Welcome to the Dr. Friday Radio Show! In this episode, we have tax expert Dr. Friday take on the latest tax updates, answer the caller’s questions, and talk over the following topics:
- What You Need To Know About Inflation Reduction Act
- What Is The Corporate Tax Rate in 2022
- What Are The Chances of Getting Audited In 2022?
- Which EVs Qualify for the New Electric Vehicle Tax Credit?
- Dr. Friday’s Tips on Contacting the IRS
- The Biden-Harris Administration’s Student Debt Relief Plan
- How To Make a Tax Deal With IRS
- How To Find Out How Much You Owe To the IRS
- Sub S Corporation Tax Deadline September 15, 2022
- Individuals That Filed Extensions Deadline October 15, 2022
and much more!
Transcript
Announcer 0:01
No, no, no, she’s not a medical doctor, but she can sure cure your tax problems or 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. 615-737-9986. So here’s your host, financial counselor, and tax consultant, Dr. Friday.
Dr. Friday 0:27
Good day, I’m Dr. Friday, and I’m here live on the radio. You can join us if you want at 615-737-9986. Hopefully, the background noise won’t be too bad you can. Today we’re going to talk a little bit about the Inflation Reduction Act, I know there are quite a few different things happening. This one obviously did pass back on, I think the 12th or 14th of the month. And so we’re gonna cover a few of the things that we all need to know there’s good and bad, in some of this.
Dr. Friday 1:06
Obviously, one of the biggest concerns is they’re going to increase corporate taxes, which I know everyone thinks is a great idea for those big bad corporations in the bad times, that is I’ve never seen a corporation yet pay taxes. So if they’re going to increase, that means it’s going to cost us more for the product that we’re buying. And we’re already in a big inflation situation. So I don’t see how that is actually fitting for an inflation Reduction Act. But either way, you look at it. That is one.
Dr. Friday 1:33
One of the other things that may or there depends on your choice of cars and vehicles, but they are going to increase energy efficiency. So they’re trying to give people some incentives. While I was reading up to $14,000, it looks like a lifetime. And then they’re going to bring back some of the energy efficiency that we didn’t have. So you know, smaller ones like refrigerators, all of those had expired, or most people have met their lifetime, dollar amounts, and now they’re going to be able to actually be able to use some of those credits on your tax return.
Dr. Friday 2:08
So going back to clean fuel, clean energy, heat pumps, solar, all of them are back on the table as far as being able to possibly take off. Of course, a big part of this is the increase in tax enforcement, I think it’s like $124 billion, 85,000 new people. I would say if you are an individual that is behind on taxes, or a person that is trying to deal or wanting to get better acquainted with getting yourself straightened out in taxes, this would be a time to do it now possibly vs, they’re going to be doing a lot of training at some point, they’ve already said that a big number of these are going to be auditors.
Dr. Friday 2:51
So if they’re going to be auditing, that means you and I all of us are going to be potentially on the table. So sooner you get yourself caught up and your resolution was taken care of they can’t go back if they’ve accepted your resolution. So one of those situations where you really do want to try to deal with this the best that you can.
Dr. Friday 3:10
So if you haven’t obviously, I’m an enrolled agent licensed with the IRS. It’s what we do all the time, we’ve been doing it for the last 20-plus years, been on the radio for the last 12 years for some of you guys that might not know who I am.
Dr. Friday 3:22
So it’s something we’ve been doing. It’s not something with the change of tax law or anything else. But you do want to go ahead and try to get a handle, especially on back taxes or resolution. You know, because again, at some point here, they’re going to be hiring enough people to do get back to pretty good audits prior to 2018 or 2019. Right before they went into COVID, they had a much higher population.
Dr. Friday 3:50
Actually, I think it was probably as far back as 2012 or 2013. They are down on the numbers. But once they get back up there also audits were higher back in those days. So the potential of you getting audited or having to deal with an audit is definitely something that you could need to prepare for. So doing your taxes with the eyes, or the idea that you can be audit proof is also another good thing. It’s not that you can’t be audited, but that the numbers on your tax return would be justifiable. So it’s really important that you actually think about that as well.
Dr. Friday 4:21
So again, if you want to join the show, you can 615-737-9986 is the number here in the studio. And we are living. You probably can hear that we are living here today. So if you have questions like I said we also have the law that he’s trying to pass I don’t believe it’s been signed, but it may have been signed. I mean, as of Friday, it wasn’t signed anyways. The educational the college credits he’s trying to do. I heard something about if you $20,000 if it’s a Pell Grant or any of those $10,000 for others if you’re in college right now, I don’t believe it applies, I believe it applies to people that have already graduated. But again, we will get more and more information on some of these situations so that we can get you in, I do know there are income limitations, I think is 125,000 for an individual and 250, for a married couple.
