Welcome to the Dr. Friday Show! A few days left and it’s Christmas Day, but we’re still the gift that keeps on giving – especially to all your tax questions. In this episode, host John Haggard is on studio while Dr. Friday is on phone while at the annual Christmas Parade in Gallatin. Together, they talk about pressing tax issues as well as answer questions from callers live. Topics include:
- Dr. Friday Live on the Annual Christmas Parade
- Who Has the Better Tax Advantage Between Non-Married Couples?
- Virtual Currency and IRS
- Whistleblower Allowance
- Filing Jointly or Filing Separately for Newly Married Couples
- Tax Credits on Home Renovations
- Will You get in Trouble for Developing Your Will-Be Inherited Property?
- Tax Advantages for Military Personnel
- Tax Credits and Homelessness
- Capital Gains from Selling Rental Properties
- Should You Keep or Withdraw Your 401k Before You Die?
- Early Retirement Questions from Two Different Callers
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.
John Haggard 0:29
Live from America’s Music City Ladies and gentlemen, it may be Saturday where you are but it’s Friday, all day, every day all the time with the tax doctor, the tax lady, the doctor of accounting known in these parts of America as the Dr. Friday and live from the parade scene. There she is. And here she is Dr. Friday. Hello, Dr. Friday!
Dr. Friday 0:50
Hello John sounds like you guys had an awesome show going there. I totally missed it this year.
John Haggard 0:55
Well, we missed you. I gotta tell you it’s a wild of just a great hour. I got to talk to some people. One guy called in and he said, I’ve been trying to win that venison, that deer meat for four years, or at least a couple of years or whatever.
Dr. Friday 1:08
It always shocked me on how many people, well, I mean, we get the ton of phone calls when he gives away that deer meat every time.
John Haggard 1:14
It’s really something and he’s a deer hunter. And so Joe said, as you probably heard, you want the left side of the deer the right and you said the left. Now, I don’t know the difference between the left and the right side. Do you?
Dr. Friday 1:24
No, I was curious when he asked that, I was like is meat better on one side of the deer vs the other? I mean, I don’t know the big difference, you know? I’m sure there’s one side of it that may have more… I don’t know, better meat, apparently. Who knows?
John Haggard 1:38
I’ll tell you what, if anybody says anything to me about deer meat and they ask I’m gonna say left side. I don’t know why. But if Joe said left side, I’m going left side.
Dr. Friday 1:49
Better side, we’re all gonna go with that. This is a little bit – next week, we’re having our big giveaway. First time in eight years. We did do it together. Next year we will be back together here. But this next week we’re going to be having our big Christmas show for the Dr. Friday Show. Just so we can make sure we give back as we both Joe and you and all of us have been doing this for a while, almost nine years. I think, John, and you know, it’s a great way to maybe give someone a little Christmas surprise. It’s always nice to get something when you’ve worked hard.
John Haggard 2:22
Just a lot of fun and to get to talk to the folks and some of those who’ve been with us for years ever since we’ve been on the air and just great to connect once a year. That’s absolutely the truth. Now you’re live on the parade scene. So tell the folks what’s coming up there.
Dr. Friday 2:36
Well, we have the biggest parade we have Leiper’s Fork and then at two o’clock, that one actually it started and then we’re going to be at Spring Hill which is a night parade which is always my favorite type. And that starts at five o’clock and our parade our float is completely blasting with color and movement. We built a Ferris wheel as well as a swing on the float. So it’s got a lot of movement this year and a lot of lights.
John Haggard 3:06
So you have a Ferris wheel?
Dr. Friday 3:09
Yes. seven foot Ferris wheel.
John Haggard 3:12
That’s fun. That sounds like a lot of fun. Well, folks, if you’re just tuning in here and even for the first time you’re listening to Dr. Friday, the Dr. Friday show. She’s an enrolled agent with the Internal Revenue Service. No, she does not work for the Internal Revenue Service but like an attorney who can represent you in a court of law she can represent you because sometimes we find at the end of the year, Dr. Friday runs into people that haven’t filed taxes for 5, 10, 15 years. I think she’s even had a client maybe 20 years. And some of it out of fear. You don’t think well how am I going to pay a million dollars back because that’s what they say I owe over $500,000 or whatever it is. But this is the show where you call in and get the advice and we always do should say this actually on the Dr. Friday Show if you’re worried that IRS agent might recognize your voice or something like that put a sock over your you know, disguise your voice. Plus will give you all the answers and of course Dr. Friday’s number as well so you can talk confidentially. But any tax question you have at all it’s hard to believe that 2019 is almost gone so you know we got to get the taxes together got to get the paperwork together, but call now 737 WWTN, 737-9986. Get that tax advice free here on the air. To Murfreesboro, we go and let’s bring Blake on to the doctor Friday show. Hey, Blake!
