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Join Dr. Friday, trusted financial counselor and tax consultant, as she dives into this week’s hottest tax topics! From IRS refund delays to capital gains on property sales, Dr. Friday answers listener questions and shares valuable tax-saving tips. Whether you’re wondering about earned income credits, qualified charitable deductions, or how to handle debt forgiveness on your taxes, this episode is packed with insights to help you navigate tax season 2025 with confidence.
Topics Covered:
- IRS Refund Delays: Why some refunds, especially those with earned income credits, are held up and what to do if you’re waiting.
- Claiming Dependents: Legal issues when biological parents wrongfully claim children on tax returns and how grandparents can file correctly.
- Mileage Rate Updates: Business miles are 67 cents per mile in 2024 and 70 cents per mile in 2025—key deductions for self-employed individuals.
- IRA Contributions: The deadline to contribute to traditional and Roth IRAs is April 15, 2025—how it can lower your tax bill.
- Qualified Charitable Distributions (QCDs): How retirees over 70½ years old can donate pre-tax from their IRA to save money.
- S-Corp Vehicle Transfer: Steps to legally transfer a company-owned vehicle to personal ownership and avoid IRS red flags.
- Medical & Charitable Deductions: When out-of-pocket medical expenses and donations are worth itemizing vs. taking the standard deduction.
- Debt Forgiveness & Taxes: How canceled credit card debt counts as taxable income and what options exist for reducing the impact.
- Missing W-2 Forms: What to do if an employer goes out of business and fails to issue a W-2.
- Real Estate Capital Gains: Why most homeowners don’t owe taxes when selling their primary residence under $500,000 in gains.
- Business Owners Information (BOI) Act: Important March 21st deadline for LLCs and corporations to file required information.
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.
G’day, I’m Dr. Friday and the doctor is in the house.
I am here live in studio.
So if you’re working on your taxes, just like I am for some of my clients, then this might be the perfect time to ask a question.
If you have any questions, you want to join the show.
737-9986.
737-9986 is the phone number here in studio.
And we’re talking about taxes, right?
There’s not been a ton of tax changes from 23 to 24.
Probably one of the biggest is the mileage.
Obviously, every year we get an adjustment.
In the last few years, it’s went up.
Who knows what the next year, but it’s going to be 70 cents in 25, 67 in 24 for business miles.
And it’s a little less for charity and also medical.
But mainly what you want to make sure and what I’m finding is I have had, obviously we’ve been doing taxes now and tax season open, basically e-file open in January, end of January, 27th, I think.
And I had a couple of people calling me.
I will say our office doesn’t do a lot of taxes where it comes to child earned income credits.
But I had a client that had been waiting and we filed it on the first day of tax season.
And she contacted the IRS because it’s been more than 21 days now.
And she was told that they don’t actually release forms of individuals that have earned income credit with child credit mix until after the 17th of February.
So for anyone that may have earned income credit and you’re waiting and you’re like, where’s my refund?
Well, I will tell you, your refund is waiting, apparently, because they are trying to make sure, and I can’t say I am an advocate for it, they’re trying to make sure that the children reported on the tax return are the children that are allowed to be formed on that tax return.
So sometimes people will claim their girlfriend’s children that live with them. They’ll claim, you know, children of their own, even though they’re not supporting those children. I have two cases right now. I know myself, and I’m sure other tax people have the same situation where, in my case, grandparents have legally taken or adopted the children, and they’re raising them.
But yet the biological mother and or father, one of each in my case, are claiming them still on the tax returns, which is completely and totally illegal.
But, you know, they’re getting away with it because a lot of times it’s first in.
And in many cases, my clients are waiting for tax documents and things.
And if all you have is a small W-2 and you have two or three children that are, you know, not doing anything, then, you know, you basically say, oh, I can get $3,000, $4,000 per child, right?
So, I mean, the system isn’t perfect, that’s for sure, but they are trying to improve upon that.
So if you have a question, maybe you are raising children and someone else is claiming the tax credit, there are recourses.
We have to go directly to the IRS and we have to file specific documents.
And I have found that actually uploading a lot of those documents are also good.
Along with the tax return, we are getting better and better at that, showing that these children are legally the person I’m filing for, not the person that had been claiming them in the past.
So you just want to make sure that you are getting the credits because that’s a lot of money.
Especially if you’re after the age of 65, if you’re a person that has children, I should say your grandparent possibly or your own, and you’re raising them and you would normally qualify for earned income credit.
65 is as old as you can be.
You have to be 24 old or you have to be younger than 65 to qualify for earned income credit.
That’s another thing that I had someone come in and she was 72 and she just started taking the children in and she’s like, well, I should qualify for this, this and this.
And unfortunately, she did not qualify for the earned income credit, even though her income was low enough.
