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In this episode of the Dr. Friday Show, financial counselor and tax consultant Dr. Friday discusses various tax-related topics, including recent changes to tax laws, retirement contributions, and inheritance issues. She also takes calls from listeners, addressing their specific tax concerns and questions.
Topics covered:
- Changes to tax brackets and standard deductions after 2025
- The end of the “stretch IRA” and new rules for inherited IRAs
- Business Owner Information (BOI) filing requirements
- Cryptocurrency reporting for businesses
- Contributions to 401(k)s and SEPs for individuals over 70
- Inheritance and basis step-up for inherited property
- Dealing with IRS payment issues and correspondence
- Tax implications for retirees and Social Security recipients
- Planning for tax changes when filing status changes due to spouse’s death
Transcript:
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, 737-WWTN.
That’s 737-9986.
So here’s your host, financial counselor and tax consultant, Dr. Friday.
Good day, I’m Dr. Friday and the doctor is in the house.
It is an awesome Saturday going on outside.
Hopefully you’re able to enjoy it.
But it’s time to talk a bit about taxes.
You know how I love taxes.
We’ve been doing this about 15 years together, guys.
So it is something we have a good time doing.
If you have a question, maybe you’ve inherited some properties or maybe you want to convert
or you have converted some 401ks or something along those lines, thinking about selling
out some stock, how will that affect your taxes?
I can give you some rough ideas.
Remember the information I’m giving to you is an outline.
You need to go to your tax professional and make sure the information is appliable to
you.
But I will do my best to lead you in the right direction so that you don’t make decisions.
Always better to ask these questions before you go and do them.
If you’ve purchased some land and now you decide you want to turn around and sell that
land, it may be a good time to think if this is not a primary home, maybe I should be doing
a 1031 so you’re not paying taxes.
Or maybe you’d rather pay the taxes and get the IRS out of your investments.
There is all kinds of trains of thoughts, but I can help you with how the tax changes
are happening.
We are in 2024.
And remember, the Tax Cut and Job Act ends at the end of 2025.
So we are at the last year and a half or so of the current tax code.
No one has any idea what’s going to happen after this election and probably depends on
who wins this election.
But we need to always take into account that we know that there are some things that could
happen and we’re going to cover some of those things that may come into effect and when
it’s going to change.
The end of 2025 was when the current tax code sunsets, right?
And so there are several different things.
One of the big ones is the federal tax brackets, right?
We go from the current 12% back up to 15, the current 22 back up to 25.
Our highest is 37 and we’re going to go up to 39.
So across the board, everybody is going to be hit with a higher amount of tax come January
of 2026, which isn’t too far off, guys.
If you’ve got a question, sorry, you can join the show at 615-737-9986.
Also one of the things that will change is our standard deduction.
As we know, the standard deduction doubled when this tax act came into play.
Pretty much increased it from like 12, it’s 24 now.
We’re almost at 30,000 for a single, I’m sorry, for a married couple and 15, 16,000 for a
single individual.
So that could go back to what it was prior, which means that the standard deduction would
pretty much split in half and then more people would have to go back to trying to itemize.
Don’t know if this is going to happen, but it’s on the table.
It will sunset at the end of 2025.
So it will also increase the SALT tax, the mortgage interest.
Some of those have changed.
So some of those will be better for some, especially some of the people come from other
states that have higher income tax.
Tennessee, we’ve been very lucky.
We’ve managed to keep the state income tax out of our situation.
And so we don’t pay as much, but if you come from California, New York, or any of the state
bearing tax issues, then you probably would like to see that change because my brother
lives in California and he probably lost about $30,000 off of his itemizing when that changed
because of his state income tax.
So that’s a big chunk.
So if you’re from those areas, you probably are looking forward to that.
The good news is the stock position change for the Secure Act increased the IRA caps,
the 529 plan.
So we also have the Secure Act of 2.0, which did some things to help us catch up on if
we hadn’t been doing retirement.
If you hadn’t put money aside earlier in your life because life was not easy, then it could
change.
So the tax act of 2023 or whatever, lowered the capital gains rates.
It separated tax brackets, assets held for long-term qualified.
It went to zero, 15 and 20.
It also retained the 3.8 net investment tax.
Guys, I can’t tell you how many individuals come in and they have sold something.
They’ve got something and they’ve got a big chunk, right?
They made 400,000 profit or even anything over about 250 for a married couple, anything
over 200, including your income.
There is never, because when people think of capital gains, they don’t think of the
net investment tax, but you should.
Because the net investment tax is almost tied directly to capital gains.
So anytime you have a larger gain situation or you happen to be in a higher income bracket
and you do have capital gains, the likeliness is you could get hit instead of the 15% tax
bracket, it’s actually going to be 18.8 instead of the 20% tax bracket for capital gains.
