Welcome to another episode of the Dr. Friday Radio Show! In this episode, tax expert Dr. Friday answers callers’ tax questions and covers various topics, including:
- Does a privately held company receive a 1099 form?
- How much can charitable donations reduce taxes?
- How will having a second job affect my taxes?
- What type of HVAC system qualifies for a tax credit?
- Do I need an appraisal for charitable donations?
- Can I only claim capital gains on my tax return if I buy a house?
- Does a revocable trust avoid capital gains tax?
- Who receives a 1099 tax form?
- How can I do tax preparation and financial planning correctly?
Listen to learn much more!
Transcript
Announcer 0:01
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 0:31
Good day, I’m Dr. Friday and the doctor is in the house. And if you want to join the show, you can it is our favorite time of the year it is tax time, which means now instead of just talking about it, we are going to be doing it we are preparing taxes, goodness, every single day, this next few months. And so if you are working on your own taxes and you’re needing some questions answered, you’re not too sure how something’s going to be filed.
Dr. Friday 0:57
Or if you’re from one of those states that maybe got a little bit of tax relief, and now finding out that maybe that tax relief is going to become taxable income that is not going to affect Tennesseans. But if you’re going to in from other states, you may have some of those situations like California and some of them, where if there was tax issue to you, you may find that some of that income given to you has now become possibly taxable income.
Dr. Friday 1:23
In fact, 70 million tax returns were already filed before the IRS say wait a second, Where’s all this money? And where are we? Where are we going to tax it or not. So they’re, they’re still trying to figure out what they’re going to do. So that being said, if you’re filing taxes, and you have some questions, you can join us 615-737-9986, taking your calls, talking about all things taxes, maybe you’ve had a situation where you’ve sold real estate, maybe you have a situation where you’re doing different things, you know, I mean, maybe you’re actually having to deal with someone else’s estate, maybe someone’s passed away or anything like that.
Dr. Friday 2:06
So if you’ve got those questions, this is the show, you want to at least start the conversation. And then some of them you are going to just as a caveat, some of the information provided is more general, you may want to double check this information. In fact, I will say you definitely want to double check this information with your tax expert. And if you don’t have one, you can always give us a call.
Dr. Friday 2:26
Or we can give you a referral to someone that might be able to be an expertise in that situation. But making sure that the information you get let’s start with getting that information out. And then we can go from there. Again, it is tax season 2022. So if you haven’t filed taxes and 21 or 2020, you can still file your 2022 on time, don’t use that as an excuse that he hadn’t file past taxes. So now you’re not too sure how to file your current one. We are on the calendar year people. So even if you haven’t filed back taxes, you could start with your 2022 and deal with other issues. All right, we’ve already got the phone lit up, which is so awesome. I love when you guys call. Let’s go to Joey, and see if I can help him. Hey, Joey.
Caller 3:12
Hey, Dr. Friday. I’m in the process of selling back some company stock from a privately held company. Okay. I know what my basis is for it. And I know what I’m being reimbursed for the last year. However, I’m not really sure how to report that I did not get a 1099 which they said they weren’t supposed to give me. So I was curious where I would report that?
Dr. Friday 3:42
You’re gonna put that on a Schedule D. And this was a small company stock, correct? Yes. Was it? Was it privately held? Or was it actually public stock? No, privately held? Okay. You might want to do again, I don’t know the stock company or anything else, but in some small company stocks when you actually buy it and now know if you’ve held it for more than five years or not. But if you have, then there is some tax advantages. If you haven’t, then it’s just going to go on to Schedule D for if it’s been a year and a day, it’s going to be considered long term. If it’s less than a year, it’s going to be considered short term.
Caller 4:22
Yeah, I mean, some of it I bought back in 97. Some of it I bought was recently is 2016.
Dr. Friday 4:29
Okay, well, sounds like most of that still been held over five years. And there is some extra there there is some clauses in there and depending on if it meets all these clauses, there is a free capital gains for people that have invested into small privately held companies and they hold them for more than five years. Theoretically, the capital gains could be zero.
Dr. Friday 4:50
Now, again, I don’t know if they’re paying you back by the buyback if you’re making a profit breaking even I don’t know any of that, but you’re definitely going to want to uh, Um, I don’t know if I would just jump right on to put it as a Schedule D and paying capital gains in your situation. Most people when they get stock, like you say they go on the stock exchange, they buy it, they sell it. It’s black and white, no, real tricky.
Dr. Friday 5:14
But small business does have a specialty code in there, I would definitely suggest either calling my office on Monday or, or calling someone that deals with taxes to see if you might be able to get the information to find out this is actually potentially free capital gains, which doesn’t happen too often in our world.
