Welcome to the Christmas Special Edition of the Dr. Friday Show! In this episode, Dr. Friday plays Santa Claus and, together with her sister Sydney, gives out gift cards to the lucky callers of her show. In addition, she also talks about the following topics:
- New Mexico Tax Fact
- Is Uber Schedule C?
- Taxable Illegal Drugs
- Tax on Athletes
- Filing for Capital Gains
- Submitting a Tennessee State Income Tax Form
- Got Veteran Affairs but Still Getting CDs?
- Tax on Beards
- The First-Ever Income Tax
- When to Stop Contributing to IRA
- When You Bring a Person to Your Home to Take Care Of
- Tax Implications on Divided Estate
- Employees Non-Reimburse Expenses
No, no, no! She’s not a medical doctor, but she can sure cure your tech 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.
Dr. Friday 0:29
Good day! I’m Dr. Friday, and the doctor is in the house. Yes, we are live today, the last Saturday before Christmas. Santa is going to be packing his sleigh really soon. And so we thought we’d help out. We’re going to have some giveaways today. Also, we’re going to share some really unique and strange tax laws. Some that are in existence, some of them that are only in certain states, but you know, taxes can be fun and exciting and, you know, a little bit odd and I think so at least. So, if you want to join the show, the got questions about taxes because we all know tax season is around the corner for the 2019 tax year, or maybe you haven’t filed for 2017 or 2018 or many many years behind, 615-737-9986. 615-737-9986. I thought this is an interesting fact. A resident of New Mexico who is over the age of 100 does not have to pay New Mexican or New Mexico personal income tax. So if you make it to 100, guess what? You don’t have to pay income tax. Tell me that it is pretty cool. At least something comes with age because we all know that when you know you hit 65 and you think about Oh, should I take social security or should I do that? Different things? Alright, so in New Mexico over 100, interesting fact, no state income tax. Let’s go to the phones, we got Mac. Hey Mac.
Hi, this is Mark, how are you?
Dr. Friday 1:58
Oh, hey Mark. Sorry, my mouse is over the thing, it’s all my fault. What can I do for you?
Great. So I appreciate what you’re doing here publicly. I recently started driving for Uber. Will that be a Schedule C? And how much can I pick up?
Dr. Friday 2:15
Yes, that will be considered a small business and you can deduct miles, that’s gonna be your largest. You’re also going to have some of the other fees that Uber charges you depending on. I have some people that actually are buying their car through Uber and all kinds of different things, phones and different things, but it’s mainly going to be your miles. Now, the question is going to be marked on the miles is the IRS basically stipulates from your home to your first place of pickup is commuting, not miles. So but from that point, while you’re on the clock, theoretically, sometimes let’s say someone takes someone from Nashville down to Spring Hill, they can’t get another trip, so they’re gonna have to drive back to Nashville before they get the next pickup. That would be considered miles.
Okay, great. Thank you so much.
Dr. Friday 3:04
No worries. Thanks for calling. Appreciate it. All right, we are here live in the studio. So if you have a question, feel free to call because that’s the kind of tax planning we really do want to have for the show. But just for the fun of it, we’re going to actually be giving out gift cards now I know usually Dr. Electric and I get to do this together. I was doing Christmas parades the last couple Saturdays and I have to tell you, we did win the Franklin Christmas parade and we got put in the paper for the Spring Hill Christmas parade. So we had an awesome year. The weather was great. Alright, so why don’t we sister my sister be on the phone? All of you that haven’t met my sister Sydney. She’s always so excited. Anyways, why don’t we take the first card? It’s a $50 Texas de Brazil. Wonderful steakhouse, guys. I’m hoping Santa brings me one of these. Why don’t we take the first let’s take the third caller that calls in and says hi to my sister Cindy, will get the card. So you want to call 615-737-9986, 615-737-9986 Be the third caller, and you will be the winner of a wonderful Steak House, Texas de Brazil $50. All right.
Dr. Friday 4:17
And while that’s happening, I will let my sister go through all those I am going to share a couple other fun, interesting or wacky tax loss. Okay, so we all know marijuana basically is getting its day in the sun, it has now become legal. But we also know there’s a lot of drugs on the market on the back streets that are illegal and that people are not collecting tax. But it’s according to tax law, even though they’re illegal taxes are supposed to be collected. I mean, that’s how they took down Al Capone right. Al Capone would have never gone to jail if he had paid taxes on his illegal gains. So according to the Kansas Department of Revenue, you need to buy tax stamps and fixed them to the package. Therefore, you would then not have to worry about the state income tax. I’m not too sure how you would explain this, Hey, you know what, I need to buy a couple hundred stamps, stamps so I can put them on my illegally gotten sold drugs. But if you’re in Kansas and apparently you could avoid the state income tax issue. The federal government, you know, would be a different question. I think if I was running something illegal, I would actually put it on my tax return as if it was a true legitimate business they could not take you then down for lying on not collecting the taxes. I’m not gonna say there’s not other things, but they could not take it down for that. Do we get our winner? Do I do any pull her up? Okay. Let’s see here. And who’s the winner – Susan! Susan, you’re a winner.
