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In this episode of the Dr. Friday Radio Show, financial counselor and tax consultant Dr. Friday answers caller questions and provides valuable insights on various tax-related topics. From business deductions to property sales and retirement accounts, Dr. Friday offers expert advice to help listeners navigate complex tax situations.
Topics covered:
- Business deductions for new entrepreneurs, including mileage tracking and equipment depreciation
- Tax implications of selling a primary residence, including capital gains exclusions
- The importance of keeping receipts for home improvements and their impact on taxes
- Self-directed Roth IRAs used for real estate investments
- Required Minimum Distributions (RMDs) and their applicability to different retirement accounts
- The new Business Owners Information Act (BOI) filing requirements
- Annual reporting requirements for businesses and nonprofits
- The importance of maintaining compliance with tax laws and regulations
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.
G’day, I’m Dr. Friday and the doctor is in the house on this absolutely beautiful Saturday.
And if you have questions, I’m an enrolled agent licensed with the Internal Revenue Service to do taxes and representation.
I do not work for the IRS.
I am just licensed by them to help represent taxpayers in front of the IRS.
So if you have IRS issues, if you’re thinking about doing some, I don’t know, selling property, you inherited property, you’re in a transition in your world and you’re thinking about changing things around a little bit and how is that going to affect your taxes is always a big question.
And sometimes people just kind of make decisions or they think, I can’t tell you how many times I think that people think that they sell their primary home is they’ve got two years to reinvest the money, which was a tax code that was back.
Gosh, it had to be in the early two thousands, if not earlier.
And now we don’t have that code on the books right now.
It’s if you sell your primary home, you have an exclusion of 250,000 for a single person and 500,000 for a married couple above the purchase price or, and adding any major improvements that may have appreciated the property.
That’s why you need to understand how it’s going to work for you.
So if you want to join the show, 615-737-9986, 615-737-9986 is our number here in the studio and you can give us a call and ask questions concerning about that.
Maybe you have someone that you know that hasn’t filed taxes in a number of years and you’re concerned that, well, I mean, one of the biggest things I’ve had two clients, you know, we’re not getting any younger.
And at some point you’re thinking, I’m going to want Medicare.
I’m going to want to get onto social security.
Some people, you know, something happens in life and maybe early social security or disability, but you do realize that if you haven’t actually participated in filing taxes, especially for the self-employed, but even for individuals, they use those taxes to find out how many quarters you have actually participated and that you have to have 10 years or 40 quarters to qualify for social security as far as I know.
So you want to be able to make sure that you are filing and I had a gentleman who had to file like eight years just to get his social security benefits because he hadn’t filed taxes in a number of years.
He was self-employed, so there wasn’t anything that he needed, but he didn’t think about it until he needed it.
Same thing with college and different things.
So if you’ve got questions like that, give us a holler, 615-737-9986.
Let’s go to James in Greensbrier.
Thanks for calling, James.
What can I do for you?
Yes, I had a question.
I just started business or got my business license yesterday.
I didn’t know what all I could write off.
I have a drone service.
I didn’t know mileage, estimates, going to and from, what is the best.
That’s a great question, James.
What kind of business did you say you had?
Excuse me?
What kind of business did you say you had?
It’s drones.
Drones, okay.
Drones, D-R-O-N-E.
Yeah.
So what you basically, I’m assuming your home office is where you are keeping your drones plus if there is any invoicing you have.
Do you have an office in your home or not really?
Yes.
Okay.
So that would be our point of work.
So theoretically in yours, let’s say you come out to my 15 acres and I ask you to do some overhead shots or mark property lines, whatever, whatever you do.
Trying to wing that a little bit.
But so from your home to my property and back you would track miles plus whatever warrants here you would depreciate the drone and then if you have like Wi-Fi service or whatever you might use for software, if there’s a monthly or annual dues, that would be deductible.
So that would be right off cell phone most likely because you probably would use your cell phone for your business.
At least a portion of it might be deductible.
So that would be some of the starting things I could think of.
Okay.
And I didn’t know, I looked at, I think it was QuickBooks, they track your mileage.
I didn’t know if you had a suggestion on what to use or.
Right no, that’s a great question.
We’re certified QuickBooks advisors.
So we use a lot of QuickBooks products.
There’s also a free one that you can put on your phone called mileage IQ.
So depending on where you are in your business, you may not want to be paying 30, $40 a month yet for accounting software.
Maybe just until you get it up and going.
But the business gets to a point I would definitely suggest using an accounting software because everything’s going to kind of set up a separate bank account for the business.
