Welcome to another episode of the Dr. Friday Radio Show! In this episode, tax expert Dr. Friday delves deep into the complex world of taxes, offering clarity, guidance, and solutions for listeners. Here are some of the topics she addresses:
- Roth IRA conversions and the best time to undertake them, especially considering the holiday season.
- Maximizing your 401(k) contributions and the strategic timing for doing so.
- Advice on gifting significant amounts to children, including tax implications and necessary forms (like Form 709).
- Clarifications on tax credits and debunking myths regarding their repayment.
- Year-end tax planning for small business owners, including equipment purchases and the importance of placing new equipment into service before year-end for tax deductions.
- Tax implications of receiving a trust fund distribution.
- Guidance on home equity and mortgage issues in estate planning.
- Updates on Tennessee Department of Revenue’s new policies for small business owners regarding gross business receipts.
- Live calls from listeners with specific tax-related questions and scenarios.
- And more!
Transcript
Part 1
00:00:00.000 –> 00:00:07.000
No, no, no. She’s not a medical doctor, but she can sure cure your tax problems or your financial woes.
00:00:07.000 –> 00:00:11.000
She’s the how-to girl. It’s the Dr. Friday Show.
00:00:11.000 –> 00:00:22.000
If you have a question for Dr. Friday, call her now. 737-WWTN. That’s 737-9986.
00:00:22.000 –> 00:00:28.000
So here’s your host, financial counselor and tax consultant, Dr. Friday.
00:00:29.000 –> 00:00:34.000
Good afternoon. I’m Dr. Friday and this is the Dr. Friday Show.
00:00:34.000 –> 00:00:46.000
And we are talking about my favorite subject. It is December, so it means that we are thinking about what can we still do for the year of 2023.
00:00:46.000 –> 00:00:50.000
We only have something like 20, 24, 25 days left of the season.
00:00:50.000 –> 00:00:57.000
So we need to really start concentrating on if you’re considering the Roth conversion, you want to do it earlier versus later.
00:00:57.000 –> 00:01:02.000
Later you get towards Christmas. A lot of people are out of town. It’s hard to make that conversion.
00:01:02.000 –> 00:01:11.000
The other would be maximizing your 401(k). Sometimes people will put their final paycheck into their 401(k) to help reduce their overall income
00:01:11.000 –> 00:01:16.000
because you really have a tough time knowing what your income is until this time of the year for year to day,
00:01:16.000 –> 00:01:20.000
especially if you work with some limited bonuses and things like that.
00:01:20.000 –> 00:01:26.000
Maybe you got an inheritance or something and you can’t really convert your inheritance into a retirement.
00:01:26.000 –> 00:01:32.000
But you can maximize your work or your 401(k) or put money into an IRA of some sort.
00:01:32.000 –> 00:01:37.000
And then that would help you reduce the overall tax that maybe you’re looking at.
00:01:37.000 –> 00:01:40.000
So these are the kinds of things we really want to go with.
00:01:40.000 –> 00:01:44.000
Oh, wow. Awesome. You guys are ready for the Dr. Friday Show today. I love it.
00:01:44.000 –> 00:01:49.000
It’s not been quite tax season. We usually get that. Let’s go to Ron in Nashville and we’ll go right to it.
00:01:49.000 –> 00:01:50.000
Hey, Ron.
00:01:51.000 –> 00:01:52.000
Hey.
00:01:52.000 –> 00:01:53.000
I’ve got a question.
00:01:53.000 –> 00:01:54.000
Hey, there’s…
00:01:54.000 –> 00:02:04.000
I’ve got several million. I want to gift my kids, four kids, maybe half a million dollars, 17,000 this year, half a million next year.
00:02:04.000 –> 00:02:08.000
What are the ramifications? Is there a form I have to fill out?
00:02:08.000 –> 00:02:16.000
And if I brought in my check for 17,000, for example, for 2023, do they have to cash it before December 31st?
00:02:16.000 –> 00:02:20.000
Well, theoretically, as long as it’s written before that day.
00:02:20.000 –> 00:02:24.000
So if you give it to them for Christmas and you can’t take…
00:02:24.000 –> 00:02:30.000
Some banks still allow over like 10,000, take a picture of it and deposit and they have to physically go in for some reason,
00:02:30.000 –> 00:02:33.000
then the answer would be no. They don’t have to.
00:02:33.000 –> 00:02:39.000
As long as the check was written in the tax year, which in your situation would be before the end of the year,
00:02:39.000 –> 00:02:42.000
you are perfect as far as that.
00:02:42.000 –> 00:02:48.000
So if they don’t get cash to the first of the year, that is really their situation and that’s not a problem.
00:02:48.000 –> 00:02:53.000
And if it’s 17,000, then we don’t have to worry about filing the gift tax return.
00:02:53.000 –> 00:03:00.000
If it goes above that number, anything above, it’s a form 709 and you’re going to file the difference.
00:03:00.000 –> 00:03:05.000
So if you give them half a million dollars, then back out the first 17 and the remaining will show up on that form.
00:03:05.000 –> 00:03:09.000
All you really need is their legal name, social security number and address.
00:03:09.000 –> 00:03:14.000
And then the date that it was given and how much. Sometimes people will do it in multiple things.
00:03:14.000 –> 00:03:19.000
And that’s really the only thing. The only other side, as long as it stays at the half million,
00:03:19.000 –> 00:03:24.000
I don’t believe you’ll have a situation. Right now, of course, we have a lifetime gifting of, I don’t know,
00:03:24.000 –> 00:03:29.000
was it like $11,000, $11 million or something?
00:03:29.000 –> 00:03:33.000
The problem will be if the limitation comes back down.
00:03:33.000 –> 00:03:37.000
And I will say in 2024, you do have 18,000 just as a point of interest.
00:03:37.000 –> 00:03:45.000
It went up to 18 in 2024. But, you know, your situation on that one, you can figure out.
00:03:45.000 –> 00:03:50.000
I don’t know what’s going to happen if they bring it back down to a million dollars lifetime
00:03:50.000 –> 00:03:55.000
and you’ve given away three million, which I have some clients that have.
00:03:55.000 –> 00:04:00.000
I don’t think it’s grandfathered in. Theoretically, it could become what we’ll have to go back and file gift tax returns.
00:04:00.000 –> 00:04:05.000
I’m not actually sure. But right now, the answer is file 709. Give the kids the money.
00:04:05.000 –> 00:04:09.000
We’ll deal with the next one depending on what happens. It may change nothing in our lifetimes.
00:04:09.000 –> 00:04:13.000
And we may be perfect. Does that make sense?
00:04:13.000 –> 00:04:24.000
So with that, that would ask half a million. We wouldn’t pay. I wouldn’t pay taxes on like up to 40 percent on the half million.
00:04:24.000 –> 00:04:33.000
Right. I mean, to gift. So to gift somebody money, the person giving the money has to already have paid tax
00:04:33.000 –> 00:04:36.000
or will pay tax if they’re taking it out of some sort of investment.
00:04:36.000 –> 00:04:42.000
I would suggest if it’s in an investment that is giftable, meaning stocks or something like that,
00:04:42.000 –> 00:04:49.000
gift the kids the stock at the value of the stock and let them deal with it versus you pay the tax.
00:04:49.000 –> 00:04:54.000
But that is your choice. I don’t know if this is cold cash or if it’s in an investment that you’re cashing out
00:04:54.000 –> 00:05:02.000
and then wanting to give them cold cash. So what I have is this an investment run or is this cash?
00:05:02.000 –> 00:05:04.000
It’s cash.
00:05:04.000 –> 00:05:07.000
It is cash. OK, well, then we don’t have to worry if it’s in cash.
00:05:07.000 –> 00:05:15.000
You’ve already paid tax on it is the theory. And then you’re just writing checks to the kids and they don’t have to pay any tax.
00:05:15.000 –> 00:05:19.000
And there’s no tax at this time for that.
00:05:19.000 –> 00:05:30.000
But the four hundred and eighty two thousand, let’s say next year, that would reduce the lifetime.
00:05:30.000 –> 00:05:36.000
Lifetime. Is that correct? Yes, sir. That would reduce the lifetime. That’s 100 percent correct.
00:05:36.000 –> 00:05:42.000
Yes, it would go against your lifetime of eleven million. Yes. OK. All right.
00:05:42.000 –> 00:05:46.000
And are you married, Ron? No. Are you married or single?