Thank you, Dr. Friday, I appreciate it.
Dr. Friday 5:54
No problem. Now, sister did you get her information yet? Okay. So I am going to To leave her on the line and you’re going to pick it up on that site because I have absolutely no idea what else to do. Susan, congratulations and Merry Christmas.
Merry Christmas to you.
Dr. Friday 6:12
Okay, so obviously Susan you probably hear me talking at the same time my sister will pick it up or whatever cuz this is sort of different normally just hang up and on the people when I’m done with them, and I don’t have to lose it. But you know what, we’re gonna have fun here. It’s Christmas. It’s all about being a little bit different. And once we figure out the system, I think I can hit this button. Did that work? Okay. Alright, so anyway, so we’ve got something going there and we’re good. Okay, so here’s another interesting thing for all my athlete loving sports you guys, did you know this? There’s a tax on athletes who play in different cities and states, of course, I knew that because on their w two it often says it. Did you know the first one that started it was in 1991 after California, of course, you gotta love California, started taxing the earnings of the Chicago Bulls players? It was on the 1991 NBA Finals when the LA Lakers played the Chicago Bulls in the state added their own version of tax because they love money.
Dr. Friday 7:15
That’s what it says. So it basically became a true tax but it started against the game and NBA game against the Lakers and the Chicago Bulls. And apparently, California decided they want a piece of the action so they started taxing the players. So let’s see if that works. So we’re good there. Alright, so we’re coming up on our own roundabout way of making that work system. Don’t worry, I’ll try to follow up. Alright, if you do want to join the show, you have a tax question. You have a question about maybe you know, have a wacky tax thing that’s actually out there that you’d like to share. You know, today’s a great day, it’s Christmas people. It’s a time to give back to say thank you. And that’s my way of doing that is for everyone to get a little something but also just enjoy. Taxes are part of life, you know you’re going to have to deal with them but you know, not every single day so if you have a question, or you have a little story to share 615-737-9986, 615-737-9986 Here’s something I thought was interesting New York lovies, an eight cents tax, and every slice or toasted bagel.
Dr. Friday 8:28
Okay, if you ever been to New York City you know how expensive bagels are period right? But did you know that they actually have a levy on themselves? Every bagel sold in New York City, they have to pay an eight-cent levy. That is crazy people totally and completely crazy. So I thought that was a fun point. Another one in Texas. You gotta love Texas, too. Okay, it’s not about guns, people but it’s about a strip club. So five dollar fee for every customer that uses the strip club pole. Okay, I don’t make this stuff up. It’s too good to know. So it’s a $5 fee every single time that happens. Alright, we’re on those phone lines. We got a question here from Bob. Hey, Bob.
Yes. Good afternoon.
Dr. Friday 9:17
Yes, I’ve got a tax question whether or not I need to file the last few years, I hadn’t had to pay any taxes. The only thing income I have is social security and then I have to do a mandatory withdrawal every year.
Dr. Friday 9:32
RMD. Okay. How much is that usually run?
Oh, about $6,000.
Dr. Friday 9:37
Okay. That’s it?
Dr. Friday 9:40
You do not have to file.
Even if I have a lot of capital gains where they send out?
Dr. Friday 9:45
Okay, so if you have capital, so you do have capital gains, it’s not in your IRA. I’m assuming the capital gains is with after-tax dollars? So yes, you will need to file mainly because they don’t always get the basis. So it may not be taxable, but you do need to do a Schedule D to make sure the IRS realizes even though you sold $100,000 worth of stock, you only made $5 in profits, you know, or whatever.
They are just for, you know, where I have mutual funds on account for the…
Dr. Friday 10:17
So this is going to be interest dividends that you’re receiving and capital gains that they’re in an account that’s being managed. So again, if that it would depend on how much it is. So if it all adds up to less than another $12,000 you know, all the interests that the dividends the qualified dividends and the capital gains end up being less than 12,000 plus your requirement and distribution of six you still should be in a zero tax situation.
Yeah, cuz my situation hasn’t changed and I hadn’t bought or sold any yet.
Dr. Friday 10:55
But it’s been a really good year in the market. So sometimes that would be what would actually help you on that particular situation.
Dr. Friday 11:01
All right, thanks mate. Talk later. Bye. All right, let’s go to the phone. We’ve got Carol. Hello, Carol.
Hi there Dr. Friday.
Dr. Friday 11:10
What can I do for you?
What would cause me to have to file a Tennessee state income tax form?