Even if you’re a sole proprietor, always cleaner to have a separate bank account, run all your business expenses only through that.
And then you can take money out or put money in personally through the account, but it’d be easiest in the big picture to get used to keeping your business expenses separate from your personal.
Well, thank you very much.
Thanks.
That was a great question.
Appreciate it, James.
Good luck in the business as well.
All right.
If you have a question, you can join the show.
615-737-9986.
Always making sure that when you start a business too, there was a cost.
He got a business license.
He purchased a drone.
All of those would be tax deductible in the first year.
So even if you didn’t make a lot of money, you made the attempt to start a business, that would be a tax deduction as long as you tried to start the business.
So if you’ve got questions again, you know, dealing with taxes, obviously something I enjoy, but most people don’t.
So if you’re not sure about something that you are doing either in your business, cause you’re a small business and maybe you don’t have an accountant or tax person, especially when we all started out, we didn’t really have the finance or it wouldn’t have been cost efficient.
But if you, you know, best idea is to keep either monthly envelopes or just a spreadsheet with copies of your receipts.
Always put all of it together.
Maybe you’re not too sure if you purchased, maybe you went and took a class that covered drones or, you know, took some sort of webinars or any of that.
Keep all of that because it all led to the business that actually is now generating income for you in his case, but it’s also the same in other cases.
Now I will say a lot of times people like to try to take off a vacation and call it a business deduction.
Very popular.
Um, couple of catches to that one, the IRS is kind of onto that too.
So if you’re going to Florida, think about it.
Um, and you’ve taken your wife and kids and you said, well, Hey, I went there and I was checking out houses because I’m a real estate agent and you know, you’re not licensed in the state or maybe you even are licensed in the state, but you have no other real estate there.
Going and looking at houses for any real estate person is not a tax deduction unless you purchase it.
So hunting is not a tax deduction.
The intent to want to go by not a tax deduction, only a tax deduction is when you purchase it.
So if you’re driving around neighborhoods all day trying to find a house to buy, that will not be a tax deduction.
If you’re ever audited, I’m not saying that people aren’t claiming it, but you’d have to have some really good tax documentation showing that you went to this house, you, you talked to the owners, you did this.
You’d have to have something because miles become quite the situation.
All right.
I think it’s Judy in my town, Spring Hill.
What do you have going for me, Judy?
We purchased our home in 99 for around $250,000.
We sold it last year for around $950,000.
So we made over what the IRS is going to allow my husband and I, I need to know how specific is the IRS going to become tax time next year.
I’m not going to have to show receipts for those 20 years worth of improvements.
Am I, if I give a list and the amount, is that enough or what will they need?
If you’re actually audited, you would have to have documentation showing that you put a pull in the backyard may have been 20 years ago, but you know, ideally you have something and I agree with you because even myself, I mean, sometimes the improvements we do on our own home, we don’t really think of as a rental.
I keep every receipt because I know it’s a rental and I can write it off.
But for my primary, I don’t think about the improvements I do in my home.
And I will say I’ve not yet in 30 years had an IRS come back and audit that to that extent.
You know, so you are, I mean, if you paid 250,000, so the question is, did you do another $200,000 worth of improvements on that house?
I don’t know the answer, Judy.
And that’s what, you know, because right now, 250 plus the 500 exclusion makes it 750.
You sold it for 950.
You’ll have closing cost fees, but in real estate and all that, but you’re still around $200,000 capital gains as of right now.
But I’m assuming you may have, since that was an older home, you said 99, you may have gutted the house and not gutted, but you know, redid the kitchen, put new floors versus the old carpet.
You may put wood floors in.
I don’t know if that’s the case, but that’s the kind of stuff that would have increased the value of the home.
So if I just give a list and I say, so we remodeled this bathroom and that cost was around $6,000 and I add up that list over 20 years.
Right.
Just remember, if you put two air conditioner units in the 20 years, you can’t write them both off, right?
It’s only what was at the end that actually increased the value.
Okay.
I didn’t know that.
And the depreciation of just the area, that doesn’t even matter at all.
No, that was a good investment for you.
But the answer is no, that doesn’t, it’s all about the dollar amount, right?
So yes, sit down, really sit down and figure out, Hey, you know what, five years ago, we threw a new roof on the house.
We did all the bathrooms, we upgraded from linoleum to wood.
I don’t know, you know, just saying those kinds of things, which would have increased the value of the home.
Right.
Okay.
That’s what I need to know.