Dr. Friday 5:24
So it may be something that, you know, you can consider, again, I think the max will be the $10,000, that you want to do. They are encouraging, obviously, through both of these bills, the inflation reduction, as well as the one they’re working for on the college. Everything’s trying to go more green, trying to encourage people to buy electric cars, install electric cars, get solar, those kinds of things. So they are, if it’s something that you’re wanting or thinking about, it’s probably a good time to consider the possibility because we were getting almost down to I think, like 20%, or something on the solar is eventually going to drop off. And now it’s come back up. So that’s exciting.
Dr. Friday 6:09
For any individual that’s wanting to go solar, I’m not too sure, man, again, I have family in California, it’s a lot easier there, they sell the electricity back, they’re able to cycle it, I live out Murray County. And I can tell you right now we don’t unless something’s changed, when I went and looked at it last year, we don’t have the ability. So we have to actually have the battery system, which is quite expensive. The solar itself isn’t so bad. But then you have to get the batteries to save the energy so that you can actually use the solar because most of us aren’t home during the day when the solar is actually being generated.
Dr. Friday 6:45
So you might need to talk to an expert, I might have one of them come on the show. I’ve got several clients that are very up-to-date on that kind of thing. So again, if you’ve got a question, maybe you’re thinking about getting your taxes or if you may be inherited something, or you’ve bought some property that you’re selling, and you’re trying to figure out how much will your tax bill be. These are pretty important questions because you don’t want to go spend the money, that is actually money, you have to pay to the IRS. On the other hand, you don’t want to be thinking, you know, you have a huge tax bill, and maybe it could be as low as zero. So it’s just a matter of what the situation is.
Dr. Friday 7:20
So if you do have a question you can join us, we are live here at 615-737-9986, taking your calls here in the studio. As I said, we’ve had a lot of activities with the inflation Reduction Act and trying to see how that’s going to change some of our ways of doing taxes. I mean, they’re going to be there’s going to be in the next five years. And I think it’s going to take nearly five years for them to do the kind of hiring that they’re wanting to do. But it is also going to be something that I think, again, if you are an individual that hasn’t filed taxes for a number of years, and you’re not even sure how to start, we can help you with that.
Dr. Friday 8:08
Or if you’re an individual that, you know, you have filed or you owe to, you know, large dollar amounts. You know, again, making a deal with the IRS is often at the time when you don’t actually have a lot of taxes, or finances or things, you know, in your you know, you don’t own a house, you don’t have a large 401k, you don’t own property. Because no matter what these people always are telling you. And in all honesty, the fact is, you are not going to get a very good deal. If you have real estate, and you have the ability to borrow against that real estate.
Dr. Friday 8:47
It’s not something I mean, the IRS isn’t going to sit there and say, “Oh, you know what? You know, we’re just gonna let that real estate go away, and you can build equity in that we’re gonna write off your IRS debt.” They’re also not going to allow for private schools, and they’re not going to allow for, you know, high-end vehicles and things like that if, if you have large bills, so, you know, there is a way of setting yourself so that you’re able to try to figure out what you should and shouldn’t do. But on the other hand, you do not want to have a situation where, you know.
Dr. Friday 9:21
I had someone come in yesterday and she’s one of my regular clients and you know, she’s at a situation or points where she went to try to finally settle some things with the IRS, but, you know, she has a piece of property even though it’s not her primary home, she rents but she has a piece of property that you know, has value to it and the ability to borrow against it. So, you know, you have to look at your finances and understand how that’s going to work. Otherwise, you don’t have the ability to just say, “Well, you know, I bought this land during the time I could have paid my taxes or I have these different things, I built up equity in but I didn’t pay my taxes.”
Dr. Friday 10:04
Well, the IRS is sitting there going, “Well, we know you didn’t pay your taxes. So we want to have a piece of that because it is our share of the equity that is in these things.” So I mean, more than once again, you know, people the best and easiest ways to you to go borrow the money and pay off the IRS if you have the ability to do it, because it’s just going to be the fastest and easiest and less interest, fewer penalties and much more controlled.
Dr. Friday 10:28
But not everyone can borrow. I mean, a lot of entrepreneurs and people I deal with their credit isn’t going to support something like that. So if you can’t support it, then how are you going to deal with it? Do you know what I mean? So you’ve got to think about that as well, you’ve got to think, “Well, hey, I might have an asset, but the money isn’t there. So what am I supposed to do about it?” And then we have to come up with a plan a situation where you’re able to, you know, do something with it instead of just, you know, because sometimes, even though you’ve got assets, it doesn’t change the fact that you can’t, or you don’t have the situation where you’re not able to do something with that asset.