00:05:46.000 –> 00:05:50.000
OK. I wasn’t sure if you’re married, you could double it is everything I was thinking.
00:05:50.000 –> 00:05:55.000
Yeah. Yeah. OK. You got it.
00:05:55.000 –> 00:06:02.000
Thanks for listening. Appreciate it. All right. Let’s go to Bryant in Spring Hill.
00:06:02.000 –> 00:06:07.000
Hey, Dr. Friday. Just got a quick question. Hanging out at work at the water cooler.
00:06:07.000 –> 00:06:13.000
And we were talking about tax credits and there was a theory thrown out that you have to pay the tax credit back.
00:06:13.000 –> 00:06:17.000
So don’t accept it. Could you shed a little light on that theory?
00:06:17.000 –> 00:06:22.000
Which tax credit would that be? Do you know? Like a child tax credit?
00:06:22.000 –> 00:06:26.000
Oh, no. So child tax credit, you don’t pay back.
00:06:26.000 –> 00:06:33.000
The only tax credit that existed that I can think of right off the top of my head was the homebuyer’s credit back in.
00:06:33.000 –> 00:06:39.000
Gosh, it’s been 10 years or more. So back in 2010, nine, eight, something like that.
00:06:39.000 –> 00:06:47.000
They gave someone seventy five hundred dollars. And in that case, every year they had to pay five hundred dollars back until it’s paid off in full.
00:06:47.000 –> 00:06:51.000
That’s the only time I’ve ever seen a credit that is actually paid back.
00:06:51.000 –> 00:06:54.000
I mean, there’s the energy credits. That’s 30 percent off.
00:06:54.000 –> 00:07:02.000
If you get solar, you don’t pay that 30 percent back. If you do something, you know, your kids, you have to keep them anyway.
00:07:02.000 –> 00:07:08.000
So there’s no giving it back. So there’s really none that I can think of off the top of my head.
00:07:08.000 –> 00:07:16.000
The only other kind of business deductions would be like if Section 179 or something like that, where if you sell it, you would have to do a recapture.
00:07:16.000 –> 00:07:21.000
But no credits. Most credits are credits just like deductions.
00:07:21.000 –> 00:07:25.000
I can’t think of, like I said, very many of them that would require you to pay back.
00:07:25.000 –> 00:07:31.000
So I’d say you want to maximize any credit that you can qualify for.
00:07:31.000 –> 00:07:36.000
I love it. I’m a client of yours and I knew you would have the answer and I thought this would be the best time to do it.
00:07:36.000 –> 00:07:38.000
So thank you for all your service.
00:07:38.000 –> 00:07:42.000
No problem, buddy. Thanks, Brian. I appreciate it.
00:07:42.000 –> 00:07:52.000
All right. So we are live on the radio. 615-737-9986. 615-737-9986.
00:07:52.000 –> 00:07:57.000
Taking your calls, talking about taxes. But we also want to think about year end.
00:07:57.000 –> 00:08:02.000
We are at the end of a calendar year almost. We only have a few weeks left here.
00:08:02.000 –> 00:08:09.000
And so now is the time to be thinking first, if you do qualify for equipment, if you’re a small business owner and you’re thinking,
00:08:09.000 –> 00:08:16.000
well, you know what, we have a really healthy profit and maybe we need to go ahead and buy a piece of equipment,
00:08:16.000 –> 00:08:21.000
buy a truck, buy a dozer, whatever your business might be.
00:08:21.000 –> 00:08:29.000
Now may be the time to think about it. But keep in mind, tax law specifically says it has to be put in service.
00:08:29.000 –> 00:08:36.000
So that being said, if it has to be put in service, you can’t go buy it on December 31st and take it off on your taxes
00:08:36.000 –> 00:08:40.000
unless it was a truck you drove off the lot and it’s already ready to be working.
00:08:40.000 –> 00:08:45.000
If it’s a piece of equipment and has to be brought into the factory or manufacturing or whatever you’re doing,
00:08:45.000 –> 00:08:50.000
that piece of equipment needs to be installed and working before you can deduct it.
00:08:50.000 –> 00:08:54.000
Very important because sometimes people are like, yeah, I purchased it already.
00:08:54.000 –> 00:09:00.000
Oh, what? But they weren’t going to deliver it until the first of the next year or whatever.
00:09:00.000 –> 00:09:03.000
And, you know, well, if you deliver it next year, then it’s a tax deduction for next year.
00:09:03.000 –> 00:09:10.000
You may have used the money in 2023, but if you’re not getting it until 2024, it is not a legitimate tax deduction.
00:09:10.000 –> 00:09:16.000
Important to understand. So I just want to make sure that you have and understand how that one’s going to work.
00:09:16.000 –> 00:09:20.000
All right. We have another phone call, Rick from Cookville. Let’s see if we can get him on the line.
00:09:20.000 –> 00:09:27.000
Hey, Rick, what’s happening? It’s a great day. I’m telling you, I’m glad I’m glad to talk to you.
00:09:27.000 –> 00:09:33.000
Can I tell you what I’m doing? I have a house that I’m building, a house that I’m building for my daughter,
00:09:33.000 –> 00:09:43.000
building it out of my own equity in my home, and I’m going to convert it to a long term loan for her.
00:09:43.000 –> 00:09:49.000
She’s already pre-approved for the loan. All that. We’re doing the house really cheap because I’m doing all the labor
00:09:49.000 –> 00:09:54.000
basically myself. So my daughter is going to get this great house.
00:09:54.000 –> 00:10:00.000
The house is going to be valued at a lot more than she’s going to pay for it.
00:10:00.000 –> 00:10:04.000
Will I be going to have a lot of equity in it when you’re done? Yes.
00:10:04.000 –> 00:10:10.000
Yes. Will I be taxed for that equity as a gift to her?
00:10:10.000 –> 00:10:16.000
No, because I mean, what you’re gifting her is your blood, sweat and tears.
00:10:16.000 –> 00:10:22.000
Assuming you’re not crying, Rick. But anyways, in all honesty, no, because really what you’re gifting her is labor.
00:10:22.000 –> 00:10:27.000
So, you know, is she going to use this as her primary home?
00:10:27.000 –> 00:10:34.000
The fact is the value of the home, whatever the value is that you have in it is truly her original basis,
00:10:34.000 –> 00:10:40.000
which is pretty much probably the loan that she’s taking. So if the house is maybe worth, let’s just say 300,
00:10:40.000 –> 00:10:45.000
but you have 150 only in it, right? Because of all the labor and stuff you haven’t had.
00:10:45.000 –> 00:10:52.000
So she’s going to have 150 in that house. And then when she sells it, whatever the difference,
00:10:52.000 –> 00:10:58.000
and this may be 10 years from now, 20 years, hopefully more than five years, then she get a step up.
00:10:58.000 –> 00:11:07.000
But she’s really only going to get it for the value that you put into it, not the value that the loan says it is.
00:11:07.000 –> 00:11:09.000
Does that make sense? OK, that makes great sense.
00:11:09.000 –> 00:11:14.000
She’s going to have a lot of equity in there. But the fact is, if we only have 150 grand in it,
00:11:14.000 –> 00:11:21.000
then that’s all she has in it is the $150,000 that she’s basically paying back on that mortgage or loan.
00:11:21.000 –> 00:11:26.000
You know, and make sure the biggest thing is make sure you go ahead.
00:11:26.000 –> 00:11:31.000
Your labor’s free. And my personal taxes, then it will not. Right.
00:11:31.000 –> 00:11:36.000
None of this is going to show up on you at all. None of this is going to show up because you’re using a home equity.
00:11:36.000 –> 00:11:41.000
That’s going to. So that’s non-taxable money. And then when you convert it into the loan,
00:11:41.000 –> 00:11:45.000
you’ll pay off your home equity again, a non-taxable situation.
00:11:45.000 –> 00:11:50.000
And then she’ll have the 30 year loan or whatever that she’s going to take out and pay off the difference.
00:11:50.000 –> 00:11:57.000
The biggest thing is, is that whatever you pay for, because some of this may come out of money you didn’t have in that home equity.
00:11:57.000 –> 00:12:01.000
I don’t know. I’m just saying maybe just personal money that you’ve actually invested.
00:12:01.000 –> 00:12:06.000
You want to make sure you can track the true amount that you put into this house if possible,
00:12:06.000 –> 00:12:11.000
because that’s really going to be her value. OK. That makes sense.
