Another episode of the Dr. Friday Radio Show is here! In this episode, Dr. Friday takes on the latest tax updates, answers callers questions, and talks over the following topics:
- Dr. Friday’s Tax Tips For the End of the Year
- Charitable Contributions for Married and Single People
- Cryptocurrency and Taxes
- The Build Back Better Act
- Why You Should Start Preparing for Tax Season
- What You Should Consider Before Selling Your Home
- RMD’s Are Back on the Table for 2021
- What Is a Step-Up In Basis?
- Should You File Married or Jointly?
- How To Know If You Are Paying Penalties and Interests
- How to Get Back on Track With the IRS
and much more!
No, no, no, she’s not a medical doctor, but she can share a cure for 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
All right. I’m Dr. Friday, and we are living here in the studio. It’s a beautiful Saturday. Actually, it’s a little overcast. Hopefully, some of you guys will be going out to some of these Christmas parades. This year, I didn’t actually do afloat, we have decorated the house. But it’s a bit crazy, I got serious lights going on. But hopefully, everyone will enjoy the holidays and keep them safe for everybody.
Dr. Friday 0:53
But if you want to join the show, we are getting close to the time where we’re going to be getting ready to think about taxes again. And so I want to make sure that everyone if you’ve got questions if you haven’t filed your taxes now is a great time to try to set up an appointment in the next week or two before the holidays to see if we need to be getting some transcripts or if we need to be moving forward.
Dr. Friday 1:12
So that way we can try to make sure and if you have something different that happened this year, maybe you’ve done some sale of real estate or, you know, inherited or whatever, this is the time we need to double-check and make sure because January 15, I mean, that’s the last time to make your quarterly estimate for the year of 2021. And from that point on, we’ll go from where we have.
Dr. Friday 1:34
But if you want to join the show, you can at 615-737-9986. And we will take your calls online here live. So if you’ve got questions about that, we’re going to talk about some of the things you did.
Dr. Friday 1:53
Just covering a few of the things that maybe you know we’ve every year, it seems like in the last couple years, we’ve had some changes, some different things that have happened with tax law, some major ones, some smaller ones. And every year they like to add a few things or take a few things away.
Dr. Friday 2:07
So I just want to make sure one of the big things obviously in 2021, that changed directly from 2020 is the charitable contributions for everyone that does not itemize, we still have the line deduction of 300 per single and this year 600 for married. So again, that’s something that you have to deal with.
Dr. Friday 2:26
And RMDs, you do have to do your required minimum distribution. That’s kind of important, because a lot of times, especially last year with COVID, they did remove those you did not have to take your RMDs. And then we’ll talk a little bit about qualified charitable deductions using your RMD. And getting a dollar for dollar deduction by giving to charity, especially considering a large number of you guys do it all the time.
Dr. Friday 2:52
All right. Well, we’ve got Don from Brentwood jumping on the phones. I appreciate it keeps my show more exciting. Hey, Don. What do you get for me, sweetie?
Well, when all of our seven grandchildren were born, we put $10,000 into their account for college. And now we’ve got one in college one is going next year, we want to know how do we get that money to them. And as there a tax situation?
Dr. Friday 3:27
Is it a 529 plan? Or was it educational IRAs, do you know?
Oh man, it’s educational. It would put it is.
Dr. Friday 3:38
Okay, I’m gonna guess. And this is just a guess. I’m gonna guess that it’s a 529 plan, that is typically what grandparents set up for their grandkids. And so you should be able to go directly to Charles Schwab and have that check issued directly to the college. And it can go for housing as well as education.
Okay. And that’s all we have to do?
Dr. Friday 4:01
That’s it. That’s it, then there’ll be a form at the end of the year that you’ll be able to report on your tax return, it’s a wash basically, as long as it’s being paid to the college, you’ll be covered for what you’re saving for you No. And then the growth will be tax-free, because of the fact that it went to education.
Okay, so my wife and I don’t have to worry about that anymore. We just tell them to send it to the college that they choose. And we’re out of it.
Dr. Friday 4:27
Correct. Right, exactly. I mean, just have them send it to the college, that will be perfect, but out of all the grandchildren, there’s going to be one or two that aren’t going to go to college. I mean, you know, that’s statistically probably.
Dr. Friday 4:40
I mean, you may not have that situation, but I’m just saying you may run into that. And then there may be a time where you’ll have to cash it out. There could be a penalty, or you’ll have to pay tax on the growth, and then you may choose to give the money to the child for you know, I mean, trade school. There are all kinds of other things kids can do.
Dr. Friday 4:57
Buy their first house right but there isn’t going to be the same tax advantage. So as long as the kids are all going to college, it’ll be clean and easy for you. But if they choose not to, under a 529 plan, you can roll it to another child, or at some point, you’re going to be no more grandchildren. And you’ll have to, you know, do something with it.