It didn’t qualify because of her age.
So again, some things are not perfect in tax law.
We all know that.
And it’s something that’s going to continuously be something we have to correct or deal with.
But meanwhile, when we’re working on all the things we’re trying to work on, we just want to make sure that we have the proper documents to do what we want to do. And if you need help with your taxes, all you have to do is pick up the phone. You can call us live here in the studio at 615-737-998-661-537-9986. Taking your calls, talking about all of my absolute favorite subjects.
Remember, you can still contribute. I had a little text come in real quick and they’re like, can I still put money in my IRA? And the answer is yes. You have until April 15th to contribute to either a Roth or a traditional IRA. Obviously a traditional IRA would reduce your taxes where Roth you pay taxes today and then it grows tax free. Always a really good idea to make sure you’re visiting that information because sometimes yesterday I was working with one of my clients and he had a balance due originally of like $4,000 or $5,000. And he’s like, well, we qualify for putting in some money. And we maximized both him and his wife. It was $16,000 they put in, but they saved $3,600 in tax. That’s a nice savings by putting almost 20, more than 20% of your money into an IRA and instantly saving that much money. That’s a great investment. So people look at it and sometimes it’s not that good. Sometimes a person put in, you know, say, well, I’ll put in 8,000 or 7,000 if you’re under the age of 50 and, um, you know, they maybe save $500.
Now again, not like it’s, it’s an insane growth no matter how much you put in. And I’m not a financial planner and I am not advising people to do Roth IRAs or IRAs or anything in the financial side.
The only time we look at doing anything with IRAs, usually in my office with exception of helping people figure out the tax liability for conversions and things is traditional IRAs, because, well, a SEP or a traditional IRA, we still can contribute money into as self-employed individuals or an individual that has worked or had earnings. So it’s a way of saving tax dollars, right? And you want to make sure you’re always visiting that information, even if you don’t decide to do it that year. Sometimes it’s better some years, and some years you’ve got your money tied up in other things and you can’t break up with $16,000 or whatever that is. And sometimes it’s more or less depending on how much you have. And I also want to bring up QCDs. Every year, it amazes me how many people, even my own clients or new clients that are coming in. And I know for almost 15 years, I’ve been talking about them here on the radio. For a few years, we didn’t have it as a permanent situation. A QCD is a qualified charitable deduction. It’s only available for people over the age of 70 and a half, which at the time that they came in, that was the age that you had to take required minimum distributions. When they changed the age up to 73, they did not change the age of qualified charitable deductions. So you can take an RMD at the age of 70 and a half and give it to a charity.
The advantage is once you’re at that age, and let’s say you do $5,000 a year to your church, Right now, you’re writing a check or putting cash into the tithing, and it’s not deductible, most likely, because the standard deduction is so high.
But in the case of the QCD, you don’t itemize.
It comes right off of your 1099-AW.
It’s a deduction, and it’s a dollar for a dollar.
So if you gave $5,000 and you took out $10,000 for your RMD, then you’d only pay tax on $5,000.
So this is a wonderful advantage for individuals doing that kind of situation.
All right, let’s go to Brad in Murfreesboro.
Hit him before we have to take our first break.
Brad, what can I do for you, sweetie?
Hi, Dr. Friday.
I’ve got an S corporation, and I’ve got a vehicle that the corporation owns, and I’d like to transfer it to me personally.
And so my two questions are, what would the journal entries be to make that happen if I don’t want to actually write a check?
And two, how do I determine the fair market valuation?
What will the IRS accept?
IRS would accept you taking it to CarMax or someplace like that and get a fair value for it.
That would be what somebody else would pay for it is what you need to pay for it.
So you can use the blue book values, but a lot of times people would take the very lowest, and sometimes it didn’t hold up because it was like in prime condition and they claimed it was in like the worst condition.
So my suggestion is CarMax or one of those.
There’s a couple other ones out there that you can use.
And you can do a lot of that over the computer now.
You don’t have to physically drive it in someplace.
I think you can get estimates.
Get something that someone else, then the journal entry would be obviously assets sold.
Recapture, depreciation, reset.
So you zero out the asset, recapture the depreciation, and the difference would be either a gain or loss on that piece of equipment.
And then you can either offset it as money the company already owes you from, you know, pass-through for this current year.
So instead of doing a shareholder’s distribution, and I don’t know you, so I’m assuming, or whatever.
Or you can write a check and then obviously turn around and pay yourself back.
If there’s loans or anything on the book, I would just take it against the loan.
If there is no loans left on the books, and again, I don’t know your financial, then the offset would be shareholders’ dividends.
Okay.
All right.
So I recapture it for the full value, the full purchase value, and then sell it and then whatever the difference is is the law.