You could be 23.8 and that 4% almost 3.8% when it’s on a higher dollar amount, it throws
people.
I mean, I had a guy that came in and he did not have $16,000 difference and he did not
ever been told about this.
He obviously hadn’t been listening to my radio because let’s be honest guys, I’ve talked
about this across the board.
I don’t even quote basically.
I always say 15, 18.8 and 23.8 because there really isn’t a difference as far as I’m concerned.
There are certain things that may not go quite so high.
The 0% capital gains rate is wonderful, but it really only applies to a single person
that has $55,000, including all their other income in there or a married couple of about
110, again, including all of your other income.
So it’d have to be a fairly small capital gains or you happen to not have a lot of other
income.
So you’re able to maximize that situation when it comes into play.
So that’s the wonderful situation.
So let’s see here.
So actually here, 2023 capital gains.
So in 2024, if you’re single, you can make up to 47 plus the standard deduction of 14.
So that is $61,000 basically you can do.
And a married couple, they can have 94 and 28, so 22, 122.
So that’s a little shy.
But you can have the zero.
And then the 15% actually goes all the way up to 518 for a single person.
And here’s the marriage penalty and 583 for a married.
So single 518, married 583.
But keep in mind when you went from 47 roughly as a single person to 200, everything above
that 200 now has that 3.8.
Same thing for a married couple, anything.
So you can have zero and then you have the 15% up from 47 to 250, then everything above
that is going to be 18.8.
And then, you know, obviously once you get over those numbers, you start getting into
the 20% tax bracket.
Let’s see here, under age 17, they still have the $2,000 for the child.
That is in the year that your child turns 17.
So if your child on December 31st turns 17, that means you’re no longer, that child is
over the age of 17 or 17 and older.
So you will get $500 versus if that child is, I would say 16 and under, you get $2,000.
I never understood that one guys.
It’s not something I’m going to be able to justify because to me, most children don’t
graduate high school at the earliest is 17.
Most of the time, and sometimes it’s 18.
So if the child is still your dependent, and even after that, they’re likely to be your
dependent.
So the IRS, I actually asked this at a meeting, gosh, years ago of a revenue officer.
I said, what’s the difference?
Why not make that 18, you know, in the year in which you turn 18 instead of 17?
And their answer to me was the age of a 17 year old, they have the ability to go to work.
Therefore, they can participate in helping the family.
I don’t know about that, but that’s the answer that that was given.
So that’s important for everyone, I guess.
Don’t forget, we still have available the catch up for your HSA and your IRAs, right?
So you in a health savings account, if you’re 50 and older, you can play catch up and add
an additional $1,000.
And then on a IRA, I believe it’s the same thing, an additional $1,000.
So if you’re 50 and older, you can play catch up or you can just contribute more money to
retirement, trying to help you maximize what you have and where you’re going with that.
So these are important changes or really just what’s coming down in 2024.
We want to make sure that we are maximizing what we have.
I am not a financial advisor.
I want to put that out there because I get a lot of emails for people that say, well,
I want to convert my IRA.
And I understand in those situations, if you’re converting your IRA, you do want to talk to
a tax person because you want to know how much money is it going to cost if I decide
to convert this.
But I don’t give advice at all on what kind of investment, who should contribute to a
standard IRA or a Roth IRA.
That is for an expert that’s in financial planning.
I am not that individual.
So also want to bring up the fact that in 20…
Remember when we had the SECURED Act in 2019, it eliminated the so-called stretch IRA.
So when you inherit an IRA, there is 10 years that you have to take all of your money out,
you have to take the requirement on distribution, but you don’t have to clean it out to the
last day of the 10 years.
Used to be that it used to stretch over your lifetime and it would then go to the next
person inherited and they would stretch it over their lifetime.
And it was a way of inheriting money, but you wouldn’t have to actually take it out.
The IRS is now basically saying we want all of our money.
And keep in mind in a traditional IRA, in the idea of the stretch, the IRS would very
rarely get all of their money in anyone’s lifetime, right?
Because it was stretching over and smart families just allowed it to keep rolling over and you
kept having an inherited IRA.
But the IRS is, well, money hungry, right?
So they’re having enough troubles paying their bills.
So one of the things they said is, “Oh, wait, let’s get all the people that have IRAs and
they pass away.
Within 10 years, we’re going to get our taxes.”
So I mean, that’s millions if not billions and trillions of dollars that they would be
actually be getting because I mean, a lot of people have IRAs or 401ks or any of those
kind of traditional situations.
So it’s just really important to make sure you understand that when you leave this to
your children, they will be locked into having to take that money out.