Okay. All right, that makes sense. We were just worried about taxes and penalties and all that.
Dr. Friday 5:23
Exactly. Well, those kids grow up way too fast on so yeah, I would definitely talk to your Charles Schwab guy and make sure that this was for me as an educational fund. But there are a couple of other ones out there, but they should all treat the exact same way. As long as it’s used for education, the growth should be tax-free.
It goes straight to college. And then the grandchild can pull that money out.
Dr. Friday 5:48
Right, exactly. I mean, that’s exactly right. So you pay it to the college, and then it will apply to his education, classes, school, housing, whatever it is that you know, the college is being paid for, yes.
And the child is in control of it?
Dr. Friday 6:03
Not likely. The college will have. I mean, once you pay it to the college, he won’t be able to get a refund, he won’t, he’ll be able to apply it to his education. But you know, the whole point is not to be able to put it in his hands, right? Because otherwise, he could spend it for who knows.
Tuition, books, housing.
Dr. Friday 6:20
Anything like that housing, food, tuition, books, everything that goes through the college, if he’s living off-campus, a lot of times that would be something, you can still use that, but you may have to issue it to a landlord or something. So that’s why I say you kind of need to talk to Charles Schwab. Just to make sure that you’re in compliance, they should know what rules apply and what doesn’t apply for that particular type of fund.
Dr. Friday 6:45
All right. Thanks, Don. Appreciate the phone call. Thanks a lot. All right, if you’ve got a question, you can easily reach us here at the show at 615-737-9986. And, you know, if you’ve got questions, remember, we’re getting close to the in the year again, annual gifts.
Dr. Friday 7:10
A lot of times people prefer to give the grandchildren or their kid money, you can do that up to $15,000. An individual so a married couple could receive $15,000 each. So if I wanted to give my brother and his wife money, I could give them each 15,000 without having to turn into a gift tax return every child above the age, you know, well, I should say any person can get a $15,000 for each person that has it married, with four kids and grandchildren, all of them can get up to you know, the total can only be $300,000. This year excludable gifts, so they do have a maximum for that. But that would be the total for them, the lifetime is still 11,700,000.
Dr. Friday 7:58
So you know you got a little way to go to spend all that money. So that would be something you have to consider. Boosting your federal withholding tax, if you expect to owe taxes for 2021. It’s a great plan. I mean, that’s what we’re looking at right now is people that may actually owe, especially if you have rental properties, maybe you flip some of those. If you have played the stock market, I had a gentleman call me the other day.
Dr. Friday 8:24
And I will tell you, I’m not totally, to be quite honest with you when it comes to gambling. As far as like there’s a lot of sports now we have a lot of sports, gambling, and things that you can do on your phone legally here in the state of Tennessee. And this gentleman at least has done a very good job of playing those games. And I don’t have a lot of clients that do that I’ve had a lot of people that day trade or, or individuals that play the stock market, but not necessarily gambling.
Dr. Friday 8:53
So, you know, it is one of those situations where you do need to make sure you’re dealing with somebody that is an expert and how that’s going to work for your taxes. What is deductible, because they’ve kind of changed 2106 where you would usually put your basis on there. It’s gonna be a little harder with the higher itemizing if you have smaller amounts of gambling.
Dr. Friday 9:14
So, you know, we’ll take a look and see but if you’ve got questions about you know, those or if you’ve cryptocurrency, we can answer your questions here at 615-737-9986. Let’s get Monica on the line. Hey, Monica.
Hi. I have two quick questions. One is I demolished my home and living in an RV and building a home is the interest on a construction loan tax-deductible. That’s the first question
Dr. Friday 9:43
And the construction loan is for your primary home. Correct? Okay. Um, it would be deductible if you have enough of it. Yes.
Enough of it. Okay.
Dr. Friday 9:54
Well, I just mean, if are you married or single?
Dr. Friday 9:58
Okay, so you have to have to itemize, you have to have more than $12,800, which would include property taxes, charitable contributions, and mortgage interest. Okay. I’m in the lower interest rates right now, you know, a lot of people are having less interest being collected, but if you do meet those, you will be fine.
Well, it’s so okay. So and then my next one may be contributing to this is about current charitable can, you know as your contribution? Yes. And you said something about a 600 limit? And I do itemize. And is there a certain you have to give above a certain amount in order to be able to deduct it?
Dr. Friday 10:43
No, the 600 I was talking about are 300 for a single 600 Are people that do not itemize for people that are just taking the standard deduction, if you’re able to itemize, you can take all the way up to 60% of your income in charitable contributions. So there are no limitations.
Dr. Friday 11:00
And if you did more than that, it would roll over to the next year. So I have some people that will, you know, give some sort of collectible or something, it may take them years to actually, you know, use it all but itemizing doesn’t max out on that. So if you’re going to itemize all of your charity will kick in at the same time. Okay.
