Welcome to another episode of the Dr. Friday Radio Show! In this episode, Dr. Friday talks all about taxes, new tax updates, and answers caller’s questions:
- Tax Filing Deadline Is May 17, 2021
- Itemizing Charitable Contributions
- Make Sure To Have All Your Tax Documents
- You Can E-File Tax Returns
- How To Find Your Stimulus
- Why Haven’t I Received My Tax Return?
- PPP Extended Until May 31, 2021
- Who Qualifies For A PPP Loan?
- What Is the New Tax Law?
- Unemployment Is Taxable Money
- Do You Need Help With Tax Representation? Call Dr. Friday
and so much more!
No, no, no, she’s not a medical doctor, but she can sure cure your tax 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 at 615-737-9986. So here’s your host, financial counselor, and tax consultant, Dr. Friday.
Dr. Friday 0:30
Good day. It’s Friday and the doctor is in the house on this kind of gloomy and possibly really nasty weather. Hopefully, you guys are all staying safe in there. But we’re going to have a good hour of talking about my favorite subject, which is taxes. That’s right, taxes, taxes, taxes. We are still in the 2020 tax season, even though it’s 2021, we’re still doing taxes for the year 20. So if you haven’t filed your taxes, you still need to do that or file an extension. Extensions are going to be required on or before May 17, which is the deadline date. Remember, an extension does not extend the money due. So if for some reason, you don’t like the numbers on your tax return, and you’re thinking, “Hey, I’ll just wait and see if I can do something.” Or if you’re waiting still for forms, because I still have several cases where K1’s and things like that are not received. You need to make sure when you file your estimated tax amount when you file your extension, go ahead and send in an estimated tax form. That would be the best or smartest way to handle that. So if you’ve got Tax Questions, this is the show to do. Call 615-737-9986. We are taking your calls.
Dr. Friday 1:44
I’m an enrolled agent licensed with the Internal Revenue Service, which means it’s all I really do guys is taxes and representation. So if you’ve got IRS issues, you’ve got problems that you’re trying to deal with. I’m the person, you least want to take the first call to. Our initial meetings are always free, because we want to make sure that we’re all on the same page and how and what we’re going to do to try to help some sort of resolution to your situation. So if you need help, you can call the office on Monday and they will set up an appointment for you. I know many of you have probably sent in or I know we get quite a few through our websites, I will let you know that we’re going to be responding to those. It’s been a little crazy. We’ve had a lot of tax clients come in last minute that was from last year. So we always try to get the same clients done. And so it’s just been a little bit busier considering procrastination is probably the middle name for many, many of my clients. So again, if you want to join the show, you can at 615-737-9986.
Dr. Friday 2:44
All right, so making sure that a lot of people when I’m looking and reviewing taxes, and they’re trying to itemize again, itemizing is only required if you’re spending more money on interest, or if you’re a very giving person, you have a lot of charitable contributions. Because the average person that has less than $12,400 is not going to itemize with those deductions, which are basically made up of property taxes, sales tax, interest, and contributions this year only so far. I don’t know if it’s going to roll into 2021. But in 2020, they did add an additional $300 worth of contributions. Now that is the same no matter if it’s a single person or married couple $300. So if you gave $300 or more, you will get an additional, even if you’re not itemizing charitable contribution, so don’t miss out on that. Otherwise, obviously, just making sure that you have all of your tax documents, sometimes things get amended things get changed. That is what often happens when people come in. A lot of people rush to get their taxes done and then find out that something’s come in that they forgot about. Then they have to amend those taxes, we can now e-file amended tax returns.
Dr. Friday 3:59
Also, let’s talk a little bit about I know a lot of you guys sit by the computer and I think every single day often go on to and see where is your refund and where is your stimulus check. Nothing wrong with that other than the fact that I will let you know our office at least never can really do a lot to help under those circumstances your stimulus check. If you can’t find it online, you’re going to have to phone call and find out if there’s a reason you haven’t received it. I will tell you if you haven’t received the first two stimulus, the best way to get it according to the IRS is to file your 2020. Now I will tell you that is also holding up a lot of the refunds. Some people you know just taking longer than 21 days and I think the website now says 28 days for them to give the refund but it is taking longer. Usually, you can see in there when they have issued or if they’re going to issue but if you haven’t received it and the issue date has come past then you might want to call them and find out if there’s an issue with either your direct deposit or your mailing address, because again, a lot of people don’t always look at their tax returns. A year two or late, they may find out that they’ve relocated or they filed the taxes and didn’t look at the address until after they had been submitted. Yes, you can amend and refile taxes with the proper address, but who knows how long that’s going to take to get corrected.