Dr. Friday 11:05
So, you know, you need to understand how the game is played, you need to understand what the IRS is looking at what’s the obligation you have. And then from there, what are you going to do with it, you know, and get, make a deal, make it work, understand how it works so that you can get yourself back on your feet. So again, as an enrolled agent, licensed by the Internal Revenue Service. No, I do not work for the IRS. I’m licensed by the Internal Revenue Service to do representation and taxes.
Dr. Friday 11:36
So that’s what we do and how we do it. And if you need help with those, we’d be more than glad to help you do that stuff. But otherwise, it comes down to where you’re not able to, you know, make those situations work for you. So if you have questions, or you need help doing that, that’s what we can do. 615-737-9986 is the number here in the studio 615-737-9986. We’re gonna take our first break, and we get back we can get to some of your phone calls, or we’re going to start taking some of the emails that I’ve gotten and try to answer some of those questions as well. But you can give us a call again at 615-737-9986. And we’ll be right back with the Dr. Friday show.
Dr. Friday 12:32
All righty, we are back here live in the studio. And you can join us if you want at 615-737-9986. So next we’re going to be going to the phone lines we’ve got Kenneth on the line. Let’s see if I can hear anything. Can you hear me?
Caller 13:11
Yes.
Dr. Friday 13:12
There’s my boy. Hey, Kenneth, what can I do for you?
Caller 13:15
If I heard you talking about the taxes? And if you like to owe anything, what should you do? So I’m kind of curious what steps you should take as far as if you do owe taxes and depending on that certain amount. What are the steps that you should take?
Dr. Friday 13:33
Great question. So the first thing you really want to do is you probably need someone to help you but even if you don’t The first thing you’re gonna need even if you go in and talk to someone like myself, is you’ve got to know where your money is, meaning how much do you pay in rent, utilities, car payments, life insurance, health insurance, etc, etc. They, when when we talk about an offer and compromise or a deal with the IRS, the IRS will not allow for things like credit card debts.
Dr. Friday 14:03
Even if you have credit cards, they don’t build it into the number because they feel you can pay us or you can pay the credit card. But they do allow car payments, health insurance, and then your basic there is $1 amount. So if you’re paying $5,000 a month in a mortgage, the IRS is going to pretty much disallow the offer and compromise, or they’re going to cut it down, then it’s going to come to how much money you make. When it’s all said and done. It doesn’t make a difference how much money you owe the IRS. It really is how much money they think they can get from you.
Dr. Friday 14:33
And if it’s enough to cover your bill. That’s why a lot of times you’ll hear these big companies that talk on the radio and they’ll say you have to owe more than $10,000 or more than $50,000. I’ve heard that’s because the IRS has a time limit and it’s basically 10 years from the date you have filed your taxes if you haven’t filed and they haven’t filed any statutory tax returns for you. Then you still have 10 years so if you Whoa, $10,000, they’re gonna think that you could probably pay them at $5 a month for the next 10 years, and therefore an offering compromise, most likely would not be a viable option.
Dr. Friday 15:11
But if you owe 50, or 60, or $70,000, and you’re making 50 or $60,000 a year, and you’ve got a wife, or you’ve got a child, then you probably have a potential. Now, again, you want to make sure if you’ve got equity in a home, if you have the ability to borrow money, either on credit cards, or anything that comes into question when it comes to paying the IRS for the amount that you can afford to pay, you’ve always heard things like 10 cents on the dollar, or whatever, I have done more than one of those, you know, but in all honesty, I’ve also done ones where people owed 150,000, and they paid 75,000.
Dr. Friday 15:51
Because that’s what was available, and that’s what they were able to pay. So if you want you can do a free consult with us or you know, whichever, but you’re gonna need to probably get a handle on it first, are you up to date to file all your tax returns? You know everything is in compliance, and then the second is dealing with the IRS.
Caller 16:11
So what if you’re only in the thousands? Like 1500, that’s probably not even worth it, right?
Dr. Friday 16:16
No, I’ll be honest, no, because again, you have that 10-year collection period, unless this was from 2010. And then you might be at the end of the 10 years, depending on when it’s filed, but you will be better off just start sending them $10 A month, then I’m just saying, you know, just set up a payment plan. And if you can’t, because you know what life is hard.
Dr. Friday 16:36
And sometimes you can’t, you can probably get them to put a hold on it potentially making you not collectible for a year or two and giving you a little breathing room. But if you only owe less than $2,000 the likeliness is to be quite honest, you’re going to end up paying someone more money than you owe. So it’s not likely that that’s even a viable concept for you, but better just to start sending them small amounts of money when you can afford it.
