Welcome to the Dr. Friday Radio Show! In this episode, tax expert Dr. Friday discusses the latest tax updates, answers callers’ questions, and covers the following topics:
and much more!
Transcript
Announcer 0:00
No, no, no, she’s not a medical doctor, but she can sure cure your tax problems or financial woes. She’s the how-to girl. It’s the Dr. Friday show. If you have a question for Dr. Friday, call her now. 615-737-9986. So here’s your host, financial counselor, and tax consultant, Dr. Friday.
Dr. Friday 0:30
Good day, it’s Dr. Friday and the doctor is in the house. What a wonderful Saturday. It’s a little overcast out there. I know. But it’s still a nice day out there, at least. So if you have questions, maybe you’re starting to think about It’s almost the end of the year. So if you have any kind of changes that you’re thinking Roth conversions, selling something, possibly maximizing a 401 K, now is the time to be doing that, because we only have a few more weeks of this year. And anything that happens in 2023 pretty much stays in 2023.
Dr. Friday 1:06
So if they’re thinking about making a change or altering these next couple of weeks will be the weeks that you want to do that if you want to join the show, you can 615-737-9986. And for many of you that have been listening for a long time we’ve been on here, I think 1314 years, we have our big Christmas show next weekend. So as many people that have listened, many of my clients actually have when one little gift cards, we give away 1000s of dollars and two hours Doctor electric and the Dr. Friday show merges for that one weekend. And we we have a great time thanking all of our listeners for listening all year, and using all services.
Dr. Friday 1:54
So again, that will be next Saturday starting at one o’clock on the Dr. Electric show. So that’s gonna be a lot of fun. And, again, if you want to join the show, if you’ve got questions about taxes, or maybe you’ve inherited or you’ve sold something, and you just want to make sure you’ve estimated your taxes, keep in mind, if you have sold a piece of property, or you have made a large profit on a stock or anything else, the IRS expects within 90 days an estimate to be made either 110% of what you owe the year before in total taxes, or the amount due that you would estimate do up to 100%. Otherwise, you could look at penalties.
Dr. Friday 2:39
So again, if you’re at that point, and you’re like oh my gosh, because January 15 is our final estimate for the year of 2022. And so we want to make sure that you have made all the proper estimates and that you are making sure that the money has been passed, because the worst thing would do is if you’ve sold something you already have a client come in the other last Wednesday, I think it was and they had sold an $800,000 piece of property and their basis was a couple 100. So they’re looking at roughly 80 to $90,000 worth of estimated taxes needing to be paid in.
Dr. Friday 3:16
But looking at their prior year, we able to send in a smaller amount, not a whole bunch. But we did send in less than what we know could be due but we want to send that in again. So that the IRS doesn’t hit us with failure to file or proper estimated taxes. Because those fines can add up and you want to make sure that you have that information in there. And I would say now’s a great time to start thinking about the 2022 tax year. How many jobs did you have? Did you sell or do anything unique? Did you sell your primary home? Did you buy a primary home not that they’re allowed nowadays, itemizing is a little different than most but you know, still want to make sure that you’re not missing out? Did you have any major medical situations that you give money to charity?
Dr. Friday 4:04
Remember, cash contributions for a married couple is 600 above the standard deduction. And for single individuals, that’s $300. So you would get the standard deduction plus 300 or 600, depending on your filing status. So we want to make sure that we don’t have you know that you don’t don’t forget to tell your tax person that information. Many people think well I give something to Red Cross or I gave cans I give close I you know, do those but the tax law specifically says cash when we’re talking above the line contribution on those situations.
Dr. Friday 4:40
So you want to make sure you have that and you’re moving forward. We also want to talk a little bit about the combination of tax breaks and the child tax credits. Some modifications are in is taking place beginning you know, we know 2020 And there’s a 15 year amortization schedule that People are using, and some of the tax law is going to be expiring come 2025, we’re going to be going into 2023. But we want to make sure that you’re keeping our eyes out, see if Biden does have some tax law that he wanted to make permanent.
