You won’t want to miss out on this episode of the Dr. Friday Radio Show! Dr. Friday talks about all things taxes, deadlines, and the following topics:
- Can My Child Get a Stimulus Check If They’re My Dependant?
- Do You Need Help With Your 2020 Taxes?
- Do I Need To Tell The IRS I Own Cryptocurrency?
- There Is More PPP Money Available
- Should I Claim My College Child?
- The Third Stimulus Coming March 15- April 15
- Unemployment and 1099 G’s Payment Is Taxable Income
- Do You Need Help With Tax Representation?
- Have The Right Documentation For Filing Your Taxes
and answers other caller’s questions!
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 at 615-737-9986. So here’s your host, financial counselor, and tax consultant, Dr. Friday.
Dr. Friday 0:30
Good day, I’m Dr. Friday and the doctor is in the house. It is that season, guys when all of us get to go file our tax returns. Forms are coming in. I know more and more people have now received their unemployment form. I just want to make that a reminder that 1099 G’s are responsible to be filed on your tax return. You’re also going to be reporting, if you’re filling out your own tax return, you will be asked “Have you received both stimulus?” I have a lot of people that say, “Well, I received one of them in 2021.” it doesn’t make a difference they are reconciling the one you received in 2020, as well as the one you received in 2021. Both of them are being reconciled on this tax return. So it’s not taxable income, I want to reiterate that because a lot of times people think it’s taxable or not, it is not taxable income. But if you have not received it, you will be able to get it as a refund on your tax return or help pay for taxes, whatever it may be, as far as the situation is on that. So you do want to make sure that you’re filling that out.
Dr. Friday 1:35
Also, the last couple of years because of the tax change, we all know that charitable contributions in 2020 on this tax return, I don’t know if it’s going to extend past this year. But they’re asking us if you gave $3,000 to charity in the year 2020 above the standard deduction. Make sure you have receipts. I know a lot of people just love to throw a number in there. But you never know if you’re going to be asked for this. But when it comes down to it, I have great clients. Maybe you only gave $100 maybe gave $200. Whatever it is you gave, remember, fill in the charity section because that’s going to roll over to a separate deduction onto your 1040. So you want to make sure you have that information. It’s an additional deduction. So again, it’s not a credit, it’s a deduction, but it is going to help no matter what it’s always nice to get a few more dollars in our pockets. So and then this year, big decisions about college kids who are claiming them all that. I will say if you have a college kid, don’t just file it before you figure out who’s going to claim, and legitimately some of these kids have worked and taken care of, but they’re not maybe supporting themselves over the 50%. But you need to figure if they’re going to be a better deduction, what’s going to happen on that. So make sure you talk to your tax person when you’re agreeing to taxes or if you’re doing your own file your kids and yours altogether. Make sure you’re making the right decisions when it comes to your college kids. College credit could be $2,500, but some parents make too much money or don’t have the benefit, or they didn’t pay enough, maybe the kids are on a full ride, and maybe they’re working a job on the side. So they’re making you know, 15-16,000 a year. So they really are able to support themselves, even if it’s not necessarily in the same lifestyle that they’re living, according to the IRS. So just put some thought into that make sure you have yourself and your kids all in the best place.
Dr. Friday 3:34
If you want to join the show, you can at 615-737-9986. We are taking your calls, I’m an enrolled agent licensed with the Internal Revenue Service to do taxes and representation, which basically means I deal with taxes all the time. If you have gotten love letters from the IRS and you don’t know what to do about it. I will say be a little patient. We’ve had quite a few cases where we sent information last year to deal with an IRS issue we mailed it in, and we’re getting letters as if that was never ever received. So just be careful. If you get a second letter. I am a firm believer, there’s nothing wrong with recertifying another letter to them. I think a lot of our mail got lost in the closed down or maybe just got piled up someplace. I don’t really know. But it didn’t seem like it got the answers we needed. Especially with amended tax returns. I don’t they just didn’t seem to get processed. So we need to figure out what to do and how to do that. So my suggestion is just recertified them the answer if you’ve already done it once and I have found that that works really well for us. All right, let’s go ahead and go the phone lines. We got Debbie on line three. What can I do for you, Deb?