Caller 17:02
Yeah, that’s what, uh, that’s pretty much what I did with the $35 or $40 a month because I think it was like a payment plan. But I just wanted to make sure I was doing it the right way.
Dr. Friday 17:16
Yep, you did the best you could under the circumstance, obviously. Because no matter what, you probably owed 600 You paid in 1300. But you know, there’s no easy way there is a waiver, you can always send a letter if you have a penalty, and anyone listening if the IRS has sent you a penalty letter, you can always send a letter asking them to please waive the penalty based on your history of attacks. And if you haven’t had a waiver in 31 months, sometimes they will waive some of the penalties. That might be something you could address, depending on how much the penalty is. But other than that, there’s not much more you could have done. I mean, you’ve done what you should have done.
Caller 17:53
Thank you so much. I do appreciate it.
Dr. Friday 17:55
No problem. Thanks, Kenneth; I appreciate the call. And he’s done a good job. And that’s exactly what you need to do is most people need to sit back and think about what is your situation. What can you do? And I mean, there’s no perfect situation for everybody guys, there is nothing I mean, there’s not a situation where everybody’s going to agree with exact same way.
Dr. Friday 18:19
So you know, and I have people come in all the time that I mean, “They’re gonna charge me you know, $211,000 and I probably only owed 140 to start out with, you know, five years ago.” Yes. And you know, multiple years multiple penalties, and depending if these are failure to pay failure to file failure to comply, there are a lot of different failures to do that you can get yourself stuck into.
Dr. Friday 18:44
So again, not a huge situation you can deal with it just like Kenneth did and not ignore it. He said he’s been sending the payment and he’s been making these plans. Again, if you have a situation and you owe taxes, and you have some you know some of that then I would say that is to keep things going and make sure you have it going that direction but other than that you want to basically keep moving and make sure you are dealing with your situation everybody’s situation is different guys, no one has the exact same situation not everyone owns the exact same not everyone goes through the different situations you have.
Dr. Friday 19:27
I have people that are suffering with illness, I have people that went through divorce, I have people that you know what life just got hard. And you know they got behind on taxes and I will say a large number of my clients are self employed. So, you know, you have to deal with each and every one of those situations as they are applied to you. But the one thing I can say in any one of your situations, do not ignore the IRS. It is not a win win situation there is I mean, I know some people they’ll say “Hey, I haven’t filed taxes in 10 years, I’ve never gotten a letter from the IRS,” my answer to you is, if you didn’t owe money, then you missed out on stimulus money in most cases, so then you left $3,200 on the table in the last two years.
Dr. Friday 20:16
And even if you do owe money, I just finished somebody that we filed 17 through 21. And because of the stimulus money, he basically is paying all of his taxes off with their money. So now he’s caught up, and it really didn’t cost him $1. To do it. So, again, you know, sometimes it sounds like, “Oh, I’m getting away with something.” But are you really getting away with something? Or is it really just, you’re thinking, “Hey, you know what, I don’t have to file taxes like everyone else, the IRS doesn’t know where I’m at.”
Dr. Friday 20:49
And if you’re a self employed person, and you move around, yes, if you’re an employee, and you move around, sure, the IRS probably doesn’t know where you’re at either. But most of us not really the situation. Many of us work the same jobs, go to the same house, you know, I mean, we are pretty trackable, we’re not really hiding very well. So just again, one of those situations where yeah, you can get away for a while. But then if you want to buy a house, if you want to send your children to college and use FASFA guess what, those are requirements, you have to have tax returns to do that.
Dr. Friday 21:26
And if your tax returns are not filed, then you’re going to be missing out on that situation. And you’re going to have to deal with not being able to get loans or you know, maybe paying higher interest rates, because you’re going to secondary lenders, all these situations are all part of that. So all I can say is if you want to move forward, and you want to make sure that your life, now it’d be a good time to start considering some of that, because it isn’t going to be as simple in the future when they’re hiring more and more people and a large number of them are going to be auditors, which just means that all of us are going to have to be super careful now, you know.
Dr. Friday 22:10
I mean, sometimes I mean, I’ve seen some tax returns, oh, my goodness, people I can tell you, I mean, am prepared by tax professionals, they say they are and you know, you’re sitting there going, What in the world was this person thinking it would never have passed an audit in the best of days.
Dr. Friday 22:27
So, if you see refunds, if you see numbers that, you know, you might not always know about, and I know you’re sitting across the desk from someone that’s, you know, supposed to be a tax professional. Just keep in mind that if that is the case, and you think the month numbers don’t necessarily add up you, the tax payer is the person that is going to be held responsible.