Dr. Friday 5:24
So, the IRS is moving as quickly as possible, but you need to make sure that you have all of your information correct the first time, if possible if you’re looking for where your refund is, you can go to irs.gov, click on ‘Where’s My Refund,’ and it will give you a status update. Now in some cases, it will say they’re working on it, they’ve received your return, and they’re still processing. In many of those cases. They’re either trying to match up W2’s because you have multiple W2’s and maybe one of your employers did not file the W2 Social Security Administration. There are children that are being claimed that were or were not being claimed a year before and they’re trying to match up are you allowed to have those children as well as a lot of people are trying to get their stimulus money. Maybe that money according to the IRS has already been received, We’ve had a couple of cases where people have told us they had not received the money. But yet the IRS is sent back proof that the money was received by them. So again, I would definitely suggest reviewing your bank statements to make sure that that money, especially the first one where a lot of people say they’d never got the $1200. You know, as I said, we’ve had at least one case in our office where they said they didn’t have it, they looked didn’t see it, the IRS sent back proof.
Dr. Friday 6:41
They weren’t entitled to the complete $1200, and that’s why they didn’t see it. So you might want to make sure that your information is correct. And that you have, you know, checked to make sure there’s no deposit. I had another one which thought that they hadn’t received the refund because it was similar to the amount of refund they were supposed to be getting from another year when they had filed and then found out that that was actually the stimulus money and they had not received their refund from the other side. So nothing is actually perfectly simple, as we all know. But we do want to make sure that you are getting your information. So again, the IRS website is going to be your best bet. The second bet will be is getting on the phone and calling the IRS. I’m getting more and more positive responses where people are saying they have actually spoken to a revenue officer and have been able to get information about their situation. And again, I’ve had two people email or text me during my radio shows. And they’ve said that they had to prove their identity. One of the reasons they weren’t getting their refund was the IRS had supposedly marked it as possible fraud, and therefore they were going to have to prove and that’s pretty simple.
Dr. Friday 7:52
Again, I’m sure I’ve shared this before, but I had to do that last year, when I filed my tax return, I got a letter in the mail that said they couldn’t process my 2019 without me calling to prove that this was a legitimate tax return. Therefore, it was processed and completed. You know, they are trying to make sure and it’s it seems like more and more because we probably have had between my clients and my listeners, you know, 10-15 people that have received this notice saying they had to prove their identity. In some cases, it’s not as simple as others. Some people are comfortable with calling and talking and some people are just completely not very comfortable with dealing with the IRS period. So this is something that an enrolled agent or representative cannot do for you. They could be in the room with you, I suppose. But they cannot answer those questions the revenue officer on the other end of the IRS person wants to make sure they are speaking with the right person.
Dr. Friday 8:49
So if you’ve got questions, or if you’ve received one of those love letters, and you’re not too sure what the next step or maybe you’re just getting some of those letters from the IRS and saying that you need to do something and you’re not too sure where to begin, give us a call. You can call the radio show right now at 615-737-9986. We’re taking your calls, talking about all kinds of exciting things, and making sure that you have your information and what you need to do. If you’re not sure or maybe you’ve made a payment plan and then the payment plan went defunct, and you don’t know if you can pay off the IRS and you’re not sure. Every year you’re getting further and further there are steps and rules we need to follow when it comes to getting you back on track. And part of it is guys you have to first pay forward before you can deal with the past. That’s a simple set. For self-employed people, the hardest thing to learn is that you’re making 100% and you’re not entitled. You’ve got a partner in business and you might as well look at for every dollar you physically earn 25% of that is Uncle Sam’s. Now that would be after your expenses, but in some cases, a large chunk of your expenses. Is your lifestyle and that is not a tax deduction. Your clothes, your food, every meal, you eat out, all these different things are not legitimate tax deductions that allow the miles. So you need to look at your true numbers, and you need to start setting up a separate bank account saying, “Hey, 25% of this check needs to go over here.” If you work for somebody else, they would be taking it out of your check. Since you are self-employed, you’re responsible for that money. I know you’re I’ll say, “Well, I’m barely making it right now, I can’t afford to give another 25%.” If you don’t learn or re-evaluate your business, at some point, the government is going to have to shut down your business, because you’re not actually paying taxes on money that you’re earning. There are ways that we can help train lessons to be learned. You do have to at least start taking that information and go from there and move forward. Alright, let’s go and hit Joey in Tennessee real quick. Hey, Joey, what’s happening?