How’s it going?
John Haggard 4:45
Blake, can you hear Dr. Friday?
Yeah, okay. Um, yeah, quick question. My girlfriend is about to have a baby next year, but we are wanting to know how to be the best person to claim it, to get a better tax break.
Dr. Friday 5:04
So, do you guys live together?
John Haggard 5:11
Blake, can you hear Dr. Friday?
John Haggard 5:14
Okay. I’m not sure why you wouldn’t be able to hear her. Because we hear her she’s on the air here.
Dr. Friday 5:20
Yeah, well, the basic answer to that, I think what he said was that he and his girlfriend are going to be having a child and they are wanting to know who we get the best tax advantage. In theory, on that one, it would be most likely the person with the lowest income. If you’re not legally married, even if you live in the same home, you are considered Head of Household for whoever’s claiming the child. And if, if you were married, filing jointly or whatever, you would actually have to take the person with them, but in the fact that you’re not married, the law doesn’t apply to you. So you would be able to figure out most likely that you’re going to have a better tax advantage with the person at the lower-income bracket.
That’s what I wanted to know. I appreciate it. So thank you.
Dr. Friday 6:11
Appreciate it. Merry Christmas. Thank you.
John Haggard 6:15
Appreciate phone call Blake. Phone number to call 615-737-WWTN, 615-737-9986. No question a dumb question. No question is stupid question. Why not save some tax money? Why give it to the IRS? This is the phone number here to call Dr. Friday to get all that advice for you. You know, we’ve been hearing a lot Dr. Friday about this. I guess they call it virtual currency stuff and this new sort of money that’s not through the bank system and all this kind of jazz. I would assume by now the IRS getting involved in that in some way.
Dr. Friday 6:54
Big time. So probably about maybe seven or eight years ago. Bitcoin and virtual currency became at least in my world became more and more popular, a lot of people were trying to invest into it. I know I’ve got some nephews that have invested into it. And part of it is the idea of no regulations. It’s kind of like, you know, rolling the dice, going to Las Vegas, whatever, no security. The other part of it is that I’ve got a whole list of clients that basically kind of like the idea, they thought that they were living off the grid, they were actually finding a way of having currency but yet no one knew you actually had the ability. Well, you know, just like anything else, just as eBay and having bank accounts online, eventually became a part of our everyday life.
Dr. Friday 7:43
This is now something that the IRS is not only know about, but they have got a whole Task Force basically working on bringing those particular people that have been buying and selling Bitcoin to the right side of the tax law, I guess is the easiest way to That so if you have Bitcoin and you are buying and selling or if you’re mining for money or any of those situations even when you convert it from one type of currency to another that is considered a stock sale and therefore that is a capital gain short term or long term situation and a lot of people didn’t even track their basis in the beginning. So, it’s going to be challenging and the IRS is already sending out a lot of letters because Bitcoin for one had to open up their list to the IRS and become more regulated as if it was a bank.
John Haggard 8:37
So is it safe to say since there seems to be so much activity and I think most people didn’t know what you just said that if you treat it like you would have stock, you know, short term or long term – anyway, you are reporting it? Is that okay? Or would you say that, okay, perfect there.
Dr. Friday 8:55
So yeah, so that’s great, but a lot of times what happened was and you know, even more myself, even when we were doing, you know, I do a lot of offering compromises, I do a lot of payment plans up until a year ago, it wasn’t even a question on the questionnaire now when the IRS is doing this payment plan or an offer and compromise, one of the first questions on the 433 is do you have, you know, digital currency? You know, and so the government is basically realizing that it is out there and a lot of more people have it than what they have. So ignorance can no longer be part of your excuse than it might have been in the beginning.
John Haggard 9:33
All right, so as long as I want to be sure that we’re all clear on this as long as you report under the IRS guidelines if you have cryptocurrency, that’s okay. It’s not like you’re going to be automatically audited because you have cryptocurrency as long as you report it, just like you would stock is that the way that works?
That’s 100% correct. And of course, the whole word cryptocurrency is basically supposed to be not trackable. But the fact is it is trackable now. So, just gotta be really, really smart about what you think you are hiding from the government. You may not be fighting as well as you think.
John Haggard 10:09
There you go back to the phone lines on the Dr. Friday show. We go to Hendersonville and Pete, you’re on the Dr. Friday show.