So talking to a good financial planner that might turn around and say, “Hey, you know
what?
Maybe we should do a conversion or maybe we should do something now to try to leave that
tax burden to your family member would be a good idea.”
All right, we’re getting ready to take our first break.
Again, if you want to join the show, you can.
615-737-9986.
615-737-9986 is the number here in the studio.
We’ll be right back with the Dr. Friday Show.
All righty.
We are back here live in studio.
Sorry.
I didn’t hear the break.
That was my fault.
All right.
So if you want to join the show, you can at 615-737-9986.
615-737-9986.
Taking your calls, talking about all important things when it comes to taxes.
And probably one of the biggest things starting in 24, you might want to start thinking about
a state tax and creating a gifting plan.
Because without any further legislation, if Congress follows the sunset of the Tax Act,
the state tax exclusion will revert to its previous levels of 5.6 million for current
level, which is 12.92 for a single individual.
That’s kind of huge, right?
I mean, if your state is already close to 5 million, let’s just say, and with homes
and real estate and investments, it’s certainly not outside.
12 million would be difficult for a lot of us, but 5 million, not necessarily.
And so if you don’t have a good plan, and this is when I talk to individuals that really
should go to a financial planner.
They’re going to know these things.
They’re also going to talk to you about maybe the gifting, what you need to be doing about
gifting each year.
It increased 2024, it’ll be 18,000.
So right now you’re able to give up to $18,000 to anyone actually.
But let’s say that you want to help one of your kids or your child to buy a house.
I had one just recently where the parents, they put the down payment on the house and
they did it through a gifting.
And so the 18,000 that each of them can give their son was $36,000.
The difference, the amount above that, all we have to do is file a gift tax return.
And then that money will come out of their lifetime of gifting.
And so it’s not taxable.
The only person that would ever pay tax on gifting is the person that is giving it.
So if you were to go take money out of your IRA, you’re going to have to pay tax first
and then gift it to whoever you want to do.
If you win the lottery, here’s an example of a client I know, won the lottery and was
so thankful he started gifting the money out to his family before he paid Uncle Sam.
Not the best plan in the world because he pretty much gave it all away.
So he put himself into a really tight, unexpected situation.
So do not, I mean, there’s nothing wrong with doing that.
It’s just make sure you pay Uncle Sam before you turn around and have to pay the taxes.
Well, nothing worse than waking up and thinking you’ve done this wonderful thing.
And then Uncle Sam says, “Oh, you owe us $128,000 and you did not set that aside or
pay that.”
And everyone thinks when you win the lottery that the government comes in and they just
take all their money.
They took some, but it wasn’t enough.
And therefore he had thought because they had come in and taken some of the money, he
had it calculated as taxes.
And therefore he just thought he had it all in control and it wasn’t quite in control
as he thought.
So again, making sure you understand how that works.
And then there are several new rules involving cryptocurrency and other digital assets that
are still involving.
We know that, you know, things are transactions involving that may affect your tax planning
this year.
If you’re a freelancer, sole proprietor, small business owner, and you receive 10,000 or
more cryptocurrency in a single transaction, you may need to be reporting that to the Department
of Treasury on the 8300 form.
Now a lot of people may not have known that.
We as business owners, especially ones, I will say my business does not generate that
kind of cash, but let’s say you’re a restaurant owner or trying to think of something, something
that generates a lot of cash.
And so you want to go to the bank and put $10,000 in the bank and you need to provide
the bank basically where you received the money from.
It could be cash from the sales in a restaurant.
It could be from selling a vehicle.
If you’re a used car guy and maybe someone brings in cash to you, you then turn around
deposit it in the bank.
There’s nothing wrong with it, but there is a form that has to be completed every time
we have $10,000 in a one transaction in cash.
Now if it’s a check or if it’s some other format, then normally we don’t have to worry
about it because it has to go through the banking system.
But they’re saying now if you are an individual that is accepting cryptocurrency in your business,
I mean I know everyone thinks that because they’re doing cryptocurrency that somehow
it’s not going to be trackable, that it’s cash in essence, that no one’s going to know,
but it’s digital currency.
A, it’s definitely not cash, at least with cash we know that the currency isn’t probably
trackable until that person puts it in the bank, or I will say the IRS also does means
testing.
So if you’re living in a different manner, prime example is a lot of times the IRS will
actually do spot checks on audits and they’ll drive by the people’s house.
And if that person lives in a mansion with three or four sports cars and they say that
they don’t have enough money to pay the IRS, one hand is it, how did you afford all this?
And yet you say you’re only making $25,000 a year.
You know, I mean the numbers don’t match up.
So that’s the same problem that people are going to have with cryptocurrency.
