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Welcome to another episode of the Dr. Friday Radio Show, where tax expert and financial consultant Dr. Friday breaks down the latest tax updates, answers listener questions, and helps you navigate the ever-changing world of taxation. With the 2024 tax season officially underway, this episode covers key topics such as capital gains taxes, IRS resolutions, filing deadlines, tax credits, and more. Whether you’re filing back taxes, dealing with IRS collections, or simply looking for ways to save on your return, Dr. Friday has you covered. Tune in and take control of your financial future!
Topics Covered in This Episode:
- Tariffs and Their Impact: Discussion on upcoming tariffs, their potential effect on inflation, and whether they could lead to more U.S. jobs.
- 2024 Tax Season Updates: E-filing for tax years 2022, 2023, and 2024 is now open, with key deadlines to keep in mind.
- IRS Resolution Issues: The need for more resolution officers to improve IRS collections and reduce unnecessary enforcement actions.
- Filing Deadlines & Standard Deductions: Important changes to tax deadlines, standard deduction increases, and tax credit adjustments.
- Earned Income Credit Age Restrictions: Explanation of eligibility limits for taxpayers under 25 and over 65.
- 1099-K Reporting Thresholds: New $5,000 threshold for 2024, with a planned reduction to $600 in the future.
- Capital Gains Tax Concerns: A listener’s question about estimated taxes on a $350,000 capital gain and how it affects Medicare premiums.
- Surviving Spouse Tax Filing: How widows/widowers should plan their income to stay within favorable tax brackets.
- Electric Vehicle Tax Credits: Updates on tax credits for new and used EVs, including how they can be transferred to a dealer.
- Health Insurance Marketplace Issues: Risks of underreporting income and surprise repayment obligations.
- Home Sale Tax Implications: How long-term homeowners can exclude up to $500,000 in gains from taxes.
- IRA Withdrawals & Tax Consequences: A caller’s question about missing the 60-day rollover deadline and its tax impact.
Transcript
Paid for by Dr. Friday Tax and Financial Firm.
For tax services, planning, business, and IRS negotiation, visit drfriday.com.
No, no, no.
She’s not a medical doctor, but she can sure cure your tax problems or your financial woes.
She’s the how-to girl.
It’s the Dr. Friday Show.
If you have a question for Dr. Friday, call her now.
737-WWTN.
That’s 737-9986.
So here’s your host, financial counselor and tax consultant, Dr. Friday.
G’day, I’m Dr. Friday and this is the Dr. Friday show where we talk about taxes, which is one of my favorite subjects.
If you’ve got any questions, maybe you’re working on your own taxes or you’re trying to get together all your documentations and maybe something came in and you’re not too sure exactly how that should work.
This is the show.
You can ask a question.
If I don’t have the answer, if we need to do it off the mic, we can do that as well.
Easiest way to get on the show is 615-737-9986.
615-737-9986.
You can also email friday at drfriday.com.
Friday at drfriday.com.
We’re going to start the show off with someone asking me if, and it really doesn’t, in my opinion, has not a lot to do with taxes, more about maybe tax news, the tariffs that go into effect. How is that going to affect, you know, the individual? And to be quite honest, I don’t think anyone really knows. There’s already been tariffs. Many people have a tariff that, you know, 10% to now it’s going to be 25. So $25 on every hundred dollars. It would lead to us to believe that we’re going to have a higher cost, more inflation. That would be the initial guess. Um, if you’re listening to, um, some of the, uh, individuals, they will say that, uh, it opens up the forum for more U.S. jobs, more U.S. product. Therefore they’ll be able to come in at a lower price. We’ll be buying more U.S.
products versus products from other countries. Not sure. Um, it’s too early in the game to find out If that is what actually happens, that is what I know Donald Trump is hoping that if we can level the playing fields, then the U.S. companies can compete, which will create more U.S. jobs and then create a better lifestyle.
So we will find out. But that’s my answer on the tariffs. Not a whole bunch I can do on that.
What we can talk about, which is a lot more interesting as far as I’m concerned, something we can control, our 2024 tax season.
And yes, it has officially started.
We started sending them out on the 27th of January, getting people’s tax returns e-filed.
That also opened up the 22 and 23.
So if you’re filing back taxes, you now can actually file 22, 23, and 24.
They allow us usually three years.
The rest of the years have to be mailed in and dealing with that issue.
I did have an interesting conversation with a person from the Internal Revenue Service.
We were talking about basically what could be changed, what kind of situations can we look forward to.
And I know a lot of people prefer that the IRS be abolished.
Not really going to happen.
