This week’s Dr. Friday Show is here! In this episode, Dr. Friday talks all about tax updates, and the following topics:
- Will There Be A Second Stimulus Check?
- What Do I Do If I Haven’t Received My Stimulus Check Yet?
- Is The Stimulus Money Taxable?
- Is There A Way To Deffer My Social Security Tax?
- Should I Pay The IRS Electronically Or Through Mail?
- Why You Need Help With Tax Representation
- PPP Money: Forgiveness Or Pay Loan Back?
- Help If You Haven’t Filed Your Taxes
and so much more!
Transcript
Announcer 0:01
No, no, no, she’s not a medical doctor, but she can sure cure your problems or your financial woes. She’s the how-to girl. It’s the Dr. Friday show. If you have a question for Dr. Friday, call her now at 615-737-9986. So here’s your host financial counselor and tax consultant, Dr. Friday.
Dr. Friday 0:30
Good day, I’m Dr. Friday and the doctor is in the house. So if you’re thinking about taxes, maybe you’ve had something come up in your tax situation, buying, selling, changing any of those kinds of things, then you might need to ask a question. Because once you do something, it’s really, really hard. In fact, in some cases, totally impossible to correct where we might have been able to save you tax dollars. You can’t do it if you change things. So if you go without I mean, you go sell a large piece of property and maybe had the ability to tote the note or do something where you may have been able to save some taxes. Sometimes it’s not a good idea. Sometimes it is, but you need to know what your options are. So you can move forward and make sure you’re doing what you need to do and when you need to do it. If you want to join the show, all you have to do is call 615-737-9986 is the number here in the studio. We are live in-studio and as you guys know, we are working nowadays via Skype through our home offices. So if you’re hearing a little bit of a whine, I have a nine-week-old Great Dane puppy in the office with me here. He’s not totally happy because he’s no longer the center of attention for a bit of time. So just the background noise maybe a little bit scratchy from time to time, and that’s alright, you know what, they’re great and I love my baby. So if you have a call or you want to join the show again 615-737-9986.
Dr. Friday 2:00
Okay, so one of the biggest questions that I keep getting asked, Do I think there’s going to be another stimulus? So I went out there to take a look not just on my own opinions, but what other people what other companies and individuals are saying and it really sounds like individuals are probably not going to get another package. There may be because there was still leftover PPP money that may be able to do but basically, they’re now saying that what was going to be a possibly fairly decent size bill is probably not going to pass again, Republicans are feeling the pain of the first bill. Democrats are wanting to have more money put towards the post office and other situations before they’re willing to either come back to the table. So for all of us that kind of sit a little bit in the middle saying, “Why can’t we make things work? Why can’t we do things?” Well, that is why it’s a little bit more difficult. So most of us are looking at the right now PPP money. We’ve received it hopefully since it’s no longer available out there. But taking the PPP money and making sure you have a couple of options. Obviously you also have the employee credits that you can take. But remember, you can’t take both in some of these cases. The same thing with the self-employed, you can’t take both. If you’re self-employed and you’ve got Unemployment and you got PPP money, you can’t take both of them. One or the other. PPP is reimbursing you for that money. So it’s not something that you can turn around and have if you have employee retention credits that you’re taking, you can’t take PPP because PPP paid for the employees. So you have to make sure you’re playing this game right.
Dr. Friday 3:40
My biggest fear, to be quite honest with you, is really just the idea that people are going to get all whatever money they need, however they need to do it. And then they’re going to basically turn around and now the government’s coming back and saying, “Well, they’re not going to forget the PPP because I took this or I did this so I can’t get that.” They’re going to actually disallow and people are going to end up in IRS issues. It’s just like that one where they’re talking about giving employees their Social Security tax on there for the next few months or whatever, to try to give more money to the employees. But that’s the problem for our employers. We have a responsibility to make sure all taxes are paid on behalf of the employees. Right now, they haven’t released that. Right this second, for example, I would elect not to do it with my employees, because I don’t want to have the responsibility. What if one of these employees aren’t here later, then I still have Social Security tax that we did not take out of their checks. The federal government at this moment would normally come against the employer, not the employee for Social Security and Medicare tax. So we have to know a lot more about what benefits are out there. But we also have to truly understand how or what it’s going to do to us so we financially know. Okay, so we have this PPP, I’ve told you in the past, maybe not everybody should look at PPP as forgiven, or you better be increasing your federal estimated taxes because if you get it forgiven.