Hey, I only made $7,800 last year and W2 income. Would I need to go ahead and file tax returns this year for any future stimulus payments?
Dr. Friday 4:59
Have you gotten the past stimulus checks?
Dr. Friday 5:02
Okay. I haven’t read anything that says you have to file 2020 to qualify for any current certain. Coming up, we all know In March, they’re talking about giving you another one to my knowledge, you don’t have to have 2020, you didn’t make enough money, the only reason I would file it, you could go to a free site, file it and if there’s anything in box two, you would get it as a refund. I just don’t like to leave any money. I doubt there’s a lot in there. But you know, that can be a few dollars. And if it’s a free tax return just a few minutes of your time to get that money back. If there’s nothing in box two, there’s nothing that mandates you to file it.
Gotcha. Thank you so much.
Dr. Friday 5:38
No problem. Thanks for calling. Appreciate it. That’s a great question. A lot of times people wonder if they really file especially older people. Sometimes I have people that come in and when I do their taxes, many times, I’ve told them you don’t need to file, you know, you don’t need to pay me, you don’t need to file tax returns. And like I was asking her unless somehow she got missed in the system. I’ve been dealing with some people that are homeless, and they’ve been missed in the system because they’re not receiving any benefits from the government, as well as they are not dealing with anything else as far as, they’re not getting checks, they’re not getting anything, and they’re not getting the stimulus checks. So helping them try to get that resolved is the best way to do it or the easiest way to do it. Otherwise, you need to not worry about filing taxes. As long as you’re in compliance, no one says you have to file a tax return unless you’ve made money. Most of us don’t have a choice, how did we pay our rent or cars or anything else if we didn’t make money? And that’s always a common sense question. I know a lot of times people will come in and say, “I didn’t make any money. There’s no way I have to pay all these taxes.” But then you sit down, you really start looking at how their lifestyle is, did you pay rent? Do you have a car payment? Do you do you eat? You know, these are essentials that most people have to usually say yes, they don’t even have a car payment. But they usually have a roof over their head, they have to pay some rent, there’s food that’s going in their belly, there are clothes on them.
Dr. Friday 7:13
No matter how frugal you are, there is usually some and if you’re self-employed, every dollar we make is subjected to self-employment tax as well as ordinary income tax. So that can add up really quickly, especially after you’ve extended past whatever your standard deduction might be. So if you’re single, $12,400, anything above that, and you still have self-employment tax below that. So it’s important to make sure in my opinion, anybody that’s self-employed, every dollar we make, you need to have a separate bank account, and you just put 20%, depending on if you’re in most businesses, your profit margin is at least 20%. And you set that aside, every time you take a check out. I mean, my real estate people, I haven’t taken out the gross. Well, there are not that many deductions unless you have some extra staff of people under you, then that’s a whole different situation. But if you’re not doing it, if you’re just doing your own real estate sales, you really still have plenty of profits and therefore have to deal with that situation. All right, let’s see what Russell has to say, boss. Hey, Russell, what do you get?
Yes. I had a question about the whole Obamacare Affordable Care Act. What I had done was the previous year, I had told them that I was probably going to make a certain amount of money. Then COVID hit and I ended up getting extra overtime at work. And I just was flooded with work. And my boss needed me. So he kept giving me raise after raise. At the end of the year, I made quite a bit more than I projected I made. And so when I went to go do my taxes and saying that I have to pay back every bit of that money that they gave me for my insurance. It was like over $5,000. So is there any way out of that? Or do I just have to pay it even though I never use my insurance all year?