Dr. Friday 5:19
But I don’t think he’s done a whole bunch on making some of those they’re trying to get, of course, the student loan is a big one, but it’s being held up in the tax courts right this second. So we’re gonna have to wait and see what comes. But we’ll keep you notified. But again, if you’ve got questions, you can join the show 615-737-9986, the number here in the studio talking about my favorite subject, which is taxes, making sure that we are taking full advantage of everything we have going with, with the tax, you know, tax things happening, and making sure that we’re able to do what we need to do. So if you have any questions you can join.
Dr. Friday 6:09
One of the things we do know that the Republicans are starting to push on Biden to make the 2017, which we think of as the Trump tax changes permanent, again, those are the ones that will be expiring in 2025. It’s going to really, it’s going to be an interesting next few years to see what comes of a few of those situations, see if there’s been any major changes or risks that we can do with with that. But, you know, we’ll we’ll wait and see what comes to that. Also, I wonder I had a client come in, and he’s working with one of those companies that help you deal with your credit card debt. And I’m sure that’s a wonderful thing.
Dr. Friday 6:54
But I do want to put out there. You know, a lot of times people are like, well, you know, I negotiated with my credit card company, I save $20,000. It sounds wonderful, because you’re not having to pay the credit card $20,000. But you are going to he got a 1099 for it, and the credit card companies will send it to 99 out, you have to pick it up as income, there is a hardship filing, but you do have to have a true hardship to make it work. So, you know, we’ll just have to wait and see.
Dr. Friday 7:25
But in all honesty, just keep in mind if you negotiate with a credit card company, and they agree to reduce your credit card debt 99% of the time, that will become taxable income to you on your tax return. So you will be paying income tax again, it’s still a savings, you’re not paying $20,000 in taxes, you’re only paying your tax rate, which in this case, this gentleman was going to pay a little over $4,000 to the IRS, which you do not want an IRS issue after you finally trying to get a hold of your other tax issues.
Dr. Friday 8:01
So just be careful when you’re negotiating with those companies. Find out maybe there’s a way of negotiating, saying hey, I’m willing to negotiate. But I don’t want to have a 1099 C because I can’t afford to get in tax but with the IRS because now he’s got payment plan with them along with trying to catch up on his back credit card debts and things. So just put a little extra burden on him. And that’s that’s not always what we want to do. So just again, a lot of times these things sound wonderful. But make sure when that happens, you talk to them find out if there’s anything that you need to know, to make sure that this happening.
Dr. Friday 8:38
We do know that the IRS as an enrolled agent licensed by the Internal Revenue Service to do taxes and representation the one thing we have, and I know a lot of people are like I bet you’re not excited. But I would love to have a few more revenue officers, I would love to be able to do my job like I could five years ago where I could pick up the phone, call a Revenue Officer and get resolution, figure out what we can do and find and solve problems instead of having to either overwork the tax advocate office or wait months, if not a year or more to get some sort of resolution to things that shouldn’t be able to be resolved if you can actually physically get somebody on the phone.
Dr. Friday 9:17
So IRS is hiring the supposedly 85,000 new people I would be surprised if they meet that number only because anyone that is self employed or has employees working under them knows how hard it is to find someone to work right now. So I find it hard to believe that there’s gonna be 85,000 people willing to work just for the IRS but either way, if they can hire those it is going to be a large number of them are going to be going into collections. Not a surprise since that way they can actually start paying the bill for these employees.
Dr. Friday 9:53
So you know if you do have IRS issues, I’m going to say stop procrastinating. You need to give us a call We need to get resolution moving forward, we need to figure out some people, it’s not a big deal. But you know, the fact is if you haven’t, if you have a ability to resolve, it’s always better to do it when your your income and your finances are not perfect. If you have a home, and there’s equity in it, I will tell you, it’s not going to be as simple as you hear on those ads. I mean, I won’t lie to you. I mean, we do them all the time.
Dr. Friday 10:24
But a lot of these commercials and says we can sell resolved for 10 cents on the dollar. But that doesn’t happen if you’ve got 401 K’s if you’ve got stock accounts, if you have multiple residents or properties or you have a home with equity, again, IRS cannot take your primary home under normal circumstances. So again, we’re not trying to scare more just trying to say if you want to have resolution, you need to get the answers you need.
Dr. Friday 10:51
So you can start figuring out what that resolution will be, we’ll be an offering compromise, which might be 50 cents on the dollar, 60 cents on the dollar, or as low as 10 cents on the dollar. We have done those cases. But in most of those cases people are renting, don’t have any retirement, you know, they’re almost starting over and ended up with a lot of debt from a past life situation.
