Welcome to another episode of the Dr. Friday Show! In this episode, Dr. Friday talks all about tax filing and the following questions:
- What You Can And Can’t Use The PPP Loan For
- The EIDL Loan Eligibility
- What You Can And Can’t Use The EIDL Money For
- Update On The Heroes Act
- Can I Get Both Unemployment And PPP Money?
- Will There Be A Second Stimulus Check Coming?
- Why You Need Help With Tax Representation
- Talking About Capital Gains
and other caller’s questions!
Transcript
Announcer 0:01
No, no, no, she’s not a medical doctor, but she can share cure 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 at 615-737-9986. So here’s your host financial counselor and tax consultant, Dr. Friday.
Dr. Friday 0:30
Good day I’m Dr. Friday and the doctor is in the house but we’re going to have an unusual show today. So if you have a question, you can either text 615-367-0819 or you can just email Friday@drfriday.com. Both lines are down so we won’t be able to take your calls directly but again throughout the hour I will give out those phone numbers and email so that you can if you have questions, even if they Don’t make it on the air, I will do my best to make sure that you get the answers that you need to make good tax decisions, because that’s what this show is all about. As an enrolled agent licensed by the Internal Revenue Service, what we are trained to do and what I’ve tested for 20 plus years is to make sure that people have the information at their fingers to make good decisions because sometimes one decision sounds really good. “I should pay off my house. Oh, shoot, now I owe taxes on the money I took out of my retirement account. ” or things like that. Sometimes one hand doesn’t always go with the other. So making the right decisions with the right tools is what I want to be able to give people. But if it is that I want to make sure you have the information now to make the decisions. Especially now, we are in the middle of something that many of us have never dealt with in the past.
Dr. Friday 1:53
One of the big questions I’ve had we’re going to start the show out with today is self-employed individuals. So in most situations, for example, my business is a corporation. I can’t go get unemployment under my Corporation. But the employees that worked for me if for some reason they weren’t able to continue working may have been able to apply. We’ve been blessed, and that hasn’t happened. But as a self-employed a 1099 person. Many people applied for both the PPP Program and Unemployment. And so now they have the money on both, which means you’ve been paid twice for your time, right? Because if you went and got Unemployment, and maybe it didn’t cover the full income you normally have it doesn’t make a difference. It was covering you were saying you were unemployed during that time the unemployment kicked in, but at the same time you applied for what we refer to as PPP loans. That is also supposed to be 2.5% of your income, and you had them at the same time, you cannot push the PPP out, saying, “Well once Unemployment ends, I’m going to use the PPP money to pay me,” because it will no longer be forgiven. And kind of what you’ve done is double-dip on the same amount of salary. So you’ve been paid for the same time twice. So they’re really, really looking at this. Now many people have not gone into forgiveness yet, some have. If you’ve gone in under the PPP and did the forgiveness, and got forgiven on the PPP, but you also took unemployment you will have at some point, they’re saying that there is going to be a reevaluation and those individuals will be disallowed for forgiveness. Now, if you haven’t applied for forgiveness, yet, you can pay back the PPP or it does turn into a loan at 1%. Then depending on your loan, it can be either two years or five years. I believe they’ve extended it out but I did hear something on sba.gov call yesterday that said that if you were one of the earlier PPPs which I don’t think a lot of self-employed people got into the first round of it, but if you were one of the earlier ones before they change the ruling saying that you now have 24 months and five years, you need to go back to your lender and ask them to extend to change the information.
Dr. Friday 4:19
So if you got your money, like me, the PPP would have come in at the 12 weeks after, you know receiving it or whatever was earlier than the other ones and many of my clients we tried to get in there early. So if you did get PPP money and you’re self-employed 1099 and you could have hired new employees, you could have used the money to pay for those. Now keep in mind that is for employees, not other subcontractors. That is a big misconception. I know many people saying they have employees but if you’re 1099 and they are not legitimate employees if they are receiving W2 they are meaning if you’re withholding taxes, then it is an employee, if you are not withholding taxes, they are contract labor that person is self-employed in themselves and you are treating them as a subcontractor to you. So any money that you might have got under the PPP for that person would never be forgiven under the current tax situation for the forgiveness loan. So I’m not saying that you have to physically pay all this money back but I am saying that if you were looking at getting PPP money and Unemployment, you got them both they’re in the same basic period of time or were accepting them don’t look to see that money to be forgiven. It is going to turn into a loan at 1% for a period of time.