Dr. Friday 9:16
The basic answer. Russell is yes. And I know how frustrating This is. And that’s why I always try to tell people, get out of the marketplace, go get a health savings account, find another source of health insurance, because the marketplace, does it based on income. Most people don’t have health insurance. I mean, you’re busy trying to live and make money and do things you forget that you told somebody, you were only gonna make five or $10,000 or whatever. Then you made two times or three times that amount. Great. That’s usually a wonderful thing. But the health care because you are only paying 20 bucks a month or something for health care, you ended up getting this advantage that if you paid it over 12 months want to seem like such a huge difference than where you’re at right now. The good news is that can charge you any penalty on it, the most of that. But the bad news is they can charge you interest and you know all that for not having it. Yeah, Russell, I have people at last person I did just recently they owed $21,000, there was a family of four that was on it. In all honesty, just like yourself, they just forgot in a sense, they were just so busy trying to make a living, and then did a good job of it and forgot that they were only paying $300 for a family of four and ended up having to pay all that is going to have to make a payment plan to pay that back. But there’s nothing you can do.
The IRS just does a payment plan that works with me. I don’t have to pay all that all at once.
Dr. Friday 10:41
Yes. If you make a regular payment plan with the IRS, it will go for that. Yes, sir. You can make one of those and they’ll give you 72 months to pay it. They will charge you penalties and interest. I mean, you can make a payment plan. So they’re not going to be bugging you every month trying to do levees and seizures. Yeah.
All right. Well, thank you very much for your input.
Dr. Friday 10:59
No problem. Sorry, buddy.
Dr. Friday 11:03
All right, if you have a call, you can join the show at 615-737-9986. We are taking your calls. I mean, many of you guys probably have heard that they have opened up some more PPP money. Basically, for individuals that haven’t gotten PPP one, maybe because of different reasons you were rejected. Or that you didn’t get the first PPP, maybe you didn’t know. I have a lot of people, I’ve got two or three I’m working on today, three, actually. All three of them were just sole proprietors who did not realize that they qualified for the PPP. And their businesses are still in business, and they’re still working. So if you haven’t filed for the PPP it has opened, and all PPPs are going to be at the end of March 31, they’re going to be closed again. So if you’ve had PPP one was basically just based on payroll or profits of your schedule C, in most cases. PPP two you have to have that plus a 25% loss on one of your quarters. Initially, I thought it was going to be a quarter for the quarter, meaning I could take the first quarter of 2019 and the third quarter of 2020. What I have found out at least in my experience of dealing with them, it’s like a quarter, so if most people are using the first or second quarter of 2019 and first or second quarter of 2020, the same quarter, either way, to be able to show that you had that loss. So it’s really important that you have that. Why don’t we take a quick break, and I’ll let you get to those phone calls. And that way we don’t put you down too much. This is the Dr. Friday show and we’ll be right back.
Dr. Friday 13:03
We are back here live in the studio. Pick up the phone. If you want to join us around here. It’s 615-737-9986. All right, let’s do this. Let’s go-to line one with Lisa, please. Hey, Lisa, what’s happening?
Hey, my son was 17 in 2020. Works a small job after school and he has around $4,000 that he got on his w two. And they only took out $39 in federal income tax for last year. Is he required to file that? If he does, how does that affect me claiming him as a dependent and claiming him as well?
Dr. Friday 13:50
Well, he can file and there’s a box I would say there’s nothing wrong with, I hate leaving any money on the table. It will have no effect on you. Go online to irs.gov and click on one of those apps that says free tax prep. Maybe stay with him. But there’s a there’s going to be a question Lisa, it says “Can someone claim you as a dependent?” He wants to make sure he says yes to that he’ll still get his $39 back or whatever. And that way, you know he can learn how to do his first tax return. Always fun in my household. But anyway, he does not have to but if you want you can do a free one as long as he clicks that button that says he is someone else’s dependent.
Okay, great. All right. Well, thank you so much.
Dr. Friday 14:31
No problem. Thank you so much for calling. Appreciate it. Let’s go-to line three to David. Hey, David.
Hey. I wanted to call in about dependents. Same thing. I’ve got a 26-year-old and last year was the first time out of college and I did not claim her as a dependent because she had a full-time job. Well, she got laid off for COVID and she worked a couple of part-time jobs and she did did you get unemployment through all that. Because I’m contributing? I’m paying her health insurance, she’s still living at home, do I get to claim her again? Because I’m paying more than 50% of her?
Dr. Friday 15:13
I guess it would come down to how much money did she earn?
