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In this episode of “Dr. Friday Radio Show”, Dr. Friday, an enrolled agent licensed by the IRS, offers valuable tax advice and financial counseling to listeners dealing with various tax situations. Topics covered include:
- Understanding the difference between federal and state tax laws, especially regarding the sale of property and capital gains tax.
- The importance of timely tax preparation, with a focus on business tax returns and the upcoming March 15 deadline for LLCs and corporations.
- Navigating state tax obligations and the implications for businesses operating across state lines.
- Guidance on filing annual reports, business licenses, and navigating franchise excise taxes.
- Tips for handling 1099 forms, both for businesses and individuals, to ensure compliance with IRS requirements.
- Advice for individuals working remotely for out-of-state employers and the tax implications thereof.
- The episode also features listener call-ins, providing personalized advice on specific tax queries, including rental property depreciation, the taxation of social security and pensions for seniors, and the tax treatment of income from YouTube content creation.
Transcript
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.
Good day.
This is Dr. Friday and we’re live here in studio.
And if you have a question, you can join us live as well at 615-737-9986.
615-737-9986.
For many of you that may not or maybe it’s your first time listening to me on the radio,
I’m an enrolled agent licensed by the Internal Revenue Service to do taxes and
representation.
representation.
That is pretty much all I do.
So if you’re working on your taxes this wonderful weekend, or maybe you’re making some tax
planning
planning
for 2024 and you’ve got a question, possibly something to do with inheritance or selling
or buying property, paying the capital gains tax, that kind of situation, making sure you
understand what the federal tax law is compared to the state.
Kind of found out an interesting situation because we seem to have had a large number,
in my opinion, a large number of individuals that were thinking that if they reinvested
the money from the sale of their home, they weren’t going to have to pay any kind of
federal
federal
taxes.
I did find out that California state income tax has that available transaction on it.
It is not a federal law, but a state.
So you really do need to understand what is state, what is federal and how that works.
So that way you understand how you’re going to be able to save.
In most cases, you don’t want to reinvest the federal money if you’re going to have
to go pay 50 or 60 or $70,000 in capital gains.
You don’t want that tied up in something you can’t get back.
Very hard to, and no one wants to finance.
Interest rates with the IRS is now almost 12%.
Penalties run between 25 and theoretically there could be three or four different ones
and eventually could be over 100% of what you owe them.
So depending on how long and what the penalty is.
So it’s important to understand how that’s working and what you’re going to do.
So right now we’re here in the office ourselves working on tax preparation.
First things we’re working on of course mostly is business tax returns.
We only have till March 15th to file these tax returns.
Be that a 1065 or an 1120 S assuming that they’re on calendar years and that they would
be due on March 15th.
That’s right.
LLCs, now I’m not talking single.
These are the multi-member LLCs that file on form 1065 or ones that elected to be
corporations
corporations
on 1120 S. Both of them need to file the returns or the extension by March 15th.
And then don’t forget to do your state tax returns.
Anybody that is an entity in Tennessee will need to make sure that they have filed with
the secretary of state.
You will have a business license, gross business receipts, as well as a franchise excise.
It could be as little of a hundred dollars, never will be less than $100.
That’s the minimum fee, but it could always be up to 15, 20 to large numbers depending
on the type of business and how much gains that you have.
So again, very important to make sure.
And then if you’re working in other states, it is the law.
Like if you work in Kentucky, if you have a business that even though you’re a Tennessee
business, but you’re working and physically earning money in the state of Kentucky,
Kentucky
Kentucky
says, wait a second, we want our share of that money.
So you would have to file a Kentucky and a Tennessee.
Now there are ways of splitting that by percentages so that you can not have to necessarily
pay
pay
tax in both states, but it’s important not to let those kinds of things slide.
We ended up with a lot of different audits that often start out as one state or one entity
doing something.
Then we find out that, you know, multiple states come into play in different situations.
So, and also right now your annual report, if you’re an LLC or corporation, go ahead
and get it filed.
I believe we tell have until April 1st, but time flies when we’re having fun.
And so you got your annual reports, your gross receipts or business licenses.
Those could be multiples because you have county and city.
And if you did less than a hundred thousand, in most cases, you’re not going to have to
pay anything but the fee, the $15 fee for a renewal county, and it could be 15 for city.
And then you also have your franchise excise and of course sales tax always due.
And if you’re on an annual, you’re late already, cause that would have been due on January
20th.
So all kinds of little things.
The first quarter of this, of the year is always the complicated one.
If you did not file 1099s, you’re sitting there going, I know I’m supposed to, but I
didn’t do it now it’s too late.
It is not too late.