Dr. Friday 10:16
Hey! I am a caregiver to my mom. And I am going to be getting some land in the inheritance. But I am looking at building on that land before she passes away and us living in it. I sold my house to build this house. How would I keep those two separate? And then how would they go about text me on that?
Dr. Friday 10:44
Well, I mean, in all honesty, I think it’d be smart to have everything. Is this a piece of land that mom has? Or is it a flip property, is mom have a house on the property now?
She actually has a house on the property now, but I am willing to get out so many acres Build a house settlement in another area. And then we’re going to set up the land and the other house that we live in currently.
Dr. Friday 11:09
You might want to sit down with an attorney, but my suggestion would be mom gifting it to you at current value at least. So you don’t lose basis. So she can gift over $11 million without paying tax, she can gift it to you. Now, she may have to, depending on her basis, there may be some tax involved, or she gives it to you at her basis. But you’d want to sit down and figure out because the problem is once you improve that property, and it’s partly yours and partly hers, unless you can get it put into trust a mom so that will you know when she passed away, the land will come to you, you’re going to have a challenge if somebody goes against you in a you know, in a trial. Again, I mean, you may be the only beneficiaries. There’s no question of you getting it. But if there are other siblings, I think I’d want to make sure that that land was put into trust already guaranteed to you.
There is other siblings, but we have we’ve all been in agreement that that would be mine. But like you say, you’ll never know.
Dr. Friday 12:07
Well, yeah, you never know because things happen in life. And hopefully, mom will still live a nice long life. Who knows, I mean, just saying not knowing that day’s gonna happen. So if it was something that I was going to do, I would make sure that mom had a trust with that land pacifically coming to me, because once you build on it, you’ve just improved it. And theoretically, then you’re having to go and prove well, this is how much is the land this is this and then you’re gonna have to buy it at current value. And you know, it just could get messy. I’ve seen too many times that happened. So you really need to make sure the perfect picture would be that the land being put in trust so that you could inherit it at mom, step up and basis at the time of her passing. That would be the perfect scenario. If that doesn’t happen, then the mom gifting it to you early but that’s going to require you probably losing some basis or tax dollars.
Okay, well, I’ve already had the land appraised. So, I didn’t know if I could use that, because I wanted to get it appraised before I started building on it.
Dr. Friday 13:08
Absolutely, you could use that. But I mean, the fact is, who knows, I mean, again, mom may live another number of years. So mom may have paid or inherited it herself. So the basis for her may be pretty low. And what you don’t want is to have to take that basis into your home, when you could actually get it at the current value of whatever it’s worth today. You know, or whatever.
We have a CPA, would they be versed in that or?
Dr. Friday 13:36
absolutely they should be if they have questions you can call my office, but yes, most CPA should understand the inheritance versus gifting versus, you know, situation. Absolutely.
All right. Well, I appreciate it.
John Haggard 13:52
The phone call folks you’re listening to the doctor Friday show we’re live from Nashville. It means jump on the phones now. Get all the tax advice. You want some of that advice if you are going to hear the next -whistleblower allowance. There’s a question there. Someone got recently married, renovation tax credits as I look at the screen here and if you’ve got a question, here is the phone number to call when we say live that means call in and get the answers to your questions. 615-737-WWTN, 615-737-9986. Now is the time to call. John Haggard in the studio the Dr. Friday, an enrolled agent with the Internal Revenue Service and this reminder, no she does not work for the Internal Revenue Service. An enrolled agent can represent you in a court of law. You know, like an attorney would with the IRS so if you don’t want to talk to him as Dr. Friday says affectionately. If you’re tired of all those love letters from the IRS, she can take over for you and represent you will take your phone calls next on Super talk 99.7 WTN
John Haggard 14:59
And back live, we are! The Dr. Friday Show’s segment number two, live from America’s Music City ladies and gentlemen. Phone lines are open and we are live. That means call now get the answers to your tax questions. 615-737-WWTN, 615-737-9986 before we find out Dr. Friday’s advice about the whistleblower allowance let’s go to bring Curtis on to the Dr. Friday Show and find out about he’s just recently gotten married, I believe. Curtis, you’re on the air.
Hey guys. I was calling about me and my wife got married July 1st of this year. And we currently have a home together. And we both work. I’m the primary. And she’s about $27,000 a year. So we wondering if we should file jointly or if we should still file individually.
Dr. Friday 15:58
You’re probably going to find what… Can I ask if you guys your income is $250,000 or less?
It is less
Dr. Friday 16:06
Okay. So if that’s the case, you’re most likely going to be more beneficial to file jointly. Now, does she own or did you say she has a student loan interest?