Well, I don’t know that exactly right.
Dr. Friday 15:24
She would be entitled to $1800 stimulus plus the next stimulus check that’s coming down, which most likely another $1400, you’re only going to get $500. So the advantage of claiming her and her claiming herself doesn’t seem to me to be a very good deal. be better charge her rent and have her pay you some money, versus claiming her as a dependent at 26, and that way, she’s not going to get any of the stimulus.
Yeah, she got the 600 already, this last one. But then there’s the $1400 still to come.
Dr. Friday 15:59
If you claim her she won’t get that.
Okay, so that makes sense. That makes sense. But other than that, I bet I bet she didn’t make $8,000 even with unemployment.
Dr. Friday 16:11
Well, that you know, you can determine I’m not saying you don’t have the right to claim her. I’m just saying you might want to think about it.
For the dependent, it’s only $500?
Dr. Friday 16:22
Okay, that’s what I needed to know. I didn’t know if it was like $2600, or whatever it was it used to be.
Dr. Friday 16:33
Any child that’s 17 or older as $500 unless they’re in college, and then there’s some college credit for us.
Well, she’s out of college already, but thanks so much, Dr. Friday.
Dr. Friday 16:44
Thanks, sweetheart. Well, I got all choked up there for a minute. Okay, guys, if you want to join the show, all you have to do is pick up the phone at 615-737-9986. We are taking your calls, talking about my favorite subject taxes, you really can’t go wrong when you’re talking taxes as far as I’m concerned. It’s time for you guys to be thinking about filing taxes, and keep in mind, there are only about 15 days before business returns are due. We have to have all of our corporations, partnerships LLCs, the trust’s in some cases, all of them are due or an extension. So maybe right now, if you’re not sure you’re going to be able to get that finished, because maybe you’re waiting for other documents, other LLCs would have to be completed before you can finish your partnership or LLC, or you’re waiting for stock portfolios, whatever it might be file an extension. Those fees and fines are ridiculous, even for being one month late, they can add up to a small fortune if they’re not filed.
Dr. Friday 17:53
So I just want to make sure again, that everything is filed, then you don’t have any problems with dealing with filing those returns because that is going to be a big situation, you don’t want to pay penalties to the government. It’s no fun, not a good plan. Not a good situation at all. If you got questions, call 615-737-9986. Before the last break, I was talking a little bit about the PPP money, I do want to keep in mind that there is still PPP open for any individual that was in business in 2019. Then obviously into 2020. And you still have to be in business to get PPP money. There are also some regulations about if you got EDL money, or if you actually got an SBA loan. Keep in mind those funds are supposed to be used for very specific things. I was on a webinar the other day and listening to just making sure people are following the rules as far as where the money is supposed to be used, what it’s supposed to be used for. And then I think in the next couple of months, you have to start making payments if you have an SBA loan. So all those things are very important. You don’t want to get into this and then have situations you want to be able to move forward and build your business back to what you had before. So if you haven’t applied for those, or if you’re really in a hardship situation, there are some other things with the state. You want to make sure you’ve taken account.
Dr. Friday 19:22
Now if you did get any money from the state of Tennessee, you also probably received 1099 for that grant, and that is taxable income. So for any individuals preparing their own tax returns, make sure you’re not forgetting or leaving off some of the moving parts that we had this year. It’s a little bit of a crazy year with having PPP money in and then is it been forgiven and we’re all that’s going to track through our system as well as SBA loans, which we’ll be tracking and then getting interest statements on those. Then obviously, many people may be their credit card debts, and things have increased to try to keep their doors open. Want to make sure we have again, all of that information. Make sure your books reconcile before you file your tax return because it’s a lot easier to do your taxes the first time correctly than having to go back in and amend them which is often what happens. I will say I really love the fact that the IRS has now allows us actually starting in 2019 now that the e-file is open we can start electronically filing amended returns. For all those people we’ve already filed to because two different people forgot they were on unemployment. Again I’m not too sure how you forget it, but it does happen. And if you did you want to make sure you amend that return you don’t want the government to be doing the amendments for you. If you sold stock Don’t forget that is a taxable situation.
