Dr. Friday Radio Show – February 17, 2024

The Dr. Friday Radio Show
The Dr. Friday Radio Show
Dr. Friday Radio Show - February 17, 2024

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.


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No, no, no, she’s not a medical doctor, but she can sure cure your tax problems or your
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financial woes.
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She’s the how-to girl.
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It’s the Dr. Friday Show.
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If you have a question for Dr. Friday, call her now.
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That’s 737-9986.
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So here’s your host, financial counselor and tax consultant, Dr. Friday.
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Good day.
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This is Dr. Friday and we’re live here in studio.
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And if you have a question, you can join us live as well at 615-737-9986.
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For many of you that may not or maybe it’s your first time listening to me on the radio,
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I’m an enrolled agent licensed by the Internal Revenue Service to do taxes and
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That is pretty much all I do.
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So if you’re working on your taxes this wonderful weekend, or maybe you’re making some tax
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for 2024 and you’ve got a question, possibly something to do with inheritance or selling
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or buying property, paying the capital gains tax, that kind of situation, making sure you
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understand what the federal tax law is compared to the state.
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Kind of found out an interesting situation because we seem to have had a large number,
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in my opinion, a large number of individuals that were thinking that if they reinvested
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the money from the sale of their home, they weren’t going to have to pay any kind of
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I did find out that California state income tax has that available transaction on it.
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It is not a federal law, but a state.
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So you really do need to understand what is state, what is federal and how that works.
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So that way you understand how you’re going to be able to save.
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In most cases, you don’t want to reinvest the federal money if you’re going to have
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to go pay 50 or 60 or $70,000 in capital gains.
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You don’t want that tied up in something you can’t get back.
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Very hard to, and no one wants to finance.
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Interest rates with the IRS is now almost 12%.
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Penalties run between 25 and theoretically there could be three or four different ones
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and eventually could be over 100% of what you owe them.
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So depending on how long and what the penalty is.
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So it’s important to understand how that’s working and what you’re going to do.
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So right now we’re here in the office ourselves working on tax preparation.
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First things we’re working on of course mostly is business tax returns.
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We only have till March 15th to file these tax returns.
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Be that a 1065 or an 1120 S assuming that they’re on calendar years and that they would
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be due on March 15th.
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That’s right.
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LLCs, now I’m not talking single.
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These are the multi-member LLCs that file on form 1065 or ones that elected to be
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on 1120 S. Both of them need to file the returns or the extension by March 15th.
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And then don’t forget to do your state tax returns.
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Anybody that is an entity in Tennessee will need to make sure that they have filed with
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the secretary of state.
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You will have a business license, gross business receipts, as well as a franchise excise.
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It could be as little of a hundred dollars, never will be less than $100.
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That’s the minimum fee, but it could always be up to 15, 20 to large numbers depending
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on the type of business and how much gains that you have.
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So again, very important to make sure.
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And then if you’re working in other states, it is the law.
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Like if you work in Kentucky, if you have a business that even though you’re a Tennessee
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business, but you’re working and physically earning money in the state of Kentucky,
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says, wait a second, we want our share of that money.
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So you would have to file a Kentucky and a Tennessee.
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Now there are ways of splitting that by percentages so that you can not have to necessarily
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tax in both states, but it’s important not to let those kinds of things slide.
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We ended up with a lot of different audits that often start out as one state or one entity
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doing something.
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Then we find out that, you know, multiple states come into play in different situations.
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So, and also right now your annual report, if you’re an LLC or corporation, go ahead
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and get it filed.
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I believe we tell have until April 1st, but time flies when we’re having fun.
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And so you got your annual reports, your gross receipts or business licenses.
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Those could be multiples because you have county and city.
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And if you did less than a hundred thousand, in most cases, you’re not going to have to
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pay anything but the fee, the $15 fee for a renewal county, and it could be 15 for city.
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And then you also have your franchise excise and of course sales tax always due.
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And if you’re on an annual, you’re late already, cause that would have been due on January
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So all kinds of little things.
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The first quarter of this, of the year is always the complicated one.
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If you did not file 1099s, you’re sitting there going, I know I’m supposed to, but I
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didn’t do it now it’s too late.
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It is not too late.
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I am a firm believer that the 1099, no matter when you’re preparing your taxes to go ahead
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and submit those 1099s.
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Keep in mind, if you are a person that receives money from somebody else as a self-employed
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individual, tax law does not say you have to wait for that 1099 to file your taxes.
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What it says is you have to be accountable.
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You need to know how much money you have earned throughout everything.
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You don’t need to wait for those 1099s and say, Oh, this must be all I earned because
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the odds are the IRS also knows that if you only report what’s on 1099s, unless you can
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show that you worked for one or two people and they, so the two people that 1099 you
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and you didn’t do any small jobs, they’re going to do an assessment, possibly assuming
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that you did not report all of your income.
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It’s like what the 1099 case came out.
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I had a lot of people that saw the reported cause that was, that was mandated.
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This is cause it went through the bank account.
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But in all reality, again, the IRS has come down on many different cases saying that was
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an underreported income because of the situation where you have, uh, checks, cash that come
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in and just because you did not receive any documentation on it, it is your job as a
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owner to track all income in and all expenses out.
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So just putting it out there.
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If you’re a business owner and you haven’t finished your 1099s, well yes, you should
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have had them out by the end of January, but it is better to do it late than not to do
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it at all in this situation.
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So you should still do it.
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And if the persons already filed their taxes, they should have picked it up already
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So it have a zero effect on the people you’re 1099, but you would be in compliance with
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what the internal revenue wants.
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Very important guys.