Dr. Friday 11:13
Then you have payment plans, partial payment plans, non collectible, all of those exist out there for every individual, you just have to find the right one that’s going to work for you. And making sure it’s going to work for what the IRS so that way you don’t have to worry, hey, if I get a new job, if I start doing something, if you’re in a plan, then you know, then you can work within that and start working and achieving what you want to do. If you want to join the show, you’ve got a question about either dealing with the IRS or planning your 2022 or 2023 taxes, it’s pretty easy.
Dr. Friday 11:45
Pick up the phone and call 615-737-9986.Taking your call. And then that way we can make sure that we get your questions answered. Because if you make choices and you you know, ask the neighbor, this or my friend he did that what works for one individual isn’t always what’s going to work for multiple individuals, what your friend or neighbor has may not be the same situation you have. So you need to make sure that someone’s looking at your case and giving you an actual situation to make it work. All right, we’re gonna take our first break when we get back. Hopefully we’ll get some of your calls again. 615-737-9986. We’ll be right back with the Dr. Friday show.
Dr. Friday 12:47
We are back here live in studio park to the Dr. Friday show. And it looks like we’ve got Charles on the line. Let’s see if we can get Charles on here. Hey, Charles.
Caller 12:58
Good afternoon, Dr. Friday, Merry Christmas.
Dr. Friday 13:02
Merry Christmas.
Caller 13:04
Got a question. I’m retired on Social Security marry, a wife still works. What is the guest threshold or a map that you can make before they start digging your social security.
Dr. Friday 13:18
So if you’re married, it’s basically half of the Social Security. Plus, you can make up to 35,000. So take half of your Social Security depending on let’s just say that’s 10,000 you can make another 25 And then they start dinging Social Security.
Caller 13:34
Okay, so I can make up to $25,000 a year, which I’m not going to be I’ve been offered a part time job. And it’s easy work. Give me something to do play money. You know what I’m talking about?
Dr. Friday 13:46
Right? But it’s probably already been doing Charles because your wife is still working. So she probably makes more than 25,000.
Caller 13:53
Yeah, yeah. Okay. Well, then your credit I’m have not taken the job yet. Right. But I’m telling you,
Dr. Friday 14:01
it’s probably good for you. I don’t mean that. I mean, my opinion, I don’t know you personally, but I always think it’s always good to have busy work versus so she if you’re healthy enough, and you have something you can do that you enjoy it. I mean, not that it’s drudgery or something, but if it’s something you would enjoy doing, why not go out and do a little of it versus I’ve seen too many clients that retire and then they just seem to sit at home and next thing, you know, they kind of fall apart. You know,
Caller 14:28
I’ve gotten a little bored you know, I stay busy enough. I just did not want to make the money just for Uncle Sam to take it at another exactly because be countered for targeting So what could I gross a year that I’m trying to figure out? Right now he offered me a couple of days work. Gross, you know, 120 $150 a week, you know, something like that?
Dr. Friday 14:51
Well, I mean, bottom line is the way you’re gonna basically look at is Uncle Sam’s gonna take 25% of it. Okay, I mean, I’m just being pretty straightforward. Assuming that your wife is still working, and her income plus your Social Security is probably putting you guys at 3040 $50,000 combined your Social Security Plus hers. So as long as your combined income is all under 100,000, just guessing, but I’m working with this number, if it is then just figure that Uncle Sam is going to take basically 25% You have to pay Social Security, you have to pay Medicare, because you’re working for this guy. Or if you’re self employed either way, they’re going to take that out, there’s no age limit on those. So and then your federal withholding, which is going to put you at the 12%. So all in all, 25% of the check goes to Uncle Sam, the rest of its gonna go in your pocket.
Caller 15:43
So it makes you wonder if it’s even worth it or not.
Dr. Friday 15:47
Yeah, it’s still 75 and it gets you out of the house, Charles?
Caller 15:52
Well, you got to point okay, well, I just want to shoot myself in the proverbial foot.