No, no. She earns about like $27,000 a year, and I earn probably about like 50 grand. So I was just trying to get like a general range. I didn’t know that we would combine.
Dr. Friday 16:32
So that’s why you guys should combine income. You’re still in the 12% tax bracket, you should be fine. I mean, you know, you’re doing great.
Okay. And I have one other question. Last year, I just graduated from school college in July as well. And I know that will last year I got the education credit on my taxes. Will I be able to get that again this year because I was in school for six months in a year or…
Dr. Friday 17:04
Absolutely you get the lifetime? Yes.
Okay, those are all my questions. Thank you guys very much.
Dr. Friday 17:10
John Haggard 17:11
All right back to the phone lines. We go to Murfreesboro. Chip, you’re on the Dr. Friday show.
Yes. I was wondering if the compensation for whistleblowers on the federal level is taxed.
Dr. Friday 17:28
The whistleblower income is not taxed.
Okay. All right. Well, I’m hoping I win my case.
Dr. Friday 17:39
All right. Good deal.
John Haggard 17:43
Wow, that’s very interesting. Dr. Friday, the whistleblower allowance, if he wins his case, whether it’s $5,000, $1,000,000, $600,000, whatever it is, is tax-free.
Dr. Friday 17:55
Yes. It’s one of those small advantages in life, I guess. If you have notified the government of some sort of wrongdoing. And they find that you, you know, we’re very helpful in the recovery of that money. They, they will give you a percentage sometimes normally of whatever they’ve been able to recover. And that is usually not tax-free. I’m sure there are some exceptions to that rule. But it’s the way the government kind of gives back to make people feel, you know, feel good about helping them achieve. Stop the bad guys from taking our tax dollars.
John Haggard 18:35
Right there. You go to Columbia. We go and Josh, you are on the Dr. Friday show.
Definitely. How are you all?
Dr. Friday 18:43
We are great.
Okay, my question is, my wife and I bought a house in August and we are planning to do some renovations to it. And so I know there are tax credits with buying a house. And also I know there are certain tax credits for certain types of renovations that you do I just unclear on what types of renovations are covered if it’s a certain type of, you know, windows or doors or if it’s plumbing, that kind of thing. So I was going to try and see when we start to do our renovations, what all we need to keep track of far as what the claim on taxes as a tax credit.
Dr. Friday 19:23
Okay, so we don’t have an energy credit any longer unless it’s solar. So only thing that you’re going to be able to do on your house at this moment would be as if you added solar to the house would be the biggest. Most of us, that’s the only thing so we no longer have the energy credit of $1500. Well, you see $500 a year up to $1500. So you really are looking now solely at from the federal standpoint, solar and you can get up to 30% of whatever you spend back on your taxes for credits. But buying new windows, you know, putting a new roof on your house to save energy, all of that. Now, I do know, in some areas like any Yes, and some of them will give you certain credits that’s in the federal tax law. We don’t have that available right now.
And tonight, I believe I can deduct the interest from mortgage payments, and that is a tax credit, is that correct?
Dr. Friday 20:25
So it’s a deduction, but it would only be is if you’re married, you’ve got $24,400 as a standard deduction under the current tax law for 2019. So if you and your wife mortgage interest property taxes, state within our case sales, tax, and charitable contributions add up to more than that, then you would be able to itemize. If it’s less than that since you purchased your house partway through the year, you won’t even have a complete year of interest per se, you may not be able to itemize above the standard deduction. Okay, either or it’s either or so I’m giving you all kinds of wonderful, great news. Congratulations on buying a house. But you know, I mean, right now under the current tax law is it’s difficult for people that have hopefully not went into huge mortgages to be able to do it. And then they’ve even limited if you have a house, it’s $750,000 or more. The interest is only deductible up to the first $750,000 not saying that applies, but they have limited some of those things that we didn’t have in the past.
I don’t want to take up too much more time I did for another thought. So my wife is in the military. She’s been in training since July, so she wasn’t even in the queue of the president when we closed in the house, and she has been paying off her student loans while she’s been in training. So I guess it’s just a group kind of a gray area. For me it’s not as cut and dry as most people when they get a house. So she’s in the military. We do file jointly, we’ve been married for two years, and the complete deduct anything militarily as far as her expenses from when she was in training, and also the student loan interest payments that she’s made, she was wiped out, I think 22 grand in six months.