Dr. Friday 5:14
I have a client $642,000 payroll, and they had 900 during that time period. So it wasn’t that they didn’t have it. But their sales have now gone up. They didn’t get I mean, they had some low months, but not all that time, right. So now it’s coming back up, they’re going great businesses great. And if they have to add back $600 of payroll that they paid out of their money, they’re going to be showing a very nice profit this year, in which they’re going to be hit in this particular case as a single owner. So they’re looking at possibly 39% plus Social Security tax on the first 130,000. So you know that that can be very painful, but that you know, a lot of people are going to like to have the free because I’ll pay the 25 or 35 percent on just that money. And then the rest of it was money that we were able to put in the company. I don’t care what anyone says. Another lot of people are not advocates of the Payroll Protection Program. But personally speaking, I think it has helped a lot, especially small and medium-sized businesses, people that have 5 million or less in sales, that have the employees have 50 or fewer employees. Those are the ones that, to be honest, they don’t have the ability just to go to the bank and pull money off a line of credit that the bank is already established, and they don’t have the money to be able to keep things so they would have had to close down completely.
Dr. Friday 6:36
So back to my original question, and people have asked me, “Do I think there’s a stimulus check for individuals?” I personally think that is not going to happen. I think that they found that the payments did help. But the whole point is to try to get people back to work on this particular administration. And I think they feel that they’ve already had enough deficit. It’s gonna be very hard to recoup that situation. So another thing this year, of course, some people have to make a decision. You guys know, I’m huge on qualified charitable distributions, you know that if you pay money to your church or anything, and you’re over the age of 70 and a half, you can actually take it from what’s called your required minimum distributions. Even if you don’t have to take your requirement on distributions till the age of 72. At 70 and a half, you can start taking out your requirement of distributions solely for the purpose of giving it to charity, basically, and what is so wonderful about that as most of my clients, I mean, they’re huge givers and so they’re giving no matter what, but if you can get pre-tax dollars versus after-tax dollars, either they give more, or there’s a small benefit to giving. Doesn’t make a difference either way, but you really need to sit down and find out because normally you don’t have the ability to write off your charity under the current tax deductions, very few of my clients get 100% even if they give 40 or $50,000, they may maximize and be able to itemize. But in those cases, sometimes they have limitations because their income is so high, there is no, you know, you don’t have to itemize to take your QBI against your RMDS while starting to give all those qualified distributions against your required minimum distributions.
Dr. Friday 8:22
So you really need to talk to your financial planner, or you can call the show. The phone lines are open. If this is something you’re not sure about the first time you’ve heard of it. I am not a financial planner at all, but I do try to find ways for my clients to save tax dollars and in some cases, it’s the way that you deal with your retirement funds that will make the difference. The phone number here 615-737-9986. So it’s very important that you take care of that. If you have any extensions, of course, all those had to be filed by July 15. If you are an extension like myself, my businesses are required to file on September 15. As an individual, I’m required to file on October 15. It’s important to make sure that those are filed on time and any quarterlies that are due for example, my September 15 and again January 15 for the 2020 year. I have seen more letters this year in that from the 2019 filing in the last couple weeks showing the penalty for people not paying quarterlies that I have seen in a long time. Keep in mind, the government is hungry people they have spent a ton of money and I’ve seen more people get 135 for not paying quarterly is properly up to thousands of dollars for not paying them properly.
Dr. Friday 9:41
Then there’s been a couple where they put the money or they either mail checks or we suggested or we E-filed the tax return and the funds were supposed to come out when we filed and in several cases, it never happened. So obviously my suggestion if that has happened to you, if you haven’t had the money there you sent a check and it didn’t clear the bank yet. And/or you electronically filed and the money did not come out electronically. My suggestion is immediately going to irs.gov and click on “pay” and pay the amount do get the money out of your bank and get it into the IRS, you can then deal with the conversation or maybe a waiver of penalties because it did not clear but longer you wait thinking “Oh, it’s eventually going to clear they’re going to clear it sooner or later.” I have a problem with that because I’ve had cases where it hasn’t cleared ever. And these people don’t I mean, most people are mailing checks, they’re not certifying them, so we have no real proof that the cheque was put in the mail in the first place. So unless you have true documentation showing the IRS received your check and it did not cash it, then I would say you need to make sure you’re paying that bill. Setting up payment plans, the IRS is ready for that. You can go to irs.gov and again and you can set up your payment plan if you’ve already filed your 2019 and you’re wanting to set up establish a plan and it’s under believe it’s less than $50,000. They will establish electronics then which means you guys, you don’t have to get on the phone with them. You don’t have to deal with waiting for hours on the phone. I can’t tell you. I know how frustrating that is to be quite honest with you. So the best bet is if there’s any way of doing it through electronics or technology, I am suggesting to do that only because it saves on the frustration later when it comes to that. So making sure that you have done that and you don’t have too much to deal with.