00:12:11.000 –> 00:12:16.000
I needed to know. Yes, ma’am. OK, boss. All right. Thanks. Appreciate the phone call.
00:12:16.000 –> 00:12:20.000
Bye. All right. We’re going to take our first break. When we get back, we can get some more of your phone calls.
00:12:20.000 –> 00:12:31.000
615-737-9986. 615-737-9986. We’ll be right back with the Dr. Friday show.
Part 2
00:12:32.000 –> 00:12:41.000
We are back here live in studio.
00:12:41.000 –> 00:12:48.000
Hear that transition. Sorry. If you want to join the show, you can at 615-737-9986.
00:12:48.000 –> 00:12:57.000
615-737-9986. Again, we want to also be considering 2023 is not over yet.
00:12:57.000 –> 00:13:04.000
We have 2024. We’re going to start really working hard on maybe doing some better deductions throughout the year,
00:13:04.000 –> 00:13:09.000
maybe for some of us that are listening. But really, I want to concentrate on 2023.
00:13:09.000 –> 00:13:15.000
We have a couple more weeks. That means making sure and if you can, you can always look.
00:13:15.000 –> 00:13:19.000
Even one of the big things I think someone might look at is look at your W.
00:13:19.000 –> 00:13:26.000
Look at your pay stub. And if you’ve made 50,000 and you haven’t paid in six, seven thousand,
00:13:26.000 –> 00:13:33.000
if you’re single, eight or nine thousand possibly. And if you’re married, you know, at least five thousand.
00:13:33.000 –> 00:13:38.000
Maybe you need to reconsider. Are you having enough money coming out of your check?
00:13:38.000 –> 00:13:41.000
Have every last few years, have you actually had to write a check?
00:13:41.000 –> 00:13:47.000
Now, again, most of my clients know I’m not an advocate for having two or three thousand dollar refunds.
00:13:47.000 –> 00:13:50.000
That doesn’t really help my clients. They need the money in their own pocket.
00:13:50.000 –> 00:13:54.000
But I also don’t want them having to write a check for two or three thousand dollars.
00:13:54.000 –> 00:13:59.000
That can be hard when it’s sometimes depending on the business they’re in, seasonal or whatever,
00:13:59.000 –> 00:14:06.000
that there could be a situation under that. So really, really important to think about is
00:14:06.000 –> 00:14:12.000
if you’re not having enough money, you need to make that transition. It’s a W for you’re going to go back to your employer.
00:14:12.000 –> 00:14:15.000
And maybe the easiest thing would be is leave whatever you have.
00:14:15.000 –> 00:14:20.000
Just have an additional dollar amount come out. Maybe you were short five hundred dollars and you’re paid,
00:14:20.000 –> 00:14:26.000
you know, 52 weeks a year or whatever. So you just want to have an extra ten dollars a paycheck come out.
00:14:26.000 –> 00:14:31.000
So that way you don’t have to worry about that extra money when it comes due.
00:14:31.000 –> 00:14:35.000
So now’s the time to think about that. All right. We’re going to head to the phone lines.
00:14:35.000 –> 00:14:41.000
Carol in the borough. Hey, Carol, what is happening on this rainy Saturday?
00:14:41.000 –> 00:14:52.000
Good afternoon. We received a trust fund from my father’s inheritance when he died in twenty twenty two.
00:14:52.000 –> 00:14:58.000
It was dispersed. What kind of taxes will we be paying on that?
00:14:58.000 –> 00:15:03.000
So your father had a trust and you received a distribution. Yes.
00:15:03.000 –> 00:15:10.000
OK. And do you have any I mean, are you guys the trustees or is there someone else that’s a trustee?
00:15:10.000 –> 00:15:15.000
My husband is. OK, wonderful, because they’ll have better access than sometimes.
00:15:15.000 –> 00:15:22.000
So it would depend just because there was a distribution from the trust doesn’t necessarily mean it’s going to be taxable.
00:15:22.000 –> 00:15:29.000
So the question would be, was there like a retirement 401k IRA cashed out that would become taxable?
00:15:29.000 –> 00:15:36.000
And if that was distributed or did he hold back money and the trust is going to pay the tax and then the distribution or.
00:15:36.000 –> 00:15:40.000
I know I’m not answering your question because on the trust, there’s two ways of doing it.
00:15:40.000 –> 00:15:52.000
You can do what’s called a K1 from the trust and all the taxes rolls to the the beneficiaries or the trust can pay all the taxes and then just do distributions to the beneficiaries.
00:15:52.000 –> 00:15:56.000
So kind of a couple of questions on that one would be first.
00:15:56.000 –> 00:15:59.000
I don’t know what kind of assets were in the trust, so I can’t tell you.
00:15:59.000 –> 00:16:05.000
Do you know if it was just cash in the bank or if it was like a house that got sold or.
00:16:05.000 –> 00:16:16.000
It was a home that got sold. OK, the home they got so would have had a step up in basis, so that would have been zero taxable to you or to the beneficiaries.
00:16:16.000 –> 00:16:23.000
But if there was any. Huh? Capital gains, do they have to be made on something like that?
00:16:23.000 –> 00:16:30.000
Most likely, no. If it was sold within the right period and right now we’re not blowing up for a couple of years, I couldn’t say this.
00:16:30.000 –> 00:16:39.000
But usually whenever the passing, the person passed away, the house then has to be cleaned up or whatever and then sold whatever it was valued at at the time of the passing.
00:16:39.000 –> 00:16:44.000
If we sold it for that same amount or less, zero tax.
00:16:44.000 –> 00:16:52.000
If we sold it for more, then there would be capital gains, but only after the value at the date of death.
00:16:52.000 –> 00:16:55.000
All righty. The house is worth 500.
00:16:55.000 –> 00:17:02.000
Did it. OK, awesome. I was winging it there a little bit, Carol. So I’m sorry. I was like, there’s too many possibilities in there.
00:17:02.000 –> 00:17:07.000
But if you have any other questions, you guys can always follow up because that one’s not as easy over the radio.
00:17:07.000 –> 00:17:11.000
But if there’s additional questions, you’ve got my office. If not, you’ll get my office number.
00:17:11.000 –> 00:17:16.000
But I appreciate the phone call, Carol. Thank you. Thank you.
00:17:16.000 –> 00:17:22.000
All right. Let’s hit Eddie in the borough. We are rocking in the borough today. Hey, Eddie.
00:17:22.000 –> 00:17:29.000
Yeah. How are you doing?
00:17:29.000 –> 00:17:33.000
I’m doing good, Eddie. How are you doing? I’m doing good. Long time listener.
00:17:33.000 –> 00:17:38.000
Ungratefully, first time caller. My.
00:17:38.000 –> 00:17:47.000
Go for it. My father just passed last week and he was a Vietnam vet and he was 100 percent disabled.
00:17:47.000 –> 00:17:52.000
And he got a house through the V.A. that I’m actually living in.
00:17:52.000 –> 00:18:01.000
And him just passing before he passed, we were I was able to take the house and do a.
00:18:01.000 –> 00:18:11.000
He had a living will with me all over it. And then he had. And then we did a what do they call it when a trust transfer or something like that.
00:18:11.000 –> 00:18:27.000
Yes. A quick claim deed. For the house. Now that he has passed the V.A. sent me paperwork and I’m going to have to continue paying on that house or is that house because that house has been passed down to me.
00:18:27.000 –> 00:18:33.000
There’s still about two hundred forty left on the house. No, I’m going to have to continue to pay on that. Correct.
00:18:33.000 –> 00:18:39.000
That is correct. Yes. The mortgage will still go with the house. So you’re going to continue to make the payments.
00:18:39.000 –> 00:18:44.000
And the downside to that would be potentially we’d have to really see what the paperwork said.
00:18:44.000 –> 00:18:51.000
But theoretically, because you did it before his passing, you may not have qualified for what we call the step up in basis.
00:18:51.000 –> 00:18:56.000
You may have inherited at the value that he paid for it, not necessarily the value that was worth today.
00:18:56.000 –> 00:19:04.000
But your main question is, is the mortgage still tied to it or do you still. Yes. You have to keep paying that mortgage.
00:19:04.000 –> 00:19:18.000
OK. No matter how. OK. Now, is there a possibility of the of the of the V.A. defaulting on that or taking the house back to me or am I pretty much safe since I had that paperwork done?