I appreciate your help.
Thanks, Judy.
I appreciate it too.
All right, guys, we’re going to take our first break in the second here.
If you want to join the show, you can at 615-737-9986.
615-737-9986.
Again, I’m an enrolled agent licensed by the Internal Revenue Service to do taxes and representation.
That’s why we’re talking about taxes because that’s what I love and do.
I’ve been doing it for almost 30 years here in the Tennessee area.
So if you have questions concerning taxes, I’ll do my best to give you at least the right guidelines or how you want to go about doing something.
Remember anything you have here on the radio, you might want to double check with your own tax person.
If you need a tax person, you can give us a call at our office, but you want to make sure I do a little bit more generic on overall situations, giving you basic percentages because I don’t have all of your personal information.
Don’t need it to do the radio show, but just keep in mind that the information I’m giving you is to get you on the right track, to make sure you have the right choices before you go and do something and then find out it could cost you something in the background.
Okay, so we’re going to take a quick break.
When we get back, we’ll take your phone calls at 615-737-9986.
We’re going to be right back with the Dr. Friday Show.
Alrighty, we are back here live in studio and if you want, let’s join the show at 615-737-9986 and let’s go to Teresa in Columbia.
Hey, whoops, I think we just lost her.
Okay, well when she calls back, we’ll be back in, I think.
So we’ll be good there.
All right, so if you want to plan on your taxes for 2024, which is what we’re in, right?
We’re almost in the fourth quarter.
We’re in the third quarter right now, heading towards fourth.
We only have a deadline on all the tax people.
Is she online or did it drop?
Okay, I’ll wait and see it, let you tell me.
So you really want to basically look, okay, first we’ve got to finish 2023 for all those corporations, partnerships, and individuals that have it.
We have until September 15th for businesses, October 15th for individuals.
And at that point then we’ll be able to go for and get everything going on that.
So now we got Teresa back on the line.
Sorry about that girl.
What happened?
What do we got for you?
All right, I have a question.
My question is the lady that just called in, we’re talking about upgrades on her home for 20 years and if she would need receipts.
When we bought our first house, I started saving all receipts on everything we did and I dug them out one year for something and realized half of them had faded out.
You couldn’t even read them.
Yeah.
And I’ve had that for audits on businesses I’ve dealt more with than individuals.
I would suggest in any big case, I even suggest scanning them in, but we didn’t even have that until like 2002 or something.
You know what I mean?
I’m just saying that most of us, you know.
So yeah, and that’s why I say the IRS, I honestly haven’t ran into a situation.
I think it would be, you know, if someone said they brought a house and then they completely gutted it and then, you know, redid it in an amazing way or something, I think there would be more qualifications.
Most of us that do something, we redo our kitchen, we redid a bathroom, we did the floors, you know, new roof.
So I don’t really think they have any misconception that in 20 years or whatever that that kind of stuff happened.
You’re absolutely correct, Teresa.
You know, you can produce a receipt, but most of our receipts basically fade in about five years, especially on the paper that a lot of them are written on.
So good point.
So she’s like, well, hey, if you do save them like I did, it’s still not any value if I have to go back 20 years.
Right.
Yeah.
The only thing I can suggest is scanning them in in the future.
Yep.
Okay.
All right.
Well, thank you so much.
Thanks, Teresa.
Thanks for the call.
Thanks.
And she is correct.
Again, I know myself.
We have a lot of times when audits happen, people have to go back three, four or five years and people will bring in envelopes of receipts that justify their mileage or their petro or their office supplies.
And they’re on that basic ribbon that most most offices use.
And it fades, I swear to you, in like 24 months.
It’s almost gone.
Even the gasoline ones, we’ve had them fade before the end of a year.
So it’s important.
Any important documents I personally personally, personally, I think that all of that nowadays under the new technology, as Teresa brought up back in.
I mean, I don’t think we started scanning documents in this office until 2002, because we before that had all the filing cabinets had all and it took us a number of years to really and I can’t even tell you to this day that I’m totally paperless.
But basically at the end of the day, we do scan everything and shred it all.
We don’t keep filing cabinets worth.
And I would say any kind of important documents that you might have always a good idea nowadays to scan it in.
Two reasons.
One would be, you know, gosh forbid there is a fire or flood or something happens and then all your emergency documents, birth certificates, papers, ownership of documents, different things like that are either run or or hard to read.
So this way you’d have a digital copy of them.
And then obviously if you’re purchasing homes now, even your purchase papers come electronically almost.
They don’t like to give you paper copies of anything.