Dr. Friday 11:18
If you have a managed fund like the gentleman before and you have interest dividends or capital gains through that fund of more than $1250. Unless of course, you’re over the age of 65. But you sound like you’re much younger, so…
No, I am over the age of 65.
Dr. Friday 11:35
Okay, well, it’s great. If you’re over the age of 65 and your gross earnings are less than $30,000 then it wouldn’t make a difference. But if your overall income is $30,000 or more, you would still have to pay the Hall tax. Now keep in mind this year, the Hall tax is only 2%.
Okay, but it has to be over what amount?
Dr. Friday 11:55
It has to be over $1,250 and you have to earn, your overall income has to be more than $30,000.
Okay, well, it’s more than $30,000. But I don’t think we’ve earned over $1250 dollars.
Dr. Friday 12:10
Take a look and see you might. Last year, like I said to the gentleman before, last year was a really good year.
Right? That’s true. But it you have to earn it and…
Dr. Friday 12:21
Nope doesn’t have to be distributed because it could be reinvested as far as that’s concerned. So theoretically, it would just be whatever they’re showing on your 1099 be from your management company. And usually, on the front page, you will say this much and interest this much in dividends as much in qualified dividends, especially capital gains. If the interest qualified in those all EPS more than $1250, you could. Now if you’re married, it would be twice that much.
Aah, okay. Nice, good information.
Dr. Friday 12:48
Thanks, Carol. Appreciate you.
Thank you, bye-bye.
Dr. Friday 12:51
Okay, really quick. Let’s go ahead and get one more card out and we’ll take it into breaks so sister doesn’t have to work through. And we’re to give a $25 Logan card because I want everyone to have a Merry Christmas. And you could tell immediately right? Because all these cards are like steakhouses or something. What can I say? I love Christmas. Alright, so ready. Phone Number 615-737-9986 sisters go take the fifth call, and we’re going to go into the break. We’ll be right back.
And we’re back live in studio, and we’re going to bring the phones right back. And we’ve got Ryan on the line. Ryan, you are the winner!
Awesome. Thank you so much!
Dr. Friday 13:42
And I think you’ve already got everything. My sister’s already given you everything. So I hope you have a very Merry Christmas.
Same to you. Merry Christmas. Thank you so much.
Dr. Friday 13:50
No problem, buddy. Thanks. Bye. All right, now let’s go to Adam. Hey, Adam. You got a question for me?
Yes, I do. It’s a tough one for me to understand. I don’t have a source of income. I have a disability compensation, I get some veterans affairs. And so I understand there’s because it’s not a taxable income, I don’t have to file taxes, but I do have CDs at a financial institution. And I was told that I would need to pay taxes on that even if I just roll in the earnings back into the CD.
Dr. Friday 14:31
Are you single or married, Adam?
I’m married now.
Dr. Friday 14:34
Okay. Does your spouse work?
Dr. Friday 14:37
Okay, so your VA benefits thank you for serving I should first say, but those are not taxable. Those won’t come into conversation. But when you guys file, you would still be able to file as married. And then you would pick up the interest in the years that the CDs come to date, you know, when they’ve actually dispersed Even if you roll them over, you’ll have to pay tax on that interest and that’s the years in your case it was most likely going to be zero or very minimal. It really depends on how much your spouse makes. Because the first $24,400 would be zero tax for a married couple. And then after that up until almost $100,000, it’d be a 12% tax. So worse would be 12, possibly zero. Your portion would be zero, but the fact that you and your wife would file together it would become taxable.
Okay. Okay. That answers it then. I appreciate it.
Dr. Friday 15:33
Thank you very much. Bye. All right. That was a great question because sometimes we do have income, I mean, Social Security being brought that up a lot of times because just as the first gentleman or second gentleman Bob that called and said, I basically only have Social Security, they have a small investment and I have this, is it all taxable? Sometimes some of it isn’t taxable. In Adam’s case, VA disability is not a taxable situation. But he’s got his money invested. Thank goodness it is growing. Therefore, he’s going to have a situation where he needs to pay taxes. Okay, so it is time for another giveaway! Sister is sitting there saying, yay! Because you have no idea – you guys will have to meet my sister Sunday because she’s not really doing that. It’s like I love my baby sister and she’s older than me, so I’m her baby sister. Okay. Anyway, Cindy is on the phone and we are going to give a $25 Old Chicago along with a $25 AMC. And so it’s dinner and a movie kind of thing. I don’t know if it’s even enough nowadays to actually take a date out for $25 but theoretically dinner and a movie.