Dr. Friday 15:58
I know, I know. And I hear that a lot of times, but you’re still putting 75 in your pocket. And like I said, as long as it’s something that you enjoy. Now, you know, I would never suggest someone go out just to, you know, personally, for me, probably being a Walmart greeter would not be the most enjoyable thing for me to do.
Caller 16:16
The job? enjoyable. It’s not hard labor.
Dr. Friday 16:19
Exactly. It’s something that you enjoy and enjoy. It’s, there’s a value to that, especially as we get older, because it’s good for you to have a reason to get up, get out and do something. Again, that’s my personal opinion. Not probably any scientific.
Caller 16:34
Be basically $100 a week, just I’m gonna see 75 in my pocket didn’t it’s not gonna take money. Exactly. All right, that’s what I need to hear. Thank you, Doc, buddy, and have a wonderful holiday ma’am.
Dr. Friday 16:48
Thank you for calling you too, sir. And that was a great question. So thank you. So when we go through and working with these different situations, let’s see if he can get Charles off. Hopefully he did. We can deal with any of those. But it’s always good to think about those kinds of questions. I mean, seriously, nobody wants to go to work. And nobody likes to have to give Uncle Sam anything. But the real fact of it is even US business owners, anyone, you know, you’re looking at most of the time, a minimum, I mean, can go up there, but a minimum of 25% of our paychecks.
Dr. Friday 17:24
Our income, pretty much goes to Uncle Sam. And then in the perfect world, some sometimes they’ll go up higher, depending on how much money you earn. But sound like Charles was only gonna be working a couple days. So it didn’t sound like he was gonna be kicking his family over the 100,000 If he did, wouldn’t be that big a difference. But but you know, it’s really I think sometimes people I have people, they’ll say, Well, you know, it’s not worth it. If I’m not, this is a good, good idea, you should always value yourself. I’m a firm believer that but at the same time, I think you need to value what you’re going to get from it.
Dr. Friday 18:00
And I again, I think many times people you know, end up being alone being stayed at home too much watching and not not getting out. And I think being with people and you guys all know I never shut up. I love talking I love meeting I love I love being around people. And I think it’s a good thing. It’s a healthy thing for most people to do. So anyways, my my two cents the Charles life is go out there, enjoy it, see if it works out worst scenario doesn’t best scenario is you get a few dollars in your pocket, and you get to go out and enjoy yourself, hopefully doing something that’s fun.
Dr. Friday 18:34
I did want to bring up HSAs have some advantages, to make sure if you are a self employed individual, especially. But even if you’re not, if you are handling your own health insurance, sometimes people hit early retirement before they can hit Medicare, you cannot be in a health savings account. My understanding is once you start Medicare, but if you were born before 1969, you can put 4850 in your bank, so if it’s called a health savings account, so you can have a higher deductible insurance and then you put 4850 Or if you were born before 1969.
Dr. Friday 19:21
And if you were born after you put 3850 and that money, if you don’t use it, it just builds up. It’s another form of a savings account or and what’s nice about this is more like an IRA, in essence because every dollar you spend out of it is pre taxed. So you get to write it off on your tax return. And you don’t have to worry about itemizing right because we all know how hard it is to itemize taxes at that point. So you basically get to take the money you put into your health savings account, you spend it for medical all pre tax if you don’t spend it for medical and you hit the age of 72 it will be part of your Ira distributions or RMDs, but you can use it, when you are in Medicare and you need a procedure or out of pocket costs, you can still spend that money throughout your older age.
Dr. Friday 20:12
So it’d be great. You know, if you’re younger, and you just start maximizing that start putting that 3850 or 4850. And every single year, until it hits until you either are on Medicare, and you no longer can contribute, then you can spend that money or spend it throughout the time. But again, it’s pre tax dollars. So it’s so hard to get medical and to get enough in there to itemize because right now, with the standard deduction plus the 10% of your adjusted gross income, and itemizing, it’s not going to happen unless you have a very, very large account.
Dr. Friday 20:49
You know, sure, if you’re spending 20 or 30,000, on medical procedure, maybe maybe depending on your income bracket, it might help you if you’re single, married people. I mean, if you’re over the age of 65, both you and your spouse, you have like $27,000 standard deduction, it’s again, very hard to get that and put it into, you know, onto your itemizing unless you have large charity, many people start paying off mortgages, so you don’t have as high a mortgage and many people refinanced in the last couple of years. So mortgage interest is actually a lot lower than it’s been in a number of years.