How are you doing? I didn’t file taxes last year. So I went to tax do it in February, and they did non-filers for my second and third similars. It keeps saying that it’s being processed, you know, I haven’t heard anything, they haven’t given me an answer.
Dr. Friday 11:17
They’re like me. We don’t have any way of telling. All we can do is send you to that website once the tax return has been filed. If they’re saying they’re processing, it means the return has been received. The question is, the IRS is trying to figure out I guess, and I don’t know, this is a guess, Joey, that they’re trying to figure out if you’re entitled to the second one. The third one would not be a part of this. Sounds like maybe you got the first 1200. Now you’re looking for the 600. Is that correct?
Yes, and the third one. Yes, ma’am.
Dr. Friday 11:46
Right and 1400, which wouldn’t have anything to do so far with the tax return. But the 600 would be what you’re looking for, for a refund in 2020. All I can tell you is hang tough, it should come what we’re being told from the IRS, as long as they’re showing it due to you. And they’re going to be issuing a bunch of letters out explaining to people if they don’t get them or why they’re changing them, meaning somebody may have claimed you as a dependent. I’m not saying that’s the case, Joey in your case, but I’m just saying, or someone received, and they’re showing the check cashed, even if it wasn’t to you, Joey. So the next phase will be is once those letters start coming in, and we can then go back to the IRS and say, “Wait, we never received it, we have proof that we didn’t get it.” They’re going to have to do tracking or something. But right now, they’re just moving really, really slow. Since you did that in February, the earliest they could have filed if it was like on February 23, when the IRS opened. But you should have received it by now in all honesty. But obviously you haven’t. So I’m going to assume that they’re running into some sort of issue with you. But I couldn’t tell you what have you tried calling the IRS at all?
I have not been able to get through. I want to know if I’m the only one.
Dr. Friday 13:05
You are not, I will tell you I get at least three to four phone calls a day with people saying they filed they didn’t get it, or they haven’t received anything. And when they go on the website, it doesn’t give them any basic information pretty much as you said, their processing or the information you provided doesn’t tell us enough for something, there’s some other error, whatever comes up. But neither of them is very helpful because it doesn’t tell you what you can do if you’re not receiving it. So yeah, I’m sorry to say that I’m not much help on that one. All I can say is keep going or try calling the IRS.
Yeah, did it as long as I shouldn’t panic.
Dr. Friday 13:40
You shouldn’t panic yet. But I will tell you, I mean, you’ve been at it for at least two months. Now, since you got yours out in February. It hasn’t come out yet, then my guess is you probably need to touch base with them to find out what the issue is because it seemed like to me if they’re telling us 21 days that would have put you in the middle of March, you know, I’m just saying and you would have by then get a letter or some sort of communication but you’re not alone. I get a lot of people calling me saying the exact same thing and having waited a long time and I guess if anyone is listening and you got any advice maybe you’ve been talking to the IRS and have something please join the show with us because that way maybe Joey and a lot of other listeners will be able to get some information. Joey, thanks for calling. I appreciate it.
Thank you too, ma’am. Thank you.
Dr. Friday 14:27
All right, we’re gonna take a quick break. When we come back we can get some more of your phone calls at 615-737-9986. We’ll be right back.
Dr. Friday 14:50
All righty. We are back here live-in studios. If you want to join the show. You can at 615-737-9986, we are taking your calls talking about taxes. I also want to talk a little bit about the PPP and a few things that are going on. Remember, all entrepreneurs could do PPP, and those are extended till May 31. So if you have a schedule C or schedule F on your tax return and you have an income, a profit from those, not negatives, you would qualify possibly for some assistance with what’s called PPP (personal protection loans) by the SBA. Also, restaurants, bars, wine, restaurants that you know do wine and beer, all of them there is the restaurant retail loan coming out. And that one’s another one that’s going to help especially if you had like a 30% loss from 2019 to 2020. Trying to help those businesses recuperate, again, this is through the SBA. So it is something you definitely want to take a look at. If you have a restaurant, and you have the ability to show that you have had severe losses, they are trying to get more money out there, they’re trying to help save, especially if it’s a woman-owned or small restaurant, they’re not looking at really big franchises, as much as they’re trying to help at least the first round trying to help more I call a mom and pops or single owners have one or two restaurants, that kind of thing. So it would be huge to be able to help those individuals. So if you are one of them, you want to go to SBA and look up restaurant loans. It’s just been introduced, and it should be coming out really quickly.