It’s a collection company, a very big collection company.
But even if individuals no longer pay income tax, there are still a lot of other taxations that would still need the Internal Revenue Service to be dealing with.
Same thing with the state.
The state of Tennessee doesn’t have an income tax, but they still have franchise excise, business, use tax, sales tax, many other taxes.
So there is still always a need for that kind of situation.
So having more, as far as with the total revenue service, my conversation led to having more resolution officers than we have in collections, because I think a large number of things that are in collections are not always due.
So having something that is more manageable, meaning, so first we actually get a letter saying, here’s the issue, then give us somebody, a human, that we can actually deal with, and then take that to the next level. And once we’ve went through resolution, go to collection. So then their collections are actually viable, because they’ve actually had the opportunity to see if this person really owed the money, instead of just having a computer. And that’s what most of the collection starts out with, spitting out a letter every 14, 20, 30, whatever the periods are, doesn’t really help.
So when you’re dealing with resolution, as I do a lot, one of the biggest frustrations we have is that even with the phone numbers we have to go to the IRS, if somebody’s in collections, you still have to basically go through collections.
And it means you’re not dealing with the same individual.
So if you’re doing something, sometimes it can take hours first to get somebody on the phone to getting someone that can actually help with the resolution and then even having to wait and hope that their manager or somebody can call you back.
So yeah, we need to have, even though people don’t want to hear this, my suggestion was hiring more revenue agents that could actually deal with resolution in that way then or moving some of them over, whichever, we’ll see.
We may have some extra people in the government that have lost their jobs.
So maybe they can move them over to the Internal Revenue Service where they may be able to actually do something that will help all of us.
All right.
So the deadline for the taxes are April 15th this year, which is important because some years they are not.
Sometimes we have other situations.
We did have an increase on the standard deduction.
Every year we get that.
We have the child tax credit, which, of course, a lot of people may not know this.
If you’re age 25 or younger, so 24, 23, you cannot get earned income credits.
Just to let you know this, you don’t even qualify, I believe.
Oh, no.
And then for any individual that may have their grandchildren and you’re 65 and older, you cannot qualify for the earned income credit.
So if your income is very low and you have children that you’re trying to support, sometimes it helps to have earned income.
especially for low income, but that isn’t going to work.
If so, again, 25 or under 65 and older do not qualify for the earned income.
I had a situation where someone had come in, they asked about it.
They’re like, why didn’t I get earned income?
They had gotten it the year before they had turned 65 and they did not realize that there was an age limit on that.
So I think it’s important to understand those so you can make things a little bit easier for you and at least less shocking.
Because you’re used to getting $2,000, $3,000, $4,000 back, and then boom, they’re not getting anything back.
They think something’s wrong.
Nothing’s changed on your side, yet your age made the difference.
So very, very important.
1099Ks are coming out, which basically just means that there are a number of individuals where you may be getting those.
It’s going to be $5,000 or more.
That’s what you’re going to be looking at.
And a 1099K comes from the merchants.
services like Square, PayPal, wherever you might actually have a merchant service coming through.
So either way you look at that’s an important thing.
So you probably may get those and don’t ignore them because sometimes people will say, well, it’s not really income, so I’m not going to report it.
If it’s on a 1099k, even if it is not income, you need to deal with it.
You need to at least report it.
You can make the adjustments based on what might’ve been gifts or something else that was there, but it is on that form. Therefore, you need to answer for that to make sure you have what you need and where it’s going. So if you want to join the show, 615-737-9986, 615-737-9986.
Just got an email. Someone says, I haven’t received my W-2s. I was told I was supposed to receive them by the end of January. The answer is you are supposed to, but theoretically, the tax law says that employers supposed to have in the mail by January 31st. So you would have to give them enough time to get it. If they dropped it in the mail yesterday, um, it may not go out depending on, uh, how the mail moves from the business offices, uh, Monday or Tuesday, I would assume that you would have them assuming that your employer is local. Otherwise it could take them a whole week to get it to you. So, um, I had another one asked me, is there something I can do? Can I Sue them for not getting me my information like this.
So first thing I want to point out is that you should have a final pay stub.
That would be good because you were probably given one, assuming you were given one every time.
And if you weren’t, well, then that’s something, if you’re not receiving pay stubs, something you should be doing something right now with it.
Okay.
You should be basically turning around and saying, Hey, I need a pay stub every week.
And then that way, the final pay stub, if you do not have that information, you have the stub.
Now, the thing the stub doesn’t often give us is like the federal ID number of that employer.
So we need to deal with that.