Dr. Friday 21:27
So just something to think about health savings accounts, always a great way, especially for the IRS. Okay, especially for self employed individuals. IRS waive the 60 day IRS rollover rule for victims of online scams, a woman who fell from a bank fraud scheme without money from her IRA and taxable accounts and paid it over the fraud. After they threatened her. She later discovered she was a victim of fraud and contacted the authorities. But the 60 days for putting the funds back into her IRA is a non taxable rollover and became already had passed.
Dr. Friday 22:03
So bottom line is if you take money out, you can borrow from your IRA 60 days, right one time per year, you can take the money out and put it right back in within the 60 days. And it’s not not taxable. It’s kind of like a short term loan. But in some cases people borrow and then think that they’re doing apparently there’s several scams out there guys. All kinds actually. So when anybody asks you for any information when it comes to your banking name, social security number, even if it’s the IRS calling you and I know a lot of times people say well, the IRS doesn’t call there are circumstances, I know revenue officers that have picked up the phone and called clients. And you know, the clients are first.
Dr. Friday 22:46
There is nothing wrong with saying I want your supervisors name, I want their phone number, I want your your badge number, I want your phone number I will call back as soon as I’ve you know, you don’t have to immediately unless you know this revenue person, then of course, you have to talk to him. But if you don’t, don’t just there’s a lot of scams are there. They’re impersonating revenue people, and they’re basically saying that you owe money. And of course, the odds are there are, I don’t know, something like 100 million people that owe the IRS money, some ridiculously large number. So the odds are if they call enough people, there’s going to be someone that’s going to answer the phone and think it’s the IRS, because now they’re being caught, right.
Dr. Friday 23:28
I mean, that’s the thought would be so they just basically keep calling people I’ve actually had one call me and I didn’t know I did not owe the IRS, but I played along just to find out how far they would go, they finally hung up on me because apparently I wasn’t playing along with their game. But it’s not something you want to play with. You don’t want to give legal names, you won’t give social security numbers, you know, you don’t want to and I can tell you if anyone on that phone says we’re going to be sending out the sheriff’s department or the police or anything like that. That is pretty much a scam.
Dr. Friday 24:03
The only reason the IRS would ever send out the police. And most of the time, they’re not going to call you and tell you they’re doing this they’re going to show up at your door because they’re going to consider it fraud. They’re going to be coming in they’re gonna be seizing properties. I’ve never been involved in any of those type of cases, but I do know I’ve read court cases about it. So all right, we’re gonna take our second break. You can join us here online. I mean, on the radio, I’m online 615-737-9986. We’ll be right back with the Dr. Friday show.
Dr. Friday 24:44
All righty, we are back here live in studio. You can reach us here 615-737-9986 Looks like we might have some call There’s live videos, but I’m not too sure if there’s any names on them. So let me know if we do. So that way we can move forward on that. So if you have a question, you may have actually put somebody in chat, which funny never looks at. So we can go from there. I did want to share a interesting court case, I thought, I know I’m a tax nerd. What can I say? But I do think it’s interesting, a couple claimed a Unix loss for carryover capital gains loss.
Caller 25:27
And here’s the funny part. So the capital gain loss offset gains plus 3000. of other income, that’s what we all know, right? So if you have a gain of 150, and you have a loss of 160, you can take the loss of 150. So that brings you down a $10,000 loss. And then you have an additional 3000 that you can claim. These people said that they had 140. Their logic was that they argued that the Schedule D says enter the smaller of the 124 loss and the 3000 loss limit, they use the 124. Because Because negative 124 is mathematically smaller than negative three. So the court withheld the fact that you can only take $3,000 loss. Okay, let’s go to Color one color one. Hey, this is Dr. Friday, what can I do for you, sweetheart?
Caller 26:20
I’ve got an RMD coming up and I’ve heard that a few. Use that on day two to get to a church or charity or something. You know, you you get a tax deduction for it. And you still get your credit for the RMD. So how long does it take to set it up? Who sets it up? What? Is it still time to do it? Or? I don’t have any idea how to do it.