Dr. Friday 16:35
Right now, I think they only have a sample application on the site. But it will give you all the information of what you need to be able to go and get prepared to see if this is something that you might be able to use to help your small restaurant or bar survive because I know a lot of them are on the verge of closing down. Even though a lot of people have been awesome about eating out and doing things with small businesses, it is still very hard for small restaurants to be able to make a profit keep their employees on board. To just recuperate after the shutdowns especially at downtown Nashville and them. So if you’re one of those small businesses, and you haven’t received something so far, take a look on the SBA website because it is something that’s out there, I don’t want you to feel like you’re kind of alone there. Because you’re not there’s a lot of businesses that are trying to help out. So that is something out there. Again, any small business that has not received PPP, that is in business, you would qualify if you have employees or a Schedule C, you would qualify for some PPP money. And again, that has been extended until May 31, I believe. So that might be something that you need to look at to help keep your business alive and keep you moving.
Dr. Friday 17:53
If you have questions about that, or if you’re in the process of doing your taxes, and you’ve got some questions. Don’t forget that when March 12, I believe it was when the current president signed into new tax law, part of that two new tax laws was also the correction on 1099 G’s or for unemployment. The first $10,200 is free. But there is a caveat to that, it’s only for individuals that make $75,000 or less, married couples that make $150,000 or less. If you make more than that, and you happen to have gone on unemployment for a little while, you will be paying tax on it as well. So again, this is only for families that make less than 150,000 or individuals that make less than 75,000. Pretty much the same game as it was for anyone receiving stimulus money, pretty much the same situation.
Dr. Friday 18:43
So if you had those and you have filed your taxes back in February or March prior to the stimulus, the new tax law, the IRS is telling people to not file amended tax returns, and wait because they’re going to redo our software and we are going to make those corrections and send you the additional money that you would be entitled to. So again, that’s important to have because I know we have about 40 returns out there just ourselves that were filed prior to the change of the law. We are specifically told not to do anything. So if you’re one of my clients and you’re waiting, that’s what they’re telling us to do. Wait. They want us to be extremely patient this year. It seems like we’re doing a lot of waiting to wait for PPP money waiting for the stimulus money, and waiting for refunds. So if you have questions or if you need help with any of those subjects, I will do my best. But I’m telling you right now the best you can do right? The second is to go on to irs.gov and check the status of your refund. Or if you want the best way to actually do some of the information on the stimulus and where your refund is. I had one person that pulled up theirs and they’re saying no information, and then I gave them the information while they were online and it came up. This particular person did not know the filing status we had filed under. And so they had it in the wrong way. Anyways, just make sure that you have the right information that you’re putting it in because it will come up with no information available, please check your information, if that is the case. Just putting that out there for you guys. So you know what’s happening, and you know, how you’re going to deal with it and what’s going to happen.
Dr. Friday 20:30
If you have other questions at this point, guys, you can reach the show at 615-737-9986. Okay, so making sure that you are tracking your expenses. I’ve been seeing a lot of clients this year, especially in the last couple of months that are maybe behind a couple of years, small business owners, and not having good record keeping. Of course, some of these people have also left money on the table, right? We talked about PPP, we talk about the stimulus, if you haven’t filed taxes in the last two to three years, you probably not received any of that money. So you need to make sure that you stay current with your taxes, because you never know when the government is going to do something interesting like handout some money, and then you’re sitting there going, “Wait for a second, I didn’t get any of that.” That’s because you weren’t current. Now even individuals that are applying for the stimulus money on their tax returns, it doesn’t have the same shielding as it did when you had the money that would have been coming to you prior to going through the IRS if that makes sense. So when they offered the stimulus and that money came directly into your bank or it was a check sent to you. If you owe the IRS money, and if the second stimulus, if you had back child support, you still receive the money. But if it’s on the tax return, they said they were going to change it and make it something different. But in all honesty, they did not do that. And so they’re basically once it’s on your tax return, it’s reducing your income tax or applying to any taxes. So that’s why when some of the people are asking where they’re stimulus check, in some cases, if some of them had outstanding Child Support, back student loans, or any of those kinds of things. What was going to be the interest on that? So it’ll be interesting. Hey, let’s go to Randy in Tennessee. Hey, Randy, what’s happening?
hey Dr. Friday. I’ve got a question about it, I’m not exactly sure what it’s called and want to call it a 1021 or something like that transfer for property sales. If you’re going to sell a piece of property at one location and buy something at another location. I guess it was the same state. I’m not sure about that. Can you explain that to me a little bit how it works?