Caller 5:33
Okay. All right. Well, thank you.
Dr. Friday 5:36
No problem. Great question. Thanks, Joey. All right. Again, if you want to join the show, you can at 615-737-9986. So we can the least if nothing else, guys, what I love about this show, and what we’ve done it for 13 plus years, is because I’m hoping to make you think just like this, hopefully, maybe Joey will fall into a situation where he can actually get an exclusion where normally, you might not know about it. Or it may come down to that, you know, he at least educated himself and were able to get the right thing, I just don’t want to leave it on the table, and then find out later that he wouldn’t have had to do it. It’s like 1030 ones, or any other situation where sometimes there are ways of us not always paying taxes. So we’ll just have to stay in touch. And we’ll see what happens with that one.
Dr. Friday 6:25
But if you’ve got a question, maybe you inherited or you’re selling, or you’re dealing with some sort of tax issue, maybe you’re getting love letters, and you’re like, “Okay, you know what? I’m tired, I’m finished, I’m ready to deal with the IRS before I go and buy a house or before I take this increase in a job.” You know, because I hate to tell you, but better you are on paper harder is going to be to get any kind of deal with the government. Okay? It just makes sense, right? Why would the government give you a deal if you have the potential of being able to pay them back just because you don’t want to or just because their interest in dividends is as much as you owed originally? Well, they’ll be the first to tell you the IRS is not loan officers, and their rates are no better than, you know, some loan sharks to be quite honest.
Dr. Friday 7:13
But you know, they’re, they’re not in that business. So the truth is, I mean, I can’t tell you how many times I get people that walk in my door, and they’re all like, well, I called this company and they said, they can make a deal for me. And they, you know, they want five grand, they want 10, grand, whatever, it doesn’t really make a difference about their fees. The fact is, they’re not going to be able to do it when you have all the money the IRS wants in the equity of your primary home, where you may or may not be able to sell the house.
Dr. Friday 7:41
So you may or may not be able to get a mortgage. But that’s no longer on the table, the IRS has come back with ruling saying, if you have equity in your home and you’re not able to get it out doesn’t mean we’re going to give you a deal. It used to be a few years back, we used to have a little bit more leverage with that they have changed the rules. So or if you’ve got a 401k where the money is sitting, because you’ve contributed over the years and not paying your IRS debt, guess what? IRS is in there going, “Wait a second. That’s our money. You gave it to them instead of us. So guess what? We’re taking it.”
Dr. Friday 8:15
So be logical about those questions. Okay. I mean, when you call these companies, and I know they’re on the radio, they’re always telling you, oh, we can settle for 10 cents on the dollar. And we’ve done it. We do it all the time. But in those particular situations, we don’t have real estate, we don’t have 401 case. So it’s a lot easier to make those deals. All right. Let’s talk to Joe in Hendersonville. Hey, Joe, what’s happening?
Caller 8:42
Under Matt, and I understand there’s a if you have a employee that’s going to be buying it, there’s a different tax break or something.
Dr. Friday 8:52
We only heard part of the question. I’m sorry. You sound like you said you had a laundromat. And I’m guessing you have an employee wanting to buy it.
Caller 9:04
Yeah.
Dr. Friday 9:05
Okay. Okay. Just making sure I heard.
Caller 9:08
There’s no land involved, it’s just the business and the equipment.
Dr. Friday 9:13
Okay. So he’s basically buying the name or the goodwill as well as whatever equipment is in it? Is he buying your corporation? Is it in a corporation or LLC? Or is he best buying those assets, the goodwill and the assets, but under his own business name?
Caller 9:26
No, there’s no corporation.
Dr. Friday 9:30
Well, in all honesty, they’re the mean really, the the advantage to the employee will be is that he’s purchasing the goodwill and the equipment in you may have already fully depreciated that equipment, he’ll be able to put a new value at the time of sale, depending on how much he’s paying for it.
Dr. Friday 9:46
And that value then would become section 179 for him, so he would have a tax advantage but there isn’t necessarily a tax advantage for an employee to purchase a business and just there’s no tax code that covers that. It’s really gonna be how he sets up his business, as well as the evaluation of how much goes into goodwill versus how much goes into the equipment.
Dr. Friday 10:07
Because sometimes the advantage to the buyer putting more towards equipment and less towards goodwill is not always the advantage to the seller who’s already section 179. All of the equipment, which makes yesterday recaptured depreciation on the sale of that equipment. So sometimes there’s a meeting ground or a conversation that has to be had between two accountants to figure out who’s going to, you know, kind of, what’s the best way to do that.