Dr. Friday 16:40
Take the fifth caller 615-737-9986 now Alright, so here’s a trivia while sister is going to go crazy on the phones. And I think this one’s funny for all my hipster friends, okay? Beware: Peter the Great’s of Russia – this is a while ago, okay guys? But did you know Peter the Great in Russia once taxed people for having beards? I just thought that’s a little interesting since a lot of my friends have taken on getting beards. And you know, what if once somebody tax something, let’s think about that. How crazy could it be to have someone else tax something? I mean, I heard – I’m horrible, I don’t remember the woman, but she wants to have Medicare for All. And one of the things she says is that we’re going to just take the 1% to 2% wealthiest people, and we’re just going to add a little more tax to them. Well, if you guys remember, was it back in 1915, or thereabouts, when taxes actually first started, and they said we are only going to tax the first 1% of Americans. That’s all we’re going to tax. We’re just going to start this little tax and it’s going to be enough money for us to hit 1% of America that’s going to give us more than enough money to help pay for the war efforts and all this it’s not going to affect everybody so voted in.
Dr. Friday 18:01
Okay, hundred years later, everybody’s paying taxes, people, everybody’s filing. So just be careful when someone says, oh, we’re only going to hit this income bracket, or we’re only going to hit these people, because sooner or later, you may have just signed in a tax, it’s going to affect your grandchildren. And now they’re going to be taxed at a higher bracket all because of someone’s great idea of bringing a new tax on to the books. So just the point of interest in some interesting conversation on that one, because anytime they come in and they always say we’re only going to tax that 1% or we’re going to tax just that little bit of hire section. Well hate to tell you doesn’t always work because look at the current tax law. We’re already being taxed. All right. Let’s see here. We have got jack on the line. Jack, you’re a winner!!!
I know! Thank you so much. I have to tell you, this is the first thing I’ve ever won.
Dr. Friday 18:57
I know, you’re like me! It never happens! But it’s always nice to, you know, feel like you’re getting something so if nothing else of your first Christmas present has arrived, you are a winner, my friend.
God Bless You!
Dr. Friday 19:10
Hey, Merry Christmas, sir.
Dr. Friday 19:12
Thanks, bye. Alright, so we are live here in the studio as you can tell, and what this whole show today is really just about fun and exciting. And I’m used to having a sidekick. Joe’s usually here taking part of the show, actually pretty much trying to take over the show. Missing him here. We are having our ninth year we’re getting ready to go into our ninth year. So this is our eighth Christmas show that we’re having here. And we’re just trying to share all of our wonderful listeners. You have no idea how important it is that you guys listen and that you participate. And that you’ve given me the honor of being on this station or on the show for that long. So if you want to join the show, it’s 615-737-9986, 615-737-9986. We’re going to take another person. Hey, I’m on to dinner in a movie thing. And that was the first one you have to admit the first three cards that didn’t include steak. But we’re going back to steak because now we’re going to do Logan’s and a movie. $25 Logan and $25 movie. And we’ll take caller number three, and just go with it. 615-737-9986, 615-737-9986. The phone lines are lighting up sister is going at it. All right, we’re having a good time here. I’m having a good time here.
Dr. Friday 20:32
And I don’t even have any coffee bad enough. Anything else? All right. So let’s see here. What other interesting tax things can I share with you? The first income tax ever file was in England in 1404. I think that’s an improvement. The first property tax in the United States was actually collected in 1798. It was on land, house and slaves. Just saying that’s what was going on back in those days. First US tax was actually, I mean, sorry that I said 1915 I believe it was 1862 when they had the first tax return put into the United States 1862. So that was and it was funny as the first government office built was for the Commissioner of the Internal Revenue in 1962. So out of all the offices and all the little things in the world, that was the first office was to collect money after they put into the first tax. And then the 16th amendment ratified in 1913. established the first permanent US tax return that was when I was thinking, so 1913 was the first permanent tax. But before then, up until that time, we did have different taxes that we were dealing with. All right, we have a winner. Let’s see Kathy.
Thank you. Thank you. Hello, Dr. Friday!
Dr. Friday 22:00
Awesome. Thank you for listening. Thank you for calling. All those good things. I hope you have a Merry Christmas?
Why? Thank you. I hope you did too. I just have one quick question. Well, I have to pay tax on the gift.
Dr. Friday 22:11
No, it’s not enough for you to pay tax on. Good. I love it. I love it. Thank you. Great question. All right, girl. Bye.
Thank you. Bye-bye.
Dr. Friday 22:20
All right. I love it. Yes. Theoretically, since it was only to an individual, it is $25 the other 25 I have to eat as a tax deduction. You know what? It’s not about that. But I loved her question. Let’s go to Steve. Hey, Steve.
Hello, Dr. Friday. Merry Christmas.
Dr. Friday 22:37
I have a question. I am going to be 70 years old, next March. And I’m working can be working for a long time to make a lot of money. How long can I contribute to my continue to contribute to an IRA?