Dr. Friday 23:02
Absolutely, It’s called 1031, you were barely close. So it’s a 1031 exchange, and basically, it’s been around a long time. But it’s like kind is what it’s referred to. So let’s say you have a piece of real estate, let’s that’s a most common thing, you have a piece of investment, real estate. And you sell that piece of investment, real estate and you put the money an escrow will be put aside and the 1031 and then you go buy another one of a light kind. So an example would be you’ve got a rental home that you’ve had for a number of years, you decide to sell it, it’s worth $200,000. You sell that home for 200,000, you have to go buy something equivalent to that. Now you can buy up to three properties with 1031, but theoretically have to spend $200,000 to buy the next property. So it’s not what you originally paid for it, It’s not what you originally had, it’s what the selling price is compared to the new investment has to be for the same amount that you sold the old investment.
So he sold one property, if you sold one property, you could buy three with that 200,000?
Dr. Friday 24:12
Yep. You have up to three, and it doesn’t have to be in the same state. This is a federal law. So it’s anywhere in the United States.
Okay, is there a timeframe on that?
Dr. Friday 24:25
I believe it’s 90 days, I think there are some extensions but all in all. I think you have to have the light kind of the ones that you want to buy within 90 days listed. Again, I’m not a total expert. I’ve heard that there are some extensions that can be given. But I would always shoot for what the requirement is just to make sure.
Okay, and that is tax-free? If you do within the requirements of the 1031 transfer?
Dr. Friday 24:50
First, the text and the next building and then theoretically keep deferring it until you either pass away and then the step-up in basis happens or you sell it in. At that time, you’ll recapture all those deferred capital gains.
So the basis does read, I guess you said the basis, like the basis on a $200,000 piece of property, if it was 100,000, even though you bought another $200,000 piece of property, or three of them worth 200. That basis would still remain 100,000?
Dr. Friday 25:22
It will stay at what the release, whatever the capital gains that you had on the original first one, that will roll into the next one. So your basis will be what the original one was at that time if that makes sense. So like you just said, if the basis on that property was only 100,000, so you would have had taxes on a profit of 100,000 capital gains. The new one, the basis rolls in at 200. Now, if you have to do improvements or anything else after that, it will increase the basis, but you’re keeping that same basis rolling into the new property that you would have had on the old property.
Right. Okay. Okay. Well, that explains it.
Dr. Friday 26:01
Cool. All right. Thanks. That’s a good call. I appreciate it.
Great. Thank you. Thank you. Bye.
Dr. Friday 26:06
Bye. All right. Let’s hit Lisa, real quick before we take the break.
Hey, Dr. Friday. I’ve got a question. I get paid a form 1099 NEC and I only work for this one company exclusively. I do accounting services for them. That’s the way I get paid. So would I qualify for PPP money because of that or not?
Dr. Friday 26:35
Because you do a Schedule C on your personal tax return, and you pay all of your own social security and medicare or self-employment tax, however, you want to refer to it. So that’s what they’re looking at. So you are considered a small business owner.
Okay. All right. Yes, they reimburse me for like, if I have to go to the post office, you know, sending out packages. I mean, they reimburse me for some things, not everything.
Dr. Friday 27:03
Right. So, basically, they’re paying you for your time, and they can’t reimburse you for that. In all honesty, it sounds like their kind of treating you a little bit like an employee and kind of like a subcontractor. But in all honesty, your tax return is reflecting a subcontractor or a small business owner, because there’s a Schedule C that 1099 used to be miscellaneous this year in NEC’s is reporting on and then you pay all of your own self-employment tax.
Dr. Friday 27:32
That’s what you’re going to, they’re going to want a copy of your schedule C. And based on whatever is on, I don’t remember what the one that rolls over to 1040, whatever your total profit is, that’s what they’re going to use as if it was your self employed income.
Okay. All right. Then I got one other question. I have my son, who is disabled, still lives with us at home, we have to take care of him. He’s 21. I’ve claimed him throughout the years, of course, because he is disabled. Could I not claim him this year? Because he was not eligible for any of the previous stimulus money. He did get this last one.