Caller 10:33
Okay, all right. Okay.
Dr. Friday 10:35
All right, buddy. Thanks very much. So we are talking about taxes, as we all know, I love my taxes. And there’s so many different things in taxes. That’s what makes it so exciting and, and constantly changing, which keeps me entertained a lot. But what we do want to make sure is that everybody is dealing with their situation, we’ve had a huge change in the economy lately, right?
Dr. Friday 10:35
I mean, my restaurant owners are having a difficult time not only with just being restaurants, which is always a, in my opinion, a difficult business, but labor right, and now we’re finding out that labor across the whole United States is basically on a downturn. And, and I really don’t understand why they were saying something last night on the news that had to do with, you know, the fact that people retired, a lot of people may have went to retirement, the way that we got behind on supply and demand.
Dr. Friday 11:38
So that that slowed down people hiring, and then people basically took jobs that were not as you know, they were underemployed. So I’m not gonna say but all of that kind of comes to play when it comes into taxes. Because this last year, I mean, we’ve done obviously, we’ve already done a ton of taxes, and we’ll have more to go. But just last Friday, when I was doing some tax returns, I had several people that normally had a single w two, and often ended up breaking even or with a few dollars as a refund.
Dr. Friday 12:08
But under the fact that they had worked multiple jobs, or a wife went to work. And normally, you know, they were home with the children, whatever, we had more jobs and actually higher income in this current year 2022 versus 2021, and 2020. And they’re actually ending up owing money. Because keep in mind the tax code, I don’t care what anyone tells you, the tax code does not do a good job in estimating taxes for people that have either quit a job and then went to work.
Dr. Friday 12:38
And another job because keeping the tax code basically looks at the money we make, and they look at it annually, even though they’re you’re getting paid weekly, bi weekly, semi monthly or monthly, they look at the code looks at it that this dollar amount that’s on this check, if you say it’s weekly, they’re multiplying that by 52. And assuming this is how much money you’re going to make.
Dr. Friday 12:59
So if you’re working two jobs, the system doesn’t know how to do that, because they don’t have the dollar amount of your other job. So it’s either in most cases, in my opinion, under estimating how much money is coming out of your paychecks. So a lot of times, we have to go and compensate for that by asking for more money to come out of another paycheck, I have one gentleman that we’re having to compensate for $150 per paycheck, because that’s how much we’re off between their two jobs and how much money has been being deducted.
Dr. Friday 13:28
Now, personally, I think somebody is claiming something other than they should, which means if you’re married with a child, keep in mind, when you say you’re married, it means that you are supporting someone else, right your spouse, be that man or woman or whatever it is, you are supporting the spouse. And then if you say you’ll have one, you have one child. In most of the cases of my clients, at least they’re not supporting each other, both husband and wife both work.
Dr. Friday 13:56
And so if you’re both claiming, married, and zero, and there are no children, you could end up with a situation where you’re still not heavy enough taxes come out, because you claim married and zero, which means you each are supporting each other, which you’re not because you both have jobs. So the tax code is not as black and white. And there is nothing wrong with if you’re you’re in the higher middle income situation where each of you are making more than $75,000.
Dr. Friday 14:22
And you may not have enough coming out that you can claim single or you can claim like this gentleman where he’ll have to have additional come out. Make sure you’re having at least enough breaking evens all we’re asking for because it’s so hard throughout the year you’re working, especially if there’s children. And then you said that the end of the year someone comes back says oh, you owe a couple $1,000 And that that is not easy. So anyways, if that’s happening to you, give us a call if you want or you can I can help you, you know over the phone, but right now we’re live on the radio and you can reach us at 615-737-9986. We’ll take our first break we’ll be right back with the Dr. Friday show.
Dr. Friday 15:10
All righty, we are back here live in studio. And we are here to take your calls and talk about my favorite subject, which is taxes, taxes and more taxes. So if you haven’t filed your taxes yet Well join the club. Many, many people have not filed the taxes yet. But if you are working on your taxes, keep in mind, if you are one of those people in the I think it’s 19 states, Alaska, California, Colorado. Now those are near us. I mean, we got a lot California sets come visiting obviously Delaware, Florida, Georgia, Florida. I mean, Georgia, Hawaii, Idaho, Indiana, Massachusetts, Minnesota, New Jersey, South Carolina, Virginia, and Rhode Island. Any of those, they all got these state refunds. And some of them were called for inflation, whatever they were for people, we’re not claiming them as taxable income. And now many of the states I know California has already come down.