Dr. Friday 22:19
She’s done an awesome job of the answer to that is up to $2,500 of interest is deductible depending on your income. So there could be yes, there could be a tax deduction available there for you guys. And there are certain military deductions if she was overseas, if she’s in the reserves, there are you know, I will tell you I am not a total expert. I don’t do a lot of military here in the Nashville area. I know some of my other people that do enrolled agents that I talk with at near military bases, there are certain things that would be a tax advantage. So before you, you know, do anything I would definitely try to talk to somebody that actually does military taxes. Just to make sure because she’s active military there should be are there are certain advantages to active military along with the fact that her student loan interest would be deductible up to $2500. Again, I think you guys have to make less than $125 a year. Right around that dollar amount. Okay?
Dr. Friday 23:23
Great. Thank you very much. You may have a wonderful Christmas.
John Haggard 23:28
Folks, you’re listening to the Dr. Friday Show. She is the tax lady. If you’ve got any questions at all, now’s the time to call. 2019 is almost over, just another what, 15 days or so. What is this the 14th, so 16 17 days, want to get all those tax items together and get ready? Now’s the time so if you got a question, complicated, simple no matter what, here’s the big thing – there are no dumb questions when it comes to tax. So just hey, call in and say, “You know, I just don’t quite understand, I know you’ve talked about this before, but I just don’t get it. Please help.” And she will. The number to call right now again when we say live that means you can call in and get the advice 7615-737-WWTN, 615-737-9986 When we come back we’ll talk to Fred on a tax credits question once again listening to the Dr. Friday Show. John Haggard in the studio and the tax lady right there she is Dr. Friday taking your calls next on Supertalk 99.7 WTN.on
John Haggard 24:37
Back we are ladies and gentlemen. The Dr. Friday Show, the tax lady she’s here answering all of your tax questions at 615-737-WWTN, 615-737-9986. Back to the phone lines bring Fred in Middle Tennessee onto the doctor Friday show. Hi, Fred.
Hi there. How you doing?
Dr. Friday 24:54
Dr. Friday 25:01
What can I do for you?
Well, several years ago I got deathly sick. I was retired and got a bunch of rental property and I lived off the income from around property but got real sick and lost all my property and then buying foreclosed on my home I lost that. And IRS is saying that I was due $300,000 tax credit for business loss. So they gave me $300,000 tax credit, but I’m homeless and I have nothing, I can’t work. And I’m wondering is any, anyway I could get some kind of relief from this? I don’t need a tax credit I can’t work anymore. Right?
Dr. Friday 25:47
Well, unfortunately, the tax credit basically means that you don’t owe any taxes. Am I correct?
No, I don’t know any taxes.
Dr. Friday 25:57
Well, unfortunately, that’s really the only thing the IRS can give you. I mean, there are organizations as we both know, that might be able to give you some assistance out there. But when it comes to, you know, taxes, the
I don’t know, I don’t know of any place, to be honest. Yeah, I don’t know of a place to give me assistance. You may know, I’ve never heard of
Dr. Friday 26:23
Depending, I mean, if you’re basically homeless, there are, you know, many different companies, depending on what part of the state you’re in, there are government agencies that will help individuals to at least find a home, find food. I’m not gonna say it’s gonna get you back to where you were before you were sick because it sounds like you are doing pretty good and now obviously, life is giving you a pretty bad shake. But, you know, unfortunately doesn’t help protect this. Sorry.
Well, I’m sorry I took your time. You have a good night.
Dr. Friday 26:56
No, I’m sorry about you. Merry Christmas, sir. Sorry.
John Haggard 27:00
Back to the phone lines, we go to Nashville and Ronnie, you’re on the Dr. Friday show.
Dr. Friday 27:08
Hey, this is Friday. Hey, Ronnie, did you?
Yes, yes. Ronnie had a question about capital gains. I have a rental property that I’m selling. And I wanted to know how long do I have to reinvest. And if I didn’t make that deadline, what would the penalty be?
Dr. Friday 27:36
So you don’t have any time to reinvest unless you elect to do a 1031 exchange. In that point, you have 90 days from the time of closing to actually chose the property in which you are going to do the exchange for. And if you don’t, then you will pay ordinary capital gains being if you owned it for more than one year. It’d be a long term. If it’s a short term property and be considered ordinary income tax.
Okay, so it’s long term, I’ve owned it for about 10 years.
Dr. Friday 28:06
Okay. Do you have any idea what you’re expected to have for gains?
Dr. Friday 28:15
Okay, so what’s your, before the 70,000? Give me a ballpark. It doesn’t have to be to the dollar. I think just a rough idea of what your income normally is before that. $70,000
$80,000. Okay, so you’d be looking at 15% capital gains on the 70,000.
Dr. Friday 28:35
Okay. Okay, Dr. Friday, thank you very much. No worries. Thanks, Ronnie.