I am a firm believer that the 1099, no matter when you’re preparing your taxes to go ahead
and submit those 1099s.
Keep in mind, if you are a person that receives money from somebody else as a self-employed
individual, tax law does not say you have to wait for that 1099 to file your taxes.
What it says is you have to be accountable.
You need to know how much money you have earned throughout everything.
You don’t need to wait for those 1099s and say, Oh, this must be all I earned because
the odds are the IRS also knows that if you only report what’s on 1099s, unless you can
show that you worked for one or two people and they, so the two people that 1099 you
and you didn’t do any small jobs, they’re going to do an assessment, possibly assuming
that you did not report all of your income.
It’s like what the 1099 case came out.
I had a lot of people that saw the reported cause that was, that was mandated.
This is cause it went through the bank account.
But in all reality, again, the IRS has come down on many different cases saying that was
an underreported income because of the situation where you have, uh, checks, cash that come
in and just because you did not receive any documentation on it, it is your job as a
business
business
owner to track all income in and all expenses out.
So just putting it out there.
If you’re a business owner and you haven’t finished your 1099s, well yes, you should
have had them out by the end of January, but it is better to do it late than not to do
it at all in this situation.
So you should still do it.
And if the persons already filed their taxes, they should have picked it up already
anyways.
anyways.
So it have a zero effect on the people you’re 1099, but you would be in compliance with
what the internal revenue wants.
Very important guys.
It’s something that you don’t want to just let slide through.
Again, if you want to join the show, if you’re listening on this very chilly Saturday and
you’re working on your taxes or you’ve got some sort of tax situation, maybe you’re even
helping out your parents or friends and they have some situations where they’ve either
cashed out 401ks or maybe they they’ve lost the loved one.
How does that affect the tax returns?
Um, to be able to make sure you’re getting the right tax advice or if you’ve got a basic
question, we’ll do our best to lead you there.
The phone number here is six one five seven three seven nine nine eight six six one five
seven three seven nine nine eight six.
Um, another thing happened this week, which I think is kind of interesting where nowadays
we have a lot of individuals that work from home, but the companies they work for are
in other States.
So again, let’s use, I have one that came in and the, the wife works for the company
in Tennessee.
I mean, she, she works here in Tennessee.
The company is in North Carolina, so they’re taking taxes out on her income because that
is the state law.
Anyone that earns income in North Carolina, no matter where you live, you’re going to
file taxes.
So of course we filed the taxes and instead of getting all of her state refund back,
because
because
she has to report what was earned in that state, even if she never stepped foot in it,
she ended up with $62 refund out of a $600 a withdraw from her check.
So again, if you’re going to work for other States, some States aren’t quite so bad, or
if you live in South Carolina and you work in North, sometimes they’ll give you credit
for one side or the other.
The hard side is when you live in Tennessee where there is no state income tax and so
there’s no brotherhood or sisterhood where you can exchange, okay, I won’t pay South
Carolina tax, I’ll pay North Carolina, et cetera.
California is another firm believer in that concept where you have a situation where if
you work from here, you can file a non-resident in California, but you’re never going to
get
get
dollar for dollar back of that money because even they’ve earned the money in California,
no matter if you live there or not.
So that is a very, very important thing to understand how the tax law works and how you’re
going to be able to get it because most employers are going to have to follow state law.
And so when you get a job out of state and still live in Tennessee, make sure you build
in the idea that you might be paying an out of state tax situation.
Just because you don’t live there doesn’t mean they’re not going to take your share.
Are we ready for Ann, Anna?
All right, let’s hit Anna.
Hey Anna.
Hello there, Dr. Friday.
My question would be if I have a place that is cleaned by someone and she has her own
cleaning business, am I required to attend her a 1099?
And if so, can you explain that to me a little bit and what the amount is and whatever?
Yes ma’am.
And answer is yes, she is providing you a service and that’s how we kind of define 1099.
Someone like my lawn person, my guy that comes through and trims all my trees, as long as
I pay them over $600 a year, then I need to be paying, sending them a 1099 for those
services.
services.
If this is your in-house cleaning person, again, you are supposed to, but in my case
is some of the stuff would fall on a business like it’s a rental, right?
If the person goes out and does my lawns and cuts my trees and I’m going to deduct that
on my tax return, I can’t deduct if I didn’t 1099 them in all honesty.
I mean, you can, but if you’re caught, there’s a penalty for not doing it correctly.
So if this is your home cleaning lady, that may be a little harder because most people
don’t, but any in-home person that we pay, cook, cleaning person, sometimes we have
somebody
somebody
that might be like an assistant that helps out with an older parent, all of them should
be getting 1099s or household employee W-2s.