Dr. Friday 16:06
And I think they’ve said that theirs is going to become taxable. So if you got one of those, you may have to amend a tax return if you file but the My understanding is if you haven’t received your refund, and maybe one of these are showing up under you the IRS is holding those returns to wait until processing Someone asked if if they’re going to extend the tax deadline, my understanding is that the IRS has already come back and say no, the extension will not happen. April 18 is our actual tax deadline this year, April 18. Due to Emancipation Day, and all these other holidays, they love to throw in there for us. So if you want to join the show, you can 615-737-9986 is the number here in the studio.
Dr. Friday 16:58
And we are live right now. So you can join us. We do want to talk a little bit about the HVAC systems. And what you’ll be able to claim there is an energy savings out there for individuals. But I do want to make sure that people understand this is part of that whole lifetime. And so if you have already taken off some of that, for for air conditioners, windows, in the last I think it was from 2009 forward. So in the last, what, 10 years more 12 years, and you’ve taken some of those energy credits, you may not qualify for your new HVAC system, if you’ve put it in.
Dr. Friday 17:41
Again, a lot of things like buying the new cars doing automobiles, some of that is not going to kick in because some of the cars had already hit the 100,000. And there’s a lot of things a lot of misconceptions on if you buy an electric car, will you or will you not get the $7,500 and that is something that has to be researched at the time of purchasing, they actually put your event in, and then they’ll tell you if it’s qualifying, I would make sure I get that and print it out to make sure that you don’t end up thinking you’re buying something that you’re going to get this credit on and finding out because some of the cars not made all 100% in the United States and all kinds of other things that you may or may not be able to do anything without them.
Dr. Friday 18:26
The the IRS also has come down the disability can tap into retirement accounts before age 59 and half without penalty. As a general pre 59 and a half usually hits from IRAs or anything you have a 10% penalty, we all know. But if you are considered legally disabled, though, or mentally or physically, then you would be able to get an exclusion on taking money from a retirement account. So that might be something to consider. Still want to get the qualified deduction.
Dr. Friday 18:58
The ghosts or traditional IRAs que CDs, I want to tell you guys about these every seems like a talk about a lot. But I can’t tell you how many people I meet that are age 70 and older that are taking what’s called required minimum distributions, yet they still give a lot or they give money, I should say, to charity deductions. And they’re taking that from their pocket. I mean, this is the only time pretty much especially nowadays without itemizing charity pretty much right now.
Dr. Friday 19:26
So if you give money to a charity, and you are over the age of 70, and you do have requirements on distributions, then giving it directly through your custodial through the QCD. Instead of doing it, you get 100% tax deduction, and you don’t have to itemize. So, you know, I know sometimes it’s easier to take the money out of your pocket or a check that you leave at the church versus having to preempt the charitable deduction, but it is something that you can use and take care of and make sure that you understand that it is a charitable deduction but it’s going to come above the line which is great because that made you can even give more money if you want to don’t get that way.
Dr. Friday 20:06
Holders of cryptocurrency cannot take loss deductions for its decline in value. Okay, this is the same with anything. I have quite a few people that think that first, let’s say cryptocurrency isn’t a security it is not capital gains, right. So there so capital loss write offs from worthless security isn’t available to individual second, cryptocurrency values may have sustained declining even to less than one cent, but isn’t worthless.
Dr. Friday 20:38
So there is no deduction of loss. Third, even if a ordinary loss that breaks you is solo is available to individuals 2017. Reform, remove that. So again, cryptocurrency guys is not being considered a security on the stock now there is Bitcoin at some of them, but a lot of these that are not in there. So you cannot claim losses on your crypto, mid devaluation or anything else under the current tax law.
Dr. Friday 21:09
So this is kind of important to know because I know I’ve got one client that has huge losses, huge losses, and it’s not going to be something that’s going to be able to be able to deduct from his taxes. Another thing with cryptocurrency contributions must be satisfied the rule of property donated. So the IRS says IRS treating virtual currency as property for income tax purposes, a woman who own crypto donated it to a charity and took $10,000 write off see attach the 8382 I’m sorry, 8283 to her return, but didn’t get a qualified appraisal.
Dr. Friday 21:51
So I’m in the middle of an audit right now with a gentleman that had inherited a someone’s house and it had a lot of I don’t call it stuff but a lot of clothing and different things. And he itemized he did everything correct. But the problem is when you take more than you know several $1,000 Even a small individual items, the IRS is right now ruling that you have to have an appraisal because the overall value of all the assets was more than I think it’s like 3000 or $2,500.
Dr. Friday 22:25
So, they’re coming back and disallowing almost $40,000 worth of charitable deductions. Even though every little item was less than $50 he you know, we’re trying to come up with a you know, never thought to get it appraised because it was a small items that were adding up into one big item. But the IRS is coming back and mean that’s an interesting approach trying to give cryptocurrency away.