So it’s another good way of putting together that organizer is what I would like to think of it as a way of keeping our lives somewhat.
Because if something happened to you, you’d want all those documents someplace where somebody, your custodian, you know, beneficiaries, whoever’s going to be dealing with your situation or like I said, an emergency somewhere, you know, where you you need someone to be able to access those documents.
So think about having all of those, even though it’s good to have those papers.
Normally, most people probably put all the important stuff in a safe or a safe deposit box.
But if you’re not that kind of individual, then at least taking pictures, saving them offsite, you know, you can use a, you can even use your phone.
I mean, scan it or any of those are out there where you can do it for free, scan them in, put them onto, you know, carbonite.
I’m a huge carbonite person, but you can use whatever you want to, to make it work.
But it’s important that you have some sort of backup, right?
I know when we travel a lot, I love my pastime in life is traveling.
And one thing my sister always makes sure before we go overseas, anytime we do, of course, we’ve got photos of all of our important documents.
But my brother here, who’s always in the office, he has copies of those documents in case something happens and we’ve lost our passport or we, you know, some sort of document that we’ll need.
He always has a copy.
So that way we’ve got lots of copies in case of an emergency.
And that’s what we have all those.
Okay.
So taxes are the same way.
Remember, a lot of times people want to know the IRS theoretically has seven years, unless they consider it fraud.
And then theoretically the door is open.
But most people to be quite under, under the current tax laws, you’re really going to be looking at three years.
They’re going to audit the year that you’re in, possibly go back a year or go forward a year.
So there’s basically the three years is what they’re usually looking at under a normal standard audit.
Unless some reason, like I say, fraud or some major issue comes up, they will not go past that.
So if you’re scanning or keeping your tax documents, I still go with the old rule.
Seven years.
You don’t need more than seven unless it is a piece of property, some sort of deed, something that you have, let’s say stock certificates, right?
Or, or, uh, cashiers or anything that you have that bonds, uh, any kind of certificates, right?
Anything that we give us your basis or when you purchase something is very important.
Life insurance policies and all of that also an important thing to, to have in there.
Um, so just keep in mind that anything other than that, you can pretty much go with the basics.
All right, let’s hit Ron in Manchester.
Hey Ron, what can I do for you, bud?
How can you hear me?
I can hear you now.
Okay.
So people buy these trucks, uh, they give 80 to a hundred thousand dollars for them.
Uh, I’m, I’m a tax preparer too down here in Manchester.
Cool.
But I don’t know as much as you do.
They buy these trucks for 80 to a hundred thousand dollars and then they, they, they look at us to try to get the government to pay for all of this.
Uh, yeah.
And, uh, they, um, in the first place you can generally come out, uh, by taking actual expenses and then prorating it by the number of miles that they log for business.
Uh, but once you do that, uh, are you stuck with doing that or can you convert to, to, to mileage?
Because after the first year, the mileage generally gives a bigger deduction.
Well, Ron, you are a smart man, seriously.
So no, you can’t, whatever the vehicle is, we have to stick with actual or miles for the lifetime of that vehicle.
Because obviously miles covers a portion of the vehicle’s usage and the cost.
Well, in the first year they section 179 the truck, you know, I, I’ve never been a huge, I mean, obviously if you have a business, you’re in a plumber and you need to have a truck and you’ve got that going and you buy new ones, you know, bigger crews or whatever.
Yes, there is.
And after you have more than three vehicles in any business, you’re stuck with actual, you can’t take miles after three vehicles.
Now you’re, you have to take the actual expense and depreciate.
So, uh, for fleets or anything, they consider anything more than three, a fleet.
But that being said, I think a lot of people look at their taxes and they say, okay, I’m going to go spend a hundred grand and I’m in the 20% tax bracket.
So now I’m going to save $20,000 on a hundred thousand dollar vehicle.
To me, that’s not necessarily a great investment unless you really need that vehicle to make money.
So, you know, I mean, so I like miles because also you and I also know to do pr, do true depreciation, you need to be using that vehicle 100% for business.
And you know, again, some people there, it’s pretty obvious their trucks are business trucks, but I’ve got a lot of people that go out and buy an F three 50 and you know, they’re just driving it and it’s a regular, it’s not wrapped.
It doesn’t have anything and it’s their main car.
They don’t have a second vehicle that’s not going to qualify for a section one 79, you know?
So I think sometimes people hear about spending money on trucks or, or anything over 6,000 pounds, but I don’t always think that people do that.