Okay.
Well, I think that answers my question.
And if that has not been done before, then how would you end up prior years?
I wouldn’t.
I would actually just move forward doing it correctly at the time that you found out about
it.
Okay.
All right.
Very good.
Thank you so much for your time today.
I appreciate it.
Thank you for calling.
I appreciate that.
Okay.
Let’s try Steve in the borough.
Hey, Stan, what’s happening?
Would it be Steve?
Oh, it could be Steve.
Let’s try Steve in the borough.
Hey, Dr. Brody, how are you doing?
I’m doing awesome.
Thanks, Steve.
Hey, this is awesome.
I finally get to call you.
I hope it’s going to work out good.
Hey, I’ve always filed.
My wife and I both work hourly.
We just file.
I’ve been filing it every year because it’s nice and simple.
Well, we bought a little farm a few years ago.
It’s a long farm.
It’s a long farm.
It’s a long farm.
It’s a long farm.
It’s a long farm.
It’s a hobby farm, if nothing else.
Most of us prefer not to be hobby farms.
Most of us like to be considered a working farm because then, I mean,
besides the fact that a green belt does require $500.
I want to say it’s $1,500 every three years, $500 a year,
something like that to keep our green belts.
And so theoretically that could still be a hobby farm.
But I think it’s a good thing.
I think it’s a good thing.
I think it’s a good thing.
I think it’s a good thing.
We depreciate or we enter assets or things when the business physically starts.
So if you start the business in 2024, you can move all that into the business in the
year of 2024 when it actually was used to do it.
So that would be my suggestion.
If you still plan to open a business, actually open it, see if it can make it successful
and generate business.
And if you can, then it’s legitimate business and then you can depreciate or write off
these
these
expenses depending on what they were.
Okay.
Well, that’s great.
I was worried that I would lose every bit of the write off that I bought last year.
So I was worried about that.
Yeah.
No, you’re good.
You just need to do it.
I didn’t make a dime last year, but this year I’ve made some money.
Okay.
So the attempt was made.
So it sounds like in 2024, you’ll be able to take that investment and pay yourself back
or use it as a tax loss, whatever it might be.
As far as business, would you suggest DBA or LLC or?
I would start with a DBA in most cases.
If you want to get a good general liability insurance, I don’t know what you’re doing,
but at least let’s make sure the business is going to be a viable business before you
start investing into LLCs, which then you have a $300 annual fee.
There’s a whole different cost you, you know, a thousand dollars a year to keep that one
open basically or paying and doing things.
So you want to be able to make sure that’s it, you know, that’s really going to work
as a business.
Then I would suggest moving into probably a single member LLC.
Okay.
So that works.
Okay.
Thank you.
Thanks.
Appreciate it.
All right.
So if you want to join the show, you can at 615-737-9986, 615-737-9986.
We’re taking your calls here live in studio.
Those are great questions.
And, you know, bringing back the farm, not in Steven’s case necessarily, but many people
have working farms.
You may have bees, you may have lumber.
You may, it may not be what you think.
Always the more traditional is cattle or crops of some sort, but you know, if you’re
working
working
and making money and most of us for the greenbelt have to have some money coming in to
qualify,
qualify,
you may want to make sure that you’re maximizing those.
But like anything else, it doesn’t necessarily meet with businesses.
You, you have basically three years to make a profit.
If you don’t make a profit within three years, the IRS is pretty much looking at it as if
you’re just, it’s a hobby.
You’re not really attempting to make money.
You’re just using it to somehow generate a tax loss.
And let me clarify that as well, is that if you’re losing money every single year, I had
an auditor once say to me, what kind of person, seven, 10 years, I think this one company
had had a loss 10 years in a row.
And she said, who in their good mind would want to have a business that keeps losing
money?
Who can afford to lose a hundred and plus thousand dollars in 10 years on a business?
So you know, I mean, if you’re really in business, you’re not in business to lose money.
You’re in business to make money.
So keep that in mind.
That is the mentality that the IRS is looking.
Now farms, especially with ones that do certain types of crops.
I mean, I know my nut crops can take almost 10 years to have a mature tree.
So, you know, one of those situations where you want to be able to make that work for
you.
So tracking, making sure you’re managing it and everything else is going to be important
for the thing that you have happening.
So tracking all your expenses and doing that is a great idea.
If you want to join the show, you can at 615-737-9986, 615-737-9986.
Of course, at this time of the year, we get a lot of different types of businesses and
situations.
And often we deal a lot with trust and estates.
And so I do want to let you know that most of them being that they’re not always on a
physical year end or a calendar year and they’re on a physical year and maybe that you
didn’t
didn’t
get yet your K-1 or your distribution information.