Dr. Friday 22:52
But you know, without having the value of anything, it doesn’t make a difference what it is specially something like that you cannot take the value because the nice thing is her cryptocurrency when she gave it could have been worth 10,000. And a week or two later been worth $1. Theoretically, when she gave it if it was worth $10,000. She could have taken that even though she may not have been but it’ll sell it for that. So interesting tax advisor situation I’m not sure if I would have went that direction. But it is keep in mind virtual currency or cryptocurrency is going to make it more challenging. So you know losses, things like that are going to be argued if you think you’re going to take them off your tax return.
Dr. Friday 23:35
All right, guys, if you have question on the show, you can easily pick up the phone 615-737-9986 for all of you that may have no idea who I am. I’m Dr. Friday with Dr. Friday tax and financial firm. I’m an enrolled agent licensed by the Internal Revenue Service through taxes and representation. Kind of think of me as a shield between you and the IRS. We are there to help move forward in resolving issues so that way you can actually move on with your life without having to deal with the IRS directly. So if you need help with doing something like that, this is the show I am the person you need to talk to you but right now you can join us live 615-737-9986. We’re going to take our second break. We’ll be right back with the Dr. Friday show.
Dr. Friday 24:29
All righty. We are back here live in studio. I’m Dr. Friday and you are listening to the Dr. Friday show. And we are going to be taking live phone calls at 615-737-9986. And let’s go to is it Janine, caller one.
Caller 24:53
Hi, thank you. My call. I have a quick question for you about Chris currency, I said buys and sells cryptocurrency, like it’s going out of style every day. And we were told by someone at h&r block that if you, you don’t have to claim that on your tax return unless you buy a house. Is that true?
Dr. Friday 25:20
But no, theoretically, now if you’re just buying, they may I don’t know about a house, I don’t know where that would come into play. But if you’re just buying, then the answer is you don’t have to put it on your tax return. If you are selling, it is taxable income if there’s profits.
Caller 25:40
Okay, that’s what I needed to know. Thank you so much for your time.
Dr. Friday 25:45
No worries. Thank you. Appreciate it. All right. Bye. Bye, bye. I think my little my little streamer thing. Oh, there we go. All right, let’s hit Linda in Franklin. Hey, Linda, what’s happening?
Caller 26:02
I would like to know if there’s any difference in filing your income tax is single versus winter?
Dr. Friday 26:11
Well, there is but to be actually truly a widow. You have to have minor children after the year in which the person passed away. So the year that you lose your loved one, you’re still married, because no matter if they died, January 1 to December 31, you would still fall married in that year, the year following that you would be single unless you have minor children. And then if you do have, then they give you a higher standard deduction. If you have minor children. Thank you. No problem. Thank you, Linda. That’s a great question. Appreciate it. Oh, righty, I’m just keeping her Yes. Let’s see. Was it Clara? Fort Campbell.
Caller 26:55
Hi, how’s it going today?
Dr. Friday 26:58
It’s going great. How do I say your first name? Yeah, Kara. Okay. Sorry. I wasn’t too sure if I was right. All right, what can I do for you.
Caller 27:08
So I’m actually medically retired out of the military right now. And I’m trying to figure out what I want to do next. I was actually thinking about going into an accountant or educated specifically to do my old taxes, because I’ve been doing a lot of stock trading now. And I’m wondering if that’s a bad motivation in order to try to pursue that kind of career?
Dr. Friday 27:37
Well, I’m gonna be honest, doing this for 25 years. Plus, I would say, If you love numbers, and you like people, and you’d like to learn taxes are the perfect place for you doing it just because you want to learn your own. Heck, I have people like that basically prepare their taxes. And we have some of the most interesting conversations. Because when when you’re doing your own taxes, and you really understand how they’re being done, sometimes you can actually do something even better than a person that you might walk in once a year and give them the paperwork because they may not have asked you something that they should have.
Dr. Friday 28:08
So hopefully we don’t do that. But I’m just saying, Cara, it’s there’s absolutely nothing wrong with educating yourself, you may or may not choose the one to do anyone’s but your own. But knowing more about tax code or knowing more about socially, if you’re in the stock business with wash sales and everything else, there are ways or situations that you might want to know about. So that way you can save yourself tax dollars or prepare to pay taxes because of a wash sale going the wrong way.
Caller 28:38
What would be the best way to kind of research or to get my foot in the door? Like in terms of trading education, that kind of stuff?