So, hey, let’s hit Danny so that way people don’t have to just keep hearing me talk and we’ll get another voice on the radio.
Can we hit Danny on the line?
Thank you so much.
Hey, Danny.
Hey.
Hey, thanks for calling.
No worries.
I have a capital gain from 24, about $350,000, and I wanted to see about what I’m looking at in the taxes on that.
That’s one thing.
I’ve got a couple of questions.
Well, can I ask you on that one?
When you say a capital gain is $350,000, that is not what you put in the bank necessarily, but that is your actual capital gains, right?
I mean, you purchased something, so has the cost come out?
That is what we have left after the cost.
Yeah, that’s right.
That’s the profit, about $350.
And can you just give me a lowdown, roughly what your other income is, Danny?
Do you have either pension, Social Security, a real job?
Where do you stand?
Other than that, I have Social Security and I have some interest income, and all that’s going to be around 45.
Single or married?
Married.
And does that include her income as well?
The 45?
Okay.
Yeah.
Okay.
So what is your second question while I do some quick math?
I’m going to try to remember it now.
Oh, yeah.
Do you think there’s going to be any changes since we have a new administration before I have to file this?
I do not.
That’s a great question.
I’ve had that asked quite a bit.
And I do not think he’s totally, his tax laws expire at the end of this given year.
I think he’s going to make any adjustments or anything he does, even if he can lower taxes or maintain the tax law.
I don’t think it’s going to happen until 2025.
I don’t believe he’s going to backdate anything into 2024 is my opinion.
Yeah.
So, all right.
So let’s take a look here.
We have with your income, the total income combined, roughly just using some rough numbers here, 395 adding the 45 in.
We all know social security isn’t 100% tax, but for the sake of our conversation and the radio, we’re going to go with the full number.
The first 250 on the capital gains is going to be 15%.
And then the remaining 100,000 is going to be at 18.8.
The 45 is going to almost be washed out with your standard deduction.
So there will be some ordinary income that will hit you roughly at $10,000.
assuming you and your wife are both over the age of 65.
Don’t know if you are or not, but I’m making an assumption since you said Social Security.
So you’re looking at maybe another $2,000 of ordinary.
So you’re looking at $3,750, $3,750.
And then on the other $100,000, $18,800.
So ballpark, you’re looking at about $56,000.
I’ll just call it $60,000 just to be on the safe side for all of the tax.
How’d that come up with your estimate?
I have a feeling you probably already estimated yourself.
Well, I’d count half, and I was coming up with a little less.
Yeah.
I might be on the high side, but I figure I’d rather give you the high number, and then you say, yes, I saved money.
Then it goes to 60 and then you’re under and you’re like, oh, darn, I wish I had set aside more.
So, yeah, I probably I will definitely say I’m on the high side.
But yeah, for simple math, I think that will get you in the right ballpark.
And then when you get ready to do your taxes, because, again, Social Security isn’t taxed 100 percent.
And I kind of threw that all in at one time.
Yeah. That reminded me of another question on my Social Security.
If, uh, what’s it going to do to my social security?
Social security will do nothing.
Medicare is what it’s going to mess up.
Um, yeah, I knew that.
I was just making sure other listeners, I knew where you were going, Danny.
Um, so Irma is what they call it.
Irma is going to come and it’s going to bite you.
Um, it’s going to probably go up by a couple hundred dollars a month.
um and for for 12 months basically so file now and then next year file early and then that that way they base it on the the taxes so that when you file now by the time they get it in the system and make the adjustment it’ll be a few months down then you’ll get a sweet little letter saying oh based on your income you owe us more money we’re going to start taking that out and then for 12 months that’s going to happen uh but i would say it’s going to hit you and your wife most likely well once before we had this uh capital gain like this it was wasn’t this much but uh the way it worked that time after i filed i found out i made the the gain they didn’t do anything until the january of the next year like if i do the same this time maybe i know it seems the same distance and you’re you’re you’re going to be over because i think you can make about 220 you and your wife i’m saying you know before you hit the next um bump up but at what you’re at which is at least 353 whatever it’s going to be after your standard deduction um but it may they may wait to the following year i’m not exactly sure all i remember is when my clients call and they basically say oh yeah um they you know this happened so i’m glad you brought that up irma can be extremely uh painful when you have these situations.
Yeah.
The last time they waited till the next year.
Okay.
Well, I do appreciate your help.
Thanks.
All right.
Thanks, Danny.
All right.
We’re going to have to take a quick break.
When we come back, Rita, if you can hold through the break, I’d appreciate it.
This is the Dr. Friday show.
We’ll be right back.
All righty.