You put the full value in.
I always put something as an other income account.
I just make an other income account in my journals, and then I zero out the total asset.
I zero out the recaptured depreciation because we’ve got to recapture it, and then I offset that with what the value was, and then the difference of those three is what your profit is.
Fantastic. Thank you so much.
No problem. Thanks for the call. I appreciate it.
All right. That was a good question.
I haven’t had one of those for a while like that.
So I’m thinking a little bit, and I actually want to give Brad a good thumbs up because so often I’ve looked at people’s books and people have just transferred the asset out of the books.
They basically just zero it out.
So they don’t, you know, I didn’t get anything for it.
We washed it off and therefore there’s no gain.
There’s no value.
But if audited, Brad is doing the correct thing, which means, especially if you want to put it into your own name, you own it, it would be too hard for the IRS to see that you own it.
And therefore, you know, you’ve eliminated the recapture.
I mean, in most cases, if this was an over 6,000-pound vehicle, you have already accelerated depreciation.
So, it basically on the books probably is a zero value.
So whatever the value on the street is what he’s going to pay capital gains on, which is what the step that a lot of people try to ignore because they don’t want to pay that.
But he’s doing it the right way.
It’s always sometimes easy to take the shortcut until you really want to get reconciled with the IRS.
We don’t want to do that.
All right, we’re going to take our first break.
If you want to join the show, you can.
615-737-9986.
And we’ll be right back with the Dr. Friday Show.
All righty, we are back here live in studio.
I wish I could hear that music. I don’t hear it anymore.
All right, we’re going to go right to the phone.
We’ve got Gary in Nashville.
Hey, Gary, what can I do for you?
I was just trying to figure out whether it’s a waste of time to add up all my out-of-pocket medical expenses, which probably add up to maybe $3,000 and charitable contributions that might be about that same amount or a little more maybe.
And trying to figure out if it’s just wasting time to add all that up or do I just take the standard deduction?
Are you single or married?
Married.
Okay.
I’m going to say because if you’re, well, $29,200 if you’re under the age of 65.
If you’re older than 65, then you’re going to add another like $3,000.
So it’s going to be over $30,000.
And the numbers you’re giving me, even if you could maximize property tax and sales tax, you’re still at maybe $16,000, you know, like three for medical, three for charity.
And we know we don’t get medical dollar for dollar.
So I would say it’s going to probably be, my personal opinion, you’re probably going to be just taking the standard deduction.
Okay. Well, I didn’t want to sit down and go through all that junk if I didn’t need to.
I hear you. That’s a lot more work than people like to think.
I know. I have a lot of people that would save all their receipts and do all of that.
And there’s nothing wrong with that.
But at the end, we weren’t able to use it under the current tax code.
So, yeah, I don’t think unless you’re my opinion, unless you’re medical is probably 15, 20,000.
And hopefully it’s not. But I’m just saying then you’ll get, you know, maybe a big chunk there.
and then your charity as well being more like $10,000, then I would say you might be chasing the ability to itemize.
Otherwise, I don’t think you, you know, take the standard.
You don’t have to spend all the money and you’re good.
You got to.
I appreciate that.
No worries.
Thanks for listening, sir.
Okay.
All right.
So we’ve got, if you want to join the show, you can.
615-737-9986 615-737-9986 taking your calls, talking about my favorite subject, which is taxes, and then we’re talking about different things. Again, if you want to really try to, this year, if your goal is to maybe catch up on retirement, a lot of times people are always looking for different ways to save money. Now, there is a difference. If you’re making $400,000 on a W-2, you’re going to max out your 401k, hopefully, just as a normal, but sometimes people don’t. But your best bet is either, in most cases, is to also look at your tax bracket. So even though you’re an individual and maybe you’re making $50,000 or $60,000 or your married couple making less than $120,000, you know, it may be better to think of a Roth.
Again, I’m not giving financial advice.
I’m talking on the tax aspects, right?
Because on the tax side, you are in the 12% tax bracket.
Pay tax today on all of your money.
Invest it and let it grow tax-free.
Seems like a no-brainer.
The difficult becomes is when you’re in that 22, 24% tax bracket, do we do a Roth just so we don’t have to deal with the IRS?
Or do we go ahead and invest?
That’s when you need to have a really good tax person.
I mean, a good financial advisor along with a good tax person.
because my game is usually instant gratification.
You know, I mean, what’s going to be a way that we can do some tax planning in the next year or two, but we don’t know tax law five, 10 years out.
We know what we hope it is, but let’s be honest, it changes every year.
Unlike a financial planner who may do a five or 10 year plan, you can plan taxes, but it won’t always stay the same.
So sometimes you really do have to be smart enough to make sure you have a backup plan or whatever on that.