No, the IRS may not have all of the access to the wallets yet.
That’s obvious in some of the situations.
But if your lifestyle, if you’re out buying and selling and trading and using that money
to do something, and then you as the small business owner like myself, if I were to have
one transaction that is $10,000 or more, I have to report that even though it’s cryptocurrency.
Because if I don’t, the IRS audits me.
Now they’re going to see that there was unreported income.
Even if you report it, you didn’t report it properly in the way it was.
This reporting for digital is somewhat similar to the cash.
It’s a banking law.
And I do want to bring up the BOI, the business owner information.
Don’t forget as any kind of small business, I mean, I guess all business, 1120, 1120s
and 1065s, which would be limited liability companies as well as partnerships, corporations,
all of them, you have a responsibility.
It goes also under the foreign banking, the foreign banking center or whatever, but as
part of the IRS.
And that is required for anyone that opened a business prior to this year, you have until
December 31st, basically to, to file this report.
It’s not a hard report.
It’s a little bit time consuming, but it’s not a hard report.
Basically you have to have every partner’s driver’s license or passport.
Most of the information is on those.
And you’d be able to file this.
If you don’t, the penalty is $500 a day, a day people, this isn’t a one-time penalty.
It is a day.
Now I’m sure that’s may or may not be hold up at court, but it doesn’t make a difference.
We prefer to avoid those.
So make sure that you have filed the BOI business ownership information by that time.
If you haven’t, then you need to, you know, you can call our office, we’re filing them
or if you need assistance or whatever, but it’s really, really important.
This is one of those that you don’t want to be late to the party kind of situation.
Because to my knowledge, there’s no waiver available for that.
If you have opened the company in this year, you only have 30, 60 days, I believe 60 days,
maybe it’s 90 thereabouts to file this form.
So it needs to be filed ASAP.
Pretty much as soon as you open the company, you should be filing the BOIs.
It’s that simple.
That way it’s just like getting your secretary of state, federal ID number, getting your,
you know, franchise excise numbers.
That should be the same time that you get all that, that you’re also getting this file
form.
To my knowledge, it’s a one-time situation.
We don’t have to file it every year.
It’s not like an annual report.
At the moment, it’s easily falling under just the situation that you want to be able to
do what you’re doing now.
So just, you know, putting it out there, keeping it real for you guys.
If you have any questions, you can certainly join the show at 615-737-9986.
Taking your calls, talking about all the funny things.
Tax code, just so you know, in 2024, you’re going to basically have a single filers that
will make up to probably tax brackets.
Here we go.
22% starts at $47,150 for a single person and $94,300 for a married and 24%, $100,000
for a single person, $200,000 for a married.
Penalty tax penalty really doesn’t start kicking in until the 37% tax bracket.
At that point, it’s a single person will do better than a married couple at that rate.
But other than that, it’s pretty much, you know, 100 here, 200 for married, which makes
sense.
All of those are important.
Don’t forget to step up if you have a 401k and you’re over 50 years old.
You also have the additional 7,000 that you can put in.
So that’s pre-taxed.
Always tell people if you’re dealing with anything where maybe you’re getting money
from one side and you really just want to roll more money into retirement, play the
game.
If you inherit $20,000 and maybe it’s an IRA where it’s taxable, increase your 401k
so that 20 grand will come out on your check and therefore your payroll taxes or your actual
tax bill will not be much higher than what it would have normally been.
Make sure your withholding stays up to what the standard is.
But it is a way of, and then now your money’s in a tax deferred just like it was when you
inherited and you’re not really changing your lifestyle.
It just makes life a little simpler in that situation.
So again, making sure that you have that health savings account.
Like I said, if they’re eligible to catch up $1,000 if you’re 55 or older and not enrolled
in Medicare, remember a health savings account, you have to stop contributing to when you
start Medicare.
So usually that’s 65 unless you’re disabled or you have some other situation where you’re
on disability or something like that.
So we’ll have that.
All right, while we get ready, we’re going to take another quick break here.
When we get back, we’ll get to the phone lines.
If Dan can hold through, that would be awesome.
You can reach us here live in the studio at 615-737-9986.
We’ll take your calls.
We’ll try to do our best to get this information.
I’m an enrolled agent licensed by the Internal Revenue Service to do taxes and representation.
That’s what I do.
So if you have tax issues, you have love letters coming, just also keep always in mind that
when we are dealing with a resolution situation, it is not going to be a fast resolution.
Unfortunately, I’ve got cases that have been open for a number of years.
So just stay tuned and we’ll keep up.
We’ll be right back with the Dr. Friday Show.
All righty, we are back here live in studio.
We’re going to be thankful that Dan held through that break.
And let’s go ahead and go live to Dan and see if I can help him out.