We are back live here in studio.
Let’s get Rita on the line.
You can get enough to hold through that time.
Hey, Rita, what’s happening?
Hey there.
In January of 24, my husband sadly passed away.
And so I’m filing jointly this year, which I understand all that.
So this next year for the year of 2025, I’ll have to file as single.
And it looks as though that the schedule, if you make $48,475, that’s the maximum that I can make and still get a 12% tax bracket.
With filing jointly, it’s a very large range for 12%.
And I live on mutual funds and Social Security only.
So my question is, should I this year try to just take less money so it won’t go over the 48, 475?
Well, the 48, 475 is after the standard deduction.
So first I want you to add in the standard deduction.
So when they’re looking at it, they’re already taking out, which is what, 14, I don’t know how old you are.
So it’s like 14,000 something if you’re under 65 and it’s like 15 something if you’re over.
And I should know that number.
I just don’t have it as my cheat sheet right here, right this second.
So let’s just take it safe.
You can add $14,000 to that.
And then on Social Security, only 85% of that is taxable.
So if you’re making, you know, $10,000, only $8,500 of it would be taxable.
So you might want to add that back.
Whoops, did I lose, Rita?
I think I did.
So that would be the two situations that I would look at.
Could you start over, please? You got cut off.
Are you still there, Rita?
I am now. Start over, please.
I am so sorry. I looked down.
Okay. So I said the first thing you want to do is you want to add back in the standard deduction for the year of 2024.
So that way that would be $14,600 if you’re under 65 and an additional $1,500 if you’re over 65.
Okay, hold on. I’m 81, so you’re telling me that I can deduct $19,000 instead of $30,000.
So $16,000, you can deduct $16,100. I’m sorry, let me clarify this. You said $48,475 was what a single person can earn. I want you to add $16,100 to that when you’re looking at your numbers. That the numbers for the tax code, they’re backing out the 0% tax. So the 0% is the standard deduction.
Okay. So technically I could make 32,000 and still be in the 12%.
Well, you can make 64,000 and still be in the 12%. Yes. That’s where I want to go. And then on top of that, you also look at your social security. So if you’re making $10,000 in social security, only 8,500 of that is taxable. So you have 15% of that social security. When you’re, when you’re looking at the total number, 15% of that is not taxed. They can only tax 85%. So I’m just giving you a little with mutual funds and interest. Sometimes things go up or down, but I’m just saying you’re probably closer to 65, 70, depending on how much social security you make that you can earn and still be in the 12% tax bracket. Okay. Cause I don’t want to go to another one. Thank you so much. Thank you. Bye-bye. Okay. So that was a fun one. All right. Let’s Rita get back on the road there. If you want to join the show, you can 615-737-9986. 615-737-9986.
Taking your phone calls, talking about my favorite subject, which is taxes. It’s what we love to do.
And we’re finally back in our season. It seems like a lot of times I’m like, oh, we’re preparing or we’re filing for extensions or we’re finally back in October, right?
We were finally finishing up 2023.
So we are just starting the 2024 tax season.
Some people will call it the 25 tax season because it’s 25, but I like to think of the year I’m actually filing the taxes, not necessarily the year that people are doing them in.
So if I’m confusing you, we are in the year of 2025, preparing tax year 2024.
So we have a few things that did get up to $7,500 on electric cars, brand new electric cars.
You can get $4,000 on a used electric car.
Now, these are for individuals that are using them for personal use, right?
Not for anything else, just personal use.
Effective, the 17th of 2020 final assembly of new cars must be in North America.
So if you brought a car that was not fully assembled here and it’s a new car, then it won’t qualify.
I would always suggest go to irs.gov.
You can search under the search engine for tax credit electric cars.
It will pull up all the manufacturers if you qualify, how much you might qualify for, allowing you to do that.
New in 2024, you may be allowed to transfer the allowable credit to an eligible dealer to reduce the amount owed on the purchase of the new or used car.
It’s kind of interesting.
Be interesting if that actually works.
I guess we have a new car person.
We’ll find out if that’s the case at some point.
Also, energy credits for the home, non-business energy credits for energy efficient property and residential economy credits for solar equipment was increased.
So you are going to still be able to do that.
And then extensions for the marketplace insurance are still out there.
I will be honest, guys, I’m not a huge fan of the marketplace.
And it’s nothing to do with the insurance.
I’ve never used it.
I don’t have it.
What I have an issue is it’s based on income.
So if you happen to have a really good year and or just as that gentleman, Danny, I called earlier, let’s say he was on the marketplace.
I know he said he’s over age 60, but let’s say he was on the marketplace.