00:19:18.000 –> 00:19:22.000
Yeah, I don’t I mean, I doubt they want the real estate as long as you keep making payments.
00:19:22.000 –> 00:19:30.000
And I’ve had clients that have their spouses have died and the mortgage was in the spouse’s name and they just keep paying it until they sold it later.
00:19:30.000 –> 00:19:38.000
To be quite honest, I don’t believe and I’m not an attorney, but I don’t think anything is going to happen as long as the mortgage is paid.
00:19:38.000 –> 00:19:43.000
All right. Great. You don’t think that would be more of a problem? Yeah. Cool.
00:19:43.000 –> 00:19:49.000
Sorry for the loss of your dad, though. Thank you, ma’am. Appreciate you. Yeah. Talk to you later.
00:19:49.000 –> 00:19:54.000
Thanks, Eddie. All right. We are on the Dr. Friday show. You can join.
00:19:54.000 –> 00:19:58.000
I’m getting some great calls today, guys. A little bit more than sometimes, at least.
00:19:58.000 –> 00:20:04.000
We normally in tax season, we blow up the phones, but it’s a little early, but I’m appreciating them.
00:20:04.000 –> 00:20:13.000
You can reach us here in studio at 615-737-9986. 615-737-9986.
00:20:13.000 –> 00:20:16.000
I do want to put out there for all business owners.
00:20:16.000 –> 00:20:23.000
You guys have been receiving letters from Tennessee Department of Revenue about your gross business receipts.
00:20:23.000 –> 00:20:32.000
OK, so here’s how this is going to work. If you have less than $100,000 and if you only have one location, this is simple.
00:20:32.000 –> 00:20:38.000
Less than $100,000 in your sales, you will not be paying business tax.
00:20:38.000 –> 00:20:42.000
You do need to notify them that you have less than that.
00:20:42.000 –> 00:20:48.000
So I’m not exactly sure because some people, some years could be higher, some years could be lower.
00:20:48.000 –> 00:20:54.000
And so you have to still keep a gross business license.
00:20:54.000 –> 00:21:01.000
So you have to have a license. It’s just going to go. It used to be like less than $10,000 or less than $3,000.
00:21:01.000 –> 00:21:03.000
But now it’s going to be less than $100,000.
00:21:03.000 –> 00:21:12.000
So that’s great news for all the small business owners that are trying to make ends meet and then having to pay another $40, $50, $60 on a business license.
00:21:12.000 –> 00:21:19.000
So you do have to contact Tennessee Department of Revenue and let them know what your gross receipts were, as my understanding.
00:21:19.000 –> 00:21:27.000
Now, if you are a contractor and you in the same county have more than one location, but see some of my people,
00:21:27.000 –> 00:21:32.000
they may make $30,000 or $40,000 in a county and/or a city.
00:21:32.000 –> 00:21:36.000
As long as that county and city end up to be less than $100,000,
00:21:36.000 –> 00:21:42.000
you don’t have to do the 50 million different business licenses that we’ve been doing in the past.
00:21:42.000 –> 00:21:44.000
Now, some of you guys, it’s not going to make a difference.
00:21:44.000 –> 00:21:49.000
You’re doing more than 100 in all the different cities and counties, or you have multiple locations in those cities and counties.
00:21:49.000 –> 00:21:54.000
And if those multiple locations add up to more than 100,000, you’re paying it no matter what.
00:21:54.000 –> 00:22:02.000
So it’s really designed for people making less than $100,000 in a city, county area.
00:22:02.000 –> 00:22:12.000
So if you’re not sure, you can go to tentap.tn.gov and you can look at, if you haven’t already received this notice,
00:22:12.000 –> 00:22:16.000
it’s kind of an important thing. We’re going to be filing those come January.
00:22:16.000 –> 00:22:20.000
Gross business receipts are actually due, I believe, April 1st.
00:22:20.000 –> 00:22:27.000
But normally we start filing them once we know what our December sales, then we have the year to date and we can start filing that information.
00:22:27.000 –> 00:22:30.000
But it’s really important. Now would be a good time.
00:22:30.000 –> 00:22:36.000
Now, some of you guys, if you’re close, if you’re already at 90,000 and you have the rest of this month, you may exceed.
00:22:36.000 –> 00:22:42.000
There’s no special. If you were at $101,001, you have to file.
00:22:42.000 –> 00:22:48.000
They’ve already came out and said there’s no middle of the road. It’s 100 or less or 100 and more.
00:22:48.000 –> 00:22:53.000
So just putting that out there because I’ll have people come in and say, “I was so close.”
00:22:53.000 –> 00:22:56.000
Well, close isn’t going to quite cut it in this case.
00:22:56.000 –> 00:23:05.000
Again, if you have a small business and I have a number of them, this is going to be great news for because they’ve always had 30, 40, $50,000 a year.
00:23:05.000 –> 00:23:12.000
It’s just a little business that people have. Those are no longer going to have to deal with the business license.
00:23:12.000 –> 00:23:17.000
Now, again, I still think there’s a little bit of information missing because I’m not positive.
00:23:17.000 –> 00:23:21.000
That means that we won’t have to have a business gross receipt because I think we do,
00:23:21.000 –> 00:23:26.000
which means there’s a minimum of like $30 that we have to pay no matter what.
00:23:26.000 –> 00:23:29.000
So we’ll find out more about that as we keep moving.
00:23:29.000 –> 00:23:34.000
I think that’s probably going to be in January when we find out that they have made some adjustments to this.
00:23:34.000 –> 00:23:41.000
But if you are one of those individuals that have just a little small business on the side or just maybe a one-man team,
00:23:41.000 –> 00:23:47.000
then just keep in mind that you should, and this went in effect for 2023, not 2024.
00:23:47.000 –> 00:23:52.000
It goes in effect for 2023, so it will be something that we can take in effect immediately.
00:23:52.000 –> 00:23:58.000
So at the end of this year, maybe you won’t have to pay that several hundred dollars that you normally pay for a business license.
00:23:58.000 –> 00:24:01.000
Maybe we can actually pay zero. That’s always great news, right?
00:24:01.000 –> 00:24:04.000
All right, we’re going to take our second break here on the Dr. Friday Show.
00:24:04.000 –> 00:24:11.000
You can join us live here in studio 615-737-9986.
00:24:11.000 –> 00:24:14.000
We’ll be right back with the Dr. Friday Show.
Part 3
00:24:14.000 –> 00:24:19.000
Live in studio, this is Dr. Friday with the Dr. Friday Show.
00:24:19.000 –> 00:24:22.000
I’m an enrolled agent licensed by the Internal Revenue Service.
00:24:22.000 –> 00:24:25.000
That means I do not work for the Internal Revenue Service, guys.
00:24:25.000 –> 00:24:29.000
I’m licensed by the Internal Revenue Service to do taxes and representation.
00:24:29.000 –> 00:24:34.000
So if you have IRS issues, you’re getting some love letters in the mail, you’re not too sure,
00:24:34.000 –> 00:24:38.000
maybe you’ve got a special drawer you like to throw them in so that way you can ignore them.
00:24:38.000 –> 00:24:42.000
And why do they always come by twos if you’re married? Why do I always get a whole bunch of them?
00:24:42.000 –> 00:24:44.000
These are always the questions we have.
00:24:44.000 –> 00:24:48.000
Just so you know, it should always, if it’s a joint tax return,
00:24:48.000 –> 00:24:52.000
both people on the joint tax return should receive their own letters.
00:24:52.000 –> 00:24:54.000
It doesn’t mean that you both owe that.
00:24:54.000 –> 00:24:57.000
Well, theoretically, whoever can pay it pays it.
00:24:57.000 –> 00:25:00.000
But the dollar amount is the total amount due on those letters.
00:25:00.000 –> 00:25:06.000
So I had an email earlier, it says, “My husband and I both got letters and it shows that we owe 600 and some dollars.
00:25:06.000 –> 00:25:09.000
Does that mean each of us owe 600 and some dollars?”
00:25:09.000 –> 00:25:13.000
And the answer is no, together you owe 600 and some dollars.
00:25:13.000 –> 00:25:15.000
So that’s just a point of interest.
00:25:15.000 –> 00:25:20.000
Also want to put out there, next Saturday is the Christmas show.
00:25:20.000 –> 00:25:24.000
You guys know for the last 15 years, and guess who will be on with me?
00:25:24.000 –> 00:25:27.000
Dr. Electric. I know some of you guys are probably missing him.