Dr. Friday 28:47
Again, great question. Um, I’m going to suggest I mean, there are a lot of online courses or even joining some of the sociation there’s the National Association of tax preparers, there’s, you know, 10, Tennessee, a society of enrolled agents that you don’t have to be an enrolled agent to join any, there’s several of them that have what I was gonna say is live seminars, I know for a lot of people, and you can find out if they’re doing tax preparation, that’s what you’re going to want to go to a seminar or an online seminar that started with the basic tax preparation.
Dr. Friday 29:20
So you can learn about the schedule D, the schedule, 1040, a E, whatever, you know, the different letters, but the basic tax return. And that will get you at least starting on the track of where and what you want to know. And then once you find out where you kind of fall into what you like to do, or what you want to know more about maybe more about schedule DS and how that extra truly affects taxes and short term and long term, then you can always take more, but I would suggest either going to because the nice thing is that those organizations, you can also meet people that might be able to help you along your path. I know I’ve met a lot of great people with those organizations. So hopefully that helps.
Caller 29:59
It really does and If I have time to ask one other unrelated question, but still absolutely sure. We just put into houses last tax for windows in our house last tax year. They like a little energy sheet something.
Dr. Friday 30:16
So there isn’t a credit out there for you. So the question is, and sounds like you’re young, so you may not have maximized any prior energy credits. So I would definitely be doing your taxes or if you have someone doing bring that information, the Energy Star rating so that they can see if those windows would meet the criteria. Okay. Perfect. Thanks for call. I appreciate it. Thanks so much. All right, let’s say, Diana.
Caller 30:45
Hi.
Dr. Friday 30:47
Hello, sweetheart. What can I do for you?
Caller 30:50
Well, I have learned so much today. On your show, you had mentioned earlier that there was a gentleman who had inherited lots of stuff from his parents, and me and my siblings are going to be in that category. Individual pieces aren’t worth five can $20 but as a whole, it’s a lot of stuff. So my question plus their their real estate. So my question is, would a revocable living trust. And I guess this is more on real estate than stuff, prevent me and my siblings from paying the capital gains tax on the real estate?
Dr. Friday 31:45
Well, I will say I’m an advocate for trust, okay, not necessarily for what you’re asking. But because I don’t really like lawyers. And I mean, nothing wrong, lawyers got lots of friends, but then having because if you go through probate and everything else, it just becomes a lot more expensive. Now a lot of people say they have to pay to have a trust set up. And yes, you do. But in the big picture, I’d rather pay while I’m alive and have it set up and have to leave that to my beneficiaries to have to go through probate.
Dr. Friday 32:12
Okay, that being said, if you are left a home under current tax law, your your siblings and you are not going to pay any tax because we get what’s called a step up in basis. So at the time that the final pair, and if there’s two or if there’s only one, whatever, when they pass away, whatever that is, you may need to get an appraisal within a 30 day period. And that sometimes that can be very simple, especially if you’re going to sell the real estate agent can give it to you.
Dr. Friday 32:38
And then when you sell it, so you know, but there was likely not going to be a lot of capital gains on the house itself. But if the house is full, and you might say, hey, you know what, we’re just going to like Goodwill, and we’re so take this all to Goodwill, which is what this gentleman did. And thinking that he had went I mean, this Joe was great. As far as documentation he put on there, you know, he went through the goodwill thing, and he bought every sweater, all this stuff documented the whole thing. But the IRS came back because of the value of the amount of loads that he had taken to Goodwill, that it was over the maximum of 2500.
Dr. Friday 33:15
So my suggestion, and I resent bringing it up, because we do have quite a few people that inherit from their parents would be to get somebody to come in there and give a rough estimate an appraised value of the entire household goods. Some of them you may sell and some of it you may keep doesn’t make a difference. If you keep it again, there’s no tax due because you get the value of the current, but getting some of some sort of appraisal before you start taking it all or or giving it away might be a good plan if you want to use that giveaway on a tax return.
Caller 33:50
Okay, thank you so much. I appreciate it.
Dr. Friday 33:54
Thank you very much appreciate you too. All right, guys, we’re going to be getting ready to be taking our last break here. So if you have a question that you’ve been waiting and saying, oh my goodness, I have one question. You might want to pick up the phone 615-737-9986 will be the number you’re gonna call here in studio. And, and then we can always go over and there really isn’t. A lot of times people think oh, this is kind of I should know the answer.