Dr. Friday 11:35
If you haven’t received your stimulus check. Keep in mind calling the IRS isn’t going to help you. The IRS did issue the checks but there is a separate number and I’ll pull it up here in a minute. A separate number you can call if you haven’t received your stimulus. Most of those cases, I will say at least to my clients or people that are contacting me they filed their 2018 Or 2019 recently or in the last couple months, and they did not get you to know, they haven’t received the stimulus yet. But you know there are ways and they’re some they’ve moved that thought they updated the information with the IRS because they mail two new tax returns they’re finding out if that is going to happen and where that money is at and they sign up that went to the old address. I don’t believe the IRS is going to re-mail out checks. But again, if the stimulus if you’re still missing it, you do want to try to go to the irs.gov first and look where my stimulus is. Then if it doesn’t work for you, there is an 800 number that we can call and I will again I will look that up in a minute and we can deal with trying to make sure that we have everything you need for you to find you the money because I know it’d be very helpful for you but while we go on this break Look at that number. And if you’ve got questions, please call the show 615-737-9986. We’ll be right back with the doctor’s Friday show.
Dr. Friday 13:24
They’re back live here in the studio and again, you can join us live if you’ve got questions. 615-737-9986. Charlotte, thank you for holding through. Can I help you?
Caller 13:41
Yes. Dr. Friday, I received, I believe it’s called a stimulus check earlier in the year. I had a series of strokes. So I’m sorry if I forget, but we were surprised to get another one. And I wonder if we’re still going to get it?
Dr. Friday 14:07
Well, that’s a great question. And that’s what everyone is kind of wondering at this point that has not been approved by the House or the Senate. I mean, no one has approved it. There’s a lot of people talking out there that there’s going to be a second one, many say before the end of the year, but it probably really depends on who’s elected and everything else at this point. I mean, so at the moment, no, there is not a second stimulus actually available to us. But there is a lot of talk about them actually, possibly giving us another one.
Caller 14:36
Thank you very much. I appreciate it.
Dr. Friday 14:39
Thank you very, very much. Appreciate you, Charlotte. All right. We are live here in the studio. So if you do have a question about either your stimulus or maybe your taxes or your refunds, or maybe you’ve gotten a love letter, and you’re like, “Oh my gosh, how am I going to deal with this? What am I supposed to do?” And it’s almost impossible to deal with the IRS, I totally relate people. I deal with it every single day, But, it is doable. We do it all the time. And so can you. In fact, I’ve had many clients that have managed to get through more and more on the IRS. So I will say that’s obviously positive news. But if you have questions, or you need help, and it’s something I might be able to do. We obviously do this for a living. So if there’s something you need, maybe you haven’t filed taxes in a number of years. I will tell you that the offer and compromise, they got back to work much earlier than the phone systems or collections did. So they are open, we are working with several cases with offers and compromises, which is basically just where you always hear on those ads, “Oh, we can get you a deal. 10 cents on the dollar.” Well, I’m going to be quite honest with you. I have gotten some deals for people with 10 cents on the dollar. But that isn’t certainly the norm and it’s not every single person because, in all reality, you have to find out do you have a 401k? Do you have equity in your home? Do you have a business with equity, is it payroll tax, which we call fiduciary tax? Or is it income tax? payroll tax? You know, what kind of tax are we looking at? Are we trying to negotiate as a personal business, any of it is business or an or personal. Sometimes if you’re self-employed, it all becomes one. And then it comes down to, is it just you? Are you married? Does that person have assets or equity in anything? Are you going to inherit something? These are major questions that have to be asked before anybody, I don’t care who you sign up with. If they’re not asking you those questions before they’re asking you for money, then my personal opinion, they’re looking more out for their own pocketbook and less out for what we are trying to be doing, right?