Hey, Dan.
Hey there, Freddie.
Thanks for taking the call.
Quick question, and I’ll take it off the air if you need me to.
I’m driving.
I’ll be turning 73 next year, but I’m still working.
Can I still contribute to my 401k while I’m also taking RMDs?
Yeah, it’s a crazy world, huh?
So yes, you’re not…
For one, if the 401k is with the company you’re still working with, you’re not even required
to take an RMD on it and you can still contribute under the current laws.
I’m self-employed.
You’re self-employed, so that’s a SEP.
And so as long as you will, I think you still have to take RMDs on a SEP, but you can still
contribute to a SEP at 73 because you are still working.
Great.
Good to hear.
Thank you.
No problem, mate.
Thanks for the phone call.
Appreciate it.
All right.
Cheers.
Thanks, babe.
And we got Mac in Nashville.
Let’s see if I can help Mac.
Hey, thank you for taking my call.
I got a question about the BOI.
I’ve had my business for like 21 years, so I never filed a BOI.
No, this is a brand new law that came in effect last year and they gave us until December
of this year to make…
Well, actually it came in effect January or February of this year.
Time flies when I’m having fun.
Because they basically gave us 12 months to make this happen.
So agreed.
We never had a BOI.
We’ve never had to deal with it.
I’ve been in business almost 30 years, never filed one before.
This is something to do with foreign banking.
I think they’re looking, my personal opinion, because when filling out these forms, they’re
trying to prove that the people that are claiming these K-1s are US citizens or that they’re
claimed properly on the K-1s because you have to have a passport or a driver’s license.
So basically is it for sole proprietor or just LLC?
No, 1060, yeah, it has to be an entity.
So 1065 form, 1120 form or 1120S, sole proprietors do not have to do it.
Okay, that was my question.
Okay, so it’s just LLC and corporations.
Right.
So it has to be a multi-member LLC, not a single member.
Copy that.
Thank you so much.
We love your show.
Thanks, Mac.
I appreciate it.
Thank you for calling.
All righty.
So those were great questions.
And I know the whole BOI, in my opinion, never knew what it was.
Wasn’t even thinking we were going to have to do anything with it because I’m thinking
it’s not really an accounting thing.
But most of my clients are the same as myself, which basically means we’re pushing it to
someone that hopefully understands it.
A lot of them are like, “Well, what if we don’t want to do it?”
I don’t believe, in my opinion, maybe there’s someone listening that knows more of this.
I don’t think we have an option.
I think we have to file it.
There are a few industries that are not required to file it, mostly financial insurance where
I think their licensing usually already covers this information, so they’re not required
to have to do this.
But most small businesses or medium or large businesses, whatever, do have to do this kind
of thing.
I think on the stock market, you’ve already filed a lot of this information because public
trading requires certain exposure.
But most of the companies I deal with are privately owned, small business, and therefore
you have…
We’ve never did this.
We never had to do this information.
And it may be also another way of somehow then matching up if money is coming in and
out from overseas.
I really don’t know.
It has to do with the foreign banking, so it has to have something to do with foreign
government of some sort.
The FUBAR is what we called it, federal banking, foreign banking.
We do file that for individuals that have bank accounts in other places like Australia
or Canada mainly.
I’ve got one in Australia, one in Canada, and a couple over in India.
And so we have to file that mostly reporting information that if we earn any interest or
dividends that money has to be taxed here in the United States on your US tax return.
So those are important things, but we’ve never had that same reporting unless you have a
foreign banking account in a business.
But again, that doesn’t apply to any client that I know of in my world.
Doesn’t mean that it’s not out there.
So again, just be careful because the penalties can add up on these things.
And a lot of times people are like, “Oh, I never heard of it, so I don’t want my people
to say that.”
I don’t want you to basically say, “Oh my gosh, I didn’t know there was this thing and
now you got a letter in the mail and you’re sitting there going, ‘How am I going to get
this?'”
And they’re not sending out letters at this time saying, “Well, you are required to file.”
Like Tennessee Department of Revenue, I know a lot of you guys got that whole franchise
excise and the whole, “You should be able to get a refund.”
And to be quite honest, I have found some.
Yeah, some of my clients have, but a large number of them did not qualify because they
had already basically paid the minimum amount or the change was minimal and it wasn’t a
change in taxes because they hadn’t reported their net worth, but yet they reported the
Schedule G.
So when you reported it the other way, it really had zero to no change on it.
So again, but if you are, and remember that has to be filed by November.
If you need to file the amendment 2020 through 2023 for the new tax law that was passed here
in Tennessee for franchise excise, many people took away from that, that there is no franchise
excise.
That is completely wrong.