00:25:27.000 –> 00:25:32.000
I know I miss him on the radio, but he’s going to join and I’m sure he’s going to offer up some deer meat,
00:25:32.000 –> 00:25:35.000
which has been a winner and I don’t understand it.
00:25:35.000 –> 00:25:40.000
But hey, my listeners, his listeners have always loved giving away the deer.
00:25:40.000 –> 00:25:45.000
So next week we are going to have a one hour show that we’ll be doing from 2 to 3.
00:25:45.000 –> 00:25:47.000
And we’ll be giving away a ton of stuff.
00:25:47.000 –> 00:25:50.000
So many of you guys, year after year, have managed to get in.
00:25:50.000 –> 00:25:53.000
It’s going to be a little shorter because we used to be able to do two hours.
00:25:53.000 –> 00:25:58.000
So this year we’ll have a one hour Christmas show next Saturday with Dr. Electric and myself.
00:25:58.000 –> 00:26:01.000
And we’ll be doing a ton of giving away.
00:26:01.000 –> 00:26:06.000
Since we have to cram everything into a one hour show, probably be a little faster than normal.
00:26:06.000 –> 00:26:09.000
We may have something silly like you guys having a sing Christmas carol or something.
00:26:09.000 –> 00:26:15.000
I don’t know. We always enjoy kind of having some fun with you guys because, you know, we have to say thank you somehow.
00:26:15.000 –> 00:26:22.000
And we enjoy having our audience or, you know, I do since Joe decided not to do the radio any longer.
00:26:22.000 –> 00:26:28.000
So I’m still here. So anyway, you can join us next Saturday, obviously, to get all those.
00:26:28.000 –> 00:26:31.000
But this Saturday, you can still join us live in studio.
00:26:31.000 –> 00:26:34.000
If you’ve got a question, maybe you’ve received some love letters.
00:26:34.000 –> 00:26:37.000
Maybe you have to figure out, I want to get straight with the IRS.
00:26:37.000 –> 00:26:41.000
I don’t even know where to begin. I’ve moved several times. I’ve gotten divorced.
00:26:41.000 –> 00:26:45.000
I don’t know when we filed taxes. I don’t know if we ever filed taxes.
00:26:45.000 –> 00:26:48.000
And I haven’t really gotten love letters. Sometimes I have people come in and they’ll say,
00:26:48.000 –> 00:26:53.000
IRS hasn’t sent me anything, but I know I haven’t filed for the last five years.
00:26:53.000 –> 00:26:58.000
So I think I need again, 2020 and 2021 were big years.
00:26:58.000 –> 00:27:03.000
Guess what falls off by April of next year? 2020.
00:27:03.000 –> 00:27:08.000
And if you haven’t gotten the stimulus money because you didn’t file taxes for the last five years.
00:27:08.000 –> 00:27:13.000
And so you weren’t on the list. You may be leaving free money on the table.
00:27:13.000 –> 00:27:18.000
And so often I find that a lot of times people don’t owe as much as they think.
00:27:18.000 –> 00:27:23.000
Even people that leave money on the table. But you won’t be able to get a refund.
00:27:23.000 –> 00:27:28.000
You can only go back three years for refunds. So ’21, ’22, ’23 will be what we have coming up.
00:27:28.000 –> 00:27:31.000
Right now it’s ’20, ’21, and ’22.
00:27:31.000 –> 00:27:37.000
And the two years that we did receive stimulus, if you were qualified for it, was ’20 and ’21.
00:27:37.000 –> 00:27:41.000
So I just want to put that out there because it’s very important to be able to get out there
00:27:41.000 –> 00:27:44.000
and don’t want to leave money out there.
00:27:44.000 –> 00:27:47.000
Even if you owe money, why not use that money to pay back?
00:27:47.000 –> 00:27:51.000
I mean, it’s still $1,400 or thereabouts, depending on your situation.
00:27:51.000 –> 00:27:55.000
If you qualify. If you’re in the higher tax brackets, we don’t qualify for it.
00:27:55.000 –> 00:28:01.000
But if you were in the lower married couples making less than, I think, $150 or single under $75,
00:28:01.000 –> 00:28:04.000
you did qualify for some or all of the stimulus.
00:28:04.000 –> 00:28:08.000
And if you have a number of children, that just adds up on top of it.
00:28:08.000 –> 00:28:11.000
All right, so we’ve talked a little bit about IRAs.
00:28:11.000 –> 00:28:15.000
You don’t have to worry so much about making–I mean, I’m not a financial planner,
00:28:15.000 –> 00:28:18.000
so I’m sure financial planners would say make it as soon as you can.
00:28:18.000 –> 00:28:25.000
But you don’t have to make your IRA, your Roth IRAs, or even your HSA payments quite yet.
00:28:25.000 –> 00:28:29.000
They can go all the way up until tax day, which is April 15th this year, guys.
00:28:29.000 –> 00:28:34.000
Finally, an actual April 15th, unless something happens, that will be our due date.
00:28:34.000 –> 00:28:37.000
On that day we do have to pay all of those.
00:28:37.000 –> 00:28:45.000
Right now the only ones that are really important is people that actually have 401(k)s or some version,
00:28:45.000 –> 00:28:51.000
403(b)s, there are several different versions, that the money comes from your paycheck that has to go in.
00:28:51.000 –> 00:28:56.000
You can’t just take money and send it out to your 401(k) if you’re working for somebody.
00:28:56.000 –> 00:29:01.000
They have to take it from your paycheck and then take out because it’s deferred, right?
00:29:01.000 –> 00:29:03.000
So you want to be able to pay it in that way.
00:29:03.000 –> 00:29:07.000
And then there’s the Roth, which is not deferred, but still comes out of the paycheck.
00:29:07.000 –> 00:29:13.000
So if that’s something you need to do, you might want to sit back and just look at your checks and see where you’re at
00:29:13.000 –> 00:29:15.000
and just see if it’s the thing that you need.
00:29:15.000 –> 00:29:24.000
Again, I’m not a financial planner, but all I do know is that you can’t, and many times you cannot have an IRA and a 401(k).
00:29:24.000 –> 00:29:26.000
Again, I’m not a financial planner.
00:29:26.000 –> 00:29:29.000
I keep putting that out there because these are questions you should be asking them,
00:29:29.000 –> 00:29:33.000
but there is some backdoor IRAs you could talk to them about.
00:29:33.000 –> 00:29:40.000
But many times I have people that end up paying penalties on their taxes because they went ahead and put money in an IRA
00:29:40.000 –> 00:29:45.000
and they were already paying into a 401(k) and their income didn’t allow for it.
00:29:45.000 –> 00:29:49.000
Now, if you’re single and making less than $30-some thousand dollars, I think it’s like $36,000,
00:29:49.000 –> 00:29:54.000
you can get the saver’s credit and you can put money into both situations.
00:29:54.000 –> 00:30:00.000
But you cannot do that if you’re making $150 or something as a single person.
00:30:00.000 –> 00:30:03.000
So make sure you know the game, make sure you know how to play it,
00:30:03.000 –> 00:30:09.000
and if you’re trying to set aside a lot more money for your retirement than what you can do through the basic system,
00:30:09.000 –> 00:30:12.000
then you need to talk to, again, financial planners.
00:30:12.000 –> 00:30:16.000
That’s where they make their bread and butter, taking the money, putting it someplace, and hopefully growing it.
00:30:16.000 –> 00:30:19.000
So when you hit retirement, you have it.
00:30:19.000 –> 00:30:26.000
But that is tax-wise, most of the time I usually see the penalty side of things.
00:30:26.000 –> 00:30:29.000
So I want to make sure that you’re thinking about that.
00:30:29.000 –> 00:30:34.000
And then obviously I’m a huge advocate for the health savings account if you have the option
00:30:34.000 –> 00:30:41.000
because many of us are blessed where we don’t have to actually use insurance or go see doctors a lot,
00:30:41.000 –> 00:30:43.000
at least not yet in my life.
00:30:43.000 –> 00:30:47.000
And so having a higher deductible, lower insurance payment,
00:30:47.000 –> 00:30:52.000
and putting more money into a health savings account is a good plan for someone like myself.
00:30:52.000 –> 00:30:54.000
Again, not going to be perfect for everyone.
00:30:54.000 –> 00:30:57.000
If we were all the same, how boring would this world be?
00:30:57.000 –> 00:30:59.000
So I just want to make sure we’re all on the same page.