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It’s something that you don’t want to just let slide through.
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Again, if you want to join the show, if you’re listening on this very chilly Saturday and
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you’re working on your taxes or you’ve got some sort of tax situation, maybe you’re even
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helping out your parents or friends and they have some situations where they’ve either
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cashed out 401ks or maybe they they’ve lost the loved one.
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How does that affect the tax returns?
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Um, to be able to make sure you’re getting the right tax advice or if you’ve got a basic
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question, we’ll do our best to lead you there.
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The phone number here is six one five seven three seven nine nine eight six six one five
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seven three seven nine nine eight six.
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Um, another thing happened this week, which I think is kind of interesting where nowadays
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we have a lot of individuals that work from home, but the companies they work for are
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in other States.
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So again, let’s use, I have one that came in and the, the wife works for the company
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in Tennessee.
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I mean, she, she works here in Tennessee.
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The company is in North Carolina, so they’re taking taxes out on her income because that
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is the state law.
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Anyone that earns income in North Carolina, no matter where you live, you’re going to
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file taxes.
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So of course we filed the taxes and instead of getting all of her state refund back,
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she has to report what was earned in that state, even if she never stepped foot in it,
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she ended up with $62 refund out of a $600 a withdraw from her check.
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So again, if you’re going to work for other States, some States aren’t quite so bad, or
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if you live in South Carolina and you work in North, sometimes they’ll give you credit
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for one side or the other.
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The hard side is when you live in Tennessee where there is no state income tax and so
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there’s no brotherhood or sisterhood where you can exchange, okay, I won’t pay South
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Carolina tax, I’ll pay North Carolina, et cetera.
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California is another firm believer in that concept where you have a situation where if
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you work from here, you can file a non-resident in California, but you’re never going to
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dollar for dollar back of that money because even they’ve earned the money in California,
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no matter if you live there or not.
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So that is a very, very important thing to understand how the tax law works and how you’re
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going to be able to get it because most employers are going to have to follow state law.
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And so when you get a job out of state and still live in Tennessee, make sure you build
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in the idea that you might be paying an out of state tax situation.
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Just because you don’t live there doesn’t mean they’re not going to take your share.
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Are we ready for Ann, Anna?
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All right, let’s hit Anna.
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Hey Anna.
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Hello there, Dr. Friday.
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My question would be if I have a place that is cleaned by someone and she has her own
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cleaning business, am I required to attend her a 1099?
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And if so, can you explain that to me a little bit and what the amount is and whatever?
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Yes ma’am.
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And answer is yes, she is providing you a service and that’s how we kind of define 1099.
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Someone like my lawn person, my guy that comes through and trims all my trees, as long as
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I pay them over $600 a year, then I need to be paying, sending them a 1099 for those
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If this is your in-house cleaning person, again, you are supposed to, but in my case
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is some of the stuff would fall on a business like it’s a rental, right?
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If the person goes out and does my lawns and cuts my trees and I’m going to deduct that
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on my tax return, I can’t deduct if I didn’t 1099 them in all honesty.
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I mean, you can, but if you’re caught, there’s a penalty for not doing it correctly.
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So if this is your home cleaning lady, that may be a little harder because most people
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don’t, but any in-home person that we pay, cook, cleaning person, sometimes we have
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that might be like an assistant that helps out with an older parent, all of them should
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be getting 1099s or household employee W-2s.
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Well, I think that answers my question.
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And if that has not been done before, then how would you end up prior years?
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I wouldn’t.
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I would actually just move forward doing it correctly at the time that you found out about
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All right.
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Very good.
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Thank you so much for your time today.
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I appreciate it.
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Thank you for calling.
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I appreciate that.
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Let’s try Steve in the borough.
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Hey, Stan, what’s happening?
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Would it be Steve?
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Oh, it could be Steve.
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Let’s try Steve in the borough.
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Hey, Dr. Brody, how are you doing?
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I’m doing awesome.
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Thanks, Steve.
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Hey, this is awesome.
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I finally get to call you.
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I hope it’s going to work out good.
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Hey, I’ve always filed.
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My wife and I both work hourly.
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We just file.
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I’ve been filing it every year because it’s nice and simple.
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Well, we bought a little farm a few years ago.
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It’s a long farm.
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It’s a long farm.
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It’s a long farm.
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It’s a long farm.
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It’s a long farm.
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It’s a hobby farm, if nothing else.
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Most of us prefer not to be hobby farms.
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Most of us like to be considered a working farm because then, I mean,
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besides the fact that a green belt does require $500.
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I want to say it’s $1,500 every three years, $500 a year,
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something like that to keep our green belts.
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And so theoretically that could still be a hobby farm.
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But I think it’s a good thing.
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I think it’s a good thing.
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I think it’s a good thing.
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I think it’s a good thing.
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We depreciate or we enter assets or things when the business physically starts.
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So if you start the business in 2024, you can move all that into the business in the
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year of 2024 when it actually was used to do it.
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So that would be my suggestion.
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If you still plan to open a business, actually open it, see if it can make it successful
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and generate business.
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And if you can, then it’s legitimate business and then you can depreciate or write off
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expenses depending on what they were.
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Well, that’s great.
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I was worried that I would lose every bit of the write off that I bought last year.
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So I was worried about that.
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No, you’re good.
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You just need to do it.
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I didn’t make a dime last year, but this year I’ve made some money.
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So the attempt was made.
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So it sounds like in 2024, you’ll be able to take that investment and pay yourself back
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or use it as a tax loss, whatever it might be.
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As far as business, would you suggest DBA or LLC or?
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I would start with a DBA in most cases.