Make sure you’re holding on to that.
All right.
So you have and they can be the same thing with any investment or anything else.
Just make sure that you’ve got your investments, that you’re dealing with your situation.
So you’re able to take care of your taxes.
You don’t want the IRS coming back and saying, oh, wait a second, we’re going to change
your
your
taxes and this is how we’re going to make this happen because you didn’t report something.
So change of income is never a good idea by the IRS.
I don’t like the IRS changing my tax returns.
So don’t rush to file just because you want to make sure you have you want to make sure
that
that
you have everything on your tax returns before you hit that send button.
Because a lot of times those schedule B’s, those 1099 B’s from your investment companies,
we’re still getting some in.
So it’s important that you have that going for you.
All right.
Let’s hit Doug before the break if we can.
Doug in Bowling Green.
Hey, Doug, what’s happening?
Hi, Dr. Friday.
Thank you for taking my call.
I have a quick question about business mileage.
I’m set up as a corporation.
I own my own business.
As far as business mileage goes, am I wiser to just tabulate my mileage during the year
and take it as a federal deduction or reimburse myself from the business on a monthly
basis?
basis?
Is this a C Corp or sub S Corp?
It’s a C Corp.
OK, I’m going to say and I operate as a C Corp too.
I do it all through expense reports on a monthly basis.
And then that way it reimburses me and I don’t have to deal with any of that on because
it’s
it’s
hard to do a C Corp on your own personal side because you’d almost have to do it as because
on K1s we can do it.
But when it’s a C Corp, we only take our W2s.
You’re really just an employee otherwise.
And there’s no deduction on your personal tax return for your miles as an employee.
So you have to have a corporate setting which basically says we’ll do reimbursements,
a reimbursement program where you can do expense reports for meals and miles and hotels,
whatever
whatever
might have come.
And then every month the corporation writes off the expenses and they reimburse you
personally.
personally.
Perfect.
OK, that’s what I thought.
I thank you so very much.
Hey, great question.
Thank you.
Let’s hit Linda really quick.
Hey, Linda.
Hey, I’m a senior and I was wondering, do I have to file taxes?
Well, what do you have for income?
Can you give me a rough rundown?
Social Security.
I draw about 18000 a year from Social Security, Social Security or other.
And pension.
Yeah.
OK.
So how much if you were to just educate guests, what is your pension per month or per year?
Well, that was including it too.
I know.
So I mean, because the problem is, so just give me what your pension is compared to Social
Security.
Either one.
What’s the pension for a month or a year?
My pension is like 378 a month.
OK.
And my social is about.
So you’re not required to file.
You are not required to file.
When, when is it?
What does it get to?
What limit to file?
So you take half of your Social Security and and add all your other income.
And if you come up to twenty five thousand dollars, then you will be in a taxable
situation.
situation.
Oh, OK.
OK.
If I do yours, it’s not going to get there.
So we should be good.
Oh, ma’am.
Thank you.
Thank you very much.
Yeah.
All right.
We’re going to take our second break here.
When we get back, we’ll get some more of your phone calls at six one five seven three seven
nine nine eight six six one five seven three seven nine nine eight six.
We’ll be right back.
All right.
We are back here live in studio already halfway through the show.
So if you are thinking about a tax question you might want to have asked or if you’re
thinking about what you need to be doing to start considering for twenty twenty four.
thinking about what you need to be doing to start considering for twenty twenty four.
I do want to bring out because a lot of times when people are M.D.s require minimum
distributions because of the age difference in the changes there has been.
distributions because of the age difference in the changes there has been.
You know, it used to be 70 and a half and then it was 72 and then it was 73, which is the
current law.
current law.
Seventy three.
The year in which you turn 73, you’ll start taking your RMBs.
But the quality of qualified charitable deductions or the QC D has been instill in effect
for people that are 70 and a half or older.
for people that are 70 and a half or older.
So even if you’re not taking requirement of distributions, you can take one and do a QC D
for qualified charitable deduction.
for qualified charitable deduction.
Nowadays, it’s very difficult. I have some clients. I mean, I really do think Tennessee has
probably some of the most amazing people that do charitable work and contributions.
probably some of the most amazing people that do charitable work and contributions.
But in many cases, based on income, you don’t always meet that standard deduction that
comes.
comes.
You may be giving eighteen thousand dollars a year, but you don’t have a mortgage and your
property taxes are only three or four thousand.
property taxes are only three or four thousand.
You could not have an actual deduction on your tax return.
And again, let me clarify. I know many of you do not do those deductions just for the hope
to save a few dollars in taxes.
to save a few dollars in taxes.