So let’s hit Frank while you just got him on the line there for me, and then you’ll let you get line two.
Hey, Frank, what can I do for you, sweetheart?
Yes, ma’am, I have a question for you.
I work for an employer.
The employer shut down in October, and none of the employees have gotten their W-2s, and we don’t know what to do.
I can access my last paycheck and see all the information, but I don’t have the employer identification number to do anything with it.
So you can make a W, basically says in the tax software we have at least, we can make up a W-2 based on the fact that we don’t have that, but you won’t be able to e-file.
Your second best bet is to go get, I don’t know if you have access, but one of you, just see if any one of you can go into the irs.me and see if they’ve uploaded your W-2.
That’s where we usually get when we’re working for multiple years.
We can get that information.
It sounds like maybe you’ve already tried that, Frank.
Well, I don’t have her EIN, but my tax software will usually look it up if it’s in the online database because I use TaxAct.
And I don’t have an EIN to look it up with.
Yeah, so you’re going to have to use your final paycheck stub.
And you’re going to have to click that it’s, you know, it’s a paper filing.
You don’t have any, you don’t have the EIN number.
Can you get the EIN number?
Have you tried using, I hate to say this, AI or Google or one of those and saying, can you look, you know, the address, you know, the name of the company.
EIN numbers are not necessarily like social security numbers.
So I don’t know if you’ve done a search to see if an EIN number shows up.
Just looking to see.
I have, but I haven’t had any luck because I don’t exactly know where to look.
I’ve even tried the Tennessee state site.
Yeah, it won’t be on the state.
It’s going to be on the federal site.
And I don’t know if you have anyone since you use it.
E-Verify is what you’re going to be wanting to use to do it.
So you might be able to go into E-Verify and see if you can find that information.
But I’ll be honest.
Normally, you have to have a license for that.
And two, most of the time, we’re just verifying a number we already have.
And 90, you know, 99% of the time.
So I’m not helping you much on that, Frank.
So I would check your own, just pull your own transcripts just to make sure it’s not under there.
Not, then you’re okay because at least you’ve got your final paycheck stub.
And if they closed at that time, I hate to say this, but they may not have finished out the year.
They may not have even filed a social security, which is sad because there’s some huge penalties assessed when you issue W-2s, but that’s not our problem.
But yeah, anyways, let me know what you figure out.
But yes, you’ll have to do a paper filing and you’ll have to use your pay stub.
Well, thank you so much for your time.
You have an awesome day.
Hey, you too, sir.
Good luck.
All right.
Let’s hit Adam in Murfreesboro.
Adam, my boy, what’s happening?
How are you?
Thank you for your help.
I am good.
No problem.
What can I do for you, my friend?
Love some advice.
Question.
So starting in COVID, you know, ran up some cards, credit cards, making ends meet like people had to do.
I had a family member move in.
My mom was a hip, several hip surgeries.
So I had some medical.
And then also had some ID theft.
And so about a year or so ago, I did some debt consolidation, you know, entered in that, paid it all off now.
And then, but this tax season, all of a sudden I received like three different things.
You know, credit card looks like WGs or something, you know, where, you know, it’s the debt forgiveness amount.
Now, does that count as regular income?
That’s what I’m being told.
It does.
I really wish the one thing that these negotiation companies, and sometimes I’ve been told by people, they’re being told that they will not turn them in to the IRS.
But the bottom line is what the IRS looks at is you spent $50,000, you only paid back $25,000, so the other $25,000 is income that you earned because you used it for lifestyle that was provided.
We all agree with this, Adam, but that’s the way the argument goes.
So, yeah, so you have to take the 1099 that they give you and it becomes now, depending on your situation, if your debt is higher than your basic income or your assets, or if it was secured, any of it was secured against your home, which I don’t think in your case it was.
No, no, no.
It was just credit cards and stuff or medical.
Yeah, yeah.
So you can try to see if you qualify for forgiveness on it.
But I will tell you, 99% of the time, I mean, I have not successfully had it.
So you can try it.
But they basically just ask you how much is your mortgage, what’s your mortgage value, what’s your home, what do you have in the bank.
And if you are insolvent is the word they like to use, which doesn’t really mean the same thing to us.
It just means that your debts are higher than your income.
Then you might be able to qualify.
Otherwise, yeah, it’s a very misconception.
You tried to do everything right.
Hey, I didn’t want to go bankrupt.
So I tried to make a deal.
Most of it was just interest and stuff that you didn’t pay back probably.
But yes, it comes down to it.
It really does.
It hurts.
Yep.
Well, yeah.
And I just thought I was going to break even this year.
So now, you know, I don’t know, it’s $3,500 or something.
I owe.
So I’m just trying to debate.