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If you want to get a good general liability insurance, I don’t know what you’re doing,
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but at least let’s make sure the business is going to be a viable business before you
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start investing into LLCs, which then you have a $300 annual fee.
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There’s a whole different cost you, you know, a thousand dollars a year to keep that one
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open basically or paying and doing things.
00:17:42.040 –> 00:17:46.040
So you want to be able to make sure that’s it, you know, that’s really going to work
00:17:46.040 –> 00:17:47.040
as a business.
00:17:47.040 –> 00:17:51.040
Then I would suggest moving into probably a single member LLC.
00:17:51.040 –> 00:17:52.040
00:17:52.040 –> 00:17:53.040
So that works.
00:17:53.040 –> 00:17:54.040
00:17:54.040 –> 00:17:55.040
Thank you.
00:17:55.040 –> 00:17:56.040
00:17:56.040 –> 00:17:57.040
Appreciate it.
00:17:57.040 –> 00:17:58.040
All right.
00:17:58.040 –> 00:18:10.040
So if you want to join the show, you can at 615-737-9986, 615-737-9986.
00:18:10.040 –> 00:18:12.040
We’re taking your calls here live in studio.
00:18:12.040 –> 00:18:13.040
Those are great questions.
00:18:13.040 –> 00:18:20.040
And, you know, bringing back the farm, not in Steven’s case necessarily, but many people
00:18:20.040 –> 00:18:22.040
have working farms.
00:18:22.040 –> 00:18:24.040
You may have bees, you may have lumber.
00:18:24.040 –> 00:18:26.040
You may, it may not be what you think.
00:18:26.040 –> 00:18:33.040
Always the more traditional is cattle or crops of some sort, but you know, if you’re
00:18:33.040 –> 00:18:38.040
and making money and most of us for the greenbelt have to have some money coming in to
00:18:38.040 –> 00:18:41.040
you may want to make sure that you’re maximizing those.
00:18:41.040 –> 00:18:45.040
But like anything else, it doesn’t necessarily meet with businesses.
00:18:45.040 –> 00:18:48.040
You, you have basically three years to make a profit.
00:18:48.040 –> 00:18:52.040
If you don’t make a profit within three years, the IRS is pretty much looking at it as if
00:18:52.040 –> 00:18:54.040
you’re just, it’s a hobby.
00:18:54.040 –> 00:18:57.040
You’re not really attempting to make money.
00:18:57.040 –> 00:19:01.040
You’re just using it to somehow generate a tax loss.
00:19:01.040 –> 00:19:07.040
And let me clarify that as well, is that if you’re losing money every single year, I had
00:19:07.040 –> 00:19:13.040
an auditor once say to me, what kind of person, seven, 10 years, I think this one company
00:19:13.040 –> 00:19:15.040
had had a loss 10 years in a row.
00:19:15.040 –> 00:19:19.040
And she said, who in their good mind would want to have a business that keeps losing
00:19:19.040 –> 00:19:20.040
00:19:20.040 –> 00:19:27.040
Who can afford to lose a hundred and plus thousand dollars in 10 years on a business?
00:19:27.040 –> 00:19:31.040
So you know, I mean, if you’re really in business, you’re not in business to lose money.
00:19:31.040 –> 00:19:33.040
You’re in business to make money.
00:19:33.040 –> 00:19:34.040
So keep that in mind.
00:19:34.040 –> 00:19:37.040
That is the mentality that the IRS is looking.
00:19:37.040 –> 00:19:42.040
Now farms, especially with ones that do certain types of crops.
00:19:42.040 –> 00:19:46.040
I mean, I know my nut crops can take almost 10 years to have a mature tree.
00:19:46.040 –> 00:19:50.040
So, you know, one of those situations where you want to be able to make that work for
00:19:50.040 –> 00:19:51.040
00:19:51.040 –> 00:19:57.040
So tracking, making sure you’re managing it and everything else is going to be important
00:19:57.040 –> 00:20:00.040
for the thing that you have happening.
00:20:00.040 –> 00:20:04.040
So tracking all your expenses and doing that is a great idea.
00:20:04.040 –> 00:20:14.040
If you want to join the show, you can at 615-737-9986, 615-737-9986.
00:20:14.040 –> 00:20:18.040
Of course, at this time of the year, we get a lot of different types of businesses and
00:20:18.040 –> 00:20:20.040
00:20:20.040 –> 00:20:23.040
And often we deal a lot with trust and estates.
00:20:23.040 –> 00:20:28.040
And so I do want to let you know that most of them being that they’re not always on a
00:20:28.040 –> 00:20:33.040
physical year end or a calendar year and they’re on a physical year and maybe that you
00:20:33.040 –> 00:20:39.040
get yet your K-1 or your distribution information.
00:20:39.040 –> 00:20:41.040
Make sure you’re holding on to that.
00:20:41.040 –> 00:20:42.040
All right.
00:20:42.040 –> 00:20:46.040
So you have and they can be the same thing with any investment or anything else.
00:20:46.040 –> 00:20:51.040
Just make sure that you’ve got your investments, that you’re dealing with your situation.
00:20:51.040 –> 00:20:56.040
So you’re able to take care of your taxes.
00:20:56.040 –> 00:21:00.040
You don’t want the IRS coming back and saying, oh, wait a second, we’re going to change
00:21:00.040 –> 00:21:05.040
taxes and this is how we’re going to make this happen because you didn’t report something.
00:21:05.040 –> 00:21:10.040
So change of income is never a good idea by the IRS.
00:21:10.040 –> 00:21:12.040
I don’t like the IRS changing my tax returns.