Dr. Friday 26:57
Right? It’s great question. It’s very simple. You’re gonna go to your custodial, let’s say it’s, I don’t know, TD Ameritrade that has your, your 401 K, okay. So you’re gonna go whoever that is. And you would normally get a letter from them. Because they’re going to say that you have to start taking your required minimum distributions. So what it’s called is a charitable qualified charitable deduction, QCD, they’ll know exactly what it is only thing you need to know is, who do you want to make the check out to, and for how much so if you’re, you got a church, just using that as an example, say, hey, you know, what, my, my RMDs $3,000, I want to pay that $3,000 this year to my church, and you can do any portion of it doesn’t be all of it, or whatever. And they’ll send you a check that you think can give to your church or any other charity is already made out to that charity. And it shouldn’t take very long. And what’s beautiful is, it comes right off the front page, it doesn’t go into your itemizing at all, it will automatically reduce your ordinary income from your 1099, our or your RMD.
Caller 28:10
So I’m trying to figure out, you know, like, if I take off, if I just do my regular RMD, and I take it, I just I just rolled it out of retirement account, and I wrote it down. So I’ve still got the money.
Dr. Friday 28:27
So this time, what you would do, instead of doing the RMD, rolling it over into your checking account, you know, because you normally pay tax every time, you would say, hey, I want to have this much go to my checking, and I want to checkmate out to my charitable deduction of this. And then they would send you a check for how much that’s going to the charity, and then the rest of it roll into your bank account like always. Yeah. Okay. But they have to do it through that distribution. You can’t just write the check out of it. You have to have them prepare the check out of the RMD.
Caller 29:00
Oh, gotcha. All right.
Dr. Friday 29:03
Nate, thank you very much. That’s a great question. Yeah, so again, for people that may not have no RMD required minimum distribution 72. Now, if you’re 72 or older, you have to start doing your RMDs. If you few years ago, it was 70. Some people are aware started at 70. Anyone that is taking required minimum distributions can qualify. So if you’re 70 or older, and you’re taking requirement of distributions, you can do a qualified charitable deduction. It’s a wonderful way because I mean, I don’t know about everyone else in their clients, but my clients, many many of my clients give to a lot of charities. So why not give from your RMD instead of from your checking account, because your checking account in all honesty? It I mean, most of them aren’t itemizing.
Dr. Friday 29:54
So maybe the first 300 or 600 if they’re married, will be above the line. deduction. But after that, it’s really, it’s not a tax deduction for people. So if you can give it from your qualified charitable deduction, it comes off the top, and then you’re able to go through and make sure that it’s, you know, that it’s gonna still count, I guess, as you know, you can even give a little bit more because now you don’t have to pay Uncle Sam any taxes on that money. And normally, what happens is, you get the money, you put it into your checking account, you then turn around and write checks or handout, cash, whatever you do for your charity, hopefully write checks, you write checks, and you give the money to the charities, and then you tell your tax person, this is how much money I gave to charities.
Dr. Friday 30:41
On this one, we would actually have the money coming directly from the custodial to the charity, therefore, you now haven’t touched the money, you can give the check to the charity, and then take it from there to put it into the system. And it gives you dollar for dollar deduction. It’s just a wonderful and I know a lot of people have not heard of this before. But again, anybody that is 70, and older, that is on RMDs, required minimum distributions can do this. And it’s a great way of doing tax planning, to be quite honest, why not give it that way versus the other some ways it keeps your Social Security not taxed as much, because if you have to run it through first and then hit the charities, sometimes you’ll pay more tax on your social security, because you’ve hit the maximum, it’s a way of saving money and putting it back in your pocket at the same time. I think it’s a good plan.
Dr. Friday 31:35
So if you have eight questions, you can certainly if you’re an internet person, you can certainly Google qualified charitable deductions, my suggestion would be is to call your financial planner or the person the custodial over your retirement accounts. And they can they guarantee you, they know where they are and how to deal with that. So it’s a great way to make sure that you’re dealing with the information properly and getting it out. But it shouldn’t take them more than a few days. So if you’re still thinking about doing something like that, it is still a possibility to move forward on that and move, you know, get get everything done, that you want to do,
Dr. Friday 32:16
I do want to put a heads out to, again, we some of you guys also we get a lot of the updates from the IRS different things that they’re looking, doing reviews and audits. And one of the things they brought up was partnerships, how people are dealing with partnerships as far as for the Tax Court, and the accounting of members withdrawing from the firm, and then the clients and how much money and how it’s being taxed. So bottom line is, if you are a LLC, you take out and pay money, if you are a partner in that LLC and you’re operating the money has to come through partner guaranteed wage or wage doesn’t come out as just dividends. If you do not work for the LLC, then you are an investor.