Dr. Friday 16:41
Let’s just be honest, we’re supposed to be helping you negotiate with the IRS. The first thing we have to find out, is there truly a negotiation? Or are we really looking for a tool to the delay, or try to find a way of making you a smaller monthly payment because cash flow doesn’t allow for the amount that the IRS wants? I mean, I had a case just recently guys, where the IRS basically came back and this gentleman was willing to make the payment plan but it was getting close to the deadline. Then he had a piece of a separate piece of land and they were going to seize his land, they were going to hold it for auction and he was having a heck of a time trying to get someone to loan him the money he needed to pay off the IRS. We got fortunate. A local bank did take on the loan because most banks don’t want to deal with loans, pieces of property that have IRS liens, that it’s just a lot of paperwork on their side. So they don’t like to do it, but this particular smaller bank did do it. Thank you very much for following up on that one because it saved this gentleman his property and his property was worth a lot more than what he owes the IRS but that doesn’t change anything. If you owe the IRS, they can take the whole thing, and then they can sell it for 10 cents on the dollar. Just like they make it like you make a deal with them. They can do the exact same thing. So just make sure that you have the information that you want and deal with what you’re dealing with?
Dr. Friday 18:01
So I have another client that basically sent over apparently they’re getting ready to be audited, I should say another listener. And it says, “Reported a big loss on my schedule C from the side of the business is this, they’re more concerned is it going to be an audit flag, especially since a lot of this was another source of income. I have a W2, but Schedule C had more than $40,000 loss still showed I could make enough money, etc.” In black and white, I do find when there are large changes. So let’s say that you report the same basic information because most people business owners, I mean, we don’t go from making 100,000 to half a million then back down to 25,000. In normal businesses, there are some businesses that have some serious ups and downs, but every day, restaurants, or accounting firms, or whatever most of us have, have some fluctuation but not a ton of it. So the second question is losing money, could you afford it? What was the reason behind it? Was that a first-time loss? Or have you been reporting a loss for a number of years, if you haven’t been reporting a loss for a number of years, then I would say it’s more likely to be disallowed. The IRS disallowed all of the Schedule C write-offs. In another case, he was reading about, because it was not substantiated. So here’s the biggest question. Can you prove the loss? So you put everything on a schedule C, but were they truly deductions associated with the earnings from that schedule C? Or were they some associated with your W2’s, or other types of expenses that you wrote off, but didn’t have anything to do with whatever you were doing to take a loss on that business? That is the biggest question of all. We always try to do taxes based on the idea that we can prove obviously, any kind of losses that we were taking, hat makes sense. You don’t want to throw numbers on a tax return and say, Let’s Roll the dice. I mean, I just go to Vegas, right? That isn’t the kind of way we want to do taxes. We want to do taxes with the idea that the IRS comes back and ask us, we can provide them with the details of how we came to those numbers, I’m not going to say that they can’t still say what they know to agree with this, or they want to see more proof of that. But at least you have the proper documentation to have that discussion. And therefore you’re not likely to have the same problems that you have under the other situation. So just saying you want to make sure that you’re dealing with that situation and making sure you’re moving forward. Okay.
Dr. Friday 20:36
The IRS is under the gun for its delay processing paper returns. How many of you guys filed either by paper or amended returns? And I know I physically talked to our advocate, which is an awesome young lady that works for the IRS. And she said all those people were on vacation and that all those returns anyone that mail that was just stacked up, waiting to be processed. So I understand how they could have done that. Many filers who mailed paper 1040 1040 this spring are still waiting for their refunds. They go to the IRS, Where’s My Refund tool and status update, but none are listed. Although the services starting to make a dent in the pile of written correspondence, the accumulation in that office was shuttered because of COVID. Congress wanted to do more. They sent a letter to the IRS asking the agency what steps are being taken to reduce these number of backlogs. And so far, they haven’t gotten any information. So all I can tell you if you have a paper filing if you’ve done something along the lines of filing your taxes other than electronically, you probably have ended up with a delay. That could be if you mail the check. You know, you have the situation where, you know, the, the checks sitting on someone’s desk, right? Waiting to deal with that or whatever. But either way, you have to deal with the situation. Millions of followers Receiving interest payments from the IRS this year from filing on July 15. The interest runs from April 15 through the filing date. Most filers are receipt received or otherwise requested direct deposit of the refund. We’ll also see the interest that the IRS owes. The bad news is that any of the interest payments you are getting are going to be reported in taxes on the situation. IRS partnership audit rules the agency wants to help it if you develop the flowchart to explain the process of the audit for partnership.