Dr. Friday 28:13
It’s a great question. And I’ll be honest, the fact is, he probably has social security. I mean, he should be entitled to that, assuming I don’t know that for a fact. But most children that are over the age of 21, will qualify for their own social security benefits, It’s not earnings, and he still legitimately a dependent of yours. Let me clarify that. So, you know, the problem is, I know a lot of people are looking for those monies. The IRS has kind of come down with if it’s a legitimate dependent, you need to still claim them, you are actually getting 500 each, and that’s combined. So you would get $1,000 versus him getting 1800. Big difference. I’m not saying it isn’t, but the IRS is saying the $500 is supposed to accomplish, what 1800 would have done if he had been living on his own. So, that’s why they changed it for the third one because everybody was freaking out, saying, “My 17-year-old didn’t get their money. I’m not getting any money.” In the first one, it was kind of a wash of it. You either got $500 as a dependent for them and or they get the 1200 right, I mean, the second one, you get 500 and it was 600, it’s only $100 difference. But the first one was the one that a lot of people were quite upset about. They finally got the thing, right, but the third time, it doesn’t take government long does it? But anyway, you know, there’s no easy answer. I will tell you, I know a lot of people that file their children as non-filers because they wanted to get that additional $800. I am not absolutely positive how the I don’t think there’s anything for any listener did that I don’t honestly believe there’s anything wrong. I don’t think the government’s going to do anything but in all honesty, they have kind of come down and said, “Hey, if they’re truly legitimate dependence, then they’re dependants and you need to go through that direction. If they were truly not dependents, then they should be filing on their own anyways. So it’s not an easy answer because your child is, you know is over the age of 21. I’ve always felt there should be, I’ve always felt I have a nice, it’s the same way. I’ve always felt that children with special needs that will be living at home, basically, their entire life or with some care should qualify as a child not as another dependent, meaning that you qualify for the $2,000 every year versus the $500. No one’s asked me, unfortunately,
Well, that’s fine. I was afraid if I took him off this year and then tried to put him back on next year that it might cause a problem.
Dr. Friday 30:42
No, it would not, it’s the answer to your question. What happens in normal life, children leave the home than end up coming back divorce, whatever, that is not a problem.
Gotcha. Then they gave us the 5600. This time, we got the 5600.
Dr. Friday 31:00
Did you get 1400 for him in the third stimulus?
Right. But he also they also sent him an extra 1400 to him directly?
Dr. Friday 31:09
Well, that’s the mistake, My understanding is the IRS can’t correct them. So you kind of got his money then. Because if you take the $1,000, you guys get every year for claiming the $500 every year, plus he got 14 Plus you got the 14, if you add it all up, you’d actually be ahead.
Right. Okay. Well, I just wasn’t sure if I should do something about it. But maybe they just sent it directly into his account. So, you know?
Dr. Friday 31:33
I’m not too sure. Yeah, at this point. I don’t know what that means. I’m assuming we’re going to hear a couple years from now what we’re supposed to be doing. But at this moment, there’s not much you can do.
Right. Okay. All right. Well, thank you so much.
Dr. Friday 31:45
No worries. Thank you. All right, we’re gonna take a quick break. And when we’re done here, we’ll come back to your phone calls. You can join the show at 615-737-9986. We’ll be right back.
Dr. Friday 32:04
We are back here live in-studio on this very kind of dark outside right now. Very nasty Saturday. So hopefully everyone’s enjoying their Saturday doing something maybe inside. If you’ve got questions or you’re working on taxes like I am, you could give me a call at 615-737-9986. Like Lisa, who called a little bit earlier, I know for a fact there’s quite a few small business owners, maybe you don’t even really think of yourself necessarily as a business owner, but what the IRS does consider you. So with the SBA, people that receive 1099 is file their own taxes, do their own thing, there are quite a few of you out there that maybe had a pretty hard 2020 year, and you would be entitled to some of those PPP funds, and they are still available for people. So it is something to think about. If you file a Schedule C or Schedule F if you’re pharma, there are some other ones, but either way, you need to put some thought to possibly looking in, you can find the information. I will tell you that I’ve been using a company called Lindow, you can go to your bank, that’s usually the very first place I suggest anyone to start, if you’re looking for PPP loan, you can also Google PPP loans, I’m sure there’s a bunch of other companies. Like I said, I’ve been using a company called Lindow for ones that I don’t have direct banking information on. But any way you look at it, you can find someplace that might help you move forward and to get some of that money.
Dr. Friday 33:39
Remember, if it’s handled properly, not only will you receive the PPP, but you can get forgiveness on the PPP. Again, it does take good record keeping if you’re self employed person, you need to be drawing that money back out to pay yourself because you are the employee of a self employed business. That’s why a lot of people didn’t understand because it’s called the personal payroll payroll protection program, but as a self employed person, you are the employee of your business, you are the self employed person, and therefore you are the person that’s going to need to make sure that you have everything you need when it comes to keeping your business alive and tracking that information properly. So just want to make sure that you have what you have. And I don’t want you to leave or close your business because maybe you didn’t quite find the right information and you ended up having to close down because you couldn’t keep your doors open while we went through this crazy time that we’re going through right now. All right, let’s head back to the phone lines about Pete in Nashville. Hey Pete, what’s happening?