Thank you, bye bye.
John Haggard 28:42
Next, let’s go to Payne. Payne, you are on the Dr. Friday show.
Hello. I was wanting to know what happens on a 401k when you die but you didn’t withdraw it out? The survivor, I’m sure they’ll pay taxes on it but I was wondering if it would be better to withdraw before I die or leave it?
Dr. Friday 29:11
Okay, so it’s really kind of treated the same before or after. So you draw it out and depending on your income bracket, you know, you can pay the tax and then it becomes either a Roth, or four 401k is usually when you hit retirement, most people will turn it into an IRA. And then at 70 and a half, you’re required to say require minimum distributions. But a lot of people will let the next generation they will inherit the 401k. And then they have to take required minimum distributions for their lifetime. Or they can take it out and pay the tax at their time. But bottom line is, the money will roll over to whoever you have as a beneficiary and then the tax will be whatever their income is, it would be considered ordinary income to them.
Okay. I might hold a lot in and so I should be better off taking it out and paying taxes because I don’t have any other income.
Dr. Friday 30:10
But I would suggest I would definitely suggest sitting down and talking to a financial person, but I agree with you, there is a window of the first $25,000 or whatever, if you don’t have any income, you might be able to take some out every single year tax-free and then reinvest that money in an after-tax account so that the people you know, either for yourself or the people that inherit from you won’t have to worry about the taxes than what you know what you have. So in essence, you could give them tax-free money and you didn’t pay taxes on it either because of your low income. So yeah, I would say there is definitely a potential of converting some or all of it. It just doesn’t do it at one time. You want to do it over maybe a number of years to keep it low enough so the taxes don’t hurt.
Okay, that’s what I was wondering up. I don’t pay that much in taxes and couldn’t go parcel of it out and put it in IRA or Roth something. And they wouldn’t have to pay on much taxes on.
Dr. Friday 31:13
Really smart to be honest. It’s a smart plan. I would definitely sit down with whoever handles your IRAs or your financial person. But yeah, or your tax person says, How much can I convert? I have this question a million times and tax season, how much can I convert this year to keep my taxes below this dollar amount or, you know, zero or whatever it might be, but you don’t want to leave money on the table, especially if you’re in a low income, it would be good for you to consider conversions if it fits your financial plan.
All right. Thank you, Dr. Friday!
Dr. Friday 31:45
John Haggard 31:46
Already, folks, T-18 minutes and counting, T-18. If you’ve been sitting around saying well, you know, call Dr. Friday here in a moment, we’re going to be gone. So 18 minutes to go now’s the time. Get all the tax advice you possibly need, it’s all here. 615-737-WWTN, 615-737-9986. To Florida, we go, and Donna, you are on the air with Dr. Friday.
Hello, Dr. Friday.
Dr. Friday 32:13
How are you?
Dr. Friday 32:16
Fantastic. Earlier this morning, there was an ad that it was you and you were talking about an app that you could get to scan receipts to paper receipts to help you on your taxes. Can you explain that?
Dr. Friday 32:37
Sure. Basically, what it was I think I was talking about was the ScanIt app that basically takes pictures from your phone and turns them into PDF. It is one of many apps. You also have a neat app that does it as well that you can do sorting. But basically, a large number of my clients are entrepreneurs either real estate agents or small business owners. And when you’re small business owner, you’re usually really, really busy and keeping track of receipts can be a bit hard and sometimes they end up in big bags. So the easiest and then as it happens, yeah, exactly, no, you’re 100% correct. I have the right now I’ve got a person that gave me five years back work. And I will tell you 30% of the receipts are garbage. I can’t read them. Because they’re impossible because they’re on that filmy white paper or whatever. And it just disappears. So if you can take a picture every day or whatever, as you create receipts, and then you file them into the little folder, it says, office supplies, Tetro whatever they are, then you always have that with you and you’re not worried at the end of the year. And then you can actually get a report of the neat one, and it’s any at just the but that one you can get a report. They’ll say this is how much your office supplies were This is how much and then we use that information and then you’ve got all the receipts to justify that we ever got on it.
Fantastic. I just didn’t catch the name of it and it sounded really incredible.
Dr. Friday 34:05
Yeah, it’s a great little. It’s a great little system and they actually have full scanners. But now being able to use your phone, it’s so much easier than having to carry some sort of scanner around.
Right. So Fantastic.
Dr. Friday 34:18
Thank you for listening. I appreciate it.
Alright, thanks for being there
John Haggard 34:23
road. We go. Let’s bring San on to the doctor Friday show. Sam, you’re on the air.