I just want to pay it off or get on some sort of plan with the IRS.
I hate to do that.
I may just take a bite and pay it all off.
Well, I mean, if at all possible, because the interest in penalties is going to be more than 25% if you can’t pay them.
I mean, they’re more than well.
But it does hurt because the whole point was, you know, I mean, it’s just, yeah.
Anyways, yes, I totally hear you.
IRS is worse loan officer than it would have been a credit card.
You know, I’m just saying.
But they don’t split those up over a couple of years or anything like that.
They just drop them all at the same time.
Well, apparently yours did.
I mean, depending on how the negotiating, I guess, goes.
And again, I’m totally winging that.
But it sounds like you basically negotiated everything came up at the same time.
And therefore, they just said, hey, you closed the deal.
It would have been nice for them to figure out how to spread it at least over every year.
You’re picking up one.
But yeah.
Okay.
Live and learn.
Thank you for your help.
Yeah.
You got it, sweetheart.
Thanks.
All right.
Let’s go ahead and lease it really quick.
And then we’ll get to the break.
Kaylees, what can I do for you?
Don’t you have to wait.
Hey, Dr. Friday.
Along the same lines as the last caller, my husband passed away in 2024.
And he had a credit card that was only in his name that had some medical debt and other things on it.
And when I called the credit card company to tell them that he had passed away, of course, they canceled the card and forgave the debt.
It was a little over $6,000.
In your case, you have a different option because you theoretically are not responsible for your husband.
Therefore, you can file married filing separately.
It may not be beneficial.
It may be having a married filing situation is better for you.
But a married filing separately, in essence, your husband files his own return.
and you would file your own both married filing separately and then see if you owe any money or if you’re not required to file. I don’t know your situation, but that would be your option.
In the other gentleman’s case, I don’t think that was the case, but since your husband is deceased, I’m sorry for your loss, but you’re not really responsible for his credit card debt, which is why they forgave it. And then, you know, but obviously when filing jointly, you are now picking up any income and or expenses he had if he do it.
Right.
So married filing separately would be a way for you possibly to avoid paying tax on that, but it could hurt you.
Yeah.
And if I claim this, it’s going to also put me over on the estimate that I had did for that health mark, the market exchange thing for my health insurance.
Right.
Was your husband on Medicare or both of you in there on the market?
Just, well, after, you know, we lost, I lost insurance after he died.
It just ended and I had nothing.
Again, that may be a reason for you to look at married filing separately because then none of that will show up.
Okay.
Do you get the same standard deduction in that case?
You would get what a single person gets, not a married person.
That’s what I’m saying.
The penalty comes one way or the other, but the penalty on the marketplace can be fairly healthy sometimes.
So I would have someone compare and compare in both ways and see which way is the best for you.
Okay.
All right.
Can’t hurt.
Okay.
Thanks for your help.
Thank you, sweetheart.
All right.
We’re going to take our second break.
If you want to join the show, you can.
615-737-9986.
615-737-9986.
We’ll be right back.
All righty.
We are back here live in studio.
And if you need to join us, you can.
615-737-998-6615.
737-9986.
I did want to bring back BOI, Business Owners Informational Act.
It has passed the courts.
And anyone that did not file for their BOI, it was extended, I believe, until March.
We’ll find out the exact.
But they did pass that recently.
So Business Owners Information Act is back in play.
They did say that they were going to require it.
I really wish they would still give us a little bit more information.
And this is, again, for anyone that has a ownership in an LLC, if it may be a corporation, anything that’s been, they say, registered with the state.
So, in most cases, in our cases, corporations, LLCs, all of those in Tennessee are registered with the state.
So, even single-member LLCs would be required.
We did do, I think, all of our clients back before because at one point there was a due date of December 31st.
It then was taken to court.
And then it was, in my understanding, extended out knowing more about it.
So we will get some more information so that you don’t get hit.
Because at one point, to be quite honest with you, they’re saying, if you didn’t file this by December 31st on companies, then they were going to end up charging you $500 a day for being outside of the filing period or whatever.
Here we go.
It says to avoid it.
Now they have extended out till March, March 21st.
So that’s only like a month away.
So again, there is a BOI are e-filing portals.
You can use it.
You can do it yourself.
It’s not that complicated.
It is something that does need to be done, but they did move it to March 21st.
So if you did not do your BOI because you didn’t like the idea, maybe you just weren’t wanting to have to provide a copy of your driver’s license to or passport to the government.
You’re going to want to do that.
I just want to bring that back.
want to start talking about that again. Also, we are less than 30 days, more like, yeah, 25 days, something like that, until corporate tax returns and LLCs. March 15th is the deadline on partnerships and corporations, and many LLCs are partnerships. So remember, those are due March 15th. And so if you haven’t got all your information together, you haven’t filed it, you’re not sure if it’s going to Make it.