Dr. Friday 22:55
Well, you can – you have to stop at the age of 70 and a half Are 17 basically because IRAs are then required for you to take distributions at that point, only time would be as if you had a 401k. With your current employer, if your employer and you’re still working after the age of 70, you do not have to take RMDs, and you can continue to contribute, I believe to them. But that’s the only one that allows that other than that you can no longer contribute. And even though you’re working, you do start taking money out.
So if, for this year for 2019, I can still make that IRA contribution?
Dr. Friday 23:33
Yep. Theoretically, I think you can make it through March of next year. I mean you will be 70 at that point, so as long as you make it on it before that date, you would still be under the time period.
Okay, all right. I’ll have to come see you some time.
Dr. Friday 23:47
No worries. Thanks, Steve. Bye. Great questions, guys. I love the questions. All right. We’re gonna take a quick break. Here we come back. We’ve got another five or six giveaways for the next half of the show, So it should be great. Some more fun facts about Tax Freedom Day which we all know happen later and later all the time and when and who started some of these crazy taxes and why what was their thought behind it? So we’ll take a quick break. We’ll be right back with the Dr. Friday Show.
Dr. Friday 24:15
It’s not Christmas Eve but it certainly perky! All right, we’re back here on the Dr. Friday’s Christmas Show 2019! All right, we’re gonna go right to the phone lines. We have a $25 Logan dinner card. Great way to start your dinner out. Like I said, it’s always the fun of giving. So why don’t we take the fifth caller sister, 615-737-9986 Get yourself a Logan gift card $25 at least dinner or portion of dinner will be on me 615-737-9986 All right. So here’s another fun fact, there are over 7 million words in the tax laws and regulations. Did you know that and if better, it beats The Declaration of Independence, the Holy Bible, and the Gettysburg Address? That is only actually times three, believe it or not. So you know what, that’s a lot of words. So if you’re not sure what’s and that’s why there are all these crazy things. Some of these laws actually haven’t been enforced or they’re not around anymore, but they are still on the books and they’re still open on the books. I think that is pretty amazing.
Dr. Friday 25:37
The IRS sends out over 8 billion pages in forms and instructions every single year. That’s nearly 300,000 trees. So I guess we’re saying that the Internal Revenue Service hasn’t gone green. Because sitting here in my studio right now live, I had one of my clients send me a picture of one of those recycled trees, about a letter that he had received dated on – received it today, but actually, apparently, it was dated December 9th. So apparently, due to the slowness of the mail, making things interesting for all of my clients, which is not too unusual when it comes to that kind of stuff, and how it works for everybody else. Here’s a little interesting fact many of you guys sit around and you’re saying, oh, I don’t want to I want to mail my tax return. According to the Internal Revenue Service. 21% of paper returns have errors 1% of E file returns have errors. Think about doing E-File because E-File often double checks things to make sure it’s done correctly before we send it out. So just another thing to think about. Let’s go and see we’ve got is it Laura? Laura, you’re the winner.
Oh no, I’m so excited!
Dr. Friday 26:52
Good job, girl. I hope you have a very Merry Christmas and enjoy something special from Logan’s for us, okay?
I think we will enjoy it. Thanks. Bye-bye.
Dr. Friday 27:02
All right, that was awesome. I love giving things away. I think it has to do with being the youngest and always having been spoiled. Anyways, one never knows. All right, we’re on the right along here. And we have to, we only have four left, and we only have 15 or so minutes left. So let’s see here. Let me give you another fun fact. This is a really fun fact. But in 2016 74% of returns, filed in 2016 received a refund of $2,978. The average refund that year was $2,750. That was from 2016. Kind of interesting fact, not necessarily something that you have by 1989 taxpayers in 36 different states, were e-filing their tax returns. So we’ve been e-filing for a large number of years. It seems like it’s still out there, in 2018 I’m still trying to convince people to do e file. So, why don’t we go ahead and give the next one. Okay, ah, one of my favorite pizza parlors. You probably realized I’m getting all my favorite restaurants. It’s just one of those things when you go gift card looking you like, where would you want to go?
Dr. Friday 28:06
And then you buy it for other people because you think well if I like it, they’re gonna like it right. $50 Old Chicago pizza. This will actually cover a pizza and a cup of Bruce. Okay, just then it will actually cover a few things. $50 Old Chicago pizza. Caller number five. Merry Christmas. All right. Sisters got that. Moving right along. I hope that you guys actually do take some time. Be thankful for the family you have. I mean, I’m very blessed. I am the youngest of eight kids. A lot of you guys know that. My big sister is the one that actually is taking the phone calls and we live together and then we have six brothers between us a bit of craziness but I got lucky. I got the great sibs along with being blessed with wonderful parents and just take that time to be thankful. Christmas is all about, you know, the gifts and the giving and the receiving. But I will tell you, I am one of those people that just loves The giving part the receiving is awesome. Don’t get me wrong, we all love to get but it’s nothing better than to give back doing something. If you can do it somehow, obviously here it’s not anonymous, but I like to do things that are just surprising and shocked people, you know, oh, here you go.