00:30:59.000 –> 00:31:03.000
But start thinking if you’re a small business owner, for one,
00:31:03.000 –> 00:31:06.000
try to take the next couple of weeks and find out where you stand.
00:31:06.000 –> 00:31:08.000
Because I have a lot of them that come in.
00:31:08.000 –> 00:31:12.000
I have one on my desk right now where they did monthly financials, I guess you would call it.
00:31:12.000 –> 00:31:16.000
They had an Excel, but they didn’t do it as a continuous Excel.
00:31:16.000 –> 00:31:19.000
So they don’t have a year-to-date information.
00:31:19.000 –> 00:31:24.000
So they have no idea what their profit and loss is to date with the information.
00:31:24.000 –> 00:31:26.000
And then second, that helps you for two reasons.
00:31:26.000 –> 00:31:28.000
You know when you’re self-employed, right, guys?
00:31:28.000 –> 00:31:31.000
You know you’re supposed to be making estimated payments.
00:31:31.000 –> 00:31:33.000
And I shouldn’t even say just self-employed.
00:31:33.000 –> 00:31:36.000
Many people that are retired have to make estimated payments
00:31:36.000 –> 00:31:39.000
because you have so many different places your money’s coming from
00:31:39.000 –> 00:31:45.000
that you end up having to pay taxes every year so you pay in estimates based on the year before.
00:31:45.000 –> 00:31:48.000
So if you’re doing that, and especially as a business owner,
00:31:48.000 –> 00:31:51.000
you need to know you can’t really wait till the last minute
00:31:51.000 –> 00:31:55.000
and the next thing you know you owe $15,000, $20,000 and you’re sitting there going,
00:31:55.000 –> 00:31:58.000
“Oh my gosh, well if you made $80,000, guess what?”
00:31:58.000 –> 00:31:59.000
You have a partner in business.
00:31:59.000 –> 00:32:03.000
And for most small business–or I shouldn’t say small–for every business owner,
00:32:03.000 –> 00:32:07.000
we have a partner called the IRS or the U.S. Treasury.
00:32:07.000 –> 00:32:08.000
I don’t care how you want to call it.
00:32:08.000 –> 00:32:12.000
And they’re 20%, 25%, 30%, 35% of our business.
00:32:12.000 –> 00:32:14.000
And that’s of your profit.
00:32:14.000 –> 00:32:16.000
Not of your gross, but of your profit.
00:32:16.000 –> 00:32:20.000
They are partners, and it’s easier to think of it that way than to think,
00:32:20.000 –> 00:32:22.000
“Oh my gosh, why are they taking so much of my–”
00:32:22.000 –> 00:32:26.000
Because they’re your partner, I guess, is the only way I can explain it.
00:32:26.000 –> 00:32:28.000
The fact is tax law is tax law.
00:32:28.000 –> 00:32:32.000
And if you think you’re making money, you should have for every dollar you take out,
00:32:32.000 –> 00:32:37.000
you should be putting 25% minimum into a savings account for the IRS.
00:32:37.000 –> 00:32:42.000
And that’s not going to cover everything because most of us don’t take all the profits
00:32:42.000 –> 00:32:46.000
out of our business, but we have to pay tax on all the profits of our business
00:32:46.000 –> 00:32:48.000
if you have a pass-through.
00:32:48.000 –> 00:32:51.000
LLCs, sub-S corporations, C corporations, right?
00:32:51.000 –> 00:32:54.000
All of them are not C corporations, Schedule Cs.
00:32:54.000 –> 00:33:01.000
All three of those–LLCs, sub-S corporations, partnerships, and Schedule Cs–
00:33:01.000 –> 00:33:04.000
all of those are pass-throughs, which mean no matter if you put the money
00:33:04.000 –> 00:33:08.000
in your personal checking account or it stays in the business account,
00:33:08.000 –> 00:33:11.000
if you made $50,000, you’re paying tax on $50,000.
00:33:11.000 –> 00:33:14.000
It could all be sitting there, and it doesn’t make any difference
00:33:14.000 –> 00:33:17.000
because you’re still going to be liable for that tax.
00:33:17.000 –> 00:33:23.000
And so you have to start setting aside that money, otherwise you’re going to be
00:33:23.000 –> 00:33:25.000
sitting there going, “Oh wow, I didn’t know about that.
00:33:25.000 –> 00:33:31.000
I had an older couple come in, and they sold some property and ended up
00:33:31.000 –> 00:33:34.000
having to pay tax on that property.”
00:33:34.000 –> 00:33:37.000
Now in this case, these guys were smart.
00:33:37.000 –> 00:33:39.000
They took a big chunk of money and just set it aside.
00:33:39.000 –> 00:33:43.000
They’re not touching it until I tell them how much money they owe in taxes,
00:33:43.000 –> 00:33:45.000
and they did a good job.
00:33:45.000 –> 00:33:48.000
They ended up putting more aside than what we have due in taxes.
00:33:48.000 –> 00:33:52.000
But most of the time, people will go out, spend the money, or reinvest it even.
00:33:52.000 –> 00:33:57.000
I have people that would go sell a piece of real estate and then put it back
00:33:57.000 –> 00:34:00.000
into another piece of real estate, but they didn’t do it through a 1031
00:34:00.000 –> 00:34:01.000
exchange.
00:34:01.000 –> 00:34:04.000
They just sold and then repurchased, thinking that if I sell something
00:34:04.000 –> 00:34:09.000
and I reinvest it, that somehow that eliminates the tax, and it doesn’t.
00:34:09.000 –> 00:34:13.000
There is something called a 1031 exchange, and if it’s done properly,
00:34:13.000 –> 00:34:15.000
it can eliminate the tax for now.
00:34:15.000 –> 00:34:20.000
But most people are just looking at, “I took it, I spent it, and I then put
00:34:20.000 –> 00:34:23.000
the money back,” and it doesn’t quite work that way.
00:34:23.000 –> 00:34:26.000
And then now you’ve got a tax liability, and you can’t get the money back
00:34:26.000 –> 00:34:29.000
because it’s tied up in this other asset.
00:34:29.000 –> 00:34:33.000
So then you end up with a payment plan, and the IRS is probably one of the
00:34:33.000 –> 00:34:37.000
world’s worst loan offices, seriously.
00:34:37.000 –> 00:34:42.000
I mean, you have interest now that’s a little over 10%, and then you have
00:34:42.000 –> 00:34:46.000
penalties that are basically 25% here, 25% there.
00:34:46.000 –> 00:34:51.000
You can easily be at 50% penalties within six months, easily.
00:34:51.000 –> 00:34:55.000
So you’ve got 60% above what you owed.
00:34:55.000 –> 00:35:01.000
So if you owed $10,000, now you owe $16,000 within about six months.
00:35:01.000 –> 00:35:03.000
So it’s not a game.
00:35:03.000 –> 00:35:09.000
I mean, you really do, if you want to keep the IRS out of your bank,
00:35:09.000 –> 00:35:12.000
you need to make some plans, you need to understand, and as a business owner,
00:35:12.000 –> 00:35:15.000
you need to keep good records.
00:35:15.000 –> 00:35:19.000
Just putting it together and estimating or trying to add it all up
00:35:19.000 –> 00:35:20.000
isn’t going to work.
00:35:20.000 –> 00:35:23.000
You need to do–I don’t care if you use Excel, I don’t care if you use QuickBooks,
00:35:23.000 –> 00:35:26.000
I don’t care what format, I don’t even care if you use paper.
00:35:26.000 –> 00:35:30.000
It doesn’t make a difference as long as you can track where the money came in
00:35:30.000 –> 00:35:33.000
and where the money went out, and the difference is profit.
00:35:33.000 –> 00:35:34.000
It’s that simple.
00:35:34.000 –> 00:35:37.000
All right, guys, we’re going to take our last break.
00:35:37.000 –> 00:35:40.000
That’ll be the end of this show, and then next Saturday,
00:35:40.000 –> 00:35:43.000
we’re going to be talking about presents.
00:35:43.000 –> 00:35:45.000
That’s right, we’re going to be giving away.
00:35:45.000 –> 00:35:48.000
But right now, you can reach us here live in studio,
00:35:48.000 –> 00:35:57.000
615-737-9986, 615-737-9986.