And I’ve had more than one audit where they’ve come back on that and said, you know, that the expenses were not justified.
So it is an area that we need to document pretty good for us.
And then after the first year, unless they turn the vehicle in, they have to continuously buy a hundred thousand dollar truck every few years to really, you know, cause then you have to recapture, sell it, all that.
It’s not a clean action.
So it’s an, it’s a good for a one-time situation, I suppose.
But a longterm, I believe, like you said, miles is almost always a better and cleaner situation.
If you can get it.
Thank you for taking my call so much.
You confirmed what I suspected all along.
Thank you so much.
Yeah.
Thanks, Rod.
Thank you for listening.
I appreciate it.
Yeah.
And I think any tax person, we’re good there.
Any, anybody that does what we do, obviously, especially for the number of years that we’ve all done it.
I think, you know, the taxpayer is looking at us sometimes because they’ve heard, or they’ve seen a YouTube video or their friends told them, this is what I should do.
And I get that a lot, but what works for your friend isn’t going to always work for you.
And what your friend is doing isn’t always the right thing.
So sometimes you just need to really find a good tax person that you know is going to be there, not only just to put some numbers on a tax return, but to also make sure that you’ve got the right numbers in the right boxes on the right tax form.
Very important.
All right.
Well, thanks for the break.
If you want to join the show, you can 615-737-9986.
We’ll be right back with the Dr. Friday show.
Alrighty.
We are back here live in studio.
This is the Dr. Friday show.
You can join us live 615-737-9986, 615-737-9986.
And Jack has given us a call.
Let’s see if I can help him out.
Hey, Jack, what’s happening?
I got a question.
Probably a pretty unusual situation.
Hold on.
Excuse me.
I’m a self-employed individual and I am in real estate and I have say 21 rental properties.
Now of those properties, I have no other income except for some social security.
So of those 21 properties, about 14 of them are owned by a Roth IRA.
A Roth IRA?
A Roth IRA.
And the remainder are taxable.
The other nine properties I have to pay tax on every year.
And I’m coming up to age — I’m 71.
And I’m coming up — I decided a couple of months ago that I was close enough to 73 that I better start to become familiar with the required disbursement.
What’s the right term?
Required minimum distribution?
Right.
Or required distributions.
And in trying to understand what I could find out reading myself online, it looks like — and I’m hoping that you can verify — it looks like all the income coming in from the — within the Roth IRA bubble does not fall under required distributions.
That is correct.
That’s the beautiful thing about a Roth.
Because you pay tax when it went in.
So it grew tax-free.
That’s why I was surprised that you had a self-directed IRA with a Roth.
Nothing wrong with that.
You did say it was a unique situation.
And it is a unique situation.
Because in a self-directed IRA, I mean, the nice thing is all of that profit and capital gains, growth of those properties are growing tax-free.
Where my 12 rentals are not doing that.
Kind of like your other remaining eight or seven properties, whatever you have, that are outside of that.
Those are obviously — if you decide to sell, you have to pay capital gains or do a 1031, whatever.
So it’s an interesting concept.
I had never heard.
But you are not required.
I mean, there is no RMDs or required minimum distributions for Roths.
Because it really is your own money.
Now, I do believe that when you pass away, God forbid it ever happens, that whoever inherits those properties will have the 10 years to have to take it out.
But who cares?
It’s all tax-free.
I mean, you know, I mean, it would — only reason to keep it in there would be to let it grow for 10 more years before they distribute it to themselves, you know.
But you don’t have to worry about — other people that do self-directed IRAs usually do it in a traditional SEP or IRA.
And then when they hit 73, which is what you were aiming towards, when you hit that, then you would have had to start taking cash out equivalent to the required minimum distribution, which is like 3% of the gross per year or whatever.
And you’re fine.
You can let it ride, Jack, as long as you want.
There’s nothing there that you have to do with that unless you want.
But the person who turned me on to a Roth IRA and the fact that it can be used to own a real estate really made my — I was not — I’m a failed songwriter in that field.
You made some good investments to buy 21 properties, my love.
Well, this was back when properties cost $40,000 to $60,000.
Yeah.
Well, still, now they’re worth 10 times that in some areas, you know what I mean?
That’s true.
Yeah.
So you’ve done good in growing it.
I’m simply saying I did work hard.
I did make some sacrifices, but I’m not claiming to be a brilliant tactician.
It just happened to turn out that way.
Well, I think it was a good plan.
I’m sorry.
Go ahead.
You were going to ask how?
