000, and I decided to sell those shares this year.
The value of the shares when I first received them was fourteen dollars and
twenty five cents.
twenty five cents.
I sold them at well, the profit from it, my gross from it was eighty two
hundred and five
hundred and five
dollars when I sold them this year.
So my question to you is.
I don’t really have any expenses to take off of that, that eighty two hundred
and five
and five
dollars unless I can take the value of the shares when I receive them.
Did you actually buy them or were they given to you?
It was I said it was granted.
They gave them to me.
Granted.
OK, that’s what I thought you said.
I just want to make sure I was hearing you correctly.
So that is not a deduction.
So the eighty two oh five that you received is long term capital gains.
All of it.
OK.
And then that what’s the percentage rate on that?
Depending on your income bracket, if if you’re single and make less than fifty
thousand,
thousand,
it’s zero.
If you’re single and you make one hundred grand, then it’s 15 percent.
Well that fits me.
I’m I’m certainly make less than fifty thousand.
I’ve been retired for about twenty five years.
Well, there you go.
See, so that’s good news.
So it really has zero effect on you.
Just have to report it.
But it won’t it won’t affect your taxes.
OK, I’m certainly glad to know that.
And I appreciate you giving me the advice.
No problem.
Thank you for calling.
Yes, ma’am.
Bye bye.
Have a good day.
Bye bye.
All right.
Jim in Nashville.
Hey, Jim, what’s up?
Not much.
How are you doing?
I am doing great.
Good, good, good.
Earned income credit on somebody who is retired but did earn some money.
Is there an earned income credit for a single person?
There is.
And I believe it’s less than twelve or fourteen thousand earned.
You have twelve that we make less than twelve to fourteen thousand.
There is a small earned income credit for individuals without children.
Will they figure it and send that?
Or is that something that you have?
Yes, you would have to file a tax return.
I mean, even though you may not be required, you’d have to file the tax return
to obtain
to obtain
the credit.
I filed it.
I was just wondering if if I didn’t put it on there, will they come back and
tell me
tell me
that I earned additional?
I would like to say the answer is yes.
I have seen it done, but I don’t know if you filed it.
It would have kicked in most likely on most tax softwares.
Is this person, did you say this is an older individual or a child?
No older or neither older.
OK, yeah, should they should have qualified?
Are they on Social Security?
The person’s on Social Security.
OK, and they and they are in my.
And I did not put the ERTC on it.
Yes, I think they will.
I mean, honestly, I think they will.
But it may take six months for you to get the change of your income letter.
But don’t spend it.
They should send it.
Yes.
They don’t spend it yet.
Yeah, well, yeah.
Good idea.
Don’t spend it until you get it.
It’s a good motto to have.
Thank you.
No worries.
Thanks, Jim.
I appreciate it.
All right.
Let’s hit George before the next break.
That way he doesn’t have to wait through it.
Hey, Georgie.
Hi, Dr. Friday.
How are you?
I am doing very well.
What can I do for you?
I had filed my taxes with TurboTax and I forgot to put in my investment
interest expense,
interest expense,
which I assumed was I have a margin account and I have like over $20,000 of
margin interest
margin interest
that I paid.
I forgot to put that in my in the tax return that I filed.
Is that not a legitimate expense for investment?
You say margin?
Yes, there is a place for margin interest to come off.
It is on the Schedule A. So it isn’t going to necessarily come off of the
direct 1040
direct 1040
unless you itemize.
So it’s not going to be a part of just a straight 1040.
OK.
Is it not an investment interest?
Isn’t that not an expense?
On the Schedule A, it is an expense.
But it’s not on Schedule B or D. It falls on the Schedule A.
OK.
So you have to itemize.
And you may, I mean, if you get $20,000 and you’re single, you would be
itemizing without
itemizing without
your property tax, sales tax and other things that might have helped kick you
over.
over.
Right.
I am itemizing those.
But I’m married, filing jointly.
But another question popped up.
I guess there’s a limit.
I’m over 65.