00:21:12.040 –> 00:21:18.040
So don’t rush to file just because you want to make sure you have you want to make sure
00:21:18.040 –> 00:21:21.040
you have everything on your tax returns before you hit that send button.
00:21:21.040 –> 00:21:25.040
Because a lot of times those schedule B’s, those 1099 B’s from your investment companies,
00:21:25.040 –> 00:21:27.040
we’re still getting some in.
00:21:27.040 –> 00:21:30.040
So it’s important that you have that going for you.
00:21:30.040 –> 00:21:31.040
All right.
00:21:31.040 –> 00:21:33.040
Let’s hit Doug before the break if we can.
00:21:33.040 –> 00:21:34.040
Doug in Bowling Green.
00:21:34.040 –> 00:21:36.040
Hey, Doug, what’s happening?
00:21:36.040 –> 00:21:37.040
Hi, Dr. Friday.
00:21:37.040 –> 00:21:38.040
Thank you for taking my call.
00:21:38.040 –> 00:21:41.040
I have a quick question about business mileage.
00:21:41.040 –> 00:21:43.040
I’m set up as a corporation.
00:21:43.040 –> 00:21:45.040
I own my own business.
00:21:45.040 –> 00:21:51.040
As far as business mileage goes, am I wiser to just tabulate my mileage during the year
00:21:51.040 –> 00:21:59.040
and take it as a federal deduction or reimburse myself from the business on a monthly
00:21:59.040 –> 00:22:02.040
Is this a C Corp or sub S Corp?
00:22:02.040 –> 00:22:03.040
It’s a C Corp.
00:22:03.040 –> 00:22:07.040
OK, I’m going to say and I operate as a C Corp too.
00:22:07.040 –> 00:22:10.040
I do it all through expense reports on a monthly basis.
00:22:10.040 –> 00:22:15.040
And then that way it reimburses me and I don’t have to deal with any of that on because
00:22:15.040 –> 00:22:21.040
hard to do a C Corp on your own personal side because you’d almost have to do it as because
00:22:21.040 –> 00:22:23.040
on K1s we can do it.
00:22:23.040 –> 00:22:26.040
But when it’s a C Corp, we only take our W2s.
00:22:26.040 –> 00:22:28.040
You’re really just an employee otherwise.
00:22:28.040 –> 00:22:32.040
And there’s no deduction on your personal tax return for your miles as an employee.
00:22:32.040 –> 00:22:36.040
So you have to have a corporate setting which basically says we’ll do reimbursements,
00:22:36.040 –> 00:22:42.040
a reimbursement program where you can do expense reports for meals and miles and hotels,
00:22:42.040 –> 00:22:44.040
might have come.
00:22:44.040 –> 00:22:49.040
And then every month the corporation writes off the expenses and they reimburse you
00:22:49.040 –> 00:22:50.040
00:22:50.040 –> 00:22:51.040
OK, that’s what I thought.
00:22:51.040 –> 00:22:53.040
I thank you so very much.
00:22:53.040 –> 00:22:54.040
Hey, great question.
00:22:54.040 –> 00:22:55.040
Thank you.
00:22:55.040 –> 00:22:58.040
Let’s hit Linda really quick.
00:22:58.040 –> 00:22:59.040
Hey, Linda.
00:22:59.040 –> 00:23:05.040
Hey, I’m a senior and I was wondering, do I have to file taxes?
00:23:05.040 –> 00:23:07.040
Well, what do you have for income?
00:23:07.040 –> 00:23:09.040
Can you give me a rough rundown?
00:23:09.040 –> 00:23:10.040
Social Security.
00:23:10.040 –> 00:23:18.040
I draw about 18000 a year from Social Security, Social Security or other.
00:23:18.040 –> 00:23:19.040
And pension.
00:23:19.040 –> 00:23:20.040
00:23:20.040 –> 00:23:21.040
00:23:21.040 –> 00:23:27.040
So how much if you were to just educate guests, what is your pension per month or per year?
00:23:27.040 –> 00:23:30.040
Well, that was including it too.
00:23:30.040 –> 00:23:31.040
I know.
00:23:31.040 –> 00:23:36.040
So I mean, because the problem is, so just give me what your pension is compared to Social
00:23:36.040 –> 00:23:37.040
00:23:37.040 –> 00:23:38.040
Either one.
00:23:38.040 –> 00:23:41.040
What’s the pension for a month or a year?
00:23:41.040 –> 00:23:45.040
My pension is like 378 a month.
00:23:45.040 –> 00:23:46.040
00:23:47.040 –> 00:23:50.040
And my social is about.
00:23:50.040 –> 00:23:53.040
So you’re not required to file.
00:23:53.040 –> 00:23:56.040
You are not required to file.
00:23:56.040 –> 00:23:58.040
When, when is it?
00:23:58.040 –> 00:23:59.040
What does it get to?
00:23:59.040 –> 00:24:00.040
What limit to file?
00:24:00.040 –> 00:24:05.040
So you take half of your Social Security and and add all your other income.
00:24:05.040 –> 00:24:13.040
And if you come up to twenty five thousand dollars, then you will be in a taxable
00:24:13.040 –> 00:24:14.040
Oh, OK.
00:24:14.040 –> 00:24:15.040
00:24:15.040 –> 00:24:17.040
If I do yours, it’s not going to get there.
00:24:17.040 –> 00:24:19.040
So we should be good.
00:24:19.040 –> 00:24:20.040
Oh, ma’am.
00:24:20.040 –> 00:24:21.040
Thank you.
00:24:21.040 –> 00:24:22.040
Thank you very much.