Dr. Friday 20:41
If you’ve got cryptocurrency. I know a lot of you are like, I don’t want to tell the government it’s not their business. I hear the words but the problem is the government is going to find out. Bitcoin is now a huge thing. More and more people are talking about it. If you own cryptocurrency, there’s a specific question on your tax return that we all have to answer yes or no? Do you or have you traded in cryptocurrency? The answer has to be yes. And if you have, you want to start reporting dividends and interest that you may have coming. Mostly stock sales, be honest, most people aren’t getting interest or anything else from that, but they’re getting sales. They’re buying and selling or mining that cryptocurrency. So you want to make sure you have that situation. You don’t want to just act as no one knows about it. I can’t tell you how many tax issues that we deal with on a yearly basis because people thought that when they took money out of their 401k and the money, we had taxes withheld that they didn’t have to report on their tax return or they sold stocks. And they think because they didn’t make money on it that they had to report it on their tax return. These are the kinds of things you have to report everything and you should be getting documentation. But before you do your tax returns, sit back and just picture the fact do you or do you not have any kind of new situation that may have happened last year again, was it a crazy year? Did you sell stocks did you have to worry about a 401k? Again, with 401 K’s, $100,000, you can split that in three and make three years’ worth of payments on it. It’s something that assuming that you were affected by COVID, which almost everybody was furloughed for a period of time or affected by COVID. So now that tax form just recently, just the other day actually became available for us to actually start preparing and finishing the tax returns, at least with my software. So we now can start properly putting in the drawers that we have on that.
Dr. Friday 21:24
So it’s really important to make sure you don’t leave off that information. So if you took out money, or if you reinvest the money, a lot of times people think, “Well I sold a home and I reinvested so therefore I don’t need to have any taxes.” Again, not the situation, all I need to do is make sure that when you sell something, you report that unless it’s your primary home, and guess what you still need to report it, there is a waiver, an exclusion that gives $250,000 to an individual $500,000 to a married couple, we still report it and show that exclusion. So we have that situation going on. So we have the ability to make sure that we’re doing what we need to do. But either way, you just want to make sure that you don’t leave anything on the table so that the IRS can come back and have that conversation with you. Then you’re like, “Oh my gosh, I forgot about that.” Just sit down, try to review your year so that way you know what’s going on. And then you can actually follow up with the tax return. And if you haven’t received documentation, hold off on filing your taxes until you receive it. Making a guess or I know a lot of times people rush because they might get a refund, but I can’t tell you how many times again, people get the refund and then we have to amend the Tax Return then you have to pay plus you have to pay penalties and interest because you got money that wasn’t money that you should have received in the first place. So all those kinds of things come up and become quite a problem when it comes to dealing with that situation. Why don’t we go ahead and see if we can get Jim and then we will try to go to the break. Hey, Jim.
Hey, thank you for taking my call. I’m a first-time caller. I received a direct deposit of $2300 from a county government. I didn’t earn it though I don’t want it. I want to give it back that they will send me 1099 maybe or W2 it or something. They didn’t hold out any taxes. What’s the proper way to give it back?
Dr. Friday 24:51
Well, that’s a great question. In all honesty, most of these they don’t take back. I mean, I’ve had more than one person that says they don’t want the stimulus but they already put it in their bank account, there’s no way to send it back. The government doesn’t say, “Well, if you don’t need it, send it back.” Now, if it’s a county government, Tennessee Department of Revenue, or something like that there may be a return. I’ve never had anyone asked me on those particular things, but you will receive 1099. I’m not too sure if it’s a GE or one of those like that, that’s going to show it as a grant, and it’s taxable. So you’re going to end up paying tax on it.
So if somebody asks you to return it via a personal check to a separate person, that’s a no, no.
Dr. Friday 25:35
Because you’re still left with the tax burden.
Dr. Friday 25:40
That’s it. Yes, sir. Unless you can get them to accept it back and amend it. But you know, in all honesty, if you received it last year, you would still have to pay tax on it, even if you pay it back this year. And then if it’s a business situation, you may be able to take that loss. But otherwise, how do you write it off? I’m just saying, so it’s not going to be an easy exchange. So no, I don’t think that’s going to help.