All that happened was they eliminated the Schedule G from the franchise and excise report.
Franchise and excise is still going strong, people.
It has not changed.
You will still need to make your quarterly.
You still need to pay it.
The difference is you may be paying a little less if you were actually doing it.
Like some of my clients, the ones that have the large refunds is because they had the
net worth and the Schedule G fully completed and therefore they were being taxed too high
on those situations.
If the business is closed, you can still go back to ’22, ’21, ’22, whatever year it was,
and apply for those rebates.
You will need a balance sheet for the final reconciliation, the IRS, or a copy of your
business return if a balance sheet was completed on that.
That’s what we’re using a lot of because some of my clients don’t actually have balance
sheets.
That’s easy for them to prepare.
Many of them have profit and loss, but not active balance sheets.
The tax returns we’ve created will have them.
That is something.
That is an important part of doing everything.
Again, if you have any questions, you need to know something, you can certainly call
our office Monday morning and we’d be more than glad to try to help you understand where
we’re going.
Again, I am called Dr. Friday.
That’s actually my first name is Friday.
My last name is Burke.
I’m an enrolled agent licensed by the Internal Revenue Service to do taxes and representation.
If you need help filing taxes, you haven’t filed taxes for a number of years, maybe you’re
relocated a lot and you don’t even know where to start.
Maybe you’ve received some love letter.
Maybe you’ve never received a love letter from the IRS, but you know you haven’t filed
taxes and therefore you might have a problem.
This couple that just came in this last couple of weeks, they came in because their son is
at an age where they’re going to have to do FASFA, which is just opening up or something.
They hadn’t filed taxes.
In this case, it was not a good thing because they had refunds every year, but they kind
of didn’t want to deal with the government and everyone’s got their own keen way of doing
things.
I mean, you know, I mean they didn’t want anything from the government as long as they
paid in enough.
They were happy.
They didn’t care about the rest.
Only reason they’re doing it is because their son needs to file for FASFA to get his college
straightened out, which pretty cool parents, but in the same way, they had left quite a
bit of money on the table throughout the last number of years they had to file.
So that could be you.
I will tell you that’s happened more times than I like to say, because a lot of times
people that don’t file taxes are W-2 individuals, so they’re paying in taxes and you know, they
sometimes don’t worry about, but remember we can only get refunds for three years, 21,
22, and 23.
That is it.
If you filed an extension on 20, you may qualify if you get it in or out, a legal extension,
but basically they give you three years.
So in three years, if you haven’t filed them, they’ll take your return.
They’ll keep the refund.
And then, you know, in some cases, of course they may have assessed something and we can
zero that out so you don’t owe anything, but it’s not going to be a situation where you’re
going to get that money back.
I’ve had people leave thousands of dollars on the table, especially when 20, because
2020 was a COVID year where a lot of money was coming from the government and some of
these people did not qualify for the stimulus.
I mean like they hadn’t filed 17, 18, or 19, so they weren’t on the list, so they never
received it.
So 21 is almost off the table.
So that’s kind of important as well is to make sure that you, you know, if 21 also had
stimulus money and you want to really make sure that you have this all done now to, you
know, to deal with, because if you wait, if you don’t, if you don’t do anything, it’s
going to happen and you’re just going to leave the money on the table.
It’s really that simple.
So you don’t have that big a window to get 2021.
And like I said, the last stimulus check came in 2021.
So if you didn’t get your 2020s and you’re still wanting to see if you can qualify, then
2021 will be the last year you qualify for that.
All right.
If you’ve got a question, you can reach us live here in studio at 615-737-9986.
615-737-9986 is the number here in the studio.
We like to take your calls, hopefully at least give you the right basic information so that
you can go forward, make sure you understand what your options are.
Who knows?
You know, if nothing else, I just want you to be able to know when you go make a decision,
what’s that going to be a tax on?
If it’s even taxable, is it something you need to be saving a portion?
Because there’s nothing worse than when you prepare someone’s taxes and then at the end
of the year, they turn around and say, I have to say, well, you owe $10,000.
And they’re like, oh my gosh, you know, why?
Or whatever.
And that’s because there was no planning done prior to the whole organizing of this situation.
Right?
I mean, they didn’t have any idea where they’re at, what they’re doing or anything else.
So it’s important that you basically know how much money something’s going to cost.
So if you inherit or if you have traditional trading or if you sell a piece of real estate,
your primary home, whatever it might be, it’s important that you understand what that is,
how it’s going to happen and where it’s going to come through, because that’s the important
conversation.
You don’t want to just sit there and say, oh my gosh, and then get hit back a tax time
when you’ve already reinvested or put that money into some sort of situation where you
may not have the ability to actually get it out without penalties.
That’s a problem.