I was going to say, so, okay, I’ve got these other — I haven’t got the figure in front of me.
I’ve got 21 minus 14.
So I’ve got like seven or eight taxable properties that I pay income tax on every year.
How will that work?
I don’t own — I mean, everything I own is in property, real property, with the exception of the income that’s produced by the rental, rentals on those properties.
How do I figure for those eight properties that are taxable and that I pay tax on every year, how they’re going to be subject to the required distribution?
Are they not?
No, no, no.
They’re not in an IRA.
Yeah, yeah.
You figured it out before I even said the words.
No, because those are just in active after-tax dollars.
I mean, you purchased them or paid the mortgage or whatever, but you have them.
So no, you have — unless you have a traditional SEP or a traditional IRA, you don’t have anything that will be meeting the needs of an RMD.
That’s one good thing.
Yeah.
It’s wonderful.
Well, okay.
I appreciate you making that clear to me.
I have a tax attorney, but I haven’t been able to get with him recently.
So I thought I’d give you a call and see what you had to say.
Well, I appreciate the phone call, Jack.
It was an interesting situation.
Thank you.
Okay.
Well, you take care now.
You too.
All right.
So if you want to join the show, you can.
615-737-9986.
The number here in the studio.
And again, I am not a financial planner, but whoever Jack was working with, looking at the big picture, not a bad idea.
You know, I mean, using your Roth money and then buying into real estate because, I mean, it’s the same situation.
I suppose if you — person that loves real estate myself, I like the idea that dirt and buildings are a little more secure than the stock market.
Not saying you shouldn’t diversify into all things.
I’m sure a good financial planner will have something to say about that.
But it’s an interesting self-directed self.
I’ve had a number of clients that have self-directed IRAs that they use for buying businesses, buying real estate, which are great when you’re middle-aged or in the middle.
But when you’re starting to get close to the age of 70 or at this point 73, you now have to start taking those RMDs.
And if you have, I don’t know, a million dollar business or money in that retirement and now you have to draw 30,000, it’s all tied up in real estate.
You have to eventually either sell some of the real estate to create a taxable cash fund.
Otherwise you’re in trouble.
So it’s really important to make sure that, you know, investing is not my strong suit.
I do like to invest into real estate like Jack apparently because it’s something I think I can somewhat control, at least to the point that I — it’s, you know, it’s tangible versus buying stocks and other things.
I don’t always have the ability to deal with that.
But it’s still, no matter what, you should diversify.
But if you’re going to do it in a stock portfolio or IRA, Roth IRA, SEPs, really good to reach out and try to think of some of these other options.
That was a really interesting one I’ll have to ponder a little bit about because if you think about it, if you’re going to hold real estate, putting it into a Roth isn’t necessarily a bad idea because when you get older, it will then become tax free and you could cash it out and it won’t affect your RMDs.
So if Jack decided to sell one of his regular real estate, one of the seven that he had outside of his normal real estate, and let’s say he makes a profit of, I don’t know, $100,000 above his normal income, he could end up being penalized with his Medicare because Medicare is means tested.
And so it’s one of those deals where it’s great to have, I suppose, Medicare, but on the other hand, they penalize you if you actually make more than, I think it’s like 110 for a single person and 220 for a married couple once you’re in retirement.
And that’s 100% of your social security, not just the taxable portion.
So again, if you want to join the show, you can 615-737-9986.
I did want to repeat that taxes for 2023 are almost here.
So if you’ve got a business and you haven’t filed it, you really need to make sure it’s filed.
It’s due September 15th.
We’re almost at the end of August people.
And then if you have a personal return, it’s due October 15th.
And a little over a month away from us now.
So it’s very important that if you haven’t filed them and you did file an extension, then you’re in good shape.
If you didn’t file an extension, you’re late anyway.
So filing today or filing a year from now, pretty much, well, penalties and stuff could be more, but pretty much now up to that situation.
So it’s just really important that if you’re going to file your taxes, file them on time.
It’s always more important to file them.
And because the penalty for failure to file is fairly hefty.
It’s 5% per a month up to 25%, which is a lot when you owe a thousand dollars.
Now you owe $250 for just that penalty besides failure to make proper estimates, failure to pay proper estimates and all the other things that come with a self-employed.
And yes, estimates are not something that we just want to do.
It is a mandate in tax law.
You have a penalty if you don’t do it.
Sometimes people are like, well, why do I have to pay it?
As long as I pay it by the April 15th deadline, because you’re late.
Basically all your money should be paid in by January 15th.