Dr. Friday 5:46
If you have questions about this and you need more personal definition or you get the direct questions, you can email friday@drfriday.com or you can text 615-367-0819 and I’ll be more than glad to hopefully give you a bit more information on that. But it is important to understand we’re now going through the forgiveness period, many of the PPP loans and people are a little bit surprised at how that’s going to work or who’s going to be forgiven and who isn’t going to be forgiven. So you really do need to make sure you’ve done a little bit of research so you understand exactly how that’s going to work for you and what you need to do. Okay, so another email and again, today’s shows a little bit crazy. So if you have a question, I am all here for you. We’re going to do this in a unique way but if you have a question you can email friday@drfriday.com which I do understand is a bit difficult when you’re driving a car, or you can text 615-367-0819 and we’ll take your calls either direction there and try to get you so we can get your questions answered. Again, if it’s not on the show, I will definitely get to the answers to the best of my ability.
Dr. Friday 6:30
Okay, so the next question I’m going to take is taking money out of retirement for the COVID situation. So back in June, when they passed the Cares Act of 2020, it provided significant relief for both business and individuals for the COVID. We all know we got the 1200 dollars, we have the federal unemployment, all these things came under the Cares Act. Another thing that came included in there was for retirement investment affected by the COVID to be able to gain access up to $100,000 of their retirement savings without being subjected to first early withdrawal penalties with the expanded window for paying the income tax over the next two years so you can pay your taxes I believe it’s actually three years I think, I will get that exact detail, to expand the payroll taxes that you owe. So, unfortunately, you just got to be careful, you don’t want to just take money out of that. I mean, this is retirement money. So we’re not playing games with it, we do want to make sure that you have a reason. So the bottom line comes is that they say basically provide significant temporary relief for positive individuals who experience financial consequences due to COVID. So maybe you’re a business owner, or you lost your job. You’re trying to, you know, do what you need to do. Because normally, if you’re 48 or 49 years old, and you take money out of there, you have a 10% penalty plus taxes. So you want to make sure that you don’t have any situation that goes in with that to cover what you need to do. You do want to talk to a professional about this, a professional financial planner, somebody that can help you make the best decisions, as I often say in my show, sometimes when you start out and you think, “Oh, this sounds like a great idea. Oh, look at the relief. I can go grab some money out there. I’ll worry about the taxes later.”
Dr. Friday 9:02
I’m not too keen about people worrying about taxes later because we don’t know what later is going to bring, and that could be a bigger headache later. But it could also be other ways that you can have access or use the money for a temporary period of time to be able to give you what you need versus taking the money out. Also, people require minimum distributions under the same situation. So we call them RMD’s. But requirement on distributions, you are not required to have to take money out of your retirement. Everyone knows that either 70 or 72, depending on when you start it. There is what’s called a requirement on the distribution it comes out of the retirements that you pre-tax. So you put money in before taxes. Now, when you hit that age, the government’s like, Hey, we want our share. You never paid us with that money in the first place. So they’re taking the money back, they want their share. You don’t have to and in fact, my understanding is again, double-check this with your financial planner, but you can repay it back into the account. In fact, the same thing if you borrow over $100,000 or less, it says here that you can repay back due March 27-31st can be delayed their loan repayments for up to one year. Unfortunately, the interest accrues no matter what. So there are some unique features to this that you might want to be able to do and move forward with, but you need to make sure again, I can’t reiterate enough, talk to your financial planner. Don’t just go grab money out of retirement account, and even putting money back in for RMDs. Make sure you’re doing it the right way through the right process so that you’re getting credit for the right things, but it could save you some tax dollars on how you know that’s what this show is all about trying to wake you up to other ideas that might actually be happening. Alright, we’re gonna take the first break here and we come back we’re gonna get to a couple of the emails that have come through. We’re also gonna talk about some capital gains. Be with the president and Joe Biden my think about it as well as this year you might not have the earnings, so you might want to think about zero percent capital gain rates. So there are some positives sometimes in the so we’re going to be right back with the Dr. Friday show.