And then somehow you sell something.
Next thing you know, all the money that you would have gotten credit for, your income is too high.
And now you have to pay back.
I’ve had people have to pay $20,000 to $30,000 back to the marketplace because of something just like that, where their income changed enough to make it where they didn’t get any credit and they had to pay back the money that the state had paid for them on their insurance.
And that’s a lot of money when you don’t think about it, right? So if you’re going to be in the marketplace, my suggestion is always overstate your income. You will get some credit back on your tax return if you’ve overstated it, unlike the other way where you have to pay it back. So I understand it’s nice to pay zero or $15 for health insurance, but at the end of the year, not so nice when you have to pay three or $4,000 in additional taxes because of it, especially if you’re already basically on the line for finances, right?
So just want to make sure you understand marketplaces, I mean, I’m not necessarily pro or con against it.
I just don’t like the way it works that directly with your finances and that creates a tax burden.
And then it becomes a tax situation because now you owe the IRS money, which are not the best loan offices.
Much better to owe a credit card company that you can take into bankruptcy versus the IRS, which takes you 36, I think it’s 33 months before you can take them into bankruptcy.
Okay, so we’re going to take another break here, get us back on the proper time clock.
You can join the show when we come back at 615-737-9986, 615-737-9986.
Or you can just go to the web if you’d rather text or email, at least email, fridayatdrfriday.com.
We’re going to be right back with the Dr. Friday Show.
All righty, we are back here live in the studio.
So if you want to join the show, you can at 615-737-9986.
615-737-9986.
Taking your calls, talking about, oh, my favorite subject, taxes.
Again, I wanted to get back on that 1099K.
I don’t want to confuse anybody.
Starting in the year of 2024, the taxes were, you know, obviously you’re filing now.
Anyone meets the threshold of $5,000.
It will then lower to 600 threshold and next by the American Rescue Plan.
But right now in 2024, if you have marketplaces of any sort, PayPal, Square, any of them, they’re going to send you out because of the delays.
Obviously, we hadn’t had it, but don’t be surprised if you have sold things and $5,000 or more, and it doesn’t have to be in one transaction.
is over the entire year, $5,000, then you need to make sure that you’re putting that in to your income. So, you know, just, just again, making sure that you guys are following that kind of concept and making sure earned income credit for children up to with a family with three could be as much as $7,830. I already covered the fact that you cannot be under 25 or over 65 to qualify.
The child dependent care credit in 2024 is 1,050 for one child, 2,100 credit for two or more children.
So, you know, that’s not limited.
You have the college students, the American Rescue provided certain students, 21 through 2025.
I do want to reiterate almost all the laws that we have in effect right now that I’m talking about, the ones for the credits, the ones for the childhood, all those will expire December 31st, 2025. So we will be watching to see if anything’s going to change. You still have the college credits and there is some investor credits, cryptocurrency tax calculator. They have now on the website.
I think that’s kind of pretty cool. The IRS is now trying to help people do the calculations.
So, so again, just, you know, I mean, obviously crypto is very, very confusing.
We don’t know what’s going to make a difference or not.
And we want to make sure that you have all the right information.
So you, you, again, if you’re a Lyft driver, if you’re a freelance blogger, you know, you want to make sure that you are tracking the proper expenses.
And, you know, again, you know, Lyft and Uber provide miles.
So unless you have a mileage log that tells otherwise, that is the information that the government’s going to use.
Because unless you’re using mileage IQ or some other mileage situation, you need to be tracking.
It’s the number one deduction that the IRS is auditing, right?
I mean, everyone always acts like home offices.
That’s like so long ago.
People don’t really even worry so much because they did the simplified $5 per square foot up to 300 square feet, or you can take the fiscal expenses depending on how large your office is and how much money you’re spending.
But when it comes to miles, it’s straight out, people.
Miles are miles, and you’re going to need to make sure that you are tracking those properly and you looking up and saying, oh, I think I did about 60,000 miles.
I think I did this.
That’s not really going to fly.
IRS wants to see an actual log.
They want to know what kind of business you did.
Why did you drive there?
And I mean, now it’s 70 cents a mile in 2025.
That’s pretty healthy.
So again, if you are a person that used mile, there’s a lot of companies, real estate agents, something I talk to them a lot about, not just so much because some, they’re afraid they don’t do any, right?
They’re not gonna track a mile because they just don’t know what they’re tracking or where or why.
So they’re leaving theoretically 67, 68 cents a mile or 70 cents a mile on the table.
And that can add up a lot.
I mean, that’s, you know, thousand miles.