And then it does that, then going back to the interest on a construction loan, it has to be over a certain amount of interest?
Dr. Friday 11:27
No. Oh, well, I mean, again, you saying you’re itemizing, so it sounds like you’re meeting that now it does have a minimum, you cannot have more than a $750,000 mortgage on a home. Anything above that you are not allowed to take on a tax return. So if you’re building a million-dollar home, and or you have a loan of a million dollars, you would have to amortize the difference.
Okay. Okay, thank you very much.
Dr. Friday 11:52
I hope I’m not totally confusing Monica. But they’ve changed the laws a lot on that one. So if you have a high-end home, I mean, right now, a lot of people, they’ve, many people have taken out the equity of their homes, because the appreciation on the property has gone up quite a bit. And they’ve used that to purchase or do other things. So the problem is if you’ve taken out a new loan, and this is as of 2018, December 31. So as of 2019, forward, if you have a home mortgage for more than $750,000, you cannot take the interest above that.
Dr. Friday 12:28
So if it’s a million dollars, and it’s a new loan, starting in 2019, you cannot if it’s an older loan if you got to in 2017 18, or any of this time, but prior to that, you would be able to continue to use it up to $1 million. But again, this is a matter of how it works. And you just have to know the different tax laws to maximize what you can legitimately take.
Dr. Friday 12:51
Alright, we’re gonna take our first break, if you want to join the show, you can at 615-737-9986. We’ll be right back with the Dr. Friday show.
Dr. Friday 13:13
We’re back here live in the studio. And if you’ve got a question, you can just pick up the phone at 615-367-0819. No, sorry, the phone number in the studio is 615-737-9986. I was giving out my own phone number 615-737-9986. And we are here live in-studio for the next, oh, 30-40 minutes.
Dr. Friday 13:40
So if you’ve got a question I have to do is pick up the phone, we will be more than glad to chit chat, hopefully, lead you in the right direction, at least in that way. ideal situation people is to call and ask the question before you make the decision that way if there’s something we need to talk about, we make that decision. First and foremost, we don’t wait till you know you’ve already made the decision. And then you’re like, “Oh, yeah, maybe I should have asked that.” Because then you can’t really fix things.
Dr. Friday 14:06
I had a client that called the other day. And I’m like, “You need to do a 1031 exchange,” and he was like, “Oh, yeah, I can do that. I can do that myself.” And I’m like, “No, you cannot do you need to have someone that’s a specialist.” And then we got it all squared away. But thank goodness, we were like at the table almost.
Dr. Friday 14:20
So you don’t want to do that. You want to be prepared, make sure everything’s going the way you want it, and have it going in the right direction so you can do what you need to do. So if you need help with your taxes. I’m an enrolled agent licensed by the Internal Revenue Service to do taxes and representation. I’ve been doing this for 20 plus years here in Nashville.
Dr. Friday 14:41
And if you have IRS issues, you’re getting the love letters. You’re not too sure what to do. There was a ton of love letters from the Tennessee Department of Revenue last week. It felt like a ton. Maybe it’s because I was on vacation the week before and it just seemed like I was getting a lot of people, even people I don’t necessarily do their taxes but they are getting Love Letters.
Dr. Friday 15:04
Basically, it came down to franchise excise, right? People went through and they said, “Oh, wait, we’ve got this letter,” new letter, very bold letters, how you have failed to do your job. Not a hard thing to fix. Not a hard thing to do. But getting it done and making sure it’s on time, obviously, is always an exciting moment.
Dr. Friday 15:20
So if you’ve got one of those letters, and you need a bit of help, let me know. And I’ll be more than helpful to help you more than glad to help you do whatever it is that you should need help with. All right, let’s go to Jamie in Nashville, see if I can help Jamie out. Hey, Jamie.
Hey, Dr. Friday. How are you?
Dr. Friday 15:38
Hi, I am awesome. How about you, sweetie?
Doing great. My sister and I are in the house together. And she passed away this summer. So now it’s my house. Do I have any implications by it now being only mine tax-wise?
Dr. Friday 16:01
No, I’m assuming it was a primary home you both lived in? Or was it a rental?
No, it was primary to her. I have a home in Nashville. This house was in Decatur but it was in both of our names.
Dr. Friday 16:15
Okay. So when you inherit, you would have gotten a step up on half of the home because she was half an owner and newer half an owner. So instead of the basis would change. And then is your goal to sell or rent? What’s the next step? Do you even I mean, maybe it’s too early to ask that question. Do you have any idea what your next step will be?
It’s not too early to ask, we’re going to sell the home. And it will not be it will be sold for less than what was paid for it in the beginning, because of the repairs that need to be made.