Dr. Friday 29:16
I love those stories. You know when you’re on Facebook or reading all those little articles where somebody went paid off someone’s shopping bill or done those kinds of things. I love those kind of things. So anyway, we’re here live in the studio. If you’ve got a tax question in a moment, you’ll be able to get back through the phone lines and you can reach me here at 615-737-9986. We still have three more gift cards. So if you haven’t received one yet, stay on the line or nothing on the line you have to hang up and call back, but stay tuned. We still have three more meat-eating gift cards available to us. So that way we have what we have going and then if you’re trying to reach us, getting one moment you’ll be able to get through the phone lines and ask questions. 615-737-9986. Looks like we’ve got Patty. Hey, Patty.
Hey Dr. Friday! How you doing? I’m so excited!
Dr. Friday 30:09
I am doing awesome! Another crazy girl like me. I love it!
Merry Christmas to everybody!
Dr. Friday 30:17
Thank you so much. Merry Christmas to you. That’s great.
Merry Christmas to the whole world.
Dr. Friday 30:24
Exactly. We’re all-loving. Well, thank you for calling and thank you for listening. I totally appreciate it. Thanks, Patty.
Thank you so much. Bless you!
Dr. Friday 30:33
All right, we made Patty and Patty makes me happy because she’s so happy! It is so cool. Alright, we’re still have about three more gift cards and we’re working our way through that but my sister is taking all the calls as fast as possible. It was Benjamin Franklin back on November 13 1789, who wrote the following. Our new constitution is now established and has an appearance that promises permanency but in this world, nothing is to be considered permanent except death and taxes. Where’s the clicking people? That’s right. Gotta click. It’s almost like poetry. Okay. My sister’s like I can’t believe you just quoted that one. If Hank Parrott was here, my friend who does my financials, he would have all kinds of all those little witty little things that famous people have said, and I don’t have just sharing with you. Alright, so we are going to talk a little bit, just remember it is the almost the end of the year, you’re going to have a tough time because it’s only a few working days till you know for many of us that are actually going to be, you can still do a Roth conversion.
Dr. Friday 31:38
If you have one more paycheck, and you have a little extra money and you haven’t maximized your 401k at work. Remember putting a little bit more aside may put you in a little lower tax bracket, but that is a thought and you know, you can as one of our earlier I think it was Steve those talking about IRAs. Now you can contribute to an IRA All the way up until April the 15th. And this year guys, Tax Day is actually April the 15th, which is kind of cool. We haven’t really had that for a few years, it seems like. But just thinking about and if you’re a business owner, remember you can purchase a brand new piece of equipment but the tax law doesn’t say purchase it says to put into service. So if you purchase something that requires being set up to work, keep in mind you can only write it off once it’s in operation. So you might want to buy that earlier get it established and working, so you have something going in that direction. So think a little bit we have about eight days, seven days, whatever it is till the end of the year, so you’re gonna have to really think hard to make sure you don’t leave any money on the table. Hey Ren! Is it the name?
Hi, this is Will.
Dr. Friday 32:52
Will! Gotcha. What can I do for you?
Okay, I have a question. A friend of mine is going to take care of a person in the house in her house. And how does she file for taxes and pay FICA?
Dr. Friday 33:08
Okay, so she’s going to have – so there’s a schedule h on your personal tax return that you can use for household employees. So theoretically that can be paid at the end of the year depends on the salary. Otherwise, what you’ll have to do is obtain an individual’s federal ID number, and you will pay in the federal with the Social Security and Medicare or the FICA and Medicare to just like you do with an employer. But you basically are going to want to do this as a household employee. And you’re going to do it based on the rules of a Schedule H.
Schedule H? Okay.
Dr. Friday 33:45
Right. If they Google that they can probably find out the exact process they’re going to want to use for that. That will cover that information and then she would prepare W-2 at the end of the year for that person that she’s paying to take care of her.
Okay, and then one question, can this person claim on her tax?
Dr. Friday 34:07
Okay. So this sounds like it’s a little different. I mean, what you were saying initially well was that this person was bringing somebody into their own home and that they were going to take care of that person. Now, if that person is living off of solely Social Security and no other assets or anything, then they would be dependent on the person that just came into the home with. So, you know what I’m saying? And there would be no Schedule H. In this case, they would just be a dependent because there’s most likely spending more than what the Social Security would cover.
Absolutely, yes. Okay. That’s exactly correct.
Dr. Friday 34:40
Okay, you got it. Oh, my God. Thank you.
Thank you very much, Merry Christmas. Thank you.