You get what, $700 or 700 miles?
That’s $700, excuse me, which is a deduction, which means that your tax bracket, you’re still saving a couple hundred bucks.
Very, very important to know how to track it, what to do about it and make sure that you understand this is going to make more money in your pocket.
Sometimes people get all hung up on meals and entertainment.
Well, there really isn’t entertainment on the table right now.
Meals can be, but to be honest, most meals that are deducted have to meet two criterias.
One, you are traveling out of town, you’re staying in a hotel, and you need to, for business, and you’re deducting those meals because that is what you have.
Or you have met somebody that you are taking out to dinner to discuss business, Um, and it night, nine times out of 10, I’ll be quite honest with you guys.
We really do not want to be taking your spouse, even though that may be your partner.
I’m not saying you can’t do that quarterly, but every week it becomes date night.
So just be consistent, make sure you’re documenting.
And even if it is something that you, you are family membered, um, or you’re taking them out, there’s nothing that says in the tax law, you can’t do that, but it would be very important if you ever run into an audit to be able to document these were the things we discussed.
This was the discussion at the table. It wasn’t date night, especially if you start doing that very consistently. So it’s not that you can’t do it, but doing it properly is what’s going to save you money because if you get audited, it’s not going to work well. All right. So if you’ve got questions, maybe you have inherited property, maybe you’ve sold something and you’re not too sure how to work the basis. Been talking back and forth with a young lady here where, um, uh, shorten it out. Basically her parents put her sister and her on the, uh, title of a piece of property. I’m not big on quick claiming property with your kids because it’s better for them to inherit. But in this case they wouldn’t have. So anyways, um, mom passed away, became all three.
the father was still living father and the two children the father sold the property therefore they each got a percentage but there is no step up in basis in this kind of scenario so understanding and this is really for even a lot of my clients that may own the property take the time to try to backtrack into how did you get that property was it inherited from your parents therefore the step up in basis would apply the year that the parent passed away. Did you purchase it? Was this a out purchase? And if so, do you not have the closing documents from that? And if you don’t, I mean, a lot of that is filed in the courts or not the courts, at the courthouses and title companies, all of them are often filed. And normally it’s actually reported. If you go back and do a search at an address, it will give you the dates that it changed hands on the situation. So it is important for you to the owner of those properties to have how much money you paid for them. And in some cases, were they rental properties? Have they been changing? You know, was it just that? Did you have depreciate anything on that property? It just, it’s all very vital because like in this case, She doesn’t, they’re trying to backtrack, finding out how much money that was originally paid for, what we had, where we’re going, and then figuring out where it’s got.
But it is important because otherwise, you’re basically going to have to go back to the year that was purchased and maybe use property tax assessment.
If you purchased it, if you inherited, that would be the value of the property at the date that you inherited.
All right, let’s see if we can get Ben on really quick.
So we got to have four minutes for the next break.
Hey, Ben, what’s happening?
Okay, it’s good to hear you talk to you, Dr. Friday.
Question for you.
I bought a place this year.
I mean, I already have one.
I’m in the process of trying to sell.
Well, I actually bought it last year.
I’m trying to sell the one we currently have.
And so when you sell it, how long do you have before you have to…
So the tax on it, Ben, is the house that you’re wanting to sell, Have you lived in it and how long have you lived in it?
Oh, yeah.
We’ve lived in it.
We’re still living.
We’re working on the other house where we can move in.
So several years.
Okay.
Two out of the last five at least?
Yes.
Okay.
So the tax law is this.
And you said we.
So are you married?
Yes.
Okay.
So whatever you paid for that house, add another $500,000, and then whatever is left would either be taxable or you’ll be negative and you won’t owe any tax.
okay so we don’t have any reinvestment loss okay my other question is on the place that we bought we pulled some money out of the ira for down payment okay and i wasn’t able to meet that 60 day window so last year we’re pretty tough year trying to sell stuff i agree uh yeah especially when you got some land to go with the house when you got like more than five acres it’s a real challenge sometimes. So anyway so I wasn’t able to get the money back in the IRA before the 60-day limit was up. So I’m over 65 so what does that do for me from a tax standpoint? Well the good news is no penalty. The bad news is whatever you had to take out depending on your other income you know I’m assuming you have, you said you’re over 65.
So I’m assuming you have social security, maybe a pension or maybe take RMDs, whatever you live off of normally.
You just have to add that on top and whatever that, do you have a ballpark, Ben, of what your normal income is, what you usually would file just in the ballpark?
Yeah, I mean, but I’m still working, so I’m not drawing social security.
Oh, okay.