And I guess there is not.
Is there a limit on your income that you receive so that you’d be able to take
that deduction?
that deduction?
That’s a good point.
This is when I like to say I cheat because our system, there could be a
limited income,
limited income,
a loss that you can take, an expense.
You may roll over, but there may be a limit on how much you can take based on
your income.
your income.
Honestly, I don’t, I like to say I have a ton of people.
I don’t have a lot of people that have margin interest.
So it’s not something I put in on a daily basis, like capital gains and
interest income
interest income
and you know, George.
But if you want, you can certainly give me a call on Monday and we can pull it
up and
up and
confirm that just because you don’t want to amend a tax return that’s not
going to get
going to get
you more money back, which would be what you’d have to do to correct it.
If I put that, if I file a terrible tax and if I put that amount in there and
access my
access my
1040, do I have to file a 1040X to amend it?
Yes, 100%.
Yes, yes.
You would have to file a 1040X.
Okay.
And that’s the way to amend it.
Okay.
That’s the way.
Yeah.
Okay.
Thanks, George.
Okay.
Thank you so much.
Bye-bye.
All right.
We’re going to take our last break here and we come back.
You can make more of your phone calls at 615-737-9986.
615-737-9986.
We’ll be right back with the Dr. Friday Show.
All righty.
We are back here live in studio and we’re at the last bit of the show.
I do want to go back to George’s question because I wanted to double check.
So sometimes on the radio, it’s a little quick response I have to do.
So I was right.
You itemize it, but the question is, how do you get the most out of your tax
return?
return?
And I’m going to give you a little bit of a hint.
I’m going to give you a hint.
I’m going to give you a hint.
I’m going to give you a hint.
I’m going to give you a hint.
I’m going to give you a hint.
I’m going to give you a hint.
>> Yes, ma’am, there was.
>> Okay.
So, you know, you’re going to want to go back through and put all of that
together.
together.
So, yes, the original 75, but maybe you put another 75, especially on the
rental side,
rental side,
because, I mean, obviously I maintain rentals, and we don’t put a time, but
you want to keep
you want to keep
it at least at a certain thing.
So you may have had to redo the kitchen or you may have had to do the floors
or put a
or put a
new AC unit in it.
>> Exactly, yes.
>> So you want to keep those values, and some of them you would have possibly
been depreciating
been depreciating
or taking off on the rental side, but not on the primary side.
So you’ve got to crunch all the numbers and then come back at it.
But I would say, based on this conversation, because even if we just took
simple math and
simple math and
said, all right, $75,000 plus 250, and I’m sure you’ve done this math, I’m
just cheating
just cheating
here, but it’s 325, you sold it for 510, so you’ve got capital gains, no
matter if it
matter if it
was in all your primary or not, you have roughly 185,000 that will fall into
theoretically
theoretically
a capital gain situation.
>> Yes, ma’am.
>> I mean, depending on how much you put into it.
>> Yes, ma’am.
Now, regarding the income, if I’m correct, is there a minimum income that an
individual
individual
can make, a single can make, that qualifies them as 0% that they need to pay?
Is it under 42,000, under 50,000?
>> Yeah, it’s under 50,000.
Under 50,000.
>> Is that the income for 2024?
>> I mean, I’m going to play it safe.
It’s basically going to be closer to about 57,000, but we kind of use the even
numbers
numbers
in my world, so 50, 100.
But yes, and you can get the crunch.
I mean, I can give you the exact number, but on Monday or whatever, if you
need to make
need to make
sure you’re working towards that.
But don’t forget, you are, I mean, again, if you depreciate and if you didn’t,
theoretically
theoretically
you have recapture of that depreciation, and you’ve got 20, you may have
almost depreciated,
almost depreciated,
because back in those days it was, what, 27?
You may be on top of it.
>> 27 and a half.
>> Close to, yeah, you’re close to almost being fully depreciated on that
property,
property,
possibly.
>> I am.
I was, yes, ma’am.
That’s exactly correct.