Dr. Friday 11:29
Again, this shows a little bit unique. If you want to reach us, all you have to do is email friday@drfriday.com or you can text 615-367-0819, after 10 years, it’s like changing my train of thought and how things are going and what we’re going to be doing. Change is always good to a point at least. So I’m gonna go ahead and jump on to one of them. They just sent me something so we’ll talk a little bit we were talking about PPP loans will actually a natural progression to that would be, many people are also getting what’s called an EIDL loan. That’s the disaster loan given directly through the SBA. I’m really proud of this person submitting because so often really small business owners or people that work as a 1099 individual, don’t think about them actually really kind of being self-employed. They just think, Oh, I do this, and I do it on the side a little bit. And so I don’t know if I should apply or not apply, whatever. Now I will say that especially the EIDL loan is a little bit more credit-based. So if you just have really bad credit, or you have a situation where, you know, you don’t have the ability to. I’m thinking because I have some clients, I will tell you self employed individuals, credit is a little bit harder sometimes because sometimes you’ve had to take some risk. You’ve had to make some decisions in building your businesses and it’s not always been good or easy ones and sometimes that affects the credit. But many people I am finding many people are qualified. So an EIDL loan is, first you want to go to sba.gov and you want to apply through that website. This is not applied through a bank, kind of like PPP was, even though it was never guaranteed under a bank, it was definitely something that was processed through at least many of the banks.
Dr. Friday 13:26
Here’s what you want to kind of want to understand eligibility used for the loan payments for dividends or bonuses may not be used. So like I was talking about PPP and unemployment, there are specific things we can use this money for what the government is saying, “Hey, we’re going to give these loans to help people make it through this very unique and tough time.” I think my sister was telling me about an article about somebody who went and bought a Ferrari with it or Lamborghini or something. You know this is silly, right? This is supposed to be money at 3.75. For most people, that’s a very good rate. And I believe it’s interesting only and I’ll get the exact details but I know it’s a 30-year loan. So you have that going through. Alright, so it cannot be used to pay dividends or bonuses distributions to owners, partners, officers, directors stockholders, except when directly related to the performance of service, it cannot be paid, so you can’t pay yourself back, theoretically. So if the company as dividends or money that it owes you, they don’t want to see the PPP money going that direction, repayment of stockholders principal or loans again, they don’t want to see the money going from the business to the stockholder or the investor expansion facilities or acquisition of fixed assets. They don’t want you expanding which is quite surprising in some ways, because in some ways, you might be able to create more jobs and more jobs would mean better for the community in which you’re living or whatever. So I am a little surprised. Repair and replace any physically damaged equipment. So, again, they really don’t want to use any kind of repair of equipment. They don’t want you using pain off of refinancing long term debt. So if you have a debt that’s at seven or 8% and you use this money and you pay it off. They don’t want that paying down regular installment payments or paying off loans provided by owners or federal agencies including the SBA or small business companies are not considered agencies they don’t want that. Payments any part of a federal debt no pain any penalties resulting in non-compliance of law federal state, etc no contractors malpractice no relocation no so those are the things they don’t want you to use the money for. Now what they’re saying is need to use outside normal operations. Extraordinary items can be included temporary rent or storage, accelerated debt due to disaster inventory replacement. They’re saying remember, there are no double dipping and EIDL and your PPP load. In other words, you can’t fund both programs for the same purpose. So you can’t use your EIDL to pay your employees because you just got paid for PPP to pay your employees the same situation as the 1099 self-employed individuals where I was saying you can’t have unemployment and PPP and expect them both to be the same. So you cannot double-dip on those.