But does anyone say that doing it is going to hurt you? You could even give more.
So you might want to talk with your financial planner, with the custodian of your
retirement IRA or 401K.
retirement IRA or 401K.
Tell them that you’ve heard about qualified charitable deductions.
You want to do this because it’s a 100 percent deduction.
So if you take ten thousand dollars out at the age of 70 or half or older and you use it as
your requirement of distribution,
your requirement of distribution,
you can then contribute that to a charity with no tax.
You won’t pay tax on it. It will pass straight through. It’s just a great tool to have.
It’s not for everyone. And especially if you think about it and the people that maybe don’t
even you give two or three thousand dollars a year
even you give two or three thousand dollars a year
and you’re not going to get that deduction on your tax return in any way.
So this would be a way of doing it through your RMD, requirement of distribution.
Again, that’s a qualified charitable deduction. It does exist.
And even if you’re not yet old enough for a RMD, you can take them and do a QCD.
So you’re not sure. I would definitely suggest talking to your financial planner.
See if there’s anything that might be able to be done, because again, many of you are
already giving money.
already giving money.
The difference is you’re writing a check out of your checkbook after you take the money
from your IRA.
from your IRA.
So you get a distribution, you put it in the bank and then you write the check to the
charity.
charity.
By doing that, this money is now taxable and you’d have to deduct the charity afterwards.
By having them write the check directly to the charity and it’s a QCD, then guess what?
We don’t have to pay tax. So it’s not changing anything major in your life.
It really is just a matter of doing what you need to do and how you need to do it.
So do it the right way and put a few more dollars in your pocket or if you really wanted
to,
to,
you could even give more money to charity. Your choice.
So again, talk to your financial planner or the custodial over your IRA.
They’ll be the best to help you or lead you through how that works.
If you have a question and you’re not too sure where to start, I will be more than glad to
try to help it out.
try to help it out.
615-737-9986, 615-737-9986.
Again, we are in the process of completing 2023 taxes and in many cases,
we’re having some people that don’t have all their documents, so we’re having to get them.
If for some reason you do not receive a W-2 from your employer
and they say they’ve sent it or they want you to pay or you have to physically come by and
go pick it up
go pick it up
and that’s not a possibility for you, you can sign on to the IRS,
irs.gov and click on transcripts and you can get a copy of that W-2.
It’s a different printout, but it will give you the information to be able to put it
through your —
through your —
so you can finish your tax return.
Sometimes you can use your final paycheck, but not always do people know if it’s really
their final or not,
their final or not,
because sometimes the numbers don’t match.
So it is important to make sure you do have your final paycheck, not just one in December
thinking it’s close enough.
thinking it’s close enough.
And if you quit sometime between the year, your best bet is to try to go to the IRS.
You can fill out a form on the — if you’re doing your own taxes, there is a place that
says I did not receive the W-2
says I did not receive the W-2
and you put the numbers in and then you’re able to process that.
And if you have worked for them in the past, that’s fine.
If you don’t, you do need the federal ID number to do that.
So you’d have to call them and get the federal ID number or, you know, nowadays it’s
amazing.
amazing.
I had a client, again, came in yesterday and he’s like, well, his friend needed a copy of
his own W-2,
his own W-2,
the work he worked at, this gentleman no longer has a car, he can’t get across town to go
get it.
get it.
They refused to email it or fax it or even send a picture of it to him.
So I don’t know why employers can be somewhat difficult.
I’m sure it’s because they weren’t happy maybe with the way things got left.
But I will tell you, if you are an employer holding a W-2 for ransom in essence, which is
what I call this,
what I call this,
there is a fine that can be charged against you for doing that.
So, again, your job is to deliver this.
Now, you don’t have to chase down that employee.
If they’ve relocated and you mailed the W-2, it is not your job to go and find them
somewhere else.
somewhere else.
It is your job to make sure that they’ve received the distribution.
That’s why so many now have actually went to getting their W-2s electronically.
So people, no matter if you’ve moved the wrong address, and let me clarify, if the W-2 has
the wrong address on it
the wrong address on it
and your employer is not necessarily obligated to correct that address,
and you should have updated it with them prior to the end of the year, just so you know.
The Social Security number does need to be correct.
The legal name that you’ve provided to them, because sometimes people work off of names
that are not their legal names.
that are not their legal names.
They are only their nicknames, I guess is what I’m going to call them.
But they do need to make sure that the person is not going by a different name.
So just so you know, whatever name you put on your W-4 is supposed to be your legal name.
That will be the name the W-2 will be issued at, and then you’ll have to go from there and
take care of your situation.
take care of your situation.