00:24:22.040 –> 00:24:23.040
00:24:23.040 –> 00:24:24.040
All right.
00:24:24.040 –> 00:24:25.040
We’re going to take our second break here.
00:24:25.040 –> 00:24:29.040
When we get back, we’ll get some more of your phone calls at six one five seven three seven
00:24:29.040 –> 00:24:35.040
nine nine eight six six one five seven three seven nine nine eight six.
00:24:35.040 –> 00:24:43.040
We’ll be right back.
00:24:43.040 –> 00:24:44.040
All right.
00:24:44.040 –> 00:24:47.040
We are back here live in studio already halfway through the show.
00:24:47.040 –> 00:24:57.040
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.
00:24:57.040 –> 00:25:06.040
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.
00:25:06.040 –> 00:25:12.040
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.
00:25:12.040 –> 00:25:13.040
Seventy three.
00:25:13.040 –> 00:25:17.040
The year in which you turn 73, you’ll start taking your RMBs.
00:25:17.040 –> 00:25:30.040
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.
00:25:30.040 –> 00:25:39.040
So even if you’re not taking requirement of distributions, you can take one and do a QC D
for qualified charitable deduction.
00:25:39.040 –> 00:25:49.040
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.
00:25:49.040 –> 00:25:55.040
But in many cases, based on income, you don’t always meet that standard deduction that
00:25:55.040 –> 00:26:02.040
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.
00:26:02.040 –> 00:26:07.040
You could not have an actual deduction on your tax return.
00:26:07.040 –> 00:26:15.040
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.
00:26:15.040 –> 00:26:20.040
But does anyone say that doing it is going to hurt you? You could even give more.
00:26:20.040 –> 00:26:29.040
So you might want to talk with your financial planner, with the custodian of your
retirement IRA or 401K.
00:26:29.040 –> 00:26:32.040
Tell them that you’ve heard about qualified charitable deductions.
00:26:32.040 –> 00:26:36.040
You want to do this because it’s a 100 percent deduction.
00:26:36.040 –> 00:26:44.040
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,
00:26:44.040 –> 00:26:49.040
you can then contribute that to a charity with no tax.
00:26:49.040 –> 00:26:54.040
You won’t pay tax on it. It will pass straight through. It’s just a great tool to have.
00:26:54.040 –> 00:27:03.040
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
00:27:03.040 –> 00:27:07.040
and you’re not going to get that deduction on your tax return in any way.
00:27:07.040 –> 00:27:13.040
So this would be a way of doing it through your RMD, requirement of distribution.
00:27:13.040 –> 00:27:17.040
Again, that’s a qualified charitable deduction. It does exist.
00:27:17.040 –> 00:27:25.040
And even if you’re not yet old enough for a RMD, you can take them and do a QCD.
00:27:25.040 –> 00:27:32.040
So you’re not sure. I would definitely suggest talking to your financial planner.
00:27:32.040 –> 00:27:37.040
See if there’s anything that might be able to be done, because again, many of you are
already giving money.
00:27:37.040 –> 00:27:43.040
The difference is you’re writing a check out of your checkbook after you take the money
from your IRA.
00:27:43.040 –> 00:27:47.040
So you get a distribution, you put it in the bank and then you write the check to the
00:27:47.040 –> 00:27:52.040
By doing that, this money is now taxable and you’d have to deduct the charity afterwards.
00:27:52.040 –> 00:27:58.040
By having them write the check directly to the charity and it’s a QCD, then guess what?
00:27:58.040 –> 00:28:03.040
We don’t have to pay tax. So it’s not changing anything major in your life.
00:28:03.040 –> 00:28:07.040
It really is just a matter of doing what you need to do and how you need to do it.
00:28:07.040 –> 00:28:13.040
So do it the right way and put a few more dollars in your pocket or if you really wanted
00:28:13.040 –> 00:28:16.040
you could even give more money to charity. Your choice.
00:28:16.040 –> 00:28:21.040
So again, talk to your financial planner or the custodial over your IRA.
00:28:21.040 –> 00:28:25.040
They’ll be the best to help you or lead you through how that works.
00:28:25.040 –> 00:28:30.040
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.
00:28:30.040 –> 00:28:38.040
615-737-9986, 615-737-9986.
00:28:38.040 –> 00:28:44.040
Again, we are in the process of completing 2023 taxes and in many cases,
00:28:44.040 –> 00:28:48.040
we’re having some people that don’t have all their documents, so we’re having to get them.
00:28:48.040 –> 00:28:54.040
If for some reason you do not receive a W-2 from your employer
00:28:54.040 –> 00:29:00.040
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
00:29:00.040 –> 00:29:07.040
and that’s not a possibility for you, you can sign on to the IRS,
00:29:07.040 –> 00:29:14.040
irs.gov and click on transcripts and you can get a copy of that W-2.
00:29:14.040 –> 00:29:21.040
It’s a different printout, but it will give you the information to be able to put it
through your —
00:29:21.040 –> 00:29:24.040
so you can finish your tax return.
00:29:24.040 –> 00:29:29.040
Sometimes you can use your final paycheck, but not always do people know if it’s really
their final or not,
00:29:29.040 –> 00:29:31.040
because sometimes the numbers don’t match.
00:29:31.040 –> 00:29:37.040
So it is important to make sure you do have your final paycheck, not just one in December
thinking it’s close enough.
00:29:37.040 –> 00:29:43.040
And if you quit sometime between the year, your best bet is to try to go to the IRS.
00:29:43.040 –> 00:29:48.040
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
00:29:48.040 –> 00:29:52.040
and you put the numbers in and then you’re able to process that.