If you’re self-employed, if the employees obviously get their money out every single week, biweekly, monthly, whenever they get their paychecks, they want the self-employed to be somewhat the same way.
They don’t want you waiting to that last minute to write a check for 50,000 be just because you have it, but it’s still not something they want you to do.
They want it quarterly based on the prior year.
And then if you owe more money, then you know, you can make that on the April 15th deadline, but you need to be paying in at minimum of a hundred, 110% of the year before.
So that way you don’t end up with penalties.
I hate penalties.
Penalties are waste of hard good, our hard earned money.
So we don’t want to have that.
All right, we’re going to be going into the last part of our show.
So if you have been listening and you’re like, Oh, I really want to have asked question.
Now will be the time to call 615-737-9986.
615-737-9986.
We’re going to take your calls when we get back from this break.
This will be the last break.
So now it’ll be the time to do it.
I’m Dr. Friday with the Dr. Friday show and enrolled agent licensed by the Internal Revenue Service to do taxes and representation.
So we’re going to be able to help you straighten out your taxes.
Also understand what the tax law is when it comes to your situation.
We’ll be right back with.
All righty, we are back.
Final part of our show.
We had about eight minutes and there abouts left to be able to take our calls.
We had the Dr. Friday show and you can basically join us here live in studio at 615-737-9986.
615-737-9986.
Take your calls.
Hopefully lead you in the right direction or find out some really interesting other situations that come up when it comes to filing different things.
I did want to bring up if you do have a business, not a sole proprietorship, but a business that is licensed with the state, so that would actually be single member LLCs, multi-member LLCs, corporations, limited liability partnerships, anything that requires you to be limited, then you are going to have to do the Business Owners Information Act, which is on FinCEN or the financial banking site for crime that the IRS has set up or is basically out of the banking side.
But remember that is due.
So just if you have a new company, you only have 30 days to file on that site.
I don’t think enough information is being submitted out there for new companies to know this.
A lot of times people just go on to the Secretary of State, file a charter, and then they don’t continue on to filing the BOI.
So it’s very important to make sure that you have filed the BOI on the Business Information Act.
It really isn’t overly complicated.
It really is a matter of having a driver’s license and making sure that that information has been submitted.
Now there are some businesses that are not required, but if you’re not too sure or if you’re just, you know, go right on, just go into Google, guys, and type in Business Owners Information or BOI, you will find a bunch of information.
There are companies that can help you and you can do it yourself, but it’s very important that that is filed.
They’re telling us, and again, this is new.
It’s not something that we have to do every year as far as I know, unless there is a change to your company, then you will only have to do this a one-time situation.
But the penalty is something like $500 a day if it’s not filed properly.
I’ve not yet seen any kind of notice or collection or anything on that yet, but since most of my clients that have been in business for more than a year, so they’re not required.
I mean, the penalty won’t start till January of next year.
Let’s hope and pray that that doesn’t happen because no one likes penalties.
So making sure, but a lot of people are new businesses and I don’t think that anyone is sending out.
A lot of times people don’t even realize they have to register for franchise excise in business on 10 tap or the annual reports.
I keep getting clients that are sending me one of the things our tax and bookkeeping doesn’t really do is the annual reports that we’ll file them if someone gives us the paperwork, but it’s not something we do on a normal basis.
And then the people get the love letters from the state saying, we’ve now dissolved your partnership or your corporation and you can get it reinstated, but it’s just one of those deals where you really don’t want to have.
And it’s a pretty easy thing.
You go online, you fill it in and it paid the money.
They’re $20 or $300 depending if it’s a partnership or a corporation.
And then it’s all good for another year.
So it’s also good to make sure your email address is good because they basically are emailing these notices, making sure that your mailing address is good, making sure that your phone number is good because if they can’t contact you, then obviously you’re not going to get the dissolution information and then you’re going to be in trouble because theoretically, I think if it’s been basically over a year or two, I’ve had one client lose their name after a dissolution.
After that, I’ve never, I mean, I’ve never really seen, I’ve had some people that have been dissolved for a couple of years, but I have had some people that one situation where the name had been taken as soon as the dissolution almost happened.
So I mean, you know, you reason we all register our names and do what we do because we want to have that protection.
So you don’t want to have something where, you know, you, you built your brand and then, you know, you didn’t renew the charter and next thing you know, you’ve got yourself in a situation.
So again, all these kinds of things are things that are easy enough to track.
Most everything that we talk about honestly has a due date of basically April of every year.
Your annual reports are due in April.
Your business license are due in April.