But please, look at your pay stubs throughout the year.
Check. If you’ve relocated, contact those people and let them know that you have relocated.
Give them a, just send them a little postcard.
Say, “Hey, can you update my file when you get ready to send the W-2s?”
You know, because if you don’t get the W-2, then it’s almost impossible for you to file
your taxes properly.
your taxes properly.
And same thing if you’re dealing with an older parent, and if they have relocated, Social
Security statements don’t come out, stock portfolios.
Security statements don’t come out, stock portfolios.
All of that has to be changed.
If they’ve got a pension from somewhere else, that all needs to be updated so that they’re
getting their year-end paperwork.
getting their year-end paperwork.
And then they can see if they need to file taxes or not.
But if you’re helping them, that’s something a lot of times people don’t do.
So it’s really important that if they’re doing that, that you help them out with that.
And most of these things can be done online, on the internet.
Most of the pensions and all those have where you can submit change of address for people.
But you just need to figure out what you have or what you need to do.
All right, you know what, before the break, let’s hit Ann in Hermitage.
Hey, Ann, what can I do for you, sweetie?
Oh, hi, Dr. Friday. I’m trying to find out about rental property depreciation.
Do I? I just bought it this past year, and I’m wondering if I use the appraised value or
the actual cost minus the land.
the actual cost minus the land.
Right. We use actual cost for purpose of depreciation, and then the land cost.
And a lot of times you can get that from an appraisal or the property tax assessors, what
the land value is, or if you know it.
the land value is, or if you know it.
But yes, so you want to put in what you paid less, back out the land, so you’re really
depreciating the building only.
depreciating the building only.
Okay, because of course we know the appraisal, the amount for property on tax records is
way lower than the actual fair value.
way lower than the actual fair value.
Absolutely. In the perfect world, hopefully you paid a very low price for it and it
appraises for a lot more now.
appraises for a lot more now.
But that only comes into play, an appraised value only comes into play when someone passes
away and we get a step up in basis.
away and we get a step up in basis.
I mean, for the tax side of things.
Otherwise, we’re always working off actual pay.
Okay. And is the table for 27.5 years or has it changed to 30?
No, it’s still at 27, I think, or 28, something like that.
27.5? Okay.
Commercial is on the 30, it’s almost 30, but the 39.
Commercial is 39 because I’m working on commercial.
But residential I do believe is still at the 27.8 because I always just think of it as 30.
Okay. Now, what they’ve said on some of the things that I’ve been trying to read about this
is it’s 25 percent land.
is it’s 25 percent land.
So if I take the value of whatever I paid and do 25 percent of that, I should come up with
how much land to deduct.
how much land to deduct.
Would that be right?
That would be correct. Yes.
So they’re saying that 75 percent of the value of the house or whatever is the house and 25
percent was land.
percent was land.
Yes.
And land we don’t depreciate.
Right. Of course not.
Okay. Wow.
That helped me very much.
I appreciate it.
Have a good day.
No problem.
Thanks for listening.
Appreciate you.
All right, guys, we’re going to get ready to take our last break for the day.
So if you’ve got some questions, you’re not too sure what you’re doing or just maybe if I
can help you.
can help you.
A lot of times you guys know the answer, but you know, you need a little assistance on
that.
that.
No worries at all.
Six one five seven three seven nine nine eight six is a number here in studio.
Six one five seven three seven nine nine eight six.
When we get back, we’re going to talk about your tax questions and cover a few more
different situations that may be coming up for a few of you that might be listening.
different situations that may be coming up for a few of you that might be listening.
And hopefully you guys are enjoying this wonderful Saturday.
We’re going to be right back with the Dr. Friday show.
All righty.
We are back here live in studio for the last part of the show.
So if you have a question, you might want to jump on board.
Six one five seven three seven nine nine eight six six one five seven three seven nine nine
eight six.
eight six.
Taking calls, talking about my favorite subject of taxes.
And so it looks like we’ve got Chuck and Franklin.
We’ll just got to pop him on there and get him through.
Hey, Chuck.
Hello, ma’am.
Yes, sir.
The question I had was on.
Yes, ma’am.
All my income comes in from rental property and my mother just recently my mother just
recently moved in with me.
recently moved in with me.
She’s never elderly.
So my can I take her as a text right off?
If your mother only receives Social Security, the answer is yes. But if she has pensions
and other investments, then she’s probably pulling in more than 50 percent of her own care.
and other investments, then she’s probably pulling in more than 50 percent of her own care.
She only has Social Security only coming in.
Then, yes, you can claim her as a dependent.
OK, thank you very much.
Great question. Thank you.
All righty. Let’s see. Can we get Randy real quick?