00:29:52.040 –> 00:29:55.040
And if you have worked for them in the past, that’s fine.
00:29:55.040 –> 00:29:59.040
If you don’t, you do need the federal ID number to do that.
00:29:59.040 –> 00:30:05.040
So you’d have to call them and get the federal ID number or, you know, nowadays it’s
00:30:05.040 –> 00:30:13.040
I had a client, again, came in yesterday and he’s like, well, his friend needed a copy of
his own W-2,
00:30:13.040 –> 00:30:16.040
the work he worked at, this gentleman no longer has a car, he can’t get across town to go
get it.
00:30:16.040 –> 00:30:21.040
They refused to email it or fax it or even send a picture of it to him.
00:30:21.040 –> 00:30:25.040
So I don’t know why employers can be somewhat difficult.
00:30:25.040 –> 00:30:29.040
I’m sure it’s because they weren’t happy maybe with the way things got left.
00:30:29.040 –> 00:30:36.040
But I will tell you, if you are an employer holding a W-2 for ransom in essence, which is
what I call this,
00:30:36.040 –> 00:30:40.040
there is a fine that can be charged against you for doing that.
00:30:40.040 –> 00:30:43.040
So, again, your job is to deliver this.
00:30:43.040 –> 00:30:45.040
Now, you don’t have to chase down that employee.
00:30:45.040 –> 00:30:51.040
If they’ve relocated and you mailed the W-2, it is not your job to go and find them
somewhere else.
00:30:51.040 –> 00:30:55.040
It is your job to make sure that they’ve received the distribution.
00:30:55.040 –> 00:31:01.040
That’s why so many now have actually went to getting their W-2s electronically.
00:31:01.040 –> 00:31:08.040
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
00:31:08.040 –> 00:31:14.040
and your employer is not necessarily obligated to correct that address,
00:31:14.040 –> 00:31:20.040
and you should have updated it with them prior to the end of the year, just so you know.
00:31:20.040 –> 00:31:23.040
The Social Security number does need to be correct.
00:31:23.040 –> 00:31:31.040
The legal name that you’ve provided to them, because sometimes people work off of names
that are not their legal names.
00:31:31.040 –> 00:31:36.040
They are only their nicknames, I guess is what I’m going to call them.
00:31:36.040 –> 00:31:43.040
But they do need to make sure that the person is not going by a different name.
00:31:43.040 –> 00:31:49.040
So just so you know, whatever name you put on your W-4 is supposed to be your legal name.
00:31:49.040 –> 00:31:56.040
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.
00:31:56.040 –> 00:32:00.040
But please, look at your pay stubs throughout the year.
00:32:00.040 –> 00:32:07.040
Check. If you’ve relocated, contact those people and let them know that you have relocated.
00:32:07.040 –> 00:32:10.040
Give them a, just send them a little postcard.
00:32:10.040 –> 00:32:14.040
Say, “Hey, can you update my file when you get ready to send the W-2s?”
00:32:14.040 –> 00:32:21.040
You know, because if you don’t get the W-2, then it’s almost impossible for you to file
your taxes properly.
00:32:21.040 –> 00:32:30.040
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.
00:32:30.040 –> 00:32:32.040
All of that has to be changed.
00:32:32.040 –> 00:32:39.040
If they’ve got a pension from somewhere else, that all needs to be updated so that they’re
getting their year-end paperwork.
00:32:39.040 –> 00:32:42.040
And then they can see if they need to file taxes or not.
00:32:42.040 –> 00:32:46.040
But if you’re helping them, that’s something a lot of times people don’t do.
00:32:46.040 –> 00:32:51.040
So it’s really important that if they’re doing that, that you help them out with that.
00:32:51.040 –> 00:32:55.040
And most of these things can be done online, on the internet.
00:32:55.040 –> 00:33:03.040
Most of the pensions and all those have where you can submit change of address for people.
00:33:03.040 –> 00:33:06.040
But you just need to figure out what you have or what you need to do.
00:33:06.040 –> 00:33:09.040
All right, you know what, before the break, let’s hit Ann in Hermitage.
00:33:09.040 –> 00:33:11.040
Hey, Ann, what can I do for you, sweetie?
00:33:11.040 –> 00:33:17.040
Oh, hi, Dr. Friday. I’m trying to find out about rental property depreciation.
00:33:17.040 –> 00:33:31.040
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.
00:33:31.040 –> 00:33:38.040
Right. We use actual cost for purpose of depreciation, and then the land cost.
00:33:38.040 –> 00:33:47.040
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.
00:33:47.040 –> 00:33:53.040
But yes, so you want to put in what you paid less, back out the land, so you’re really
depreciating the building only.
00:33:53.040 –> 00:34:03.040
Okay, because of course we know the appraisal, the amount for property on tax records is
way lower than the actual fair value.
00:34:03.040 –> 00:34:10.040
Absolutely. In the perfect world, hopefully you paid a very low price for it and it
appraises for a lot more now.
00:34:10.040 –> 00:34:17.040
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.
00:34:17.040 –> 00:34:19.040
I mean, for the tax side of things.
00:34:19.040 –> 00:34:22.040
Otherwise, we’re always working off actual pay.
00:34:22.040 –> 00:34:30.040
Okay. And is the table for 27.5 years or has it changed to 30?
00:34:30.040 –> 00:34:34.040
No, it’s still at 27, I think, or 28, something like that.
00:34:34.040 –> 00:34:36.040
27.5? Okay.
00:34:36.040 –> 00:34:41.040
Commercial is on the 30, it’s almost 30, but the 39.
00:34:41.040 –> 00:34:44.040
Commercial is 39 because I’m working on commercial.