Dr. Friday 16:49
Okay, well, at that point, I mean, the bottom line is, you’ll be able to claim. You’re still going to want to take the step-up in basis on her half, only because you’ll be able to claim the loss. And that will help you later if nothing else, $3,000 a year, you know that you’ll be able to roll over until you eat up all the loss of that home. But either way, you know, you’re oh one a good basis, take it and then you’ll claim that as capital gains, you know, in your case, since it’s not a primary home for you.
What is a step up?
Dr. Friday 17:24
you step up in basis is, let’s say that you guys purchase this home together for simple math, let’s just say you purchased it for $100,000. And now let’s say that when your sister passed away, it was worth 200. Just simple math again and may not apply. At that time, you would be able to take half of the home, which was $50,000, and move it up to 100. So your new basis would be 150 instead of 100. That you guys originally paid for it.
Dr. Friday 17:56
So I’m just saying so that way you would actually and then if you sell it for 100, you’d have a $50,000 loss. I mean, if you’re selling it for what you originally paid for it. Um, so that would be the concept in it.
Okay. All right. Thank you very much.
Dr. Friday 18:13
And then you would you wouldn’t have any taxes do either. I mean, obviously, it’s a loss. So there would be no taxes due. Oh, that’s a blessing. Yes. Gotta be some golden lining in there somewhere. Right. Yeah. So yeah. Anyways, hopefully, that will help you in that one. All right.
Thank you very much. I appreciate it.
Dr. Friday 18:34
No problems we thought. All right, if you do have questions, again, 615-737-9986. Taking your calls, making sure we’re covering all of the things we need to cover, we donate assets and value.
Dr. Friday 18:53
So again, I had a client that she called, and she just goes, I have some stock I want to donate. And it had a lot of appreciation. And it’s actually a really great concept. If if you have something that has a lot of value, and you don’t want to worry about capital gains, and you have a charity, a worthy charity, you want to give it to, you know, there are some really wonderful ways of donating that appreciated property stocks or shares, even mutual funds.
Dr. Friday 19:25
And for more than a year, you can then the full value. So let’s say you paid 10,000 But now it’s worth 100,000 You get to donate $100,000. Now there would be appraisals required if it was a piece of art or something $100,000 to that charity, and you won’t pay the capital gains.
Dr. Friday 19:42
So again, there are ways of making taxes work and doing what you need to have done if you understand how it works. And sometimes there is we had a situation where somebody had inherited quite a bit of money, and it helped to do a big donation on some of that Because of the way it went right off, and they saved as much in taxes, and they were able to give some money to charity, which is a win-win situation.
Dr. Friday 20:08
All right. I know you’re typing boss. But can we hit Shelley really quick? You’re awesome. Hey, Shelly.
Hi, how are you?
Dr. Friday 20:17
I am awesome. What can I do for you today?
Yes, ma’am. I was just listening to your wonderful radio show and brought up some questions. And I thought, “Well, I’ll just call and ask her.” I’ve inherited my mother’s childhood home. And I’m selling it. And I’m closing on it, you know, December the 27th. And I was told that I wouldn’t have to pay taxes on what I make off the house.
Dr. Friday 20:44
Most likely, that’s a step-up in basis I was referring to with Jamie. So when you inherited that house, you would have inherited at the value of the day that that person passed away your mother, your father, whatever. And so at that time, whatever it was worth, and you sell it for the same dollar amount, there’s absolutely no taxes.
Okay, good. That’s what I was telling me. I kind of got confused. I was like, Oh, my goodness. Oh, no, maybe
Dr. Friday 21:17
I need to be making sure I’m not gonna get a tax bill.
And then if I gotta pay 30% of 200, maybe I will.
Dr. Friday 21:30
Yeah, that would be a shame. And that is I mean, you know, that’s one of the tax cuts that the the the Democrats or Biden is really trying to eliminate is the step up and basis is huge because it’s the one time that most people are going through probably one of the worst times of their lives in the golden lining, is that the things that they inherited your parents or your sister, whoever it is that you inherit from, has already paid tax on all that money, right?
Dr. Friday 21:54
I mean, it’s not like we get to write off principles. So it’s, it’s a very good tax thing. And it only usually happens once or twice in our lives, that we might inherit something normally from our parents. So yes, good luck with that. And hopefully, it will, it will turn out where you invested in a better investment.
Yes, I’m going to turn around and pay it off.
Dr. Friday 22:18
Of course, that’s a very typical thing to do, which, or at least the money’s going something that you know, will hold value. So that’s a good thing.
Yeah. Yes, ma’am. I appreciate your help. Also, my mom didn’t have life insurance, and I paid for her funeral. Will I be able to write that off on my taxes?
Dr. Friday 22:36
No, that is not a tax deduction for you. No, ma’am.
Okay, it’s paid for, it’s done.
Dr. Friday 22:43
Yep. No problem. Thank you, sweetheart.
Yes, ma’am. Thank you.