Dr. Friday 22:38
So if you’re filing a partnership, there is a new button that says “Do you want to apply for the new process or stick to the old process?” Keep in mind that partnerships are often done with the individuals are also audited many times in a partnership audit because let’s get serious. Some things flow through a partnership into the individuals because they pay taxes on their personal tax returns, the partnership itself very rarely pays any kind of taxes. So you just want to make sure. Again, any of these things that people send over and they’re asking, what’s my odds of this? There isn’t a perfect position? Sure, you can look and say, “Well, statistically, you have a point 3% or a three or 4% tax to get audited.” But I’ve met people that’s been audited three or four times that you know, and then I have other people that maybe should have been audited, but have never been audited. You don’t know that. So you must not prepare your taxes guys with the idea that you have such a small percentage of being audited because if you get audited, trust me if anyone’s listening that has ever been audited, feel free to call in and just share your experience with that because that is not something I think anyone wants to do. The phone number is 615-737-9986. We’re gonna take a quick break here and we come back we’ll take some of your phone calls and some of your emails. We’re gonna be right back with a Dr. Friday show.
Dr. Friday 24:12
We are back here live in the studio. This is Dr. Friday’s show. I am an enrolled agent licensed with the Internal Revenue Service to do taxes and representation, which basically just means guys, I do one thing really, really good: taxes and representation. Which I know y’all say is two but not really because if you don’t file your taxes, you need representation or if you file them and you have some problem, but it all starts with taxes. So if you have tax issues of any sort. I’m the person you want to call, we can help you get straightened out, we can help you get back on track, we can help you figure out what the IRS is really expecting from you and what is a truly good deal that you can have from the IRS because really when it comes down to it, again, I can’t reiterate enough. There are a number of companies out there that I would love to just have a conversation with because all they say is, “Give us a call. If you owe the IRS $10,000 or more we can help you.” Yeah, they can, but they don’t they leave the impression from the ads that they’re going to give you 10 cents on the dollar and they don’t have any input. There are rules and regulations, the Internal Revenue Service has set up. There is a way that we have that we can help you try to get things straight back with the IRS. But I mean, I can tell you cases I’ve been doing this for 20 plus years, I had one gentleman that swore he could not afford to pay the IRS. He said I just don’t have the money, but yet he had three kids in private school. What do you think the IRS thought? Do you think that they thought the private school that he had his children in was essential considering he was actually paying him as far as the IRS was concerned, using IRS money for these kids through school? So you know, there has to be some logic. You can choose to do that. But at some point, it will catch up to you. So you know, you have to figure out what is your true options. What is the availability sooner you can figure that out is better than waiting until the last couple of years because then they don’t have as much time? And the extensions are harder and they need to collect, remember 10 years from the date they’ve received the tax return, they have to collect that money.
Dr. Friday 26:17
So if you filed something back in 2006, and it was filed on time. It probably fell off sometime in 2017. Assuming there were no delays. For example, when I talk about offering compromises, I actually stopped the clock for those individuals and in some cases, that clock could stop for nine months to a year, and then the IRS could still reject it. So it’s something you have to think about when you’re dealing with it. It’s like bankruptcy, right? You have to have 31 months of debt already. So anything newer than 31 months, the IRS is not even going to allow to go into bankruptcy. But if you have older IRS debts and you already attend to go bankrupt. I’ve seen many people forget to take their IRS debt into bankruptcy. Now I have had several that say, “I’ve got to file my taxes up to date to file bankruptcy.” But obviously that has nothing to do with getting the debt of those taxes in there because they’re not 31 months or longer. So, make sure you’re dealing with someone that knows how to do what they need to do, and how you’re going to deal with it. Again, we’ve talked a little bit I keep getting some emails about is there a way of me deferring my Social Security tax? I really think at this moment, that’s still up to the employer. I don’t feel like that’s something that most employers should, from the accounting standpoint, really get into because I just think there’s too much risk for most of us to deal with that. Making sure if you have rental properties, and sometimes people buy a piece of property, they want to fix it up, and then they plan to flip it but maybe it becomes a rental or vice versa. They plan to be rental and there was a just turned out to be an investment. Just keep in mind, I’ve quite a few businesses or individuals that are in the business of flipping properties, that is basically ordinary income very few of my flippers have ever kept their home for over a year. So you need to make sure you’re tracking all of your expenses, your mileage, your interest if you’re borrowing the money from moneylenders, and different things. Make sure you’re tracking all of that and sometimes it can roll from one year to the next. So it’s not always a calendar year on a flip. You might have brought in November and sold it in February, you still had it but the bottom line is the money is going out during those times. So I always suggest doing your very best to make sure you’re tracking and always 1099 your subcontractors, if you have individuals that are doing work for you, at over $600 subcontractors have to be 1099. It’s very very important to make sure that that is happening and that you are dealing with this situation.