00:34:44.040 –> 00:34:51.040
But residential I do believe is still at the 27.8 because I always just think of it as 30.
00:34:51.040 –> 00:35:02.040
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.
00:35:02.040 –> 00:35:10.040
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.
00:35:10.040 –> 00:35:11.040
Would that be right?
00:35:11.040 –> 00:35:13.040
That would be correct. Yes.
00:35:13.040 –> 00:35:22.040
So they’re saying that 75 percent of the value of the house or whatever is the house and 25
percent was land.
00:35:22.040 –> 00:35:23.040
00:35:23.040 –> 00:35:25.040
And land we don’t depreciate.
00:35:25.040 –> 00:35:26.040
Right. Of course not.
00:35:26.040 –> 00:35:27.040
Okay. Wow.
00:35:27.040 –> 00:35:28.040
That helped me very much.
00:35:28.040 –> 00:35:29.040
I appreciate it.
00:35:29.040 –> 00:35:30.040
Have a good day.
00:35:30.040 –> 00:35:31.040
No problem.
00:35:31.040 –> 00:35:32.040
Thanks for listening.
00:35:32.040 –> 00:35:33.040
Appreciate you.
00:35:33.040 –> 00:35:36.040
All right, guys, we’re going to get ready to take our last break for the day.
00:35:36.040 –> 00:35:41.040
So if you’ve got some questions, you’re not too sure what you’re doing or just maybe if I
can help you.
00:35:41.040 –> 00:35:45.040
A lot of times you guys know the answer, but you know, you need a little assistance on
00:35:45.040 –> 00:35:46.040
No worries at all.
00:35:46.040 –> 00:35:51.040
Six one five seven three seven nine nine eight six is a number here in studio.
00:35:51.040 –> 00:35:56.040
Six one five seven three seven nine nine eight six.
00:35:56.040 –> 00:36:05.040
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.
00:36:05.040 –> 00:36:08.040
And hopefully you guys are enjoying this wonderful Saturday.
00:36:08.040 –> 00:36:10.040
We’re going to be right back with the Dr. Friday show.
00:36:10.040 –> 00:36:17.040
All righty.
00:36:17.040 –> 00:36:20.040
We are back here live in studio for the last part of the show.
00:36:20.040 –> 00:36:23.040
So if you have a question, you might want to jump on board.
00:36:23.040 –> 00:36:32.040
Six one five seven three seven nine nine eight six six one five seven three seven nine nine
eight six.
00:36:32.040 –> 00:36:36.040
Taking calls, talking about my favorite subject of taxes.
00:36:36.040 –> 00:36:39.040
And so it looks like we’ve got Chuck and Franklin.
00:36:39.040 –> 00:36:41.040
We’ll just got to pop him on there and get him through.
00:36:41.040 –> 00:36:43.040
Hey, Chuck.
00:36:43.040 –> 00:36:45.040
Hello, ma’am.
00:36:45.040 –> 00:36:46.040
Yes, sir.
00:36:46.040 –> 00:36:47.040
The question I had was on.
00:36:47.040 –> 00:36:48.040
Yes, ma’am.
00:36:48.040 –> 00:36:54.040
All my income comes in from rental property and my mother just recently my mother just
recently moved in with me.
00:36:54.040 –> 00:36:55.040
She’s never elderly.
00:36:55.040 –> 00:36:59.040
So my can I take her as a text right off?
00:36:59.040 –> 00:37:10.040
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.
00:37:10.040 –> 00:37:12.040
She only has Social Security only coming in.
00:37:12.040 –> 00:37:15.040
Then, yes, you can claim her as a dependent.
00:37:15.040 –> 00:37:17.040
OK, thank you very much.
00:37:17.040 –> 00:37:20.040
Great question. Thank you.
00:37:20.040 –> 00:37:23.040
All righty. Let’s see. Can we get Randy real quick?
00:37:23.040 –> 00:37:24.040
Hey, Randy.
00:37:24.040 –> 00:37:25.040
Hey, Doug.
00:37:25.040 –> 00:37:27.040
Hey, how’s it going?
00:37:27.040 –> 00:37:29.040
I’m living the wildlife, my love.
00:37:29.040 –> 00:37:32.040
Oh, yeah. You know, it’s got a quick question for you.
00:37:32.040 –> 00:37:43.040
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.
00:37:43.040 –> 00:37:50.040
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.
00:37:50.040 –> 00:37:55.040
But the bank with good intentions, they did open an account that was interest bearing.
00:37:55.040 –> 00:38:01.040
I think I had there was seventy four dollars interest last year and on that account.
00:38:01.040 –> 00:38:06.040
And I got to thinking about the taxes and I thought, well, I checked into it, did a little
00:38:06.040 –> 00:38:10.040
It looked like I don’t have to pay taxes on that as long as it’s less than one hundred
00:38:10.040 –> 00:38:14.040
Correct. Is that correct? Yes, sir.
00:38:14.040 –> 00:38:20.040
OK. The next part of it is this year, I didn’t think about this, but she had a lifetime
00:38:20.040 –> 00:38:36.040
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.
00:38:36.040 –> 00:38:42.040
And that that is that came in and then I got thinking more about it.
00:38:42.040 –> 00:38:45.040
And I thought, well, there was interest on accounts that she had.
00:38:45.040 –> 00:38:51.040
And so last year there was probably some amount of money on interest.
00:38:51.040 –> 00:39:00.040
And I did check at the bank and got those got those numbers as well with with the
statement, in fact.
00:39:00.040 –> 00:39:04.040
And then also I got the thing about Social Security.