Dr. Friday 22:52
Alright, let’s hit Pete before we hit the break. Hey, Pete.
Hey Dr. Friday, how are you doing?
Dr. Friday 22:59
I am doing pretty well. It’s a nice day outside? Well, I think it’s actually raining. But you know, what? Sins are all day? So well, I know. Anyways, Pete, what can I do for you?
Well, that’s what you call yourself. So, I’m not calling you a bad name.
Dr. Friday 23:15
Well, I filed my tax return on May 2021. And I hadn’t received a refund yet. And I’m going on to the new tax season. And I haven’t gotten a refund, but I did call the IRS. And luckily, I got through some kind of way. And I talked to the person and they said right now we don’t have any record on it. He said that’s not uncommon, because we have a lot of them to set up. You will probably get it. But you probably pay interest on it. So I was wondering.
Dr. Friday 23:57
But if they say they don’t have it in the file, I would immediately certify another copy to them. If it wasn’t e-filed, I would certify another copy to them the only reason is you could put it at the top of its second copy. Because within basically 60 days, they should have at least posted it right should have at least gone through somewhere where it was received. Maybe it’s sitting on someone’s desk to process but it should have shown received by now. I mean Mays a long time ago. So I would actually be concerned that it’s gotten lost, you know, it’s not even in their own hands. That would be my concern.
I know, every time I’ve called I put in my social security number and you put it in the mouth, and they say, “We don’t we don’t have any record.”
Dr. Friday 24:45
Right? I would seriously I would certify another copy or even I would say e file but e file is closed until January 27. So we can’t e-file anything, but you could priority or overnight mail a copy with it. tracking. So that way you can say, “Okay, in 30 days, I’m gonna check again” and see if it actually at least shows up that they have it. You know, we’ll probably say processing because I thought that’s what you were gonna say to me.
Dr. Friday 25:11
Because I have a lot of clients that he filed, and it still says processing in it’s been since May. So I’m not going to say that they aren’t way behind. But at least it says processing. So I know they have somewhere on someone’s desk.
Yeah. I mailed mine in and I didn’t do the e-file.
Dr. Friday 25:28
Right. Well, at this point, I would do another mailing seriously, I would mail them another copy, sign it, but a second copy, you know, but second on the top of it. And make sure this time it maybe you did last time, but I would send it priority or overnight.
Okay, well, yeah, I’ve got all my W-2’s there. That’s gonna be another copy. I can just make a copy of the W2?
Dr. Friday 25:50
Yeah, just make I mean, nowadays, all those come on paper anyways. I mean, it’s not like they’re, you know, anything special to it. But you can make a copy of it. Again, make a copy of everything and just say you can even put a little thing on the front, “Second mail-in, you know, here’s a copy.” Because I just think they might not have it. I mean, they should at least show it’s pending.
Yeah. Okay. All right. One more question. When you’re applying for these jobs, now, the company is telling me that they want me to fill out a W9, and you’re responsible to take out your own taxes, and they will issue 1099. So the only way you can do that, I guess you have to just take this check and put some away.
Dr. Friday 26:39
I mean, to be honest, they’re saying, Pete, that you’re going to be self-employed and that you’re doing a service for them, which there’s a lot of misclassification on that. But if for some reason you chose to take a job like that, I would take 20 to 25 depending on your income bracket is gonna be less than 50 grand 20. If it’s over 50 grand, I would put 25. At least to start in a separate account. So for every $1,000 you have you put 250 in a tax account and you live off the other.
Okay. All right. All right. Thank you.
Dr. Friday 27:10
All right. Thanks, buddy. All right. We’re gonna take another quick break here. If you want to join the show you can at 615-737-9986 We’ll be right back with the Dr. Friday show.
Dr. Friday 27:34
All righty. We are here back live in the studio. So if you want to join us halfway through guys, 615-737-9986. Take your calls. And we’ve got Shannon from the Boro. Hey, Shannon, what’s happening?
Hi, hi. So, so awesome to be able to speak with you directly. I always listened to your show. And I always get a lot of great information and helpful tools. My question for you is, in regards to being a first-time homebuyer.
I purchased my first home back in 2015 in the Murfreesboro area. And since 2015, the housing market has I mean, it’s been doing really, really good out here. And I’m noticing that a lot of my neighbors and people around me, they’re selling their homes, and they’re getting quite a great return on their investment in their property. And I just wonder like right now, now that we’re moving into seven years into our property, what would be the best time to sell if we were looking to really be able to take quite a bit of the equity and put it towards the purchase of a new home within the Murfreesboro area.
Dr. Friday 29:11
So that’s the problem with the conversation. Easily on the tax side, you already met it two out of five years. So you’ve already hit where if you’re single, you get a $250,000 exclusion. If you’re married, you get 500. So are you married or single?