Dr. Friday 34:43
Merry Christmas. Bye-bye. Great question got around to getting the right answer on that one. But it was a good question. And that happens a lot and then you know, a lot of times I think people forget not forget they have people in their house, but they forget because their parents or someone lives with them, and they’re not absolutely sure what they have going or where they need to do. Do I need to grab the phone for Jerry? Okay. Hey, whoops. It’s not on hold, see if you got something on your side needs to be hit. So that we have but you know if so if your parents live with you or you have a situation in yours, then we can make sure that we have something where you can, you know, make sure you might be able to deduct them as all I’m saying, or you’ve got grandchildren that you’re taking care of. Any way you look at it. They’re all right, guys. Hey, Jerry. Jerry.
Hello? Yes. I’ve got a question for you. My mother died last year. And I had a rather large estate to settle. And I split it up, according to the instructions, one third, one third, one third. I got one third. I’m just wondering if there’s I don’t think there are any tax implications, but I’m wondering is there.
Dr. Friday 35:58
Well, there can be it Depends on what was left to you. So if there was stock, you’re going to get step up and basis assuming that you converted it over or whatever. If there is a 401k, an IRA, life insurance, and some of those cases a mutual fund, an annuity, any of those there could be pre-tax dollars that would require taxes being paid.
It was all stocks. It was a stepped-up basis. So and
Dr. Friday 36:25
Then she had a house, you’d also get the step up and basis so there’d be no tax on that. Assuming – oh, there was no house, so it’s all just stocks and cash?
Dr. Friday 36:36
Okay, well then No, you would have had to step up and basis on those. So there shouldn’t be any tax.
Okay, and what I did for this year on her estate was, the state earned some interest before I did the distribution. And I moved, I held back some money to be able to pay taxes against LAP, and I moves the count non-interest bearing accounts last month. So that would not make any money during 2020. So I can close out the estate. Yeah, I’m hoping that’s the right thing to do.
Dr. Friday 37:18
That was perfect. And many times we tell people to do that even though we all like to make money off in a state. The problem is it does create accounting errors or problems because you’re constantly adding tax to something you’re trying to distribute. So that’s a very smart idea, Jerry.
Okay, it may have been next year in 2020. I’m going to be receiving 30 I’ll be 70 and a half. So by then, I would start receiving distribution.
Dr. Friday 37:50
And keep in mind I don’t know if you have any charities that you always give to or whatever but if you once you start taking your requirement on distributions, you can do qualified charitable deductions. That means any money you want to pay to a charity will come right off the top so you won’t pay tax on any of that. Where before you had to itemize to get the deduction from your charity. So it’s something to think about. It’s not for everybody, but it is a great tool for many people that give to charity.
Okay, thank you very much
Dr. Friday 38:19
Okay, bye. All right. We’re going to take next card, a $25 Logan’s card, another $25 Logan’s card we’re going to take caller number 5. 615-737-9986, 615-737-9986 start calling. Cindy is waiting to take that call. We’ll be right back with the Dr. Friday Show.
We are back live in the studio. This is the last part of my big Christmas show. Let’s go to the phones. Gary, you are a winner!
Oh, thank you so much. This is awesome.
Dr. Friday 39:00
Well, I appreciate you listening and playing and enjoying it. So thank you so much for helping make my Christmas so much fun.
Great! I love the show. This makes me love it even more.
Dr. Friday 39:09
Thanks, Gary. Talk to you later.
Thank you. Bye-bye.
Dr. Friday 39:12
All right. Merry Christmas to everybody. Let’s see here, we have a couple more cards before the end of the show here. We will get the last two that we have here sister is taking on some tax questions as well. So if you’ve got a question for the show, now might be a good time to call because once I open the phone lines to the cards, they go crazy. So if you want to call us right now 615-737-9986 for tax questions. The phone lines are open for a few minutes. Here we go. Scott, how you doing, bud?
Oh, hi. Thanks. Thank you for taking my call. Merry Christmas. And I had a question. I work for a company I’m 100% commission based. And I travel all over the state of Tennessee in my own car and I pay all my own gas. And can I know…
Dr. Friday 40:06
Let me ask you this, Scott. Are you a W-2 or 1099? Do you get a W-2 or 1099?
Dr. Friday 40:13
So they changed the tax law and they took away employee’s non-reimburse expenses. So at the moment, that isn’t the courts, but at the moment, you are out there along with my hardworking truck drivers and many other people like yourself, they are using their own vehicles or, you know, have expenses that are not reimbursed by their employer. So at this moment, it is a tax loss that you’re not going to be able to recuperate.
Okay, that’s what I thought but so many people still think you can deduct your mileage.
Dr. Friday 40:45
No place to do it unless there’s somehow creating a Schedule C which would be completely wrong.
Okay, well, thank you for all your help. That was my question.