Dr. Friday 28:59
If you Like to join the show you can at 615-737-9986. Maybe you haven’t filed taxes at a number of years. And you’re just concerned, what do you need to do? How do you do it? Because now we all know that if you haven’t filed 18 or 19, you’ve left 1200 dollars, in fact, 1200 dollars, that doesn’t apply to back payroll or back taxes, period. So if you owe the IRS, you still received that 1200 dollars, the only individuals that did not receive the money were people that had back child support those individuals, that money went to the back child support, but again, it was free money that went to the child support. So it really, you know, help the government just help pay off part of your back child support if there were some, but it’s important that you keep your taxes we don’t know there could be a second stimulus. It really depends. We have very little going on at this moment. So we’re never sure exactly what’s going to happen and how it’s going to do and who’s going to be dealing with what you have, you know, as far as the situation But you need to be able to, you know, move forward and know where your taxes are, you can’t buy a house, you can’t really put your kids in school and their FAFSA or anything. You know, you just want to be able to move and do what you want to do and how you want to do it. That’s all I’m gonna say you need to make sure you know what your taxes are, how much money do you owe, and then let’s figure out a solution on how we can pay them so that you can get back to living your life, marry the people you want, without all of this back luggage that comes along with having tax issues. They are not the best loan officers. They can be a bit aggressive and wanting when they want to get something from you. And it can become quite a conversation when it really comes to the fact of making sure that you are doing what you need to do.
Dr. Friday 30:49
The other thing the IRS is starting to get a bit more firm on the 8332’s and for all of you that are saying what in the heck is Dr. Friday talking about? It’s for people that claim children. Nowadays you have divorce and every other year are you claiming children? I claim the children, “Oh, the divorce decree says I get the child every other year.” Okay, so I’m going to tell you on my side of the fence here where you’re the tax person, I don’t like it when it just says it in the divorce decree. I like it If they actually signed the 8332 at the time of divorce that says you claim the children this year, this year, this year and this year, and the other person gets them for this year, then you both have the 8332s, you know, sign off whoever the main custodial are signs it off to the person that isn’t that way they have the form to justify taking the children. I know you got divorced. Your lawyer says it’s in the divorce, but the IRS doesn’t really cap people there is a specific form. So if you’re getting divorced, is so essential for you to be able to deal with this not just with the lawyers. Then you know what happens if the first person is just angry with you. “Oh, you know, you said you were gonna do this and you didn’t. So I went ahead and claim the kids.” I have that happen a lot more than I really wish it to. And we have been fairly darn successful improving who the true custodial parents are. But especially with grandparents, I have quite a few grandparents that are awesome. They take in their grandchildren, give the parents the time to get back on their feet, but they actually have full custody of these children. But for thanking their parents for doing this, what do they do? They claim the children themselves, and then the grandparents come in, and we try to put the children in and we’re rejected. And so they don’t get the credit even though they’ve spent all the money on raising these children. So my suggestion is form 8332. Let’s have those people sign those at the time of divorce or at the custody hearings, have those signed over even though many cases my clients are the custodians.
Dr. Friday 32:57
They are the true custodians, but the biological parent is taking they will disallow the earned income, the child credit, etc, etc. And we have done as I said, we have been fairly successful in getting those funds back to the proper person but it takes a while it’s painful. Then the person the daughter or whatever their son that the child belongs to originally, now they’ve got IRS issues because now they owe all that money back because the IRS has come back and said, “Hey, we’ve changed your tax returns we’ve now disallowed you for claiming this child and the earned income credit guarantee you.” So they can owe nine or $10,000 even though the grandparents may have only gotten $2,000 because they earn enough money where they didn’t qualify for earned income credit if nothing else have the conversation. But it is illegal to claim a child that you do not have custodial over and to claim them and get earned income credit if they have not lived in your house six months and one day and you were the primary caregiver, or an income credit is one of the good things that the IRS has knocked out a lot more of, and it’s very important, they are doing a much better job. That’s why in some cases, you’ll see delays in getting refunds for EIC or for people that are in that bracket because they need proof that the W2 is legitimate because at the moment, there’s been a lot of people that fraudulently put W2s out there, and then they file their taxes, but then they can’t match it. And then the IRS has given earned income credit to someone that really just basically lied to somebody else. Let’s hit Mike. And then we’ll take the break. Hey, Mike.