Dr. Friday 16:28
Now what is really cool about these loans is that you are able to borrow the money and you have 30 years to pay it back. It’s 3.75%. Now some people may have also got in the beginning and I know they no longer have this but in the beginning, there was also a maximum of $10,000 advance EIDL loans and those would be also forgivable if it applied to your situation. Meaning you used it to help float the business rent or paying employees before PPP money came in. So it loans up to 2 million, 30 years interest rates are 3.75% for small businesses, and 2.74% for nonprofits. The first payment is 12 months from the date of the promissory note. If it’s less than $200,000 it can be approved with just a personal guarantee less than $25,000 is a non-secure collateral loan for 20 above 25,000, the SBA generally once collateral, there is no prepayment fee. So that means that if somewhere down the line, let’s hope the economy comes back and a lot of people are going to have to pay this back and maybe you were able to raise the money faster. No worries, you can pay this off anytime you want. But again, it is the loans over $25,000 usually require some sort of true tangible, you know, inventory equipment, etc, etc. or property. It says you can use what can you use the loans for unlike PPP which can only be used for payroll, business mortgage interest and business rent and lease, business utilities. EIDL loans can be used for a wider range of business capital to help make it through this economic disaster continuing through. So fixed debts, payroll accounts payable some bills can be used that were reoccurred.
Dr. Friday 18:20
Again, we already went through what we don’t want is we basically just use some common sense. If you have an EIDL loan and you’ve got it and you know you’re going to start making payments a year from when you received it. I have some people that are going to have and start making payments earlier there’s no there’s nothing wrong with that but if you know right now you’re having a tough time go for it. That you know it can be used your car and covering some of your bills if you are a Uber driver or a Lyft driver and that is your piece of equipment. So it can be used to cover the car but according to this, it can’t be used to repair the car. So talk about crazy so it can be used to put petrol in the car cover the insurance cover any of the basic needs for that car but it cannot put in it basically saying it can’t be used for total repairs. Then we’ll be able to go from there, and insurance, don’t forget, that’s pretty expensive usually for most people, so it would be able to be used for all those things. So if you are a small business, it’s still not too late. I believe they’re processing them till August 8. Now all the banks I was talking to one of them in as a Friday. So if you haven’t done the PPP, it may be too late to process. But if I were you and you’re saying “Hey, you know what, I just heard about this. I didn’t think I could do it, but maybe I should try” because what can it hurt. Again, If you get the PPP, and if you have unemployment, one will just be alone at 1%. But my suggestion is to do it today because it has to be processed and taken care of now, they’re closing it off on the 8th and that means that it has to be accepted by the SBA by the eighth, not started on the eighth with your bank. And they did extend according to the phone call was on yesterday with the sba.gov. They said they have plenty of money still out there. And so if you haven’t applied for the EIDL loan, and you’re a small business owner, it may be something to consider. Maybe you’re not at the point yet, where you really need the money. But think about this, we don’t know what the next 12 months are going to bring. And we don’t know if the money is going to be there when you really need to go out and borrow it. So my suggestion to most of my small business owners, we have 12 months to hold this money, and then if you don’t use it during that time, you never need to touch it. Then you can use it to pay back the government and all good and paid a little bit of interest. But it’s there in case of an emergency.