Hey, Randy.
Hey, Doug.
Hey, how’s it going?
I’m living the wildlife, my love.
Oh, yeah. You know, it’s got a quick question for you.
I think it’ll be quick. But I’m the executive in a state that I opened last October and it
will be closing out fairly soon this year.
will be closing out fairly soon this year.
When I opened the estate account, of course, I didn’t really mean for it to open to open an
estate and interest bearing account.
estate and interest bearing account.
But the bank with good intentions, they did open an account that was interest bearing.
I think I had there was seventy four dollars interest last year and on that account.
And I got to thinking about the taxes and I thought, well, I checked into it, did a little
research.
research.
It looked like I don’t have to pay taxes on that as long as it’s less than one hundred
dollars.
dollars.
Correct. Is that correct? Yes, sir.
OK. The next part of it is this year, I didn’t think about this, but she had a lifetime
annuity.
annuity.
And I got a 1095 something in the mail the other day that shows that there was about twenty
five to thirty five hundred dollars, I guess, gain that she had gotten prior to passing.
five to thirty five hundred dollars, I guess, gain that she had gotten prior to passing.
And that that is that came in and then I got thinking more about it.
And I thought, well, there was interest on accounts that she had.
And so last year there was probably some amount of money on interest.
And I did check at the bank and got those got those numbers as well with with the
statement, in fact.
statement, in fact.
And then also I got the thing about Social Security.
And so my question is, in a situation with me as the executor, how does that work with
taxes?
taxes?
Do I need to file taxes on the estate with what she actually made last year or depends on
the.
the.
So you actually you actually have two tax returns.
You’ll be looking at Randy. You have her when she was alive, possibly January through
September, October before she passed away.
September, October before she passed away.
You will file a regular 1040 market.
I mean, those we have ability to put in her date of death that that will print across the
top of the return.
top of the return.
And that would be her final tax return. And then you pay any said tax that could be due for
her on her behalf from the estate.
her on her behalf from the estate.
Then from October through usually estates work on physical year end.
So it could be October through September, depending on whatever you have for that one.
But when that one is due, unless you chose calendar year, you will file an estate tax
return and 1041.
return and 1041.
And that will be the one that will pay tax on anything that happened after she passed away
that may have been interest bearing and or capital gains or anything else that might have happened within the state.
that may have been interest bearing and or capital gains or anything else that might have happened within the state.
The estate after her death.
OK, so like as far as I know, there was a there’s not really anything.
Well, there’s no that interest I told you about. And then everything else has been like
reimbursements or that kind of thing as far as money that has been gotten back.
reimbursements or that kind of thing as far as money that has been gotten back.
Right. There was a capital credit payout from a corporation, a telephone corporate
cooperative.
cooperative.
She was a member of. I don’t think that I don’t think that’s income.
But so basically on the estate, we’re not looking at any taxes, but I will need to file for
her personally.
her personally.
You need to file for her. And even if there is no taxes, you’re still going to have to
close the estate with a final tax return.
close the estate with a final tax return.
Yeah. Yeah. When you got that letter from this from the IRS that says here’s your Ephin
number, it will tell you that you need to file your 1041 by this due date.
number, it will tell you that you need to file your 1041 by this due date.
And and that will be how you it sounds like you won’t need to keep it open for multiple
years.
years.
So you’ll close it unless it’s on a calendar year. And then you may actually have to file
one for twenty three and one for twenty four. Just depends on the dates.
one for twenty three and one for twenty four. Just depends on the dates.
OK. All right. Appreciate the help. No problem. Thank you.
All right. Let’s see. Daniel and Old Hickory, really quick. Hey, Daniel, I got a few
minutes. What do you have for me?
minutes. What do you have for me?
Well, what I’m curious about, my daughter started doing YouTube last year in January and
she’s a traveling YouTuber.
she’s a traveling YouTuber.
She’s basically starting her own business and she spent thirty thirty thousand dollars with
no no money coming back in.
no no money coming back in.
How does that work in taxes? Well, the fact is, it’s not really a business if she’s
spending all the money and she hasn’t made any money.
spending all the money and she hasn’t made any money.
It could be considered startup where she be able to take a portion of it this year. And if
she’s going to continue it, hopefully she’ll be able to make money next year.
she’s going to continue it, hopefully she’ll be able to make money next year.
That would offset even if she shows a loss again. But she needs to show that she’s making
the attempt, especially as an influencer or a tick tock or whatever she is.
the attempt, especially as an influencer or a tick tock or whatever she is.
Go ahead. She did. She did a hundred videos and they say it takes an average of two years
to actually start showing a profit.
to actually start showing a profit.