Dr. Friday 34:31
John Haggard 34:35
All right. Maybe Sam has left us. Let’s go to Rachel in Shelbyville. Hi, Rachel.
Hi, um, my daughter just or she’s buying a house. She’s going to rent a room for her brother. They’re 18 and 19. So that will help them both with living expenses. My question is does she have to claim or how does she claim what he pays her? Because it’s her house but it’ll be they’ll both be living in it so is that she have to claim that as income.?
Dr. Friday 35:15
Well, what I’ve always been told is plain and simple if it is family it’s more contribution to the household it’s not considered income. If she decides to have baby brother or whatever, he moved out and next thing you know someone else a friend or you know, she rents it out for vrb or whatever, that does make it income. But when it’s family giving to family, it can be considered gifting it can be considered contribution and you know, unless we’re talking more than $15,000 a year, then it could get a little bit more expensive but all in all, it falls into that little loophole where no it would not most likely be income to her and not an expense since we don’t have a rental expense anyways, expense for him.
Okay, awesome. Okay, thank you very much.
Dr. Friday 36:04
John Haggard 36:05
Folks, you’re listening to the Dr. Friday Show. T-15 minutes to go. So now is the time again to jump on the phone 615-737-WWTN, 615-737-9986 to get the answers to your tax questions. When we come back, we got Sam back on the phone here with us. He’s on the road. Early retirement question, he has. Also, we’ll go to Franklin and we’ll talk to Mike and your questions. John Haggard in the studio, the Dr. Friday, an enrolled agent with the Internal Revenue Service with this reminder – no, she does not work for the Internal Revenue Service just to make that clarification. She can represent you before the IRS. That’s what an enrolled agent does. And we’ll have all the details for you next on Supertalk 99.7 WTN.we have moved on hi sweet nice
John Haggard 37:04
And back we are live Dr. Friday Tax Show right here, ladies and gentlemen, final few minutes as we go back to the phone lines. Now we do have San on the year on the road San you are with us on Dr. Friday.
Yes. Hello, Dr. I got a question for you that was born in May 1962. And I’ve been working since 19 years old. I want to get an early retirement. What is best for me to get there early retirement when I’m 62 or 63?
Dr. Friday 37:37
Well, I mean you can start taking early social security at 62 but it will limit your ability to earn you can only earn about $17,500 or thereabouts depending on when you retire. So you just have to keep in mind that your earnings if you’re going to continue to work in it takes those security may be limited. I don’t No your plan, so I’m just giving you there, but you know, take it early, Social Security would be the answer. I’m assuming that’s what you’re, you’re talking about when you say early, correct?
Yes. What I mean is I’m not gonna work after that.
Dr. Friday 38:15
Okay, so you’re going to retire at 62 or 63, whatever. And then you’re going to live also security from that point, along with whatever investments you might have.
Dr. Friday 38:27
Okay. That’s perfect. There’s no, I mean, as long as you have investment income, you can certainly take Social Security early and it won’t have any effect. It’s always when you try to work and take early Social Security that we end up in issues. So no problem with that. I would, I mean, by law think you can start at 62.
Okay, just to do exactly, because sometimes I try to Google it tells me if you’re born between this year and that year, they kind of get you confused, you know?
Dr. Friday 39:01
I will be honest with you. I don’t know, I know that when you start collecting Social Security, there is always a time limit that says you can only collect Social Security a certain time like my sister is 66 and four months or something when she can actually take it at this point due to her birthday. I am sure it has to do with your date of birth, I would say that you want to go to ssa.gov that’s their direct website and get that information. ssa.gov.
Okay, thank you, Doctor, and have a Merry Christmas.
Dr. Friday 39:37
Hey, Merry Christmas to you, too.
John Haggard 39:39
To Franklin. We go Mike, you are with Dr. Friday.
Hello, Dr. Friday. Hi there. This is Mike and I had a quick another retirement question. I’m 64 my wife 64. She retired last year. And she also collects money from our other jobs where we retirement. So she makes about 10 grand and the retirement for other jobs plus whatever social security pays or what you pay taxes on that? And would it be better for us, I’m going to still work for another few years, will it be better for us to file jointly or separately out for the best tax advantage?
Dr. Friday 40:16
I would actually consider having the conversation, whoever does your taxes, you might want to go ahead and have them calculated both ways. I’m going to lean towards the fact that married filing separately might be an advantage considering your income as being less. But you know, I will be honest, sometimes I’m pleasantly surprised that there’s no difference one way or the other, but I would think that personal security will become tax higher at your income bracket.