Dr. Friday 22:52
The IRS specifically says I mean, there are I mean, as my license and CPAs, many of us do have recourse if we do something right or wrong, then you can go against the license or our insurance. But even that doesn’t guarantee you’re going to get your tax bill, because I’ll be honest, insurance companies normally only pay for penalties and interest, they’re not going to pay what you would have owed anyways. And if the IRS comes back and says you owe $20,000, because this tax return wasn’t completed correctly, you need to know that.
Dr. Friday 23:24
So again, if you’re dealing with tax issues, or if you have a situation where this year, maybe you’ve sold something you’ve you’re in the process of, you know, renting out houses flipping homes, and you’ve got some questions, all you have to do is pick up the phone 615-737-9986 Is the number right here in the studio 615-737-9986 we get back from this break we’re going to take we’re going to talk a little bit more about the inflation reduction, which is basically a variation of the build back better.
Dr. Friday 24:00
And a little bit about I don’t think the corporate tax really is the main effect. Most of my clients in fact that I can’t think of one because you have to have more than a billion dollars before you get into the minimum tax of $15,000. So most small business corporation small individuals aren’t going to have to worry about that. But there are some things in there that may be good if you are a person with prescriptions like insulin and things there’s some legislation in there it says that they can only charge you up to $35 per month for insulin, which I have a family member that would probably love that. But we’re taking a quick break when we come back we’ll get to your phone calls.
Dr. Friday 24:49
Right, we’re back with Dr. Friday. I’m here live in studio. And why don’t we go right to the phone lines and some other voices on the radio. We’ve got Angie from Colombia. Let’s see If we can help her. Hi, Angie.
Caller 25:03
Hey, how are you?
Dr. Friday 25:05
I’m good. Looks like an interesting situation. So you got a love letter from the IRS?
Caller 25:11
I did. Okay, so what happened in 2014, we did talk to h&r block. And they said that we had a $2,000 refund. We buy peace of mind every time. And we, which now since then we’ve me and my husband are both on disability. And we heard, I mean, we get a refund. And then in June of this year, we got a letter saying that we owe the IRS $5,000, from 2014, which in 2014, could have been 400 hours, who knows. But that what happened was we went to an office not in our town, because of course, our town is closed for offseason. And they gave us like the fat two pages, but not the whole deductions that she took. But, I mean, because we’ve done a loan for him, I’m sorry. They had the wrong address, wrong city, wrong town. So we don’t even have any idea why it’s rejected. And we can’t get ahold of the IRS to find out why we owe them 5000 offers from 2014. And so what kind of just wondering what to do?
Dr. Friday 26:20
Good question.
Caller 26:24
I’m telling you, I’ve called them over and over and over. And it’s like, a nowhere situation.
Dr. Friday 26:28
Yeah, you’re gonna have to jump in on yourself. And if it was me, I would do a couple different things. One, I would try calling the IRS I know, you’ve probably done this a few times that I would try calling the IRS at like seven o’clock in the morning, they open at seven and close at seven. So I would try to do very for me, like be the first person on the phone. That would be you know, a start.
Dr. Friday 26:49
And then the second thing I would do is I would probably fill out a form called a 911. And I would go the tax advocate at this point, you need to get a copy or you can go to somebody but you need to get copies of your transcripts, you can go to irs.gov and set up an account so that you can actually pull your transcripts, you need to look at the tax return they have in the system to see if it is the tax return you did or if it’s a statutory meaning the IRS filed one on your behalf because they didn’t find one in the system. You know, so you need to find that, in essence, and this was filed on time, or was it filed late?
Caller 27:28
It was filed on time.
Dr. Friday 27:31
And they’re just sending you something in June for 14? That doesn’t make sense.
Caller 27:35
Because she didn’t have her address. She gave her address as Nashville, Tennessee. And so what happened was okay, so we didn’t really have heard nothing until June of this year. But I’ll say we didn’t hear nothing. Like during COVID when they said “Hey, you don’t answer if they don’t give anybody money at the IRS. If you owe them money. We got a call from somebody that said they were a collection agency and said that we owe the IRS and are like, “Okay, well, if I owe the IRS, they’ll send me a letter.”
Dr. Friday 28:05
Right, right.
Caller 28:07
So we basically we’ve heard nothing. I mean, we didn’t hear anything. And then in June, we got a letter saying that we owed him I think it’s like $5,116.
Dr. Friday 28:18
You are both on disability? And do you have children?
Caller 28:23
Yes. I have one at home that will be 18 on Monday.