Hey, Dr. Friday. How are you doing?
Dr. Friday 34:45
I am doing very well. Thanks for asking.
Do you still call yourself the crazy tax lady?
Dr. Friday 34:54
I would say yes. I have more than once said that. Yes.
Okay. What is the standard deduction?
Dr. Friday 35:03
So it’s 12,400, I believe for an individual and 24,800 for married couple.
Okay, now I do the SR., and it’s a little different?
Dr. Friday 35:18
So it’s 14, I think 14 one, because you get an additional $1500, or whatever, I think for being over the age of 65. Then if they’re married, I think it’s like 27 one or something like that for a married couple.
What if you’re over 65 and legally blind? It’s a little bit higher?
Dr. Friday 35:43
The legally blind does give us a Let’s see here. I know who this might be even legally blind. Let me see if I can give you the answer on that one. Yes, there is an extra dollar amount, but I just wasn’t sure if you’re over 65. If it actually gives you the extra dollar amount or not. Trying to check it out real quick. I’m gonna cheat and use my system. So it would be $15,700 if you were single, legally blind and over the age of 65.
Okay, now, if your duction is higher than your adjusted gross, you don’t have to pay your taxes evidently. Right?
Dr. Friday 36:23
That is correct. As long as your income is coming through social security or any W2 pensions or any that’s laws. As long as its not self-employment? That is true.
Okay, so you don’t even have to file, do you?
Dr. Friday 36:35
Nope, you will not be required to file.
Okay. One more another question. If you’re getting a refund, the deadline date of May 17. I mean, you really don’t have to get it in at that time. Right?
Dr. Friday 36:49
That’s correct. I mean, the bottom line is there’s no penalty for an individual that doesn’t. That doesn’t owe money to the government. You only have three years to file to get your refund, but there’s no penalty for not filing it on time.
Okay, and my last question is, once you figure your tech, it has a toolbox. I want to know what the forms are. The 18814 and a 4972. What are those forms?
Dr. Friday 37:17
An 8814 is only if you have parent elections report children’s interest in dividends. So that would be only if you had a child that’s on your tax return and you’re reporting their interest in dividends on your tax return. I don’t know if that applies to you or not. But that’s not something normal retiree unless you have a younger child that’s living with you that has interest in dividends. And the other one was a 4972? That is a tax on a lump-sum distribution. So if you get pensions or if you got money from an IRA and you took a lump sum, then that’s what you would file.
Okay, one more form. It’s online 29. It’s 8863? Something like that?
Dr. Friday 38:23
8863. Let’s see what that is. Thank God I have my software open, you are testing me. All right. 8863. Yes, American Opportunity educational that would only come into play when you have a 1098 T and you have a college student, assuming your income is less than 180,000 as a married or 90,000 as a head of household or single.
Okay, well, you got a perfect score. You’re 100. You got an A.
Dr. Friday 38:50
No problem. Thanks for testing me, I’ll talk to you later but alright, righty, thanks for doing that. Now let’s see here. We’re gonna keep moving. I think we’re I’ll take a break here real quick. And we come back, we’ll take the last bit of phone calls because I think I’m a little off on the clock but we’ll take a quick break and then we can get back to the phone lines. You can join us at 615-737-9986. We’ll be right back with the Dr. Friday show.
Dr. Friday 39:26
Alright guys, we are back live here and we’ve got someone on the phone line that was nice enough to wait through the break. So why don’t we head right on up to I believe Jason in Franklin.
Hi, yes, I’ve got a question. I ended up filing my taxes late for 2019. I was married but we end up filing married filing separately due to a pending divorce. On the forum when I filed my taxes it said ‘penalty interest’ they gave me an amount. Again, I just filed 2019, maybe two months ago? Should I expect to get have to pay any more penalties?
Dr. Friday 40:08
I would expect yes. Most of our software’s, personally, I have found to be a bit lacking because the way the IRS calculates is on a daily basis. So until the day they’ve received the payment, they continue to calculate what obviously our system is going to calculate. Even if it does a spot on job, it’s only going to calculate up to the time that we prepare them, right? I mean, I’ve just always found that you might want to figure out now if you have a really good record with the government, meaning, you know, up until now, you’ve basically always have been a fairly decent taxpayer. I’m not gonna say any of that. But if that’s the case, you may be able to get a one-time get-out-of-jail card free for kind of thing. You might be able to contact them and just say, “Hey, I know, I was late. I should be more responsible. The bottom line is, it wasn’t a perfect year. Could you please review my account just based on my history? Could you give me a waiver on the penalties ? It works, wonders. Kind of a no excuse, just get it out there. They’re pretty good about it. So again, if you have a fairly decent history, it’s something to think about.