Caller 34:41
Hello, how are you?
Dr. Friday 34:42
I am awesome, what can I do for you?
Caller 34:46
On this $1200 dollars that we received course we got two of them, me and my wife. Do we have to add that to our gross income at the end of the year and then have to pay taxes on it?
Dr. Friday 34:55
That is a great, great question. I’ve been asked that a lot and the answer is no. It will go on to our 2019 tax return. But I don’t know if you remember back in like 2008 or nine, we also got a stimulus and it just said, Did you receive it or not? And then how much so if you were entitled to, I don’t know, if you had a child at home and you’re entitled to the additional $500. At that time on your 2020, you would get credit for that. But if you were entitled to 24, and you got 24. That’s it, it would zero it out. You will not pay tax on it, but they’re just trying to make sure accountability that someone received at least what they were entitled to.
Caller 35:33
All right. Okay. Well, thank you very much.
Dr. Friday 35:35
No problem. I appreciate the phone call. Thank you. Alrighty, we’re gonna take a quick break here be my final break. I do want to give you guys this phone number. It’s not the one in the studio. If you haven’t received a stimulus, there is a phone number you can call 800-919-9835. We’re gonna take a quick break and then we’ll take the phone calls again. We’ve got Lee in Lebanon. So we’ll be right back. With the Dr.Friday show.
Dr. Friday 36:16
We are here in the studio and I appreciate Lee holding through the break if he’s still there, why don’t we put them on. Hey, Lee Hello, sweetheart. What can I do for you?
Caller 36:29
Yeah, I’m 62 I filed for disability years ago. I should have had a lawyer. I haven’t filed taxes in years and years. I don’t owe the IRS anything. But how do I get a stimulus check?
Dr. Friday 36:45
Actually, you will need it and it’s still open, you’ll need to go to irs.gov. And where it says stimulus, you need to be a non-filer. There’s a button you need to click and it’s just going to ask you for your name, address, and then you would get in the system that way. You’re one of the unusual that’s either not receiving benefits or not paying taxes or at least filing taxes, but they do account for them. So you do need to be one of those that needs to go in there and file a nonfiler return.
Caller 37:12
Oh, great.
Dr. Friday 37:13
Do you have access to the internet?
Caller 37:17
No.
Dr. Friday 37:18
Okay. You can go to the library. I do understand it’s open. You can also try calling this phone number if you have a pen I can give you the phone number for the status and I think they can walk you through for people that don’t have internet access.
Dr. Friday 37:35
Yes, it’s 919-9835. Yes, sir. Yeah, give that number a call. They should be able to walk you through. Tell them you don’t have internet access and they should be able to walk you through but you are a legitimate nonfiler.
Caller 37:52
Thank you very much.
Dr. Friday 37:53
Thank you, sir. I appreciate. Okay, so another thing I did want to touch on today is about to beware of emails, texts, phone calls. We have had another big rush, especially for seniors. I guess because they’re extremely trusting or many of them are trusting. But let me just tell you this, the IRS doesn’t call and ask for payment over the phone as far as a credit card or ask to give them your bank account number. Nothing like that. They’re not going to send the police to your door unless you are in such tax evasion that I mean, I’ve never had the IRS knock on anyone’s door with the exception of one case where there was a potential thought of fraud. Thank goodness, it turned out nothing but the fact is, I mean, and we handle hundreds if not thousands of cases. So the odds of you having the IRS physically coming with the law. Now there are collection revenue officers that will knock on your door because they’re not hearing from you and they’re making sure you still live in the same house that they’ve been sending the letters to and if you aren’t there, then obviously they have to put a track and try to figure out what they need to do. But remember, if someone calls you and says they’re with the Internal Revenue Service and that they’re trying to collect on a debt, first I would hang up the phone and I would call directly the Internal Revenue Service and asked them if there is an actual case, Never pay those people no matter what they say over the phone. I am not an advocate. The IRS now has collection firms that call and try to collect on behalf of the IRS.