Dr. Friday 28:28
Okay. So, I mean, so you really have a couple options. One, try to get your transcripts, another one call. Try to just keep calling the IRS, I’ve had more and more people saying they’re getting through, I have to be honest, I have not had as much success. And the third thing would be is to certify a letter to the IRS, you know, requesting them they see the problem is they don’t go back to 14 for for transcripts, I mean, most likely, so you’re you know, if these were filed on time, it’s just been this long and collections, you might get I mean, if it was filed in 1510 years would be 2025. When when theoretically falls off, and we’re in 2022 now, so it’s only got three more years left. You might just want to call them and get yourself I mean, again, I know I keep saying calling but someone on the phone there since it’s such a small dollar amount, according to the IRS, it’s under 10,000 or 25,000. You can be put in a non collectible situation.
Caller 29:32
It kind of irks me because like I keep telling you guys did this, we didn’t claim anything. Bring in any paper that the manager didn’t already know.
Dr. Friday 29:45
You know, that was five years ago at this point and they’re like, We don’t have anything on it or they’re, you know, they’re like not likely to I mean, even though they made the mistake, the tax return obviously shows the wrong address. I know I’ve dealt with some IRS stuff through H&R Block and, you know, even though some people buy the package and everything itself. So I mean, if you’ve got a letter, you can send a letter saying, you know, you can even just send in, we want to do a payment plan, you can go to irs.gov and set up a payment plan, or you can get yourself possibly put into non collectible because the fact that you’re both disabled, and you’re living off disability, which limits your earning.
Caller 30:24
Okay, so I just keep trying to call them.
Dr. Friday 30:27
Yeah, I’m sorry, that’s the you know, that would be the easiest, because whoever gets on the phone for something in your case, could actually give you, you know, either a payment plan right over the phone or resolution as far as disability and therefore non collectible. Either one of those would work for you.
Caller 30:41
Okay, all right. Well, thank you so much.
Dr. Friday 30:44
Thanks Angie. I appreciate it. All right. Let’s go see what Trent. Hey, Trent.
Caller 30:51
Hey, Dr. Friday.
Dr. Friday 30:53
What can I do for you?
Caller 30:55
I have a quick question regarding proceeds from selling a home and reinvesting in another property is that a considered a capital gains that I would have to pay taxes on?
Dr. Friday 31:07
So right now, we still have what’s called a 1031 exchange, but you cannot do it with a primary home that that you would want to unless you had an awful big profit, you can do it with investment property. So if I sell one of my rentals, and then I turn around, and I want to buy another rental or a piece of farmland or anything that’s considered investment property, I can do that without paying capital gains.
Caller 31:31
Even if I’m gonna live in that next property?
Dr. Friday 31:34
Right, you have to you have 90 days from the date of your sale to basically have the other property I believe there is extensions because it’s taking longer for mortgages. But you basically at the time that you sell the house, the one that you’re selling, that money has to go in escrow. And there is people that handle 1031 exchanges, and then they then write the check to the new property owner when you finalize those papers. You never touch them.
Caller 32:01
I was able to find that online. I really appreciate your help. Thank you.
Dr. Friday 32:04
No problem. Thanks. Bye. And I will say I am a firm believer in the 1031 it is one of the things is on the chopping block it was it was read in the build back better plan. It was one of the things that they were taking and removing under the inflation reduction it did not make it but for all of you because I keep getting a lot of emails on will I be able to get energy EV credit for my new car.
Dr. Friday 32:29
Here is what it says, evey must be made in North America must be made in the United States, basically. It eliminates credit for pricing, EV, so nothing for the Hummer, The Lucid Air, the Tesla’s five or model five or Model X. So there is other Tesla models, maybe some of those, the lower tax credit or new EVs with battery mineral sources from countries other than the United States. This is not going to be black and white, they’re hopefully going to put out a list. They usually have a list every year of cars that qualify for the EV credits.
Dr. Friday 33:06
They do have tax credits now for wind, solar, geothermal, also buying the battery storage and biogas credits for investors in nucular energy, hydro energy coming from clean sources biofuels and technology that captures carbon from fossil fuel power plants. So if you invest into those, there may be some additional bonuses for companies based on worker work pay, and the manufacture of steel, iron and other components made in the United States. There is some incentive for consumers to clean energy choices.
Dr. Friday 33:43
So credits for resident clean energy costs for roof solar heat pumps, wind energy systems 30% credit through 2032, which will phase out in 2032. Electric vehicles which we talked about 7500, new EVs 4009 used, we didn’t have that necessarily in the past tax credit on energy efficiency and commercial buildings. So if you are someone that owns a piece of commercial real estate might be something to consider grants and loans on company that do gas, methyl gas and other fees levied on production of excess methane, and 27 billion towards additional incentives for clean energy technology.
Dr. Friday 34:28
So that will be a important situation. Some of these provisions for fossil fuel and things are actually for public use. So I’m just mainly looking for things that’s probably going to be more effective Evie credits, the drug credits, the caps that they’re going to put they say it will help reduce some of the situation on that so that we can see where or what they have going on that they say that drug costs is going to be capped at 2000. That’d be great for people on Medicare. But that says also starting in the year 2025. So that’s a few years away.