Dr. Friday 29:28
Okay, so if you guys paid $250,000 and you sell it for $750,000 there would be no taxes. So does that kind of make sense? So the first 500,000 above what you paid for it is going to be tax-free. Now the problem with that is if you’re going to go buy a house in the borough unless you’re moving out or it’s a fixer upper. It’s gonna be hard to find something for what you paid for the one you have. So that’s going to be that you don’t reinvest into another house doesn’t save you tax dollars, the tax law is you get an exclusion of 250, single or 500 married. You do not have to reinvest into another real estate.
Gotcha. Okay, that’s helpful. Very helpful. So yeah, that was pretty much my question. It’s just something that we’ve been talking about now because we noticed that there’s a lot of movement in our neighborhood. And we just figured, like, “What’s the best time to make him consider evaluating what we want to do in the future?”
Dr. Friday 30:37
It’s good, it’s a great question, and I appreciate the call. And a lot of people are looking at that exact same. My concern is, you know because I like to buy real estate myself. And there’s just not a lot available out there now that you could probably buy a piece of land and build on it or whatever. But if there are children, or you know, I’m just saying you need to be in a certain school district to keep things at a certain place. That’s the kind of thing I think people have to consider. It’s, you know, yes, you could probably double what you paid for that home. But what are you going to pay for the next home? You know, I mean, is it gonna be double what you paid anyway? So you’re in the same situation you are today? I’m far from being if there’s a real estate expert listening. Maybe they can give us better advice on that one, Shannon. But tax-wise, you’ve already met the criteria for that particular situation.
All right. Well, thank you so much, Dr. Friday, I’ll continue to listen in and there’s nothing else I’d rather be doing on my Saturday at this time.
Dr. Friday 31:32
Well, thank you so much. I appreciate you very much for calling in. Thank you. All right, Anna, in Nashville, what do we have?
Yes, I received a lump sum from deferred compensation. And 20% was taken off the top for federal taxes. Is there any way to first of all, should I owe any other taxes on it? And if there is, can I compensate for, you know, any taxes with charitable contributions?
Dr. Friday 32:04
Well, you could possibly itemize, I don’t know your tax situation. If you’re single, you’d have to have more than 12,800 if you’re married, you have almost 26 25,000.
I do itemize.
Dr. Friday 32:17
Okay. So, you know, it would bring your ordinary income that’s considered ordinary income. So the 20% Are you single or married?
Dr. Friday 32:27
Okay, so the 20% would, then does your husband or your spouse work?
Dr. Friday 32:34
Okay. So that person, whatever their income and yours combined, you know, you’re basically looking at maybe if the whole thing was under 180, maybe 200, you might be able to clear with 20%. If it’s higher than that, I would actually probably try to get someone to do a quick calculation. If you need help. You can certainly call our office, but I mean, you know, just to make sure that 20% covers all the taxes because they’re not taking into account your husband’s salary when they’re looking at the numbers.
Okay, all right. Thank you so much.
Dr. Friday 33:07
No problem. Thank you, and I appreciate it. All right, we’re gonna hit Greg. Hello, Greg.
Hey, good afternoon. How are you?
Dr. Friday 33:15
I’m doing awesome. How about you?
Not too bad on this rainy day.
Dr. Friday 33:20
I know. I didn’t realize it was rainy until I started the radio show. Okay, so anyway, I thought it was a sunny day, when I got up at six o’clock, it was actually pretty nice. That being said, What can I do for you, Greg?
Okay, I renovated and flip the house in six months last year in Florida, and ended up with 1099. I was having difficulty with my taxes this year. So I did an extension and filed without addressing that 1099. I’m wondering about doing an addendum to my taxes to include that 1099 that I received from that property?
Dr. Friday 33:56
Oh, yeah, you’re going to need to do that. It’s called an amended return a 1040x. Because the IRS has got a copy of that 1099 s that you received, or 1099 if you’re in partnership with someone else, depending on how this all worked out. But um, the bottom line is you want to get ahead of that, because they’re gonna send you a sweet little love letter saying, “We’ve changed it” and they’re just gonna add the whole thing. And I’m assuming that may all be profit, but most likely, there are costs that go against it.
Yes, there were substantial costs. The profit wasn’t that much. But you know, there’s a substantial difference between what I paid for it and what it sold for. So is that something your team could assist me with?
Dr. Friday 34:36
Absolutely. Yeah, we do it all the time. No problem. You just need to give me a holler Monday and I’d be more than glad to get you on the schedule and we can see what we have in paperwork.
I’ll do it because I feel the same when I really wanted to get in front of this.
Dr. Friday 34:49
Yeah, I think it’ll just make it easier. Even if we owe money. We have to make a payment plan you know, any of those things will happen but at least that way you’re telling the IRS them not telling you, and that never works out well for us.
I like that. Thank you for your time.