So you still got a real job too.
So whatever that is, you’re probably going to be looking at 20, I mean, again, not knowing you been i’m gonna guess that you’re gonna put yourself in a different tax bracket so probably 24 percent depending on your total income but with a real job possibility of um do you do you take social security and have a real job or are you you pushing your social security out because you’re not yet 70 i’m pushing it out because i’m not yet 70 okay well well i wasn’t sure if you’re doing both Sometimes people have a job and work, you know, get Social Security.
But so, again, not knowing how much you took out, I’m going to guess that you’re going to be looking at at least another 20% on top of what you normally pay.
So, you know, hopefully you have to take a whole bunch out.
But that’s a totally winging it conversation.
I understand.
Well, I had to take out close to, you know, over 50K.
I’ll phrase it that way.
And how much are you making on your W-2 nowadays?
Just ballpark.
You don’t have to give me the exact dollars or anything.
Ballpark it.
Ballpark, you know, we’re talking like 100.
Okay.
Does the wife work?
No.
Okay.
Is there other income that comes in the house?
Again, interest, dividends, capital gains, investments.
Not enough to make a difference.
I mean, we’re talking, you know.
Okay.
So if you’re looking at 150, taking that out, you’re you’re you’re still going to keep yourself roughly of being a big chunk of that i would go with 20 so you’re oh you might owe about 10 grand ben that would be worse scenario on the numbers you gave me right maybe this just depends maybe less okay yeah we’ll hope for less all right Yes, we hope for less.
Exactly.
We hope for less, but I want to prepare you for more because you never know.
Okay.
All right, buddy.
Thanks for calling.
Thank you.
Thanks.
All right, we’re going to take another break here.
When we get back, we’ll be our last break.
If you want to join the show, you can at 615-737-9986.
We’ll be right back.
All righty.
We are back here live in studio for the last part of the show.
So if you’ve got a question, now would be the time to pick up the phone.
615-737-9986.
615-737-9986.
If you’re not sure who I am, I am Dr. Friday and enrolled agent licensed.
is for close to 30 years.
Basically here to help you think about what your tax question is.
If there’s something on here, that’s why you hear me give people estimates.
You need to talk to your tax person to confirm because anything I talk is more generic.
I want to make sure people are thinking, what should I be doing?
What could I have?
What could I be changing?
Whatever.
I want to make sure that the information that you’re going to do, you’re not just going out there and making decisions.
Because sometimes, you know, I’ll be quite honest.
Just like I was talking before the break about a young lady that her father and mother added the children on as a quick claim, thinking they were sharing something with their kids.
So if something happened, the money would go directly to them, which would have been better in a will or even better in a trust.
I am an avid believer in trust.
I don’t believe everyone should have to have everything in the will.
But, um, but in my opinion, that way they got to step up in basis and it would have been a tax free or the father, if you wanted to sell it, I mean, probably better because the tax brackets would be lower, but it’s just, if you quick claim, and I have people that do this to their parents will quick claim them on their homes on their, you know, there is power of attorneys.
So if you’re afraid that the children, um, won’t be able to access the bank accounts, get a power of attorney, um, um, financial power of attorney, I think is what they refer to it as you should all have financial power of attorneys. You should have, um, medical powers, attorneys, you should have wills. And I don’t care how old you are. I don’t care if you’re, if you’re on your own and you’re out there working and doing that, everyone should have those things, especially if you have parents and your young children, you know, um, I love the ads. I don’t, I think it’s for like legal zoom or something, but the ads are awesome because the one guy sitting there and he tells his son, Hey, son, if anything ever happens to me, you’re going to get this car. But he tells him, right? Tax. I mean, the law says you can’t just tell somebody you have to have it in writing. It’s a lot like taxes, right? If you want to take a deduction, you need to have proof of that deduction. Same thing with the law. So again, this has nothing to do with taxes, but so often the taxes will feed back into financial planning and therefore estate planning. So if you have nothing better to do, you might want to consider calling an attorney or talking to your financial advisor to make sure that you have covered all those bases. Because if something happens to you, I guarantee you, the state of Tennessee does have a plan for you. And unless you want your children to inherit what you thought your spouse would take and then take care of the children and give them, It doesn’t always work that way. So again, I’m not an attorney. I don’t know all the ins and outs.