Dr. Friday 35:06
All right, before we get Tom before the break, and that way we can get him off. He does have to wait through the break. Hey, Tom, what can I do for you, buddy?
Caller 35:14
Well, I’ve got a friend that has completed her tax return for last year. Well known for the appear before actually when you write and did it by paper, which was a mistake. But Senate Senate certified, and it’s got confirmation from the post office that it has been was received by the IRS. But when she goes online, to find the status of it, she gets absolutely no information whatsoever.
Dr. Friday 35:48
Yeah, she needs the recent ticking, put on the top of the paper copy of a chicken do it electronically to if she has the ability. They still you know, someone might we do some of that. But if not, she needs to print out another copy, she needs the right on the copy of it. Second copies, you can even include a copy of the first one received, if she sent it, and it was on time. It’s been a year. I mean, you know, and if it’s not showing up in the system, likeliness is it’s not in the system, she needs to get at least get it back out there again, so that she has the potential of being able to possibly get her refund at some point, I’m assuming it’s a refund.
Caller 36:29
It should be with an interest, I would think.
Dr. Friday 36:32
Yeah, there will be a percent interest she will get if she can essentially prove that they did receive it. We’re being told they’re caught up on all those back tax things. But I’ll be honest, I think I’ve up to three copies on some people, you know, every six months. I’m like if he didn’t get in the papers in six months, you’re not actually in the stack that I need you to be in.
Caller 36:52
You had mentioned something. I’m sorry. You had mentioned something about going online? I I think that it would probably be clear if you did it paper and actually wrote, as you suggest on the top.
Dr. Friday 37:08
Right. Right. And I have done that for some people, because sometimes Yeah, cannot be filed, someone has passed away. There’s, you know, there’s certain circumstances people don’t qualify. And so we have to do them by paper. And if she’s that way, yeah, I mean, again, I would make a copy of the receive the first certification so that way they know the time to discarded, I would put in there that are sending this as a second copy, because it’s now been a year and a half or whatever it may have been when she sent it. And that, you know, No knowledge has been heard. And you know, blah, blah, blah, so at least that way, and then I would certify this one as well.
Caller 37:44
And I’m sure it’ll be audited because this is definitely a red flag.
Dr. Friday 37:51
The likeliness of an audit in most circumstances is only about one to 5%. But I mean paper copies are more apt to because someone’s physically looking at him anyways. So you know me someone has to physically manually put that tax return in. So you know, it is automatically more more under review than electronic.
Caller 38:12
With the increasing stamping that you’re hearing that the IRS is proposing. And which is going to be a gigantic organization after we get through with it. Do you feel as the rumor is that they’re going to start auditing more middle class income bracket people?
Dr. Friday 38:30
Well, that is the rumor at this moment. Initially, the highest audits were being done in the last five year were people under 45, single 90, married, which is considered more like low income. I mean, I’m just saying you know more middle to low income, they a lot of times they qualify for child credits and earned income credits, things like that. They were the highest audited area outside of the millionaire’s.
Dr. Friday 38:56
Now I think that the problem with that is, the problem is they’re not able to collect now they can stop them from getting the credit next year. Because once you’ve lied and gotten child earned income credit, you can never get it again. So they can stop those people from it. But it’s not like they’re going to collect a lot of money.
Dr. Friday 39:15
So let’s be honest, middle class is always the biggest at risk, because the extreme wealth can delay it with attorneys, they rarely pay attorneys and all that which most of us just don’t have the ability to, you know, milk it forever. And, you know, we you know, we are the ones that have the homes and all the assets and they’re more apt to come after us and they know we’re likely to make a payment or take a second mortgage on our homes to give them you know, whatever.
Dr. Friday 39:41
So yes, I will say they’re going to it’s going to be interesting because they’re hiring people that have absolutely no accounting experience. So that means they have to physically train these people. So I’m not seeing a quick possibility but on the other hand, I heard something about that. If they worked for the IRS or federal offices, they might get up to 50,000 He paid back on the student loans. But the incentive may be there.
Caller 40:09
Just real quick, in my case, again, on the very top of it, she needs to write, read this as a resubmit. Is that right?
Dr. Friday 40:16
That is correct. Or second copy either way.
Caller 40:19
Second topic. Okay. All right. Thank you very much for your help.
Dr. Friday 40:23
No problem. All right, we’re gonna take a quick break, when we get back, we’ll take to the final part of the show. So if you’ve got questions, 615-737-9986, we’ll be right back.