Dr. Friday 21:09
Again, we don’t know if a second time they’re going to come through, they going to try to shut down and they’re going to regulate us. Travel isn’t picked up. So there’s a large number of people in the industry where there’s traveling things. It’s not happening. I have people that are in the tourism business or the music industry, and they’re not getting their businesses back yet. They are directly associated. We know that there’s the Hero Act, we’re going to talk a little bit about some of the Acts that are still out there that are going to be signed to potentially one of the two or merger of the two will actually happen here, I think in the next few days. And, and all I see both of them pretty much allow for a second stimulus check if you qualify for those. Also the ability to possibly extend unemployment. I know many of you listening right now, unemployment is a concern. But we’ll see what’s going to come with all that. I personally think it should go to the Pacific industry. I think it should be people that are in a true industry being affected, not just industries where people are a little afraid to go into work. Yeah, I’m not going to say I’m a fan of that. I think unless you have a true legitimate health reason or, or children at home, I get it. If your children aren’t going to school now. Most of my nieces and them that are in school. They’re either live here in the Murray county where schools are open, or even in Georgia and a couple of the schools are open. Now I have one in North Carolina it’s gonna be like one day a week. I mean, what how can you possibly work when your child’s in school only one day a week? I don’t know. That doesn’t seem like a very logical concept. But you know what? That’s outside my agreement here we need to talk about taxes or money issues. That’s more about what I’m going to be good at. So If you want to join the show, it’s going to be a little unique this time but you can email friday@drfriday.com or you can text 615-367-0819. We’re going to take our next break and we get back we’ll have more of those. We’ll talk a little bit about capital gains. We’re going to talk about the Heroes Act or some of the other things that are out there so people might be able to start preparing and seeing what we might be expecting in the next few weeks. We’ll be right back with the Dr. Friday show.
Dr. Friday 23:53
You have questions again, we are here for you. You can email at friday@drfriday.com or you can text 615-367-0819, taking your calls talking about all exciting things. If you have any questions don’t hesitate. If I don’t always know the answers, trust me, I usually can find out what’s happening and where we’re going to go with some of these things. So let me talk a little bit about capital gains because right now might be a time to think about some of that. Some people are making less money, their income bracket is lower. So right now we have in 2020, a zero percent capital gains for individuals that are single $40,000. Married is $80,000 and the head of the household is 53.6. So basically, you can sell something right now and if it’s considered short term or I’m sorry, long term capital gains, you would pay zero tax. So maybe you have a house or some stocks or something that had some capital gains and you haven’t wanted to sell because, you were going to pay 15% tax or 20%, or even 23.9%. All those, but now in 2020 maybe something to consider. Because the next bracket basically, if you’re married, you go from $80,000, which is zero, and then you have 15%, all the way up until a married couple hits. Oh, that’s what is about $496,000. And then you are going to go to a 20% tax bracket for those. So you know, anything between $80,001 and 496,000, you’re going to basically be at 15%. And that’s great. I mean, gives you a little window there. But lately, it seems like I’ve had several people that have inherited properties in which there have been some sales that have kicked people into the higher tax brackets. So, a lot of people are like, “Oh man, if I have more than $400,000,” Well, it does happen quite often to be quite honest people inherit things their basis is sometimes inherited. But the way people inherit sometimes is inherited but everyone wanted to hold on to it. So they held on to it until 10-15 years later, now, it’s commercial, instead of being agricultural, the farm is now being bought for $4 million, instead of, you know, the $400,000 they inherited it at, and now you’re in this other tax bracket. So there are ways to work around some of that.
Dr. Friday 26:35
I will tell you might want to consider before the election if you have a situation with that because Trump has actually been trying to find ways to lower capital gains rate, Biden basically suggests if you make more than a million dollars, we’re going to tax you at 43.4%. Now, that would include your capital gains. So again, you might not normally make this kind of money, but can you imagine if you sold something you’ve held on, you made an investment and then having to pay almost 44% tax on it? I mean, that would have eliminated most of your profits a big chunk of it. I’m not too sure why the government needs almost 50% of your capital gains, but that’s a different conversation. So, right now is something you might want to consider when you’re at the voting tables, as well what you’re thinking about right now when it comes to all these different situations and making sure that you’re making all the right moves. So if you’ve got questions, again, capital gain rates, there are some windows of maneuvering there, especially right now, if people have maybe some stocks or something they want to sell stock market’s been doing pretty good actually. I’ve had a few people that have been doing a little bit of what I call short term sales. So that doesn’t apply because that’s considered ordinary income. But if you hold on to it for more than a year in one day, that is long term, that’s the ideal from the tech standpoint, not saying it’s always the best thing to do, but it’s still ideal for what you want to do and what you how you want to make it work as far as being able to work your taxes out.