What I do know is if it’s not in writing, then you’re going to have some problems later in life, or you can even be leaving a hardship onto the people you love. So making sure you’ve got all that covered. If you want to set up a tax appointment at our office, you can do that easily at drfriday.com. Click on schedule. Either Chris or myself is available. Just find the dates, pick up a time, go for it. Also, if you need help doing back taxes, obviously, you know, been doing this a long time. Sometimes something happens and you haven’t filed your 21s or you haven’t filed 18, 19. We do have to go back a minimum of six years to stay in compliance. And They’ve already assessed them. You either need to file a return so you can get the proper number in there one way or the other and then make a deal with the IRS.
It isn’t, you know, a lot of times there’s a lot of companies out there and they will tell you how they can settle 10 cents on the dollar.
They can do. And I’m not going to tell you, we have settled for 10 cents on the dollar.
But the typical situation is those people do not own any real estate.
Those people do not have any 401ks or retirement. They’re living paycheck to paycheck. They are renting a facility or a house or apartment. So it’s not hard to file for those individuals when it comes down to it because they have very little that the IRS can do anything. If you have a home with equity in it, if you own a second place of a rental or even land, theoretically the IRS, If you owe the IRS, they can make you or they can seize that property in exchange for the money you owe them.
And they’re going to do it for a fast sale. Right. They’re not going to wait and try to sell it for what it could be worth.
One, they’re only looking for what they need to their they’re in.
No, they’re not real estate people. They don’t care to become real estate people.
So they’re not going to make that in a big deal for them.
And they don’t, you know, if the land doesn’t cover the debt, they’re going to just keep holding out for other things. So you need to think about all of that. If you have an issue with the IRS, make sure you’re talking to somebody that’s going to take the entire spectrum of what is required, not just get a salesperson on the phone and say, oh yeah, yeah, we can do that. We’re going to take care of you. We can do this. And they don’t even have any idea because every time I’ve ever talked to anyone that’s went with some of these big box locations. All they’ve done is basically tell them, hey, I haven’t filed taxes for a number of years. I don’t know for sure what I owe, or I’ve gotten letters and they’re saying I owe all this money. And then they base it based on what you owe the money. So if you owe 50 grand, they’re going to say you need to pay us 5,000. If you owe them 100 grand, it’s going to be 10 to $15,000. And it could be easier work for the guy that owes 100, than the guy that owes 50.
That doesn’t come into play.
They base it based on what they think you owe them and then how much they think you can afford because you’re going to say, well, heck, if I can pay $10,000 and not have to pay the government, that’s not the way it works either, may I point out?
But it sounds good on paper.
So again, if you have IRS issues, I’m an enrolled agent, I can help you.
But more importantly, if you have tax things, let’s get you on the calendar so we can make sure we can get you filed and stay in compliance.
And then we can move backwards.
We can always take care of other situations, making sure everything is going right and follow up with it.
So if you’ve got questions on that, you can always email Friday at drfriday.com.
Yes, my first name is Friday.
You can thank my father for that.
Friday at drfriday.com or you can just go to the web.
You can also send questions or anything through there, which is drfriday.com.
You can also book your appointment, find out who this crazy lady is just in case you don’t or haven’t heard me in the past.
And then if you want, you can also call our office Monday morning at 615-367-0819.
Let’s make this year the year that you file your taxes.
You make sure you’ve dealt with it because I’ve just done two different people with multiple years and both of them had refunds back in 2020.
Well, that sounds great, right?
Refunds.
I can’t get that refund.
It’s outside the collection period.
That means you can only go back three years, 22, 23, 24, right?
So you might be able to get some depending on the other, but basically you’re looking at three years.
If you get a refund from any time prior to that, then you’re not going to get it.
So you’re leaving money on the table in fear that you might owe money here or there.
Well, it’d be nice for the government to take that money and pay back something you might owe.
It’s not going to happen if it’s outside those three years.
So maybe thinking, do we need to go ahead and get caught up?
So that way, maybe if there is any money to be had, you could actually get it.
Again, in 20 and 21, there was also stimulus money that still people never got.
You can get that when you file the tax return.
You get it applied, at least against the money you owe.
So it’s not refundable because it’s outside the collection.
But these are the kinds of important things you need to understand.
Getting organized and getting straight with the IRS is going to make your life so much easier.
And also think about if you have children, FASFA comes.
In fact, a lot of you guys are dealing with that right now because I’ve gotten several calls.
I need my taxes.
I need to get something so we can get our kids lined up for FASFA.
They are using the prior year now.
So as long as you file 23, you’re fine.
24, they’re giving us a year now because it used to be we had to have it filed by like January 27th when it opened so that the parents could get the children onto the fast. Not going to be a big deal.
Anyways, just make sure if you need help, you can call us at 615-367-0819, 615-367-0819. You us out on the web at drfriday.com drfriday.com cop you later!