Dr. Friday 33:02
And it would just be profits or losses based on whatever you might have going in there. So it’s just a matter of seeing what you have on on that. But if if you are working with an accountant, I’m sure they’re going to lead you in the right direction. But make sure that if you’re taking draws from an LLC, and you are also working, that is your w two that is your wages, that money needs to be taxed for social security purposes. And that’s what this whole review of partnerships and LLCs that they’re looking for is the same thing that been doing with sub S corporations, people are trying to find ways to avoid Social Security tax by claiming that they don’t work or they’re not.
Dr. Friday 33:47
They’re just investors. And then obviously, when they’re audited, they’re finding out that these are the people that are running the company. They’re working every day, they’re answering phones, they’re running, restaurants, businesses, hotels, whatever, and they’re not getting paid as employees, they’re just taking dividends and that dividends is not the proper way because no Social Security or Medicare tax is being paid on that funds. And now the you know, they found this loophole. And so they are looking at auditing more and more of those.
Dr. Friday 34:17
And again, not the start of the show up. But we did start out with the idea that the IRS is training and looking for new employees to basically start doing these audits. And those audits are going to lead to people that might have gotten away before we’re doing something you might want to think about now. Now’s the time, maybe clean up the books, make sure you’re doing things right, processing the information correctly. Making sure that your employees are recognized as employees not 1099 in them even though it’s a lot easier. It’s still isn’t the proper way of doing it.
Dr. Friday 34:52
And moving forward as far as making sure that you can document people’s income and wages because it’s going to be big thing because not only will they get the federal income tax, they will be replenishing Social Security and Medicare. And let’s be honest, those are areas and seeing, you know, parts of the tax code that kind of right now are hurting. So they’re going to be replenishing those with audits. And those audits need to be able to we’ve already got several federal tax federal payroll audits going, where they’re looking for misclassification of employees that’s been going on for a number of years.
Dr. Friday 35:28
And I will say that, I know it’s difficult sometimes, and no one likes have to pay more than we have to especially now when hiring our employees are costing us a lot more every single time. But you don’t want to have to go back and pay someone else’s Social Security, Medicare, and get fined for not properly identifying your employee. So if you’ve got questions on that, or anything else, the show we have one more break here. We’re gonna take that and we’ll be back in just a minute with the Dr. Friday show, you can reach us here at 615-737-9986. We’ll be right back with the Dr. Friday show.
Dr. Friday 36:31
Alrighty, we are back here live in studio, we have about five minutes left to the show. So if you have some questions, or if you’ve been holding your breath, saying, “Oh, I really wish you would say something about this.” And I haven’t now would be your opportunity to try to figure out where that’s going to come from. And if you would like to listen or do remember, we do have, you can go to IRM sorry, you can go to www.drfriday.com. And you can actually listen to our shows that we’ve had in the past 615-367-0819 is the number here in our office. So if you have questions, you can also call that number, the easiest way to get answers to most of your questions is going to be through email, which would be fridy@drfriday.com.
Dr. Friday 37:19
So again, if you’re in the process of trying to figure out what you owe in taxes, how you’re going to get things done, making sure that you’re on the right page, or you know, just trying to get organized, the best way to do all of that is first probably to give me a call just to make sure we’re all on the same page. But second would also be to be able to make sure that we’re doing what we need to do to move forward with tax preparation, as well as financial planning and everything else. Because people sometimes forget that estate planning, financial planning and taxes, we all kind of cross over into each other’s information. If you’re deciding that it’s time for you to exit out of your work plan, then you’re going to need to know how’s that going to affect your future taxes as well as where are you what you’re going to live off of what’s your financial planner.