Dr. Friday 34:23
This is kind of silly question. But when you guys have the bravery to actually call a radio station, ask these questions. There’s a lot of people listening, that don’t really want to or be able to do that. So we want you to be able to feel like oh, I can you know, when you ask those questions, totally appreciate it. And those questions are great this week. I mean, they’re, you know, leading people to at least think a little bit about how you can do that and how maybe you can even set up your estate or your information so that way when something happens, you know, you’re not leaving some of this waiting for someone else to have to deal with it again. I’m not an attorney.
Dr. Friday 34:59
I am an advocate for trust solely for the purpose is that with a trust your assets, your information is not public knowledge. It doesn’t make a difference you have a lot or little, it’s still when it goes to the court that makes it public. And therefore everyone knows a little bit more about what’s going on than what some of us might prefer. You know, we don’t need big brother to know every little thing. It’s not like you’re hiding, but it’s also like you’re not in plain sight. So all right, we’re gonna take a quick break here. And that way we can get to the phone lines. We’ll be right back with the doctor Friday show.
Dr. Friday 35:31
All righty, we are back here live in studio for the last part of our show. So if you want to join us live, now would be the time to pick up the phone 615-737-9986. And we’ve got j that helped do the break. So let’s continue on the line. Hey, J.
Caller 36:00
Hey, Dr. Friday. Good afternoon. I have a question about the Aure and giving it to 401 K’s I’m going to be saving you to next week. And my financial guy told me last week that they had moved that to 73 before you have to take money out. And he said that’s the only time you could give it to a charitable is when they require you to take it out. Is that correct?
Dr. Friday 36:32
No, it’s not based on the law because the QCD went into effect at the age of 70. My understanding and unless that changed, and I can look it up and get back with you. But as of last year, you know, 2022 the QCD was still fundable from the age of 70 on even though RMDs are heading towards 75, actually, but right now it did go to 73. So, but the QCD is available for RMDs from age 70 on is is my understanding, I can definitely look up the tax code on that and make sure I’m right.
Caller 37:12
Okay, because last year, I didn’t have to pay any our income was the exact same thing this year. And we’re having to pay so.
Dr. Friday 37:20
Yeah. So it says here, it says in 2022, you had to be 72. So that was the age limit in 7073. It says that you have to be seven, you have to be under eligible for RMDs. So theoretically, under the current code, it’s saying that RMDs are qualified for each year, the IRA owner 70 and a half or over can exclude from gross income up to $100,000 of both his or her spouse for a QCD. So you might want to double check with the you know, with them again and just say, you know, hey, my tax person said that there is something that sets aside for QCD at age 70 and a half. And we can pull up IRC if we need to, if you need help just email me or whatever. But I think I think you should be able to qualify it. Yeah.
Caller 38:17
And donate it and then instead of, you know what I’m saying.
Dr. Friday 38:23
Qhy not? Why not give it to charity versus give it to the IRS? I agree. Thank you my No problem, sir. Thanks. All right. Let’s hit Pete in Nashville. Hey, Pete, what can I do for you?
Caller 38:37
Hey Dr. Friday. I have a 401 K. And this year I’m turning 72. So am I required to take the RMD?
Dr. Friday 38:49
No, that’s the beautiful thing. So as if you are 72 or younger, in 2023, you are not required until the age of 73.
Caller 39:03
Oh, so I don’t have to take until next year?
Dr. Friday 39:05
Exactly. And who knows we’ll cross our fingers. Pete maybe they’ll change it to 74 by next year. No, I’m just joking. Right now you you will be good right now you have one more year before you have to have the mandated RMD
Caller 39:20
Okay, and they send your 1099. So say if they if I have to withdraw maybe $3,000. Right. Where did you put that on the tin foil because I know they had like I already distribution. But I don’t see a 401 K just well you put a
Dr. Friday 39:39
401K is an IRA when you’re when you hit over the age of 65 and your or when you’re in retirement and put an age on it. But theoretically a 401 K in an IRA are the same, but it’s going to fall on that was at line seven or eight where it says IRAs on the on the front of the 1040 that’s where you’ll put it
Caller 40:00
Okay, and one more thing. Sure if your income is less than your standard deduction, you don’t have to file a tax form. That’s right. Okay, but you can’t file one right?
Dr. Friday 40:13
And the only reason you would file one in my personal opinion is if you had withholdings, then you want to get your money back. But if I mean, there’s no mandate that says you have to, but there’s nothing that says you can’t. So you can do it either way you want Pete at this point in the game.
Caller 40:28
Okay. Well, I look like you.
Dr. Friday 40:31
No problem, buddy. Thank you. Alrighty, so let’s see here, let’s hit on a few other things that’s happening in the world. One thing is the f bar. For that’s only for people that have bank accounts overseas.