Dr. Friday 39:31
Personally, I’m not an advocate to deal directly with them. They don’t have the ability to do the things the IRS has the ability to do. So if you’re looking to settle something with the IRS, suddenly with the IRS, they’re going to give you the same deal if not a better one than these collection agencies. Again, I am not a firm believer in using collection agencies for something I mean, they can’t even take your personal financial statement. Now if you just have a small debt and you just want to get dealt with sure pay him off I guess versus something else. Again, I would not be paying anyone but the Internal Revenue Service personally to take care of any debts that I might have or have had in those situations. Do you want to talk to people that are six, seventy and a half that have been taking RMDs or individuals that did turn 72? And if it happened in 2020, remember required minimum distributions, you do not need to take anybody, no one has to take their requirement on distribution. Now, doesn’t mean you can’t, doesn’t mean you shouldn’t I don’t want you going hungry if you don’t need but there are many people that are forced every year to take requirement of distribution because the IRS wants their share of the deferred income that they deferred. Okay, we get that but in 2020, it said you did not have to and if you’ve taken it, you can still redeposit it. So talk to your financial advisor, see if that’s a good idea. It may not be but, keeping our money one more year growing in a retirement account might be better than trying to take it out and then put it in the bank that may not make very good sense at all. All right. Looks like we’ve got Mike in Brentwood. Let’s get him on the phone. Hey, Mike.
Caller 41:07
Hi, how are you, Dr. Friday.
Dr. Friday 41:10
I am awesome. What can I do for you?
Caller 41:13
Well, thanks for doing such a good job for me. I’m one of your clients. And I wanted to ask you, I’ve heard you tell someone about paying RIS credit by credit card with some outside firm?
Dr. Friday 41:29
Well, I mean, I would suggest never using I mean, you can go to irs.gov if you’ve got debt and you know how much you can go to the IRS click pay and you can either pay by cheque account or credit card. I think they charge you like 2.3 or 3% depending on what kind of card and which agency. If if there’s a collection company though, then there are several of them that have been hired by the IRS to collect on behalf of the IRS. I personally would not pay them. I would call the IRS and settle my deal with them.
Caller 41:59
Okay, ris.gov, and they have a number to pay by credit card?
Dr. Friday 42:03
Absolutely you do right there on the screen. Yep.
Caller 42:06
Okay. Excellent. Thank you.
Dr. Friday 42:08
Thank you, sweetheart. Thanks. All right. Okay, so let’s see where we are at the end of the show. So let’s just regroup with things we need to do. It’s almost tax time again. If you haven’t filed your 2019 and you have a business and LLC, a corporation, etc. Those are due September 15. There’s only a few weeks away if you haven’t already made the appointment you need to go to DrFriday.com and click on the scheduler and pick a date because we need to get you in if you need help doing this. Also individuals October 15. Again, the calendar is open pick a date we need to get you in so we can get the file. We don’t have to always hit the send button. But people we need to know how much money is due we need to know if there’s a refund. I mean, why are we waiting if there’s a refund, let’s go ahead and file them. If you owe money, let’s figure out where you’re going to pay it or use a credit card or whatever you need to do to make it happen for you. But let’s make sure that we know exactly what’s going on and where it’s going to happen. So I’m just saying if you want to reach my office on Monday morning, what’s really easy: 615-367-0819. Also, if you have never heard of me or you’re not too sure who I am, just go to the web. Drfriday.com. If you’ve got a question and you know, you’re not big on calling the radio because you never know. Just go to Friday, like the day of the week. That is my first name of one friday@drfriday.com.
Dr. Friday 43:37
You can email your questions to me, and I will be more than glad to either respond or see if we need to set up an appointment or Skype or have a zoom meeting, whatever it might take to get us all together to find out what we need to do to make it all work for you. Again, if you have questions and you want to get started on dealing with IRS issues, or maybe you’re in the middle of an issue or an audit, and you need assistance, pick up the phone 615-367-0819 and or make an appointment today at Drfriday.com, click on schedule and you can set up an appointment under that. You can also rehear these shows as far as on blogs, or anything else. So if you have questions, don’t just guess at it, don’t just Google it. Let’s find out what’s going to be best for you because sometimes what’s best for your neighbor or someone you know, it may not be the best choice for you because not everybody shares every single thing about their situation. If you need help, I’m here for you 615-367-0819 hope you guys have an awesome weekend. Catch you later.