Dr. Friday 38:09
And for anyone as far as I’m concerned, I don’t care what your age is. I’ve seen too many people come in my office that have not had a will or trust. I am a firm believer of trust. I do not like the idea that someone’s going to go into the court and have to pay lawyers to deal with my estate. Once I pass away. I like everything to be already pre done easier for the people that would be inheriting. But that’s everyone’s choice, but not to have a will. And not to have power of attorneys, because something happens.
Dr. Friday 38:39
And everyone always thinks well, I’ve passed away well, what if you don’t What if you get hurt? What if you’re enabled, you’re incapacitated, you’re not able to pay your bills. And then guess what someone’s gonna come and say, Hey, you didn’t pay for your house and you lose your mortgage, whatever it might be. If you have someone that can step up and help. Those are the kinds of times that you need those situations. So again, if you, you need to talk to an attorney, we have attorneys, but that’s not the point you can call your own attorney.
Dr. Friday 39:05
And you can make sure that you’re getting those things done in a timely manner. That way, you’re not looking over your shoulder, that’s the most important part of life. As far as I’m concerned. I like to get my taxes done. I like to do things and then not have to go back and revisit those things. Again, it’s done. Now I can move forward and take on the next batch. And the next thing I don’t have to worry about what I did, did or didn’t do. And one of those things is definitely financial planner, you need to have a good financial planner, because when the decisions that you’re making, so often people are googling or they’re they’re using the internet and they’re like what should I do here?
Dr. Friday 39:41
They’re just like the gentleman had called and had lost his spouse. I mean, it’s already a difficult time but then they start sending you it sounds like a ridiculous number of documents and one or two of those apply to your situation. You’re thinking oh my gosh, I have to deal with 30 Different why not have someone just say these are the forms you Need, because it’s already difficult last thing you want to have to deal with is or make the wrong choice and find out that, you know, hey, I could have rolled these over and not cash something out and not had to pay the higher taxes.
Dr. Friday 40:11
Or maybe at this time, it’s better to think about caching or converting or whatever, that’s when the experts are coming into play. That’s all I’m saying you need somebody. And when it comes to IRS issues, tax issues, state tax issues, that’s when I come into play. That’s my strong suit. So if you have issues with dealing, if you’re a small business, and you’re dealing with the IRS, or if you’re, or the Tennessee Department of Revenue, we are licensed in all 50 states. But if you’re dealing with the IRS or real estate, that’s when you need someone like myself, an enrolled agent licensed by the Internal Revenue Service to do taxes.
Dr. Friday 40:48
We’ve been doing it for over 20 years, we’re here to help you understand where your taxes are, what your options are. And if you’re trying to deal with something with the IRS, you need someone else to do it. Because sometimes, it’s kind of like having someone fix your car. Do you want a good mechanic? Or do you want someone that pulls up a YouTube video and tries to follow that video says, oh, yeah, I think I can do this, look it I can follow this screen. That’s not the way you really want your taxes, your financial situation taken care of. And you want to be able to get resolution, that’s the hardest part.
Dr. Friday 41:20
Because so often again, doing this for the number of years, I’ve done it, one of the hard parts is is really getting the resolution sometimes that resolution isn’t exactly what you’re wanting, sometimes you want someone to say, “Oh, we’re gonna settle this thing, 10 cents on the dollar.” And the reality is, it’s not going to be 10 cents on the dollar, maybe it’s going to be 100%, you owe to be honest. You’ve got equity in your house, you got a 401k, you’ve got cash in the bank, no reason it won’t be. So you need to be able to figure out what’s going to be the truth and how you’re going to deal with that resolution. And then we can help you take care of the situation, you want someone that’s going to tell you how it’s going to happen, what the best options are. And then same thing, if you haven’t filed taxes for a number of years, we have lots of cases where people haven’t filed 7, 8, 10 years. I mean, I’ve had people 20 years out, in some cases, you don’t have to file more than six years.
Dr. Friday 42:16
So if you haven’t filed taxes for 10 years, it doesn’t mean that you’re going to have to file all 10 of those in May. But in most cases it doesn’t. And in that case, you may just have to go file the last six years, then get resolution and then you’d be able to move forward with the rest of your life. So I just want you to make sure you’re going where you’re going to go and if you need to reach me 615-367-0819 email friday@drfriday.com or website drfriday.com. I hope you guys have a wonderful Thanksgiving and enjoy this beautiful Saturday. Call you later.