Dr. Friday 40:45
But you know, a lot of people have not reported them in a long time or ever report them. Keep in mind that the penalty is 50% per year, it can theoretically go over 100%. And there has been many tax codes up to $2 million. One tax code came in a US citizen hadn’t reported it, they took it to court saying that this was an unfair because under under the IRS code, the Eighth Amendment, you know, they can’t charge you a penalty more than what you actually had. But in this case, they’re saying this isn’t a penalty, not sure what you want to call it, but they are reporting it as, as basically just the fine, which to me is a penalty, but the Supreme Court has refused to hear it.
Dr. Friday 41:24
But that is where they’re at right now. Keep in mind that the 10 40x if for some reason, you have to file an amended return, it can be electronically filed, I will tell you, we filed several of them earlier, this last year in 2022, and then 2021. And we had some problems with the E file showing that they were e file but clients saying they call the IRS and they’re saying they don’t have them.
Dr. Friday 41:46
So I am still an advocate for E filing. And they will now do the refunds electronically, which they haven’t been able to do. They are saying it’s taking up to 20 weeks to process or more to get the refunds 20 weeks, not 20 days, guys 20 weeks to get refunds on amended tax return. So if you have to file an amended tax return, I am an advocate for doing it electronically. But I will say that when you do that, just you know you need to follow up and make sure that it’s actually being posted properly, because it isn’t always, always doing that for us when we wanted to. All right.
Dr. Friday 42:26
So let’s see what else we have. You want to make sure that you are dealing directly with we all heard the IRS is going to be hiring over 5000 people. I’d love to know where they’re getting these people last year, only 13% of callers reached a live human being I can attest to that people are think it’s even less than 13% of my calls. So I will say if we didn’t have the Tennessee tax advocate office, I don’t know if we would have any resolution in my office because reaching a human being at the 800 numbers. I mean, getting through without being hung up is horrific. But they are trying to change that we will see and keep a close eye on if those numbers or if they actually put them all towards the service.
Dr. Friday 43:09
Because when I was talking to one of my friends in the Revenue Office, and they were basically saying that they understood they were hiring a bunch of people to actually do audits. So audits is great for them to be able to get money. But that doesn’t help us. You give us a letter and we tried to do resolution and then they come back and say that we can’t resolve it because we can’t reach a human being to actually get the resolution to be done. So we’ll see what the IRS does and how that works through.
Dr. Friday 43:35
Don’t forget the 1099 case didn’t get pushed off for people that were using Venmo. And those kinds of organizations that did get pushed to 2023. But I have had some clients get it in 2022, which means if you do receive a 10 99k, you do have to report it, you can’t get it null and void and you can’t get it taken away. So if you have had a small business on the internet, or you may not thought of it as a business, but the IRS may be interpreting as that, and you have received a 1099 K, please do not ignore any tax form, but do not ignore that tax form. Make sure you received all of your tax forms. I’ve done a couple tax returns and I’ve already had people say, “Oh wait, I guess I didn’t have this.”
Dr. Friday 44:18
So you know right now you should have probably most of your tax forms. But if you’re looking for 1099 B’s from you know TD Ameritrade or fidelity, some of those may still be been updated or whatever. So we just need to make sure again, double check that information before you send the tax returns so much easier to fix a tax return before you file it than to have to file amended tax returns. So if you have questions you need help you can reach our office at 615-737-9986 Easiest way to reach us is by email friday@drfriday.com.
Dr. Friday 44:51
Or you can know it’s like, you know, I have no idea who this person is what do I do like I’m an enrolled agent which means that I can do IRS negotiating and help you with IRS issues. And you might want to give us a call because some of those big national ones, they always sound like the right here in your backyard and then you find out that attorney you’re dealing with is in Tennessee or is in Texas or Florida, not here in Tennessee. If you want someone local, you need to call our office. The website is drfriday.com. Again, phone number 615-367-0819. That’s the easiest way you can also text that number 615-367-0819 If you haven’t filed taxes, you want to get straight with the IRS you want to deal with 2020 to start with this year, guys, let’s get it filed properly and get it done. So that way we don’t have to keep going backwards.
Dr. Friday 45:50
All you have to do is reach us 615-367-0819 or email friday@drfriday.com. Start getting your tax papers together. Make sure you have them all organized. Make sure you double check, maybe you work two jobs maybe you get one of our people have gotten some money by opening up a bank account and they forgot about that money that they had to pick up on their tax return. Make sure that if you have children that you’re doing the 1099-Ts if they’re in college, and the 1099 Q’s if you have 529 plans. Don’t forget the little things. All right. Hope you guys have a wonderful Saturday. Enjoy this weather because who knows when next Saturday is call you later.