Dr. Friday 40:54
Thanks, Scott. Merry Christmas. I’m not too sure say Merry Christmas. Happy, you just told somebody they’re not going to be able to get tax cuts is the best thing but you know what? You can’t change the tax laws at the moment. It’s just to remember who you’re voting for and go from there, I guess to see how that works for you. All right, sister. We got two more cards left and we only have about eight minutes, seven minutes left to the show. So when we do the first one, one more, one more steak eater, and then we’ll go to the last one. $25 Longhorn. See, I lived it up there. You see that we went from Logan to Longhorn? Yeah, I’m on the wild side people when I go card shopping, I can tell you 615-737-9986 Caller number five. I like that number. I don’t know why five will be taking your call sister is working on that. Meanwhile, we’re going to talk a little bit about a few things that you can do. We were talking prior to the last one. Again if you have one more paycheck and you might want to maximize 401ks because right now everything’s okay.
Dr. Friday 41:55
Maybe you got a few hundred dollars that you can set aside and you haven’t maximized. Think about your 401k. If you don’t, and you don’t have a retirement, think about an IRA. And then if you’re in the lower tax bracket, guys, and I’m going to put this caveat out there, I am not a financial planner, I am a tax person. So most of the time, I’m telling people to do a standard IRA, because it’s going to give you instant gratification. But in reality, if you are making as a married couple less than $100,000, or as a single person less than $50,000, it may be really smart too and to be contributing money into a Roth at 12%. Tax. When you hit retirement, it may be better to let that money pay it now. At 12%, let it grow tax-free because who knows, by the time you hit retirement, what is going to truly be the current tax code. We have seen some pretty crazy ones. In the years I’ve been filing so who knows what’s going to come back to you when it comes time for actually filing taxes. So again, you’ve got a self-employed person, a SEP, you know, they do have to plans and these are actually better as far as I’m concerned than the 401k or the IRA. If you have the ability to pay yourself some money towards retirement, very important. The nice thing about a SEP is because the government realizes most entrepreneurs don’t really get their taxes done on time, we are more procrastinator. So you’re going to actually put it out there into and they give you until October or until your extension date if you file an extension to put the money into retirement. So that is really important. So think about saving some money. Hey, Kristin, you are a winner.
Thank you so much.
Dr. Friday 43:36
Thank you for listening. Thank you for calling and I hope you have a very Merry Christmas.
Merry Christmas to you too. Thanks. Bye.
Dr. Friday 43:44
Alright! Phone lines are being answered by my sister. So as soon as we get if you do have a question, we have a few more minutes, about three or four left in the show. We have one more card to give away. But if you have a tax question, excuse me, you can give me 615-737-9986. I got myself all choked up there. I’m getting so excited about Christmas. It would probably help if I brought myself some coffee or something. All right. So you can tell them to live on the radio because I’m coughing on the radio, which is just not a good thing. All right, we’ve got Sue on the line. Let’s see what we got here. Hey, Sue.
Hi. I have a question. I’m a pet walker and she doesn’t take taxes out on me, right. And so what can I deduct? Can I deduct my mileage?
Dr. Friday 44:38
So you said you were a pet walker?
Yeah, I go to people’s houses and let the dogs out while they’re at work. And while they’re on vacation.
Dr. Friday 44:45
I love you, Sue. I have one of those and they’re irreplaceable as far as I’m concerned. So yeah, you’re a small business. You’re an entrepreneur because you’re doing multiple homes doing the same service for multiple people. So basically assuming that your home office where you do all your invoicing, and you keep your dog treats or whatever else you might have, you’re going to have your home as your place of business. So every time you leave the house and go to one of your clients, it would be a miles thing. And then you have five or six people in a day, and then come back to the house or whatever, but you need to track that. So you have a calendar of who you saw when you saw and what the miles were.
Right? Because, like I am working for another lady, but I’m like a general contractor or whatever.
Dr. Friday 45:29
Okay. Well, I’m assuming, you know, in all honesty, you’re an independent contractor to her, she may be pushing the law a little bit. I’m not, don’t worry about whatever, but I’m just saying, theoretically, if she tells you when and where then you have to do that. Sue, I will let you stay on the line because you’re going to be my last caller, and we’re gonna give you the last gift card. So you’re going to get a $25 Pei Wei because we’re hitting the end. Beverly, if you want to stay on as soon as I’m done here, I will pick up your call. So I don’t leave you hanging there. So I put the phone here for Sue hopefully sis you can pick up. Sue on the first one she’s line one and then Beverly, stay there if you would like to reach me 615-367-0819 is my direct phone number 615-367-0819. Check out drfriday.com, that is drfriday.com. And that way then you can also check out who I make your tax appointment people my calendar is filling up very quickly. So if you want to use the services you need to do that. I hope you guys have a very, very Merry Christmas. Call you later.