Your franchise excise is due in April.
Obviously your personal tax returns are due in April.
Only thing that might be due in March is your business returns, LLCs, 1065s, 1120s.
Those are both due at that time.
But other than that, you don’t really have too much you have to worry about.
All right, let’s see if we can get Greg on and that way we’ll have him through the end.
Hey Greg.
Hey, good afternoon.
I have a question on what you’re just speaking about.
Does this requirement happen for both for profit and non-for-profit organizations?
You know, that’s a great question.
I don’t do a ton of nonprofits so that I’m assuming the answer is yes, only to the extent that you know, it’s a good question because it is listed like our nonprofits are, I have charters right with the state.
So do, do nonprofits have to do BOI filings?
I’m going to have to find out if you want to either text or call my office or yeah, if you want to text my, my office number, the 615-367-0819 is the number.
And I can find out from the platform if it tells us that we actually have to file for nonprofits.
It’s something I should know myself.
We only do a handful of nonprofits in this office.
So it’s not something I do a lot, but that’s a great question because it could.
Now this is, this is in addition to the annual filing of the corporate report with the secretary of state, right?
That one, that one, we all know you have to file, pay the $20 and that most nonprofits are corporations pay the $20 and you’re good shape.
Yeah.
This is a new business owners information act that they have.
The reason I’m questioning it, a corporation is not a big deal.
All the shareholder or all the corporation as long as it’s not on the stock market, you’d have to have driver’s license.
But a lot of times for nonprofits, people are board members, not owners.
Right.
Correct.
So it’d be interesting to see how that, that washes out.
But I’m going to guess since they’re trying to basically, I think the whole purpose in this conversation is for them to find out if people are actually us citizens because they requiring driver’s license or passports.
And I think they’re just trying to figure out how many people, you know, who’s invested in what companies do it outside, I think.
So in this case, we’d have to, we’d have to identify, for example, corporate officers.
Yeah, that’s what I’m thinking.
I think you’d have to have the officers, the president, the secretary, the treasurer, whatever you have those.
And then they’d have to provide their driver’s license front and back.
And then we upload those to the site.
I mean, that’s really how simple it is.
And once again, existing corporations have to file by when?
Existing ones we have as long as they opened up before the first of this year, they have until December 31 of this year.
Okay.
All right.
Very good.
Well, I’m glad I caught your show because I was completely unaware of this.
And I’ll be the guy that has to file it.
No problem.
Well, I know how that feels.
Yeah.
So if you want, just send that text and I will look that up for you because I don’t know the answer.
But I do need to know that answer because there’s a lot of them out there.
Okay.
Thanks, Greg.
Thanks.
That was a good question.
Because I’m thinking most board members only are on the board for five years or whatever.
And so it’s just going to be interesting to see if a nonprofit really would qualify.
I’m thinking no, but then I’m always surprised with those things.
So we will find out for Greg.
That was a good question.
Making me think about it.
All right.
So here’s winding down to the end of the show here.
So let’s cover the basic information.
My office number again is 615-367-0819.
You can text that number 615-367-0819.
Or you can check us out on the web, which is drfriday.com.
And you can find out what we do, our services, all those kinds of situations.
So we can get you set up.
We’ll be putting the calendar out for taxes soon.
If you’re an existing client and you have not already received the calendar, please contact our office by either email, text, or call.
And we will get you on the calendar.
We have opened up the 2024 tax season calendar for our existing clients so we can get all of them on first.
And then we’ll open it up to all new clients so we can make sure everyone gets an appointment.
Also if you want, you can always email Friday@drfriday.com.
Friday@drfriday.com.
Again, as an enrolled agent, I am licensed by the Internal Revenue Service to do taxes and representation.
I keep saying that because a lot of times people aren’t exactly sure.
Sometimes they interpret that as I work for the IRS or I may do something other than taxes and representation.
Pretty small little click I have there.
You know, bottom line is if you have love letters, if you’ve been dealing with the IRS, if you have a need to set up a payment plan or you don’t even know where to go because you’re like, “I haven’t filed for 10 years.
I don’t know what I need, but I need to get back on track.” We can help you figure out all of those steps.
Something we’ve done, something we’re really good at, something we can help you achieve when it comes to actually doing taxes and making sure that those are up to date, in compliance.
That’s the words you want to do.
You want to be in compliance.
All right.
This has been an awesome Saturday.
I hope that you guys enjoy the weather.
I know I’m going to go outside and have some fun.
As we say in Australia, “Cop you later.”