>> Yeah.
So, I mean, the good news is you may not have recapture because it’s so old.
>> Mm-hmm, mm-hmm, yeah.
>> So, you might want to, if you have a tax person, Doug, if not, give us a
holler.
holler.
We can do some crunching once you get all your numbers down.
And just so you make sure that you’ve, obviously, the biggest concern is set
aside enough money
aside enough money
so you can pay Uncle Sam.
You have 90 days from the time of sale to theoretically make an estimate if
you owe
you owe
taxes.
>> Yeah, but that tax is not due until 2025.
Is that not correct?
Because it goes on next year’s taxes when it comes due?
>> No.
>> Okay.
>> Well, the tax law says you have to pay 110% of the year before or you have
to make
to make
estimates within 90 days.
>> Within 90 days.
Okay.
>> So, whatever you owed in 2023, yeah, or have it, yes.
So, you have a little window.
>> All right.
I sure appreciate all your help, Dr. Friday.
Thank you so much.
>> No problem, buddy.
Good luck.
>> All righty.
So, we’re winding down the show here.
Hopefully, you guys are enjoying this Saturday.
Seriously, it’s a beautiful day outside.
I hope you guys don’t have to spend the whole day talking about taxes, even
though I do
though I do
appreciate you guys joining me on this Saturday, considering it’s not tax
season.
season.
But for many of us, we’re always preparing, just like Doug.
He’s got a situation already starting for 2024.
And it’s great that he’s working the numbers now, not waiting for later,
because, you know,
because, you know,
the longer you think about it, then, you know, he’s got time to recreate and
figure out what
figure out what
he did and didn’t do on his property.
So, if you need help with taxes or you need consulting on how to, you know,
crunch the
crunch the
numbers or even just figure out what your liability is, because it’s a —
there’s always
there’s always
moving parts, just like on a home, primary home sale.
And Doug’s situation is a little bit different.
Most of us have one home, one residence, and then we can just take and add or
subtract
subtract
to that situation.
But in his case, because part of it was profitable or investment real estate
and the other half
and the other half
was primary, he has a split situation to deal with.
If you have questions, you can email Friday@DRFriday.com.
I do want to reiterate again about the June 17th for the eight counties of
Robertson,
Robertson,
Weakley, Cheatham, Gibson, Stewart, Davidson, Dixon, Montgomery, and Sumpna.
Those individuals are at an extension automatically until June 17th for the
tax year of 2023,
tax year of 2023,
which also means that you don’t have to worry about if you missed the fourth
quarter or
quarter or
if you missed the first quarter.
Maybe you can make it all up on the June 17th.
Now, again, don’t make the fourth quarter 2023 on your June 17th first quarter
estimate.
estimate.
You got to keep your quarters separate or they’ll put it on the wrong year.
Or if you need help, just call the office 615-367-0819.
You can also check us out on the web at DRFriday.com.
Again, DRFriday.com is the website or email Friday@DRFriday.com.
We are obviously going to be in the office on Monday, so you can just leave a
message
message
and we’ll get back with you as soon as we can.
Also, if you haven’t filed taxes, we can complete your 2023, set up an
appointment,
appointment,
get you all squared away so that way we can move forward.
Because keep in mind, you cannot do anything as far as making a deal, making a
payment plan,
payment plan,
anything unless you’re in compliance.
So just because you filed 2023 but you haven’t filed those prior years,
you’re going to find out that you don’t have the ability to make a payment
plan
plan
because the IRS has to show that you are in compliance before we can make the
payment plan.
payment plan.
So it’s important to get all that back work done first and then moving forward
on how to make the resolution.
More important to pay forward and not to concentrate so much on the past.
Often people are so worried.
All right, we’re going to be taking a quick break and we will be seeing you
next Saturday.
next Saturday.
As we say in Australia, “Cop ya later!”
Dr. Friday, Tax and financial firm, Inc.
Have you received love letters from the Internal Revenue Service?
I’m Dr. Friday, an enrolled agent.