Dr. Friday 35:02
Thanks, Greg. I appreciate you. Alright, looks like Bob real quick. Hello, Bobby.
I was wondering about the percentage of the RMDs that you have to take.
Dr. Friday 35:17
Okay. It’s based on your age and life expectancy, but it’s always been, you know, it’s roughly between three and 4%. Basically, it’s my experience. I’m not a retirement specialist, but if that helps at all, depending on how close you are, okay.
It’s a lot less than I thought.
Dr. Friday 35:46
Yeah, it’s I mean, they spread it over a fairly long period, you started 72. And I think it goes up to like, 80, something 89 Or something. Again, there’s probably a financial expert that can answer this question a lot easier. But I will say, Bob, if you have any charity that you do, I mean, again, I don’t know your situation. But if you have a church that you tie that or, you know, whatever, some sort of club, you could pay it directly from the RMB. And that’s a $1 for a dollar deduction. So something to think about if nothing else is called a qualified charitable deduction.
Alrighty, thank you very much.
Dr. Friday 36:21
Thanks, boss. Bye, bye. All right, guys. Well, we take our last break here, and we come back if you’ve got some questions, it’s been awesome. I love it. When you guys are actually all on the phone, I got a lot of new time- first-time callers I should say. And that’s always exciting because I know how brave it takes for someone actually pick up the phone and call a radio station. So it’s totally appreciated. You can reach us here at 615-737-9986. And we’ll be right back with the Dr. Friday show.
Dr. Friday 36:54
Alright, we are back live here in the studio. And if you’ve got a question, well, think about it, then pick up the phone at 615-737-9986. We got another oh, maybe eight minutes left to make some calls. All right. Let’s hit Lee, who has an IRS question. Hey, Lee.
Hi, how are you doing?
Dr. Friday 37:20
I’m pretty good. How about yourself, sir?
I’m not sure. I’ve been told that the kind of liens that I have placed on some properties are non-negotiable. I’m wondering if the person that I’m talking to knows what they’re talking about?
Dr. Friday 37:38
Well, I mean, in some cases, I will say there is not alone negotiating. Is this on your primary home? Or is this on a piece of property or investment property?
Dr. Friday 37:51
Okay. Well, in theory, I will say that the IRS basically only I mean, they can’t take your primary home, but any other property you have, you know, they have the right to put a lien in there for also seize that property, depending on your situation and payments and everything else. So how long have the liens been on the building or the properties? You know?
I think about three, probably about three years.
Dr. Friday 38:19
Okay. So the IRS has 10 years to collect. At that point, they can’t collect past that. But if there if you put it into non-collectible, or some of those kinds of things, even doing an offered compromise stops the clock. So I will tell you that I had a case recently with one of my clients that he sold a piece of property that had a lien and the lien against that one property was let’s just say it was $30,000.
Dr. Friday 38:45
But he owes the IRS $400,000. And when he went to get a buyer, they basically say, well, even though we only have a lien against that property for 440, we keep all of your properties until you’ve paid us off. So he physically had to go to the table with some extra money and completely could not even take any of the profit from that one. So, you know, the good news was he’s done paying the IRS. The bad news is he lost all the profit on the sale, that one property.
Dr. Friday 39:12
So you know, I’m just going to tell you that if you owe the IRS and you have multiple properties, that’s not your primary home, even if you sell your primary home, if there’s a lien, they can take the profits from that home. So maybe they have given you good advice. Does that make sense, Lee?
Oh, does it matter if you’re disabled?
Dr. Friday 39:33
It would be to the point that you’re non-collectible, possibly. But it would not make any other difference because the only home you can really protect no matter what would be your primary. So if you’ve got investment properties, in theory, you made mortgage payments or built-up equity in a piece of property that you use tax dollars to do it with because you didn’t pay the IRS. That’s their theory.
Thank you very much.
Dr. Friday 40:01
No problem. Thanks.
Dr. Friday 40:02
That’s always a tough thing. I’ll be honest with you guys, it’s never as simple as it sounds. And in some cases, at one point, we used to be able to do some offering compromises and prove that the equity that was in the property was not obtainable. Because the people’s either credit score or their ability to pay a bigger mortgage would not be available for the IRS, that is changed, the IRS is now looking at the properties and saying we’re willing to wait, you know, an offer and compromise has to include the current value of your home.
Dr. Friday 40:31
So if you’ve got equity in a home, even if you can’t get the money out of it, the likeliness of you qualify for an offer and compromise is pretty low. Because you know, the IRS is saying wait for a second, you know, that, that that equity is ours, and we’re going to wait out that equity to do something with it.