Okay, great. Okay, I’ll do I’ll file both ways and see what happens. Thank you.
Dr. Friday 40:49
You got it. Perfect.
John Haggard 40:50
To Nashville, we go. Larry, you are talking with Dr. Friday.
Dr. Friday. Thank you and good afternoon. Our father and stepfather passed away this past year. I’m the same guy or three, three kids, three kids. The house is going up for sale January, it’s going to be split six ways. We’re looking at about $35,000 to $38,000 apiece. How much do I need to plan on having to pay tax on that?
Dr. Friday 41:21
Probably zero. You said it’s from the sale of your father step father’s home?
Yes, from this date after he’s passed away, yes.
Dr. Friday 41:29
Right. Okay. So normally, if you if the home is let’s just use some generics. I don’t know your situation. But if your stepfather passed away, now and you sell the home page, we put it on the market immediately. Whatever the home’s value was at the date of his passing would be our basis. And normally, if you put it right on the market, you’re going to sell it for the same amount or even a little less than what the market actually says you can sell it for. So you would have a zero tax on that particular scenario. Now, if you inherited 401, K’s or IRAs, something that doesn’t get a step up those particular things could become taxable. But other than that, I would say most everything you inherit probably going to be after tax. Okay. All right. Fantastic. Thank you so much. How about Maria?
John Haggard 42:17
YouTube, on the doctor Friday show? Let’s go to Nashville. Anna, you are in the air.
Hi. Thank you. My question. I went to a person to look at all my savings and the things I’ve done. And he said that I should have been receiving Social Security from my former husband. I’m 66. I plan to keep working so I wasn’t going to retire. All right, when I called it was it was they sent a lump sum. I hadn’t known to do that. So it was about $6,000. Will I be taxed on that as income?
Dr. Friday 42:58
You will, up to 85% of it, assuming that your income, your earned income, your W2 job is over $17,000 as a single person, so like you were single. So, again, you’re going to get hit with tax up to 85% of the $6000. They will tax you at ordinary income, right? Yes, ma’am.
All right. Well, then another question. I opened up a new checking account. And if I jumped through certain hoops, I got $350. I did that, you know, someone told me that they’re going to report that and I’ll pay income tax on that.
Dr. Friday 43:36
Was that actually given to you to digitally donate to a charity or did they actually give it to you?
No, it’s from opening a bank account. And if you did these certain things and left money there long enough, you know, it was a cash bonus for opening a new account, and I did everything they said and I was not impressed with their bank, so I didn’t stay there. However, I got the incentive?
Dr. Friday 44:02
I would say yes, that’s going to come to you as miscellaneous income and taxed at ordinary rates. Now, again, if this $6,000 that you got on your husband’s Social Security and you are working, you may have a 401k or IRA that you contribute to I don’t know. But obviously, if you don’t, or if you could, you could contribute a little bit more since you had that extra income come in. It’s a thought, not something. That way, you’re deferring the income later, and that way it wouldn’t be taxed as much.
Oh, I could do that. Oh, absolutely. Okay. So even if I didn’t do it immediately, I can sort of do it now?
Dr. Friday 44:40
If you have a 401k you would have to do it before your final check, which would be probably next week or within the next two weeks. Of that, if you have an IRA you would have until April the 15th.
Okay, it’s old. I do have an IRA Well, one more question here. I don’t know if you know about this, but I have been doing plasma donations, and they compensate you for your time because it’s like an hour, an hour and a half. Will that be taxable, shown as income?
Dr. Friday 45:19
Not sure. I mean, it’s possible that could be they may also just be considered reimbursement for your travel time. And therefore, they may not actually send that to you since it’s through a charity. You said, right?
Well, I don’t know if it’s exactly charity or not, no, it’s a company that it’s not Red Cross. It’s a company that takes the plasma and, you know, they turned into a treatment for people with leukemia.
Dr. Friday 45:48
Then I would say yeah, it says something like that. I would expect that they can 99 you get paid you over $600.
John Haggard 45:54
Alrighty. We got to take off due to lack of time, folks. You’ve been listening to the Dr. Friday Show live. For phone numbers, you want to get a hold over this week 615-367-0819 and always more on the web at www.drfriday.com. You know, 1000 years from today you’re going to be alive. The question is where and you get to choose it. If you have not accepted Jesus Christ as your Lord and Savior, I can help you do it right now and you are guaranteed a place in heaven. Just say Jesus, I invite you into my heart. I proclaim you my Lord and Savior. Forgive me of my sins, and nobody can take heaven away from you. God willing, we’ll see you next week everybody John Haggard, saying blessings from the Dr. Friday Show.