Dr. Friday 28:09
Okay. So a question says, “When I come into the car repairs still running, but stalled out, get a little nervous to drive it and wanted to use.” Okay, so back to the EIDL loans. Let’s just use this because I know I probably do about 20 or 30 people that are either Uber drivers or Lyft drivers. So you guys maybe you got an EIDL loan. If you did, I was saying that so you can use it. Here’s my opinion, I would get a second and I’ll probably send this directly to you but my opinion is it’s used to maintain your business is your car. So I wouldn’t suggest go out necessarily buy a new car with the EIDL loan but I would say maintenance on that car. So if you’ve got new brakes, engines, whatever I would do repairs, insurance, tires, oil changes whatever it takes to keep that car running. Because if that car is not reliable, you can’t do your job. So EIDL loan would be used to make sure that the car is reliable to go do what you want and when it’s being done. But you cannot use that money for personal medical reasons. You can’t use that money to pay your personal rent, even though the car is parked outside the home, you can’t use that money to help you under those circumstances. Now, in theory, if you have profits, you use the money from your driving and you use the ideal to pay the gas and the insurance and everything and you have profits because you didn’t have to use that money to pay for those things. That profit could then be used to pay for your own personal care. So if you go out and you drive and you make $100 tonight, you use your EIDL loan to support the car. Then you would have $100 in your pocket to go pay your medical. So keep in mind there, there may be a way, of using it, but I would never take the money directly out of the bank and use it directly paid to my doctor or my dentist or my chiropractor because paying off medical bills would be a question.
Dr. Friday 30:21
Now I did have a situation where someone called me the other day, and he does roadside services, and kind of a freaky thing happened was apparently a car accident happened right next to where he was repairing a car and a tire flew off one of the cars and hit him. He ended up with medical bills. And under that circumstance, we’re thinking since it is going to be something that could be paid back he may need to use because he doesn’t have access to medical insurance at this point. So he is having to go to the doctor’s obviously and up at the hospital. So we’re going to see what we can do on that. But that seems like it’s tied directly to the job he was doing his job at the time of being hit by a rogue tire. Anyways you never know what’s going to happen in life so I would say you definitely want to consider doing that. PPP money can be used for health insurance and EIDL money to my knowledge was not set aside for health insurance or anything like that. But, uh, you might have and I don’t know if you applied for it but PPP money would have been available for you as well unless you collected unemployment for the time period that you weren’t able to possibly drive due to the COVID situation but there is the PPP if you apply for that, which you’d have to do like today. I think if it’s even open still, then you’re going to want to make sure that would work for your health insurance, as well as your loss of wages if you didn’t get anything for loss of wages because EIDL is not for the loss of wages. You can use it to pay people But that wasn’t really what the money is used for. It’s more to maintain your car but keep you working while you’re out there and that’s payable PPP is forgivable to do your repay so you might want to consider that.
Dr. Friday 32:11
Alright let’s see here so, you have to pay yourself to come normal costs of rent utility that’s for PPP that so also her portions had to be used that’s for the PPP low not for the EIDL. So I think you got an idea alone and people are probably like why are you talking to me like this? So if you have a PPP long to clarify PPP was sole uses Personal Payroll Protection. It’s used to pay, pay your payroll, pay your rent and utilities, pay your health insurance. That is all that money was used for. It’s not supposed to be used for anything other than that. And then you have an EIDL loan, which is the one and PPP was given to you for it started at 24 months at 1%. Now I believe it’s five years at 1%. But it’s a 1% loan EIDL is a loan at 3.75. Again, on the PPP, it can be all forgiven where you do not have to pay that one back at all. EIDL will definitely be paid back over 30 years or faster depending on your situation. So there are two loans out there along with unemployment, that many people could have gotten their hands or multiple ways of doing that. But that’s the different directions you might want to look at. And if you are a small individual with just 1099, maybe you have a small Schedule C and you only make, I don’t know, $6-7,000 a year, you qualify for these loans, you qualify for PPP, you qualify for EIDL, so you might want to look into those especially if right now you’re having a difficult time. If you’re an Uber or Lyft driver Maybe the cars are out there that the airport isn’t producing the same number of people, we don’t have the tourism that we usually have, therefore, you’re not making the money that you were kind of used to making and it’s because of COVID that you’re not making it not because you’re not trying. So that’s what these loans are coming into play and it’s something that you might want to consider looking into.