Dr. Friday 40:48
So if you are not in a payment plan, or if you if you’re having the IRS put liens and levies against payroll or, or other assets, there are things we can do. But it usually depends on the situation, no one fix for all the individuals as an enrolled agent, that’s what we do. We’re licensed to basically do negotiations with the IRS, but I’m one of those people, I’m not going to be like some of those that you hear on TV or the radio or whatever. And they say, “Hey, give us a call. And if you owe more than $10,000, etc, etc.” You know.
Dr. Friday 41:20
And then the first thing when you call them the first thing, they’ll say, oh, yeah, we can help you, we can help you start paying us this much money based on this and you know, start making these payments. I had one case where the gentleman actually had gotten one of those fake phone calls, he freaked out, he called one of those companies. And they said, “Oh, yeah, yeah, we can help you.”
Dr. Friday 41:39
He didn’t have any IRS issues. But they had already started him on an agreement plan, not even knowing that the guy did or did not owe money. So yeah, I mean, I would definitely second guess anybody that says “We can help you.” And the first thing you have to do is give me money, before they have pulled transcripts, or have gotten some sort of documentation showing what they can and cannot do. These people lock you guys in I mean, so be very careful.
Dr. Friday 42:06
At least here I’m local, you can come to my office, we can talk about we can make a plan, find out what the best way to move forward is. Get you current, which is the number one thing you have to be current with your taxes. And then we can figure out what kind of deal and there are deals to be made every single day with the IRS.
Dr. Friday 42:23
But it’s not everybody, everyone’s not going to save 10 cents on the dollar, everyone’s not going to be that one person that has absolutely no assets only has a job, and they’re earning a minimum wage. And they owe the government hundreds of 1000s of dollars because, at some point in the past, they either sold something or had something, and they use that money to do something else. And that money is no longer anywhere in sight.
Dr. Friday 42:46
That’s the kind of people that basically have it. But if you’ve got a 401k if you have equity in a home, then we have to talk and figure out what kind of deal really can be made. Don’t just sign on the line. Because it sounds like they’re going to help you let’s make sure you’re really going to get the help you need. And then I’m the person that’s least going to give you a second opinion.
Dr. Friday 43:06
Or maybe the best opinion you have, even if you don’t always want to hear the opinion is. So if you want help with taxes, if you need help with getting the IRS back on track or with your life getting back on track with the IRS or the state of Tennessee, give us a call here.
Dr. Friday 43:21
My office number is 615-7367-0819 is my number. And you can also email Friday at Dr. Friday calm. And if you’ve never heard this show before. You’re a first-time listener and you’re trying to figure out, “Who in the heck is this person?” Go to my website, drfriday.com.
Dr. Friday 43:45
Again, if you are trying to figure out, “Where do I get started? How do I make things work? What do I need to do to make it all come together?” It’s not a problem, all you have to do is you know, first, we always do a free consultation put together a list of what we need usually end up getting power of attorney. And then that way we have control of the situation and know exactly what we need to do and when.
Dr. Friday 44:08
So if you need help with that, you can always call our office, you can email you can text, whatever is going to be the easiest way for you to get communication. Our calendar is open online. So if you want to actually set up your tax appointment for next year, it is there. And this is a big reminder next week
Dr. Friday 44:26
Next week is the big Christmas show with Dr. Electric and myself. We’ve been doing it for over 10 years, we’re gonna be giving away 1000s of dollars. I’m sure Joe has at least one or two half of dears that he’ll be giving away. That seems to be always the number one thing that people love.
Dr. Friday 44:46
It’s gonna be a little different this year, there’s gonna be a different phone number than the number you’re calling today to call into the show. So you’re going to have to listen, get the new number so that you can get gift cards. Lots and lots of gift cards live Have lots of wonderful gifts.
Dr. Friday 45:02
And that way we serve, It’s our way of giving back to all the clients and listeners that we have had for the last. I think it’s 12 years actually, that we’ve been on the radio, you guys have been awesome for all of us and making, you know, Christmas and our businesses successful. And this is our way of giving back. We totally enjoyed doing this show. It’s crazy as a lot of you guys know.
Dr. Friday 45:24
So you know, hopefully, you’ll tune in it starts at one o’clock next Saturday, and we’ll be giving away as I said, 1000s of dollars of, of gift cards and deer meat and all kinds of fun things like that.
Dr. Friday 45:37
And if you want to set up an appointment, you can go onto the web for taxes for next year, the web at drfriday.com. You can set up a tax appointment if you’re already one of my clients. Hopefully, you’re on the calendar. If not, try to grab a date if you don’t see something. All returning clients will always have some dates.
Dr. Friday 45:54
I always set aside days just for you guys. So make sure you have that and then if you have a question, then give it go through the phone or maybe you’re not comfortable. You can email or call us on Monday. You getting the phone number for my office is 615-367-0819. The email is email@example.com or go to the web drfriday.com. Hope you guys are having an awesome Saturday and you enjoy it hopefully the rain won’t put a damper on the parade tonight. And as we always say, call you later.