Okay. All right. Well, thank you very much. I appreciate it.
Dr. Friday 41:21
Thanks, man. Okay. Alrighty. Let’s go to Deb.
Yes. How are you?
Dr. Friday 41:30
I am good.
Good. Yeah, I have converted an IRA to a Roth this year. Then I heard that I had a taxable event, due to COVID. I was laid from my employment at a retail store. And so I’ve heard that I can take that money and put it in three years of taxes instead of taking all that money and put it into 2020. Is that correct?
Dr. Friday 41:57
That is correct. I mean, you have two options, I’m not too sure if a conversion falls into the only reason I’m bringing this up. Is that a taxable event would be you took the money out you needed to live on, and then you want to be able to put it back and you can either put it back and you can get a refund, or you can split it between three years. Now, I don’t know if it says anything that you can’t put it back into a Roth versus putting it back into an IRA. You know, they’re both IRAs. So I would actually probably double-check that. You’re reporting the right information. Right now, if there was a taxable event due to COVID, there’s a three year spread, you can split it between three years, either. If you have the ability to maybe to earn the money and put it back in, you’ll get those taxes back and or spread the taxes for three years and not have to worry about putting it all at one time. That’s all correct. The only thing I would worry about our question is the fact that you never really took it out, you did an immediate conversion, which may not qualify for a COVID event is only thing I’m going to ask. I would have to look it up in the tax law. If you want to email me that question in that way, I can just send you back the tax law or if you’ve got a tax person, just have them double-check that to make sure it doesn’t create a problem. Other than that, you’re 100% correct. There is the ability to do it.
Okay, thank you so much.
Dr. Friday 43:17
Yep, thanks. That’s a great call. I didn’t know that for sure, and I just don’t want to give her 100% on that one. Because a lot of people had to take money out of their 401k to live, which is truly a COVID event. Doing the conversions, which are very popular right now, a lot of people are doing conversions, to try to help maybe lower their taxes later, or because they were in lower-income brackets in the year of 2020, they took advantage of that to be able to convert at a lower tax rate. But if you did take money for anyone that did have to take money out of a 401k. Last year up to $100,000. There is the ability to do this the split the three-year split and no penalty, no early withdrawal penalty, which is huge because that’s 10% on that withdrawal. So just making sure that you have that information. So if you did have to take some money out and you know, at least up to the first $100,000 you would be able to maybe spread out and get advantage of doing that versus doing it all in one year. Normally you would probably pay a 10% penalty if you’re under the age of 59 and a half.
Dr. Friday 44:26
So all of that being said if you’ve got some questions and you’re not too sure you can always email email@example.com, ask a question. Give me about 24 hours I will hopefully be caught up again and get your answers to you. If you would like to make an appointment, you can do that. One of two ways the calendar is closed on the website now. So you can either call the office at 615-367-0819 or email us again.
Dr. Friday 45:02
If you don’t have any idea who I am, and you’re bit curious, all you have to do is check out the drfriday.com is the website it will tell you all about who this crazy blonde is on the radio and talking about taxes as an enrolled agent. So if you have tax issues, you’re getting love letters, you’ve got notices of liens, or they’re coming against your paychecks or your homes. There are solutions. There are ways we can work around and get the IRS to be on the same page. But you have to first come in and get a meeting and then we have to figure out what’s going to be best for you. There’s a simple start there is a fresh start. There are a couple of different programs out there that you can use to hopefully get you on the right track. I always tell people you don’t want to come in, when you finally get back on your feet. If you’re at the bottom. That’s when you want to deal with the IRS because they have to look at your current situation, not what your earning potential is in the future. So again, making sure that you have the right information if you need help.
Dr. Friday 46:01
You can reach me at my email at firstname.lastname@example.org or call my office at 615-367-0819. I hope you guys are having a wonderful Saturday. Then next Saturday we’ll be out here again doing the same thing. So if you have questions, you need help with preparation. We can also file extensions for you but this time, unless you’re a returning client, I will be honest, we don’t have any openings. But we are more than available to do an extension and meet with you after May 17. That is the big deadline guys May 17. So make sure you file an extension on or before that day so that way you’re not late. Hope you guys have a wonderful Saturday.