00:35:57.000 –> 00:35:59.000
We’re going to take your call, talking about taxes,
00:35:59.000 –> 00:36:01.000
or maybe you’ve received some sort of letters,
00:36:01.000 –> 00:36:05.000
or you’re not too sure if you had an inheritance like Carol had or something,
00:36:05.000 –> 00:36:08.000
and you’re like, “Do I need to be thinking about taxes on it?”
00:36:08.000 –> 00:36:12.000
I will do my very best to hopefully cover that and help you figure it out.
00:36:12.000 –> 00:36:15.000
We’re going to be right back with The Dr. Friday Show.
00:36:15.000 –> 00:36:20.000
For business planning, business, and IRS negotiation, visit drfriday.com.
Part 4
00:36:20.000 –> 00:36:28.000
[music]
00:36:28.000 –> 00:36:31.000
All righty, we are back with the last bit of the show here.
00:36:31.000 –> 00:36:35.000
So if you have a question, you’ve just been, “I really want to call, but I’m so scared.”
00:36:35.000 –> 00:36:38.000
Don’t worry, we don’t take down names, we don’t take down numbers.
00:36:38.000 –> 00:36:43.000
There is really no stupid questions because, let’s be honest, not all of us know everything.
00:36:43.000 –> 00:36:46.000
If somebody was calling me about auto repairs or how to build a house,
00:36:46.000 –> 00:36:48.000
I’m pretty sure I’d be the same way.
00:36:48.000 –> 00:36:52.000
Taxes just happen to be the one thing that I have the best grasp on.
00:36:52.000 –> 00:36:56.000
So if you have a question when it concerns the taxes or anything like that,
00:36:56.000 –> 00:37:01.000
this is the show to call, 615-737-9986.
00:37:01.000 –> 00:37:04.000
615-737-9986.
00:37:04.000 –> 00:37:06.000
Again, next Saturday, put the number down.
00:37:06.000 –> 00:37:09.000
You’re going to have some fun, lots and lots of giveaways,
00:37:09.000 –> 00:37:14.000
and hopefully the phone lines won’t blow up and we lose the host system because we’ve gone crazy.
00:37:14.000 –> 00:37:16.000
But that’s all right, that would be fun too.
00:37:16.000 –> 00:37:23.000
But anyway, so we’re thinking about 2023, and I was just trying to run through a quick list in my mind.
00:37:23.000 –> 00:37:28.000
Really the biggest thing I could say is, guys, if you are — and I keep pushing the entrepreneurs
00:37:28.000 –> 00:37:32.000
because if you have to put together 12 months’ worth of income and expenses,
00:37:32.000 –> 00:37:37.000
you’re bound to miss something if you’ve got them all spread out on your desk right now.
00:37:37.000 –> 00:37:41.000
Unless it’s a really small business, therefore it’s not a big deal.
00:37:41.000 –> 00:37:43.000
But, you know, do you have the miles?
00:37:43.000 –> 00:37:45.000
And can you even take miles?
00:37:45.000 –> 00:37:48.000
Some of my clients are only businesses that do remote, right?
00:37:48.000 –> 00:37:53.000
So they don’t have a lot of things that they actually drive to unless they’re considering coming to my office.
00:37:53.000 –> 00:37:56.000
And sometimes they don’t even do that, they do it remotely.
00:37:56.000 –> 00:38:02.000
So I want to make sure that you have all of your home office expense.
00:38:02.000 –> 00:38:06.000
That is still a legitimate expense, guys, if you have a physical home office.
00:38:06.000 –> 00:38:13.000
If you’re sitting on your sofa or at your kitchen table with a laptop and you’re running your business, that’s not an office.
00:38:13.000 –> 00:38:15.000
Just letting you know.
00:38:15.000 –> 00:38:18.000
That is your kitchen table or that is your front room sofa.
00:38:18.000 –> 00:38:20.000
So you cannot write that off.
00:38:20.000 –> 00:38:22.000
It has to be legitimate space.
00:38:22.000 –> 00:38:24.000
That’s the important part.
00:38:24.000 –> 00:38:31.000
The legitimate space, it has to be able to identify a separate room with a desk, chair, printer possibly, whatever.
00:38:31.000 –> 00:38:35.000
All right, so we’re going to hit the phones real quick with Melissa because I think she’s got an interesting question.
00:38:35.000 –> 00:38:37.000
Hello, sweetheart.
00:38:37.000 –> 00:38:39.000
What can I do for you?
00:38:39.000 –> 00:38:45.000
>> We had to get some timber off of our land and I’m just trying to figure out, like, do we have to pay taxes on it?
00:38:45.000 –> 00:38:49.000
And if so, how do we file that on our taxes?
00:38:49.000 –> 00:38:52.000
>> So you do file timber.
00:38:52.000 –> 00:38:58.000
It is going to — some companies at least will 1099 you as miscellaneous.
00:38:58.000 –> 00:39:00.000
It’s not earnings per se.
00:39:00.000 –> 00:39:02.000
It’s going to fall.
00:39:02.000 –> 00:39:08.000
If you have — did you guys have to pay to replant or anything or did you just pay for the lumber to be removed?
00:39:08.000 –> 00:39:11.000
>> Just for the lumber to be removed.
00:39:11.000 –> 00:39:12.000
>> Okay.
00:39:12.000 –> 00:39:18.000
So it’s just going to — it’s going to fall on the 1040, page schedule one.
00:39:18.000 –> 00:39:21.000
But it’s basically just going to be other income.
00:39:21.000 –> 00:39:23.000
You’re not going to pay self-employment tax on it.
00:39:23.000 –> 00:39:25.000
It’s just going to show up as other income.
00:39:25.000 –> 00:39:28.000
You probably don’t have much of a deduction.
00:39:28.000 –> 00:39:39.000
It would theoretically, a lot of people would say it would depreciate the value of your land because if now it doesn’t have the mature lumber on it, it may be worth less today than it was.
00:39:39.000 –> 00:39:43.000
So you could theoretically do a schedule D with a deduction of the difference.
00:39:43.000 –> 00:39:48.000
But if you’re — the question is, Melissa, will it be replanted and will it come back up?
00:39:48.000 –> 00:39:50.000
And we don’t have the answer to that.
00:39:50.000 –> 00:39:53.000
So there is two trains of thoughts.
00:39:53.000 –> 00:39:58.000
And you might want to talk to your tax person and bring the one up where it says depletion.
00:39:58.000 –> 00:40:11.000
So basically you would take what the value of the property was before and what it would be valued afterwards without the mature trees and then take that as your cost against the cutting of the trees, which would then be a schedule D.
00:40:11.000 –> 00:40:20.000
And you’d be able to reduce your money that you receive today because obviously these trees are probably 20 years, 30 years old, maybe longer.
00:40:20.000 –> 00:40:21.000
>> Okay.
00:40:21.000 –> 00:40:22.000
Okay.
00:40:22.000 –> 00:40:23.000
Does that make sense?
00:40:23.000 –> 00:40:24.000
A little bit?
00:40:24.000 –> 00:40:25.000
>> Yes.
00:40:25.000 –> 00:40:26.000
Thank you.
00:40:26.000 –> 00:40:27.000
Yes.
00:40:27.000 –> 00:40:28.000
>> Thank you.
00:40:28.000 –> 00:40:29.000
All right.
00:40:29.000 –> 00:40:30.000
Bye.
00:40:30.000 –> 00:40:31.000
All righty.
00:40:31.000 –> 00:40:32.000
Thank you so much.
00:40:32.000 –> 00:40:40.000
Hopefully — and I would suggest in that case talk to your tax person, Melissa, because there is two ways and without having a direct conversation, there would be more information I would need.
00:40:40.000 –> 00:40:41.000
All right.
00:40:41.000 –> 00:40:42.000
Really quick, let’s hit Deli.
00:40:42.000 –> 00:40:44.000
Is it Deli?
00:40:44.000 –> 00:40:45.000
>> Yes.
00:40:45.000 –> 00:40:46.000
>> Deli?
00:40:46.000 –> 00:40:47.000
Oh, Deli.
00:40:47.000 –> 00:40:48.000
Okay.
00:40:48.000 –> 00:40:49.000
Cool.
00:40:49.000 –> 00:40:50.000
What can I answer for you?
00:40:50.000 –> 00:40:54.000
>> Hey, I was going to ask you an RMD question.
00:40:54.000 –> 00:40:55.000
>> Yep.