This month, she’s going to get her first check coming in.
Now, there you go. A lot more knowledge than I know about Daniel on that one. But as she so
the first year she can consider startup,
the first year she can consider startup,
but they won’t allow her to depreciate all of that. She’ll only be able to take like thirty
eight hundred dollars of the thirty thousand.
eight hundred dollars of the thirty thousand.
She won’t lose it. It will roll into the next year and she’ll be able to spread that over
as amateurized startup costs,
as amateurized startup costs,
because in theory, you’re saying is knowingly it’s going to take us two years before we’re
going to see a dollar.
going to see a dollar.
Right. I mean, in essence. So she’s got a lot of investments going in and hopefully she’ll
be able to use that cost and start writing it off against other profits.
be able to use that cost and start writing it off against other profits.
Is the hope. Or she’ll not. But yeah, so she may want to have a tax professional help her
with setting that up properly.
with setting that up properly.
So she doesn’t end up showing thirty thousand dollar loss in the first year, having a
negative tax return and then possibly get herself audited because of it.
negative tax return and then possibly get herself audited because of it.
OK. All right. Well, I do appreciate it. Like I said, you know, we figure two year loss,
you know, we were and she’s already coming into, you know, it’s not going to be a lot, but she’s going to get her
first check.
you know, we were and she’s already coming into, you know, it’s not going to be a lot, but she’s going to get her
first check.
You know, this month. Awesome. No, that’s awesome. That’s great. It’s a difficult business.
It’s a you know, it’s not it’s not an easy business to be in as far as I’m concerned.
It’s a you know, it’s not it’s not an easy business to be in as far as I’m concerned.
I have some that are successful, but more of them that write the apps that seem to be more,
you know, I mean, to be quite honest.
you know, I mean, to be quite honest.
But, you know, they can make good money. So and as long as she’s enjoying it, let her do it
and see where it leads.
and see where it leads.
All right. Thank you so much. Thanks, Daniel. I appreciate it. All righty, guys. That’s
pretty much going to wind up our show for this Saturday.
pretty much going to wind up our show for this Saturday.
It is a beautiful Saturday outside. So hope all of you take a little time, go outside,
enjoy the sun’s getting warmer as well, which will be nice.
enjoy the sun’s getting warmer as well, which will be nice.
Good for tax season, right? Once you guys all be able to make it to my office so I can
perform and do my job.
perform and do my job.
If you are an existing client and have not yet set up a tax appointment, please call our
office on Monday and let’s get those appointments set up.
office on Monday and let’s get those appointments set up.
If you are not a new client or if you are a new client, you can certainly give us a call.
We may not be able to fit you in.
We may not be able to fit you in.
We can try to help you find someone else to help you do your taxes so you have a
professional working with you.
professional working with you.
For all of you that don’t know who I really am or if you haven’t actually heard this silly
voice on the radio in the past,
voice on the radio in the past,
I am Dr. Friday, an enrolled agent licensed by the Internal Revenue Service to do taxes and
representation.
representation.
So if you have received love letters, if you are in the midst of getting liens and levies
and you don’t really know what you want to do,
and you don’t really know what you want to do,
how you are going to resolve it, well, I say let’s take a free consult. Let’s talk about
it. Let’s see if we can help you.
it. Let’s see if we can help you.
I will tell you we are very different than a lot of those other companies you will hear on
the radio.
the radio.
We are ones that basically are going to talk about how, what, when and where and then we
will deal with payments.
will deal with payments.
But you are not going to get, before you even talk to someone and some of these, oh, it’s
going to cost you $5,000.
going to cost you $5,000.
How much can you put down? Then you need to pay us $500 a month.
And once we get paid up to date, then we will start working your case. We work a little
differently.
differently.
So if you need help with dealing with tax issues, if you need to resolve or you want to
just get out from under the IRS or you need help with taxes,
just get out from under the IRS or you need help with taxes,
just give our office a call at 615-367-0819. 615-367-0819.
You can also go to the web, drfriday.com. That’s d-r-f-r-i-d-a-y dot com.
And you can check me out, figure out who I am. It gives you some information out there of
who and you can even send a notice through there,
who and you can even send a notice through there,
a question through the web page so you can get your things. Or you can email
friday@drfriday.com, friday@drfriday.com.
friday@drfriday.com, friday@drfriday.com.
And again, make sure if you haven’t done your taxes, you don’t know if you’re going to be
able to get them done, file an extension, guys.
able to get them done, file an extension, guys.
Gives yourself a little breathing room and we’ll be able to help you out. Hope you have
this wonderful Saturday.
this wonderful Saturday.
And as we always say in Australia, copy later.
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