Dr. Friday 34:21
Now, again, PPP, I think is pretty much closed now. And if it didn’t finish on Friday, it’s definitely probably going to be finished on Monday, because they have to have them all approved by August 8. That’s the end date for SBA to approve PPP. So that will be where you’re at and what you got going. If you want to make sure that you have the situation or information on all that you can also email friday@drfriday.com and you can get your questions asked. I have another one here real quick, “This is my son is 59 and a half has an existing 401k initiated in 2000 has lost his job Normally he would be required to pay back the loan for 60 days or count the remaining loan balance as an early distribution. Is there any provision in the cares act to allow him to count the required amount to be paid back as a cares act withdrawal, not as an early distribution penalty?” My understanding Joe is hopefully you’re still listening and I will try to respond. I don’t know if I should talk and type at the same time. That can be kind of scary, but my understanding of that will be is because he lost his job. During the COVID situation. I’m assuming it was during the month of the COVID. He will not be hit with the penalty for early withdrawal, he will still get hit with the taxes. I would even do some research if I was him to find out if he can spread the tax bill over the two years versus paying it all this year because it looked like he made more money than he did because a 401k loan he got years ago, right, he initiated back in 2018. So, again, he should not have to have the 10% penalty. He has extenuating circumstances, I believe there’s an exclusion for that. But I would see if there’s any way of him spreading the tax bill, to give him a breathing room instead of having to worry about, you know, paying it all now, this pressure of doing that on top of everything else happening right now, especially with the loss of a job, I really hope that he’s able to get a better job at the end of the show, Joe, if you’re listening, I will try to send you a link on that so that he might have someplace to start to see where he needs to look at doing anything on that. So just making sure that we have the same numbers in the same situation. Alright, so I think we’re at the break. So why don’t we take our last break and if you want to text or email, you can text 615-367-0819 or email friday@drfriday.com. We will get to your calls or your texts whatever you want to call these things. When I get back we’ll be right back with the Dr. Friday show.
Dr. Friday 37:26
We are here, live here in the studio. You can join us in here, you can text 615-367-0819 or email friday@drfriday.com, whichever is easier for you, and I realized driving that makes it a little bit more challenging. But hey, we’re all living on the edge a little bit right now anyways, okay, so we have covered our capital gains. We’ve talked about the 401k we got the EIDL and the PPP pretty much in control. So many people, obviously, when we are filing our EIDLs, one of the other things that you really have to have or even the PPP is your Schedule C. So I’m going to suggest that you need to make sure that now’s the time to start thinking about tax filings, right? I mean, I know many people would July 15, we filed extensions, we have until October 15 for individuals September 15, for corporations and other entities. But that’s gonna be here before you know it guys. It is the first of August we have something like 45 days before we have to start filing corporate returns again. Time flies when you’re having fun, now is the time to kind of get in on the whole situation. And that way, then we would be able to get you file time to review them, make sure that we’re all on the same page, and then we’d be able to do something exciting versus just winging it and saying, “Oh, last-minute, here you go.” I don’t like doing taxes that way. I won’t say there are times that we have to rush to get something finished. But it’s obviously now the time. Let’s get you caught up. Also, if you haven’t filed taxes in a number of years, many of you left money on the table, not just the fact that you owed money. But let’s be honest, you probably qualified for the $1200 dollars, or even more than that, if you were married with children, and you didn’t get the money, because you didn’t file 2018, you didn’t file 2019. If you did just file 2019. The IRS is saying that it’s going to be a matter of time before that actually comes out. I mean, meaning people aren’t going to just be able to rush out and get it taken care of. It’s going to take them a while to process your form. And to get things done.