File the extension.
It’s well worth it.
Every year we get people that come in and they’ve got a $900 to $6,000 depending on the number of partners or members in the company or LLC.
And they charge you like $200 a partner or $300 a partner for up to like four months or whatever months you’re late.
So they can add up a lot.
So you do want to make sure that that is being filed and that you’re doing it the proper way.
So that way you don’t end up late if you’re in the process.
I know this weekend we’re kicking out a large number of business returns to try to get the first batch out so that people can really make sure that they’ve dealt with their situation.
And that, you know, because then they can do their personal.
Most people can’t do anything because they’re waiting for the K-1 to go through the business return.
So, all right, let’s go quickly back to the phones.
We got Bruce from White House.
Bruce sold some property, I think.
Let’s see.
Hey, Bruce.
Hey.
Yeah, I recently sold some property, six acres I’ve had since the early 70s.
And what I did, I wound up financing most of it.
I got a $50,000 down payment.
And so I noticed when I filed the closing, they had a 1099 set up for the $50,000.
Right, 1099S most likely.
for the sale of it.
But you’re going to do a tote the note on your tax return, meaning let’s just, you don’t tell me, I’m just going to say you sold the property for $100, he put 50% down and he’s going to pay you the other 50% over a number of years or even just one year.
Hopefully there’s some interest involved.
And so what you’re going to do is as he makes his principal and interest payments, you’re going to track that and then every year you’ll pay capital gains on that percentage.
So I’m going to assume that you did not pay a lot in the 70s for this six acres.
I’m guessing, but I’m assuming you didn’t have a lot of basis in it.
$6,000 for six acres.
Okay.
I had a feeling.
So most of the money you’re making is going to be capital gains, but you’ll only pay capital gains as you actually receive the money.
So this first year, you know, so basically you’re going to take whatever your basis is divided by the percentage of whatever the total sale and you’re going to take that.
So 50,000, let’s say 3,000 of basis went into it, half of it.
So you are paid tax on 47,000 this first year.
The other 50, depending on how long.
And again, I’m just using a number for your example.
You know, as he pays it, a percentage of that whopping $6,000 will be added in, but most of it’s all going to be capital gains, to be honest.
So you just need to figure out your capital gains, and then interest will be taxed as well at the same time.
Does that help a little bit?
Thank you.
A little bit, but I thought if you had property for so long, that there was a different formula for contributing to capital gains.
You would love that.
the only time it changes is if you inherited the property. So if this was your parents’ property and they died five, 10 years ago and you then inherited it, you would get the value at the time of their death. We call this step up in basis. But since you purchased this property in the 70s and you brought it for 6,000, there is no additional step up, unfortunately.
Okay. All right. Thank you. Thanks, bud. All right. That was not probably what Bruce wanted to hear, but I’m sorry. All right. So we have a few more minutes here before the last break. So if you have questions, you can join us 615-737-9986, 615-737-9986, taking your calls, talking about all the important things. So we covered, let’s see here on the BOIs, we covered the extensions coming up. If you already know that you’re not going to make the April 15th file that extension, And let me clarify, when you file an extension, you are not extending the money due.
Oh my goodness, I can’t tell you how many people, you know, they thought, well, why am I paying a penalty?
Because I filed and paid at the time, which was in July or August when they filed the taxes.
And I’m always surprised when people think that because all of us would extend our taxes to the last day that we didn’t have to pay.
We won’t do it in April unless that was the date the government said you do this or there’s penalties.
So filing an extension is only filing an extension for paperwork.
That’s it.
Paperwork.
Nothing else.
If you owe money, you need to even go start making payments.
You need to start doing something.
But either way, you need to make sure that you are covering the amount.
If you can’t pay it all, guess what?
Pay a percentage.
Pay a little bit of it.
That way you can go ahead and make sure you have what you need on that and go on that type of situation.
So they’ll make it work better for you.
You know what?
Let’s get Kim.
That’s a fairly easy question.
Let me see if I can get her on.
I only have about a minute and a half before the break.
I can do it.
Hey, Kim, my friend, tell me what your question is.
Hey, so we just sold our house.
We sold it for $429,000.
We made $200,000 in equity, but we bought a house for $450,000.
So because we bought up, do we still pay capital gains?
I have good news for you, but not for the reasons you think.
Okay, so the new tax law that came into place almost 15 years ago was, the old one was you had 48 or two years to reinvest the money into another home equal or higher.
So you would have been perfect at that time.
The new law that we work under now is that, you said we, so it sounds like you’re married?
Right.
Okay, good.
So a married couple can sell a home for $500,000 plus whatever they paid for the home without paying tax.
So you are spot on.