All right.
Teresa and Tim, if you can hold through this last break, we’ll have plenty of time to answer
your questions when we come back to the show.
If you want to join us on the phone before the end, 615-737-9986.
615-737-9986.
As an enrolled agent, the IRS has requirements.
We have to take license.
We have to keep current with all the tax laws.
That’s what makes us different than CPAs or tax preparers is that all we do is taxes.
So we’ll be right back with the Dr. Friday Show.
For tax services, planning, business, and IRS negotiation, visit drfriday.com.
All righty.
We are back live here in the studio and we’ve got a few people on the phone line.
So let’s hit Teresa and see if I can help her with her question.
Hey, Teresa.
Yes.
My question is, my mother passed away last year in 2023 and I inherited the property.
And I’m going to sell that property, but the way property is selling now, it’s not selling
all that fast.
So I’m wondering how long do I have to sell it before I have to revert back to their basis?
There’s no time clock.
You inherited it from them.
So whatever the basis was at the time they passed away, whatever the value of the home
was when they passed away, Teresa, will always be your basis now and forever.
So I was under the impression that it would revert back after about three years.
And I thought, man, that’s huge capital gains.
Yeah.
And it’s almost impossible to know.
That’s one of the reasons they put that law is because it’s impossible for us to know
how much the parents…
Some people are good at paperwork, but some are not.
But anyways, you have no time limit on that, Teresa.
Whatever it was, whatever the appraisal came in at or comps or whatever you’re using, whatever
that is, is what you want to keep on file so that when you do sell or turn into rental,
whatever you decide to do, it will always be that dollar amount.
Okay.
Do I have to have a professional appraisal of that or…
Really it’d be a nice appraisal or at least a real estate person that’s giving you like
kind comps, something that’s documented.
So that way you have some true basis.
Okay.
That’s what I needed to know.
Perfect.
All right.
Thank you.
Thank you for holding.
Thanks.
Thank you.
Let’s get Tim from the IRS.
Tim, about my favorite people.
Hey, Tim, what’s happening?
Yes, ma’am.
I went ahead and back in my file, my 2023 taxes.
I paid them.
Their payment plan got submitted.
However, I went ahead and wrote the IRS a check for the payment amount and I’ve got
a canceled copy of the canceled check.
But they keep sending me letters telling me I owe them this much more money.
What kind of suggestions have you got that I might do to fix this problem?
So there’s two.
One is the different penalties and interest.
Have they posted your payment and they’re just looking for additional money or are they
not posted the payment you made?
I don’t believe they recognize the payment that was made at all or one part of the IRS
has not.
So your best bet is to get a copy of the front and back of that check, attach it to the last
love letter and say, please look a bit on the back of the check when you’re looking
at the banking stuff.
A lot of times you’ll see some dates like 12/31/2023.
They may have put it into 2024 because you paid it in the year of 24 and there was nothing
on the check telling him it should be for 23.
It happens all the time, Tim.
So it may be that the money is just sitting in the wrong year.
Another thing to do would be just to try to call the 1-800 number.
I know it’s going to be tedious, but if you call that, you might find out that the person’s
good enough on the phone that, oh yeah, I see that payment.
We posted it here.
We’ll move it.
But either way, you’re probably looking at the payment might be posted in the wrong year.
Okay.
So again, just get a copy of the front and the back of the canceled check and send it
back with the love letter or just call them and talk it through with them.
Right.
And I would probably still have a copy of that check because that way you know you’ve
got proof in front of you that the payment cleared.
You know that, but this way you’ve got the proof and you can read that information on
the back of the check to the person and they should be able to find it because it would
have your social security number, the date, and that way it’s probably just missed the
sign.
It happens a lot.
Yes, ma’am.
All right.
Thank you so much.
I appreciate your help.
Enjoy your show too.
Thanks, Tim.
I appreciate you.
Let’s hear it.
Val in my town, Spring Hill.
Hey, Val.
Hey, Dr. Friday.
I have a question that’s probably not too complex, but I need a little advice.
I retired first full year of retirement.
We took a small payment out of the IRA and I make about $10,000 in interest from investment.
So I think our total income is going to be about $18,000 maybe between my wife and I.
How about social security?
If I can owe money, we make about $5,200 a month in social security.
But your total other income would be totally 18K before that, right?
Correct.
My wife and I jointly.
And I’m not sure if I have to send a payment in or how to do that.
So about 50% of your social security is going to be taxed.
So theoretically, you’re going to have about $50,000 and we’re going to take off 30.
So you are looking at about, and this is a rough number, mate, you know, just working
but 20,000 at 12% and 12% of probably like you’re probably looking at about 2000.
So I mean, it’s still petty.