Dr. Friday 40:39
Alrighty, we are back here live in studio. And if you want to join the show, we’ve got about five minutes left. So you’d have to do pretty quickly. 615-737-9986 is the number here in the studio, talking about, obviously, the fact that you could be thinking or considering the fact that we might actually be looking at more audits.
Dr. Friday 41:08
You know, I mean, obviously, to be quite honest, I mean, obviously, I mean, I’ve been filing taxes for 25 years, and knock on wood, we haven’t had that many situations. But part of it is because when you file your taxes, you do try to find your taxes with the idea that if I get a love letter, I can justify my miles, I can justify my expenses, especially for my small business owners, you know, just throwing numbers on a tax return. I mean, anyone can do that, I suppose.
Dr. Friday 41:38
But, you know, at some point, you may need to justify those numbers. And that may be a whole different conversation. So you just need to make sure that there’s receipts, using QuickBooks, QuickBooks is getting easier and easier in some ways. Because now you can scan in your receipt right behind the check that you wrote, you can use cameras on your phone, turn them into PDF, so you can just keep files of all your receipts, just put them in there. And then obviously, for contractors and builders, you know, a lot of the places you purchase from like Home Depot, Lowe’s, Tractor Supply, all of them have accounts where you can actually keep your information.
Dr. Friday 42:15
So if you have to go back two years under your account, you can actually I’ve had someone do that, where they went back to Home Depot, and they were able to pull up the last two years worth of activities that was done under their account, which was very helpful, because we could prove, you know, that information at least. So, you know, again, sometimes you can get an auditor, they’ll say, “How do I know you used that 2×4 to build a house and you didn’t use it on your personal home?”
Dr. Friday 42:39
So you know, you do need to have some documentation that at the time you were in the middle of building a house, you know, and the house required 2×4’s. So you know, there are ways and the same thing with Miles, people I know. I mean, come on, guys, we all know you guys, you know, people sit there and they say, “Well, I did 25,000 miles I did 30,000 or I did 5000.” But there’s really nothing there. I mean, you can use mileage IQ, you can use different software’s, you can use something on your car, my sister use this trip thing that she does. So she knows how many miles that year she put on just for the purpose of her trip.
Dr. Friday 43:12
So she writes that down, and she has that for her business deduction versus, you know, her day to day, miles because in some cases, I think people are leaving money on the table. In other cases, I think people are stretching it way too far. I mean, did you seriously put 25,000 miles on your car, I mean, come on, that’s over 2000 miles, it’s over 500 a week, and you never took a vacation and you never went I mean, so you know a little bit.
Dr. Friday 43:38
Now I won’t say I’ve got real estate agents that walk in with mileage logs that are in the 30 and 40,000 miles. So I will not say some people do or do not have it. But it is something that you know, if you’re in a vehicle that you drive all day, because you’re doing plumbing or electrical or anything like that, very likely. But if you have a fleet of vehicles over three, you’re most likely taking actual not miles. But anyway you look at you need to make sure you’re tracking that information, and it’s going through the way you want it to go through. Because otherwise my friends, you’re not going to know exactly what’s happening or how it’s going to happen for you.
Dr. Friday 44:15
So again, you just want to make sure that you have that information in there the way it needs to be done. So if you need help, though, and you got a friend or yourself or maybe some children or family member and you know that they haven’t filed taxes or that they’re having some tax issues, there are options. We always talk about offering compromise, but there are payment plans, there is non collectible, there’s partial payment plans. These are all different types of resolution available to each and every one of us.
Dr. Friday 44:45
We just have to figure out what’s the best way to do it and how we’re going to make it work for us to get the information where it’s at and what’s the just like Kenneth when he called what was best for him and sometimes it may just be a payment plan with The request for waiver, I mean, there are sometimes circumstances that happen. And you know, I always try to tell you guys don’t wait till the end to make that resolution don’t wait to the last minute to say, “Oh, you know what? I didn’t know I could do that now and I’m gonna do you know this or that.”
Dr. Friday 45:18
I want you to make sure that you have everything you need to make it work. And one of that situation is tracking your information and making sure that you have all that in control. You know that, “Hey, I can make a deal or I have a payment plan. I’ve filed all my taxes.” You know?
Dr. Friday 45:36
If you need help with any of that you can give her office a call 615-367-0819. That’s our direct number to my office 615-367-0819 You can check us out on the web. If you have no idea who this crazy lady is on the radio. My name is Dr. Friday Burke. You can reach me at drfriday.com. Yes, Friday is my first name.
Dr. Friday 46:05
And you can also email friday@drfriday.com I hope you guys are having a wonderful Saturday that you enjoy the weather and that you’re able to get out and start doing some fun things and we can make sure that you’re making it through the crazy summertime so hope you do. Call you later.