You sold the house for $429,000.
No matter what you made in capital gains, you’re not paying tax.
Okay, awesome.
Thank you.
That’s the answer.
Okay, girl.
Thanks.
All right.
We’re going to get ready to take our last break before we go into this.
So if you’re waiting to make a phone call or you’re thinking, oh, I’ve got a question.
First, don’t think there’s ever any silly or dumb or whatever the proper word is question because when people are listening, I think the people that call are probably the bravest people because most of us probably wouldn’t call a radio show anyways.
But when you’re asking a question, a lot of times other people are also curious on the answer to that question.
I’ve been doing this for 15 years.
I have so many people that say, oh, when that caller called in about this, I was just wondering about that.
So you’re kind of the voice for other people.
So feel free to give us a call and ask the question because there’s probably someone else that would wish you would ask it.
The phone number here in the studio, 615-737-9986.
615-737-9986.
We’ll be right back with the Dr. Friday Show.
The show’s up.
We’re going to show you the news.
5-7-7-9-9-8-6.
And it looks like we have been busy.
So let’s go ahead and hit Brandon in Murfreesboro and see if I can help him first.
Hey, Brandon, what can I do for you?
Hi, Debbie.
What can I do?
So I have a question.
My wife closed out a business that she was running as a small business like two years ago.
And our CPA at the time said that we had a $91,000 loss we could claim, $3,000 a year.
And I was just wondering, do we need to show that on every year’s tax return?
Because I was instructed this year that we didn’t need it and so not to use it.
No, you need to show it and you need to take it every year.
It basically runs for 20 years if you need it or not.
But you’re going to take that $3,000 no matter what.
And it’s automatic.
So someone needs to continuously have that fed into the return.
Every year there’s a form that will say this is what your remaining balance is.
Roll that over to the 24, 25, et cetera, et cetera.
Right.
That’s what I thought.
And I tried to explain it to, you know, I was getting my taxes done this year.
And they said that, no, it’ll just sit there until you need it.
No.
We wish that.
But for one, likeliness is no one’s going to remember.
Two, the government wants a perpetual, even if you have an NOL, a lost carry for whatever, always has to go from year to year.
So that person needs to revisit the prior year because there should be a capital gain loss sheet involved that that person put in there, and they can just use those numbers to move it forward into the next year, et cetera, et cetera, et cetera.
Right.
Okay.
Yeah, I thought I heard you say that one day about a loss on a property that you sold.
So I figured it would be the same for a business.
You got it, my friend.
Yes, sir.
All right.
We’re going to go ahead and hit.
Thanks, buddy.
Let’s hit Steve in Columbia.
Hey, Steve.
Your caller earlier that was wanting to know his employee ID number?
Yes, sir.
Isn’t that at the top of his W-2s for former years?
Yeah, I had a feeling.
I didn’t ask, but that was a good question, Steve.
But I’m thinking that this is a new company they work for, so they didn’t have it a prior year W-2.
Oh, okay, yeah.
I was wondering why you didn’t ask that.
I was working on the idea.
If he had it from last year, he would have known it.
well yeah you may have made the assumption that he didn’t think to look at that though that was what i was thinking you’re right no you’re right steve i thought about it after i had gotten off so you were on the right track i did not i thought well he probably already knows he had it from last year if he would have asked that question so i was working outside of that box but you’re actually correct he may have it from last year and not even think about it well i’m the champion of the incredibly obvious and sometimes it seems wrong Well, thank you for the call.
I have another question.
Can I get another quick question about sales tax?
No, we’re good.
Go for it.
Okay.
Is there any way that you can tell when a sales tax was enacted?
Like when did they start charging sales tax on labor on repairs for automobiles?
That actually has been going for a long time.
Car lots haven’t always done it.
A lot of times people would only do, because services for a long time in the state of Tennessee were not taxed.
So people would try to run stuff under service versus the parts and repairs.
But to be honest with you, at least for the last 30 years I’ve been here, sales tax on used car or on car repair has been a part of the books.
I was about to say, I was just looking it up and it looks like it’s only been in sales force for 25 years.
Okay, there you go.
It’s probably been that long, but I’m getting old.
And we always first tax on repairs on labor.
Yeah.
But it was $4,000.
Gotcha.
You got it, my friend.
Thank you for the info.
Appreciate you.
Let’s hit Alan real quick so we can get him before the end.
Hey, Alan, what can I do for you?
Yeah, thanks for taking my call.
I was mentioning there’s a very couple of houses under $4,000.
They don’t have to do taxes on it?
Uh-huh.
Okay, now what if you sell a house and you buy one for $150 and you have remaining money and you want to just put that in the house and get three taxes on that?
You don’t have to buy a house at all.