Dr. Friday 39:48
I will say that I just got a text today from one of my clients because we do a lot of offering compromises. We deal with those issues all the time. And in his case, we had an acceptance letter, but we sent it back in March, during the closing time, and he was getting very concerned that they weren’t going to accept his offer. It took a lot longer normally only took like normally takes 30/ 60/ 90 days. And obviously we sent it in March and it’s now August 1. So anyway, long story short, this gentleman text me actually this morning and apparently went to the mailbox and voila, they had received it and they accepted it. So he was very excited. It’s always a nice thing to have an acceptance situation, but we do want to make sure that you have all your paperwork in line. Now maybe a good time to consider looking and doing things with the IRS getting yourself put into the right situation making sure that you have you know all of your ducks in a row which means paying yourself currently. So if you’re self-employed, making quarterly payments, filing all your back taxes. You don’t want to make a deal with the government for old taxes and then have a big tax bill still do. You want to make sure everything is paid, you want to make sure you’re doing quarterlies I can’t tell you how many times I have been told by individuals that they’ve got everything control. And then I go and pull their transcripts, and they don’t have everything in control people. You don’t have your taxes caught up, you are not in control. You need to be able to file your taxes, know how much money you owe, get your transcripts, you also would have been able to get your $1200 dollars and there’s probably going to be another one of those based on everything from the hero’s act that I’m reading. It’s going to probably have a second distribution for money. It’s going to be there. I don’t know how much depending on which one you’re reading and who you’re reading it with. It is going to be some somewhere and then, of course, you have the ability to get those funds and those cannot be applied to your back taxes.
Dr. Friday 42:01
There’s also the heels act. So you have the Heroes, Act, and the Heals act. Not too sure why we have to have to because we have Republicans and Democrats I know. But, you know, we use the people to be on the same page would be nice to be able to get the information and do it. But the Heals Act, of course, is looking at a $1200 dollar another one up for 75,024 for couples in 150 plus 500. For each dependent, which is pretty close to the exact same thing that was actually done with the Cares Act, the heroes act is looking at tweaking that slightly, a little bit more money for 1200 dollars for the dependents instead of 500. So I’m a guess that the Heroes Act is the Democratic bill and the Heals Act is the Republican bill. Unemployment insurance under the Heroes wants to keep the 600 all the way to December of 2020. The Heals Act wants to reduce it to 200 per week through September and let the 600 expire and then it would start again another $200 for workers that are 70% or less employed. So it’s going to be an interesting race. It would be nice to have some closure. I do realize that many people are listening may actually have some need, obviously for Unemployment. Especially people we had a show on NewsChannel five and the gentleman called you know, he’s a culinary cook and obviously at that point, they had laid him off he works in the bars and restaurant area and they didn’t have him open. So it’s going to be an interesting situation. There’s both of them are trying to come up with some sort of work childcare grants for childcare facilities, hazard pays how for an extension for federal eviction, obviously, it expires. I believe it expired yesterday. So eviction notices are able to be issued and taken care of. I know there’s probably a mixed feeling on that one. If you own a house and someone’s living there without paying rent doesn’t seem like a very good or fair situation. But on the other hand, if you’ve gotten money from the government to cover that money, then there’s nothing for you to worry about. So, it just comes down to banks cannot evict people in either can individuals. So, I do believe that canceled July 31. So that is now right. The second is available. And it’s also gonna be interesting because the Heals Act is basically trying to put some limitations on lawsuits. I know there’s a bunch of lawsuits out there right now where people are suing employers for people getting sick. I always wondered if they also sued employers when people came home with the flu or came home with other diseases, headlice, whatever it might have been if employers were sued under those same circumstances, or if this is a new way for people to see things, so it’s going to be interesting, but under Heals Act, they’re not going to be able to basically sue for five years and they’re going to have to have true justification that the employer didn’t do their best to provide care to the best of the employer’s ability. The Heroes Act does not address that fact. They pretty much leave it open. So that’s going to be another interesting.