00:40:55.000 –> 00:41:12.000
>> I know you can give to charitable organizations, but I was wondering if you can give like your — I have two sisters, and I was wondering if I could give them a thousand or a couple thousand dollars each on an RMD.
00:41:12.000 –> 00:41:15.000
>> You can’t because it wouldn’t do the same.
00:41:15.000 –> 00:41:22.000
I mean, you could certainly write a check to them.
00:41:22.000 –> 00:41:25.000
It just would not have a tax advantage to it.
00:41:25.000 –> 00:41:31.000
With a QCD or qualified charitable deduction, which is what Deli is talking about, that reduces your taxes dollar for dollar.
00:41:31.000 –> 00:41:32.000
Right?
00:41:32.000 –> 00:41:36.000
So if you give $3,000 to your church, then it reduces your RMD by $3,000 straight off.
00:41:36.000 –> 00:41:40.000
We don’t have to itemize the church or anything, and it reduces your income.
00:41:40.000 –> 00:41:45.000
>> Okay.
00:41:45.000 –> 00:41:48.000
>> But they’re not a legitimate nonprofit, so therefore, it really would just be under the gifting laws.
00:41:48.000 –> 00:41:49.000
>> Okay.
00:41:49.000 –> 00:41:50.000
So it would have to be a nonprofit.
00:41:50.000 –> 00:41:52.000
>> They would have to be a legitimate nonprofit, yes.
00:41:52.000 –> 00:41:53.000
>> Okay.
00:41:53.000 –> 00:41:54.000
Well, I appreciate that.
00:41:54.000 –> 00:41:55.000
>> Sure.
00:41:55.000 –> 00:41:56.000
That is a great question, actually.
00:41:56.000 –> 00:41:58.000
A lot of people like to think they’re kids.
00:41:58.000 –> 00:42:03.000
They could like to give money, you know, if there’s any way of writing it off the taxes, and unfortunately, it’s not.
00:42:03.000 –> 00:42:05.000
But it was a really good question.
00:42:05.000 –> 00:42:07.000
Many people wonder about that.
00:42:07.000 –> 00:42:10.000
All right.
00:42:10.000 –> 00:42:13.000
We have a few more minutes left here.
00:42:13.000 –> 00:42:22.000
So what we want to do is first, anyone that is an existing client to Dr. Friday, you need to get on the website, drfriday.com, and book your tax appointment.
00:42:22.000 –> 00:42:33.000
If you are wanting to be a client of Dr. Friday, you need to call our office, and we need to take an appointment so we can see if we’re going to be on the same page, see if we want to be able to work together or not.
00:42:33.000 –> 00:42:41.000
And again, if you’re an existing client to Dr. Friday, go onto the website, drfriday.com, click on calendar, and book your appointment.
00:42:41.000 –> 00:42:44.000
You know how fast those things book up.
00:42:44.000 –> 00:42:49.000
Then if you are not a client of Dr. Friday but would love to be one, I mean, come on, let’s be honest.
00:42:49.000 –> 00:42:52.000
We have a fun time in our office during tax season.
00:42:52.000 –> 00:42:57.000
If you want to see if we can help you, save you tax dollars, maybe prepare your taxes, not a problem.
00:42:57.000 –> 00:43:03.000
Just give our office a call Monday morning at 615-367-0819.
00:43:03.000 –> 00:43:07.000
We can then take an interview and see if we all feel like we want to work together or not.
00:43:07.000 –> 00:43:14.000
Very important, you need to make sure that whoever handles your taxes as far as I’m concerned, you need to be on the same page.
00:43:14.000 –> 00:43:24.000
You need to make sure that you’re able to communicate with them, that when you call, they answer, and that you feel that they have at least the ability to do the type of taxes that you want done.
00:43:24.000 –> 00:43:27.000
If it’s not a good match, then you need to find someone that is.
00:43:27.000 –> 00:43:30.000
But again, we all have the same concept.
00:43:30.000 –> 00:43:34.000
We want to make sure that whatever we’re doing here in our office that we match well with our clients.
00:43:34.000 –> 00:43:46.000
That way it makes it so much easier and so much smoother because, you know, after 25 years of business, I will say that there have been a few times where I have a mismatch of client and myself, and it’s never a smooth transition.
00:43:46.000 –> 00:43:51.000
So at this point in the game, we really just like to make sure that we’re all on the same page.
00:43:51.000 –> 00:44:02.000
If you would like to set up a pre-appointment, 615-367-0819, direct number to the office, 615-367-0819.
00:44:02.000 –> 00:44:06.000
Also, there’s a tax organizer on drfriday.com.
00:44:06.000 –> 00:44:13.000
Anyone that wants to start organizing their papers, if you want to just — and you don’t even have to use my services, guys.
00:44:13.000 –> 00:44:16.000
If you’re looking for a tax organizer, you can download it.
00:44:16.000 –> 00:44:20.000
It will help you preempt whatever — or even if you do your own taxes.
00:44:20.000 –> 00:44:24.000
It may help you think about — ask some questions that maybe you don’t think about.
00:44:24.000 –> 00:44:28.000
I mean, I know some of these online softwares, apparently they ask a lot of great questions.
00:44:28.000 –> 00:44:31.000
You know, just something, but it’s free.
00:44:31.000 –> 00:44:42.000
You can download it, and that way you can go ahead and, again, for all Dr. Friday clients, if you haven’t received one, just go to drfriday.com, click on tax organizers.
00:44:42.000 –> 00:44:43.000
It’s there.
00:44:43.000 –> 00:44:44.000
Download it.
00:44:44.000 –> 00:44:51.000
Go ahead and start filling it out, getting your paperwork all organized so that we have a nice little quick, simple tax season.
00:44:51.000 –> 00:44:53.000
That will be our goal this year.
00:44:53.000 –> 00:44:54.000
Always my goal, 25 years.
00:44:54.000 –> 00:44:57.000
I can’t say I’ve ever succeeded yet, but you know what?
00:44:57.000 –> 00:44:59.000
It’s always nice to have goals.
00:44:59.000 –> 00:45:06.000
If you would like to talk about tax as an enrolled agent, what we do, of course, is tax preparation.
00:45:06.000 –> 00:45:11.000
We do all tax returns, business, individuals, nonprofits, trusts.
00:45:11.000 –> 00:45:16.000
We handle all of them, and we handle all different states because we’re licensed by the IRS.
00:45:16.000 –> 00:45:17.000
We’re licensed for all states.
00:45:17.000 –> 00:45:20.000
We’re not just licensed by one state.
00:45:20.000 –> 00:45:29.000
That being said, so if you have a question and you need something done or you’re getting love letters and you’re not too sure, the easiest thing is to take an initial consultation.
00:45:29.000 –> 00:45:32.000
My initial consultations are always free.
00:45:32.000 –> 00:45:33.000
Why?
00:45:33.000 –> 00:45:35.000
Because I want to make sure we both are on the same page.
00:45:35.000 –> 00:45:36.000
Pretty simple.
00:45:36.000 –> 00:45:39.000
So if you want to do that, you need to call the office.
00:45:39.000 –> 00:45:45.000
It’s the easiest way to get an appointment and also to have a quick phone conversation to make sure we can help you.
00:45:45.000 –> 00:45:51.000
That number again is 615-367-0819.
00:45:51.000 –> 00:45:55.000
You can email Friday@DRFriday.com.
00:45:55.000 –> 00:45:59.000
Also, the 615-367-0819, you can text.
00:45:59.000 –> 00:46:06.000
So if you want to text something like just, “Hey, give me a call,” or whatever, that’s the easiest way to make this work.
00:46:06.000 –> 00:46:09.000
So text, email, or go to the website.
00:46:09.000 –> 00:46:12.000
You can also send a link right through the website and do that.
00:46:12.000 –> 00:46:25.000
If you’re an existing client and you haven’t yet got the Smart Vault uploaded, then again, send an email to me and we’ll get you the link so that way you can start uploading your tax documents as they start arriving.
00:46:25.000 –> 00:46:29.000
Let’s try to keep everything nice and neat and clean and secure, right?
00:46:29.000 –> 00:46:33.000
We don’t want to have any issues with, you know, all you hear about is issues.
00:46:33.000 –> 00:46:42.000
So last time, 615-367-0819 or Friday@DRFriday.com.
00:46:42.000 –> 00:46:43.000
Hope you have an awesome Saturday.
00:46:43.000 –> 00:46:44.000
Cop you later.
00:46:44.000 –> 00:46:44.500
Cop you later.