So when they sold that house and they made $429,000, they could have moved into an apartment and paid rent.
You do not have to re-spend it into real estate.
That sounds better than a lottery.
Exactly, it does.
Real estate is a good investment for most.
I’m sure people are listening and saying, well, I went upside down.
But most people in Tennessee, our homes are appreciating, not depreciating.
So, yeah, so if you sell your current home and you don’t want to go spend all that money, because it sounds like they only spent $200 or they went and spent more, didn’t they?
But anyway, yes, you don’t have to spend it, right?
That sounds like the Canadian lottery.
I don’t want to.
Also, I wondered if – I’ll talk to you later in time on that.
I don’t want to hold up your show.
No problem.
Okay.
Thank you very much.
Okay, bye.
Thanks, Alan.
I appreciate you.
Okay.
All right.
Thanks for the phone call, guys.
I really do appreciate it.
It makes the show so much more entertaining than me trying to figure out what you guys want to hear.
So we’re getting ready to wind down the show.
We’ve got a few more minutes here.
So, again, I want to make sure that you’re thinking extensions if you’re not going to make taxes.
they have given file taxes in a number of years.
I’m thinking that you probably want to go ahead and file extension this year.
Let’s make this the year that you catch up all your back taxes.
You might be pleasantly surprised on how many years we have to file and how much money you owe because a lot of times you’re thinking, oh, this is what I bought, and no, it isn’t.
Sometimes you may only have to go back five, six, seven years.
Some years, I mean, basically compliance is six years, but sometimes you have to go back further because the IRS has already assessed you.
So some of those information has come out.
But you just need to make sure you understand that.
Make this the year you file.
And if you’ve always been filing your taxes, obviously you know the game.
And you know you need to get all the documents.
I will say again, make sure you have all your documents.
We have a number of paperwork sitting here.
They’re waiting for this and waiting for that because we didn’t quite get everything we needed on there to make sure we have it.
So, you know, let’s get Rachel on the line real quick.
And that way we don’t have to worry about anything else.
Rachel’s got a question out of, I think she’s driving.
Hey, Rachel, what do you have?
Hi.
So my husband last year got overpaid about $5,000 over, I guess, a two-day period.
They asked us to pay it back, and we did, about $5,000.
I’m wondering, do we, and on the W-2 that we received, it didn’t take off that $5,000.
They need to amend it.
We need to get an amended W-2.
You need to get an amended W-2.
If he got overpaid and it was all paid in the same year, did it all happen in 24?
Yes, it did.
Okay, then yes, they need to amend the W-2 because they’re not giving him credit for the money, you know, he paid back or whatever.
So, yeah, you need to call them before you file your taxes.
Okay, awesome.
Thank you so much.
Thanks.
Appreciate you.
All righty.
That was another quick answer.
We’ve got some unique ones today.
I like that.
Thinking a little bit outside the box.
That’s good.
Okay.
So, if you do need help with taxes, obviously, it’s what we do.
We do all tax returns from unemployed.
You probably don’t have to worry about taxes.
From the individual to companies, businesses, nonprofits.
We do them all.
We’ve been at it for almost 30 years.
So if you need to get an appointment, you can go to our website, drfriday.com, and click on the schedule, and Chris or Dr. Friday, either one of us, and we can help you get your taxes done.
And then if you need to have a question answered, you can give us a call Monday morning at 615-367-0819, 615-367-0819.
Or you can always email.
I’m doing my best to keep up with it.
It’s Friday at drfriday.com.
Again, Friday, like the day of the week, at drfriday.com.
And for all you new listeners, yes, that is my first name, Friday.
I go by Dr. Friday, but Friday is my first name.
So not to confuse you.
And a lot of people are like, who is Friday?
Who is this person?
For all you long-time listeners, you already know who the crazy lady is.
And if you’re not sure who I am, again, go to the website, drfriday.com.
We’re here, been here for a while.
We can help you with tax issues.
I’m an EA.
I’m an enrolled agent licensed by the Internal Revenue Service to do taxes and representation, which just basically means all I do is taxes, guys.
So if you’ve got questions, if you’re just trying to make sure you’ve got your taxes right, or if you’re looking for someone that can help you tax plan along with doing your taxes, give us a chance.
So again, you can make an appointment online or you can call us at 615-367-0819.
Texting to that number as well.
Sometimes that’s the fastest way to get to us or make the appointment right through the online scheduler.
Those are the both the same ways.
Hope you guys are enjoying this Saturday.
It’s a little bit on the nippy side for myself.
But as you guys have seen, the dogs have slept through the entire show.
You haven’t heard them chitchatting.
And I know a lot of you guys listen for it.
so we got them nice and cozy so hopefully you guys have a wonderful Saturday and as we say in Australia, cop ya later!