00:39:04.040 –> 00:39:12.040
And so my question is, in a situation with me as the executor, how does that work with
00:39:12.040 –> 00:39:18.040
Do I need to file taxes on the estate with what she actually made last year or depends on
00:39:18.040 –> 00:39:21.040
So you actually you actually have two tax returns.
00:39:21.040 –> 00:39:29.040
You’ll be looking at Randy. You have her when she was alive, possibly January through
September, October before she passed away.
00:39:29.040 –> 00:39:31.040
You will file a regular 1040 market.
00:39:31.040 –> 00:39:37.040
I mean, those we have ability to put in her date of death that that will print across the
top of the return.
00:39:37.040 –> 00:39:45.040
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.
00:39:45.040 –> 00:39:50.040
Then from October through usually estates work on physical year end.
00:39:50.040 –> 00:39:54.040
So it could be October through September, depending on whatever you have for that one.
00:39:54.040 –> 00:40:01.040
But when that one is due, unless you chose calendar year, you will file an estate tax
return and 1041.
00:40:01.040 –> 00:40:14.040
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.
00:40:14.040 –> 00:40:17.040
The estate after her death.
00:40:17.040 –> 00:40:23.040
OK, so like as far as I know, there was a there’s not really anything.
00:40:23.040 –> 00:40:32.040
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.
00:40:32.040 –> 00:40:39.040
Right. There was a capital credit payout from a corporation, a telephone corporate
00:40:39.040 –> 00:40:43.040
She was a member of. I don’t think that I don’t think that’s income.
00:40:43.040 –> 00:40:51.040
But so basically on the estate, we’re not looking at any taxes, but I will need to file for
her personally.
00:40:51.040 –> 00:40:58.040
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.
00:40:58.040 –> 00:41:08.040
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.
00:41:08.040 –> 00:41:13.040
And and that will be how you it sounds like you won’t need to keep it open for multiple
00:41:13.040 –> 00:41:22.040
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.
00:41:22.040 –> 00:41:27.040
OK. All right. Appreciate the help. No problem. Thank you.
00:41:27.040 –> 00:41:34.040
All right. Let’s see. Daniel and Old Hickory, really quick. Hey, Daniel, I got a few
minutes. What do you have for me?
00:41:34.040 –> 00:41:42.040
Well, what I’m curious about, my daughter started doing YouTube last year in January and
she’s a traveling YouTuber.
00:41:42.040 –> 00:41:50.040
She’s basically starting her own business and she spent thirty thirty thousand dollars with
no no money coming back in.
00:41:50.040 –> 00:41:59.040
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.
00:41:59.040 –> 00:42:06.040
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.
00:42:06.040 –> 00:42:18.040
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.
00:42:18.040 –> 00:42:26.040
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.
00:42:26.040 –> 00:42:30.040
This month, she’s going to get her first check coming in.
00:42:30.040 –> 00:42:37.040
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,
00:42:37.040 –> 00:42:43.040
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.
00:42:43.040 –> 00:42:49.040
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,
00:42:49.040 –> 00:42:55.040
because in theory, you’re saying is knowingly it’s going to take us two years before we’re
going to see a dollar.
00:42:55.040 –> 00:43:07.040
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.
00:43:07.040 –> 00:43:16.040
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.
00:43:16.040 –> 00:43:24.040
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.
00:43:24.040 –> 00:43:38.040
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.
00:43:38.040 –> 00:43:48.040
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.
00:43:48.040 –> 00:43:54.040
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.
00:43:54.040 –> 00:44:03.040
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.
00:44:03.040 –> 00:44:11.040
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.
00:44:11.040 –> 00:44:20.040
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.
00:44:20.040 –> 00:44:25.040
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.
00:44:25.040 –> 00:44:33.040
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.
00:44:33.040 –> 00:44:41.040
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.
00:44:41.040 –> 00:44:47.040
We can try to help you find someone else to help you do your taxes so you have a
professional working with you.
00:44:47.040 –> 00:44:53.040
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,
00:44:53.040 –> 00:45:00.040
I am Dr. Friday, an enrolled agent licensed by the Internal Revenue Service to do taxes and
00:45:00.040 –> 00:45:08.040
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,
00:45:08.040 –> 00:45:14.040
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.
00:45:14.040 –> 00:45:19.040
I will tell you we are very different than a lot of those other companies you will hear on
the radio.
00:45:19.040 –> 00:45:26.040
We are ones that basically are going to talk about how, what, when and where and then we
will deal with payments.
00:45:26.040 –> 00:45:31.040
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.
00:45:31.040 –> 00:45:34.040
How much can you put down? Then you need to pay us $500 a month.
00:45:34.040 –> 00:45:39.040
And once we get paid up to date, then we will start working your case. We work a little
00:45:39.040 –> 00:45:48.040
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,
00:45:48.040 –> 00:45:59.040
just give our office a call at 615-367-0819. 615-367-0819.
00:45:59.040 –> 00:46:06.040
You can also go to the web, drfriday.com. That’s d-r-f-r-i-d-a-y dot com.
00:46:06.040 –> 00:46:14.040
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,
00:46:14.040 –> 00:46:26.040
a question through the web page so you can get your things. Or you can email
friday@drfriday.com, friday@drfriday.com.
00:46:26.040 –> 00:46:32.040
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.
00:46:32.040 –> 00:46:37.040
Gives yourself a little breathing room and we’ll be able to help you out. Hope you have
this wonderful Saturday.
00:46:37.040 –> 00:46:40.040
And as we always say in Australia, copy later.
00:46:40.040 –> 00:46:41.800
(upbeat music)