I mean, I don’t mean but it’s still a low dollar amount, but I would expect for you
to owe somewhere between two to $3,000 when you file your taxes.
Okay, now do I have to, you know, you were going to answer that, I was like, do I send
that now or just wait till I file my taxes?
Yeah.
So the good news is I’m going to, well, the bad news in 2023, when you filed your taxes,
you probably were still working.
So your income was higher.
Yes.
I’m guessing.
So my answer is you’d want to at least send the least to send like $2,000 before the January
15th final payment, because theoretically, we have to pay 100% of the year before or
the amount due.
So you can make that choice how you want to do it.
Because I don’t want to pay a penalty.
That’s really why I’m just having you send the money early because otherwise they could
try to penalize us if you wait till April 15th.
Okay, so but I could do at the end of the year be fine.
How do you even do that?
I mean, I’ve never made a payment.
I mean, I’m going to send you an email.
So go to irs.gov.
You’re going to click on the word pay.
And you have two options.
I always do ACH because it’s free.
But you can also use a credit card.
And so you just choose I would choose ACH.
And then the first page it comes up, it asks you three questions.
It’s going to be a 1040 ES, which is estimated voucher.
It’s going to be and then it’s going to automatically pull up the 2024 and the tax form is a 1040.
It’s going to ask what type of tax form and then it’s going to ask you this and the tax
years for 2024.
Okay, that sounds good.
Thank you so much.
No problem.
Thanks, Val.
All right, let’s see if Rita can get on really quick.
We’ve only got about three minutes left.
Rita, talk fast.
Okay, my husband and I have been married jointly for 36 years.
And we’ve been married for the last three years.
And my husband and I filed jointly for 36 years.
He passed away in January.
And I understand I will file jointly again this year.
Yes, because it was within the year.
But next year, I’ll be filing as a single person.
I need to know how hard that’s going to hit me.
It’s going to hit you a little bit.
But you’re also your income might have dropped because you might have built if you were both
retired, you may have been receiving more income when he was when you were both alive.
Exactly.
That’s exactly right.
That’s right.
That’s for sure.
Yeah, so it may not hit you as much as you think because what you lost in income you
lost in content in deductions.
So it may may make a very small difference.
But what I would suggest doing is, if you do your own taxes, or if someone does them,
you might want them when you finish 2024, have them convert and just make a few changes
and just see how much so that way you can make sure you might be in a little bit of
a higher tax bracket to be honest.
So you might want to have 10% coming out instead of 5%.
So I use my do my own taxes with TurboTax, but I can figure it with a pencil and see
the difference, right?
Exactly.
So the biggest thing is you’re going to have a smaller standard deduction, right?
You’re going to go in half, that’s gonna be your biggest, but you also are going to be
reducing half of the Social Security, maybe some of the pensions or whatever.
So when you see the difference, it may not be enough to worry about.
But I think it’s great Rita that you’re thinking about it, because it’s never good news when
you don’t think about it, and then you get hit with again, with having to pay taxes.
And next year it might be I might have to pay quarterly, right?
You might have to or adjust your withholdings on your IRAs or Social Security or something
so it covers it for you.
Okay, thank you.
Thanks, Rita.
I appreciate it.
All right, guys, we have hit the end of the show.
So if you want, you can give my office a call on Monday morning at 615-367-0819.
I want to appreciate all of you guys calling, makes my show so much more exciting than me
trying to figure out what people might be interested in.
So again, thank you for calling.
And then if you want to email, it’s easy, Friday@DRFriday.com.
If you haven’t filed taxes, you’re not too sure, maybe you’ve got a friend or a family
member and you’re like, what can we do next?
The next thing you should do is set up a free consult with my office.
We’re local, we’re here to help you, and we will help you resolve what issues we can if
it’s something that is even something we need to deal with.
It may be that there’s no issue at all, maybe that you have a large dollar amount to deal
with and we need to try to find some sort of resolution.
We do all initial meetings are free because unlike some of the companies that you call
on the phone, the first thing they’re doing is selling you something.
What we want to do is make sure that we can actually help you before we tell you or deal
with the money side.
Because if I can’t do any kind of resolution, what’s the purpose in billing somebody?
They don’t believe that.
So if you need to have help with that, or if you need help just building your business
and you need to have someone help you with the accounting or tax issues that you’re dealing
with, and it can be payroll tax issues, state unemployment issues, we can help you with
any and all of those, making sure that everything is filed and trying to stay within compliance.
Again, if you want to join us or call us, 615-367-0819, 615-367-0819, or Friday at drfriday.com, or
on the web, drfriday.com.
I hope you guys have an awesome Saturday, and as we always like to say from Australia,
we’re going to say, “Cop!