How does the person you’ve been asked to write a check to show his income?
Dr. Friday 26:13
You’d have to 1099 them.
Yeah. Which is a whole other thing. Okay. Well, you’ve answered my question. Sorry to do is to get to the people that issued it and tell them.
Dr. Friday 26:28
Exactly. I mean, there’s a possibility. They say, if you pay us, we will delete the 1099. You know, there is that possibility, but I don’t know how they’ll do it.
Sorry. Well, that’s the key is to delete the 1099.
That would be the key. Yeah.
Dr. Friday 26:47
All righty. Looks like Jim’s off the line. Let’s see here. You know what, let’s go ahead and take a quick break, and then we can come back. We’ll go ahead and hit Ron and Bruce and the other people that are on hold. You’re with the Dr. Friday show, and we’re going to be right back.
Dr. Friday 27:20
We’re back live in studio. I’m Dr. Friday, an enrolled agent licensed with the Internal Revenue Service to the taxes and representation. All right. We have had wonderful Ron and Bruce both halfway through the thing looks like number one Ron, we’ll start with. Hey, Ron, thanks for holding.
I just had a quick stimulus question. I’m on disability. And I received the first stimulus. But I didn’t receive the second one. So I filed the tax credit for that. My question is, is if I come up with a third one, well I have to wait and file 2021 taxes to get it or will that go by?
Dr. Friday 28:08
That’s a wonderful question. And you know, had I known that we were all going to be preparing for two or three stimulus checks to be coming through? I’m not sure Ron. I mean, obviously, the first one was really based on for a lot of my clients, 2018 situations. The second one, basically 19 because they gave it in January, February of this year. So now this one, they’re reconciling both of those for 2020. If they do it in March, it’s gonna be before a lot of my clients have even filed their taxes. So I’m gonna assume that they would not be basing it on the 2020 year for that reason, it’s still gonna be based on either 2019. But since you’re on disability, I’m kind of surprised you didn’t get it? I mean, not questioning that did or didn’t Ron, I meant that normally most of those individuals are lot of them are set up through the social security side. So they get it from that, not from the filing of the tax returns.
Well, I did file taxes in 2018.
Dr. Friday 29:06
You did okay. And it’s possible that because you didn’t file taxes in 19. I mean, this is just a guess, while guests maybe. So they didn’t see that in the file, because I do believe the second one was actually based for everybody that filed in 19. But I don’t know if you always have to file. A lot of people on disability are not required to file taxes. Do you know what I’m saying?
Dr. Friday 29:32
Yeah, so I would say filing 2020 is a smart move, just so they know that you’re in the system, not to say they shouldn’t know it, but you know what I mean? It’s a little confusing, again, not to make excuses for the IRS, but it was never set up to be a delivery system for money. It was supposed to be a collection agency. So I think that a lot of the things that are going wrong are not quite going perfectly is because it really wasn’t designed to do this particular type of situation. So I would say if you have the ability or anyone listening because that was awesome, Ron, thanks for calling, because I think a lot of people listening may have the same problem. So thank you for Be brave enough to call. Alright, let’s hit Bruce.
Hey, Bruce. Hey, I’ve got basically the same problem as Ron except I haven’t received any of my stimulus checks.
Dr. Friday 30:27
Okay, so you’re like a couple of my other clients. Even if you are not required to file Bruce, you need to file a tax return for 2020. Because I’m going to assume that either possibility you haven’t had to file taxes in the last year or two, or maybe you just haven’t filed them. But 2020 needs to be the year you reconcile it, you’ll also get the $1800 back on your tax return.
I file every year.
Dr. Friday 31:00
Oh, you do? I don’t have a great excuse for you. Is it possible you make too much money?
I sold a house a couple of years ago. So it’s possible that I did that in 2018, I guess that would have knocked me out.
Dr. Friday 31:22
But the good thing is they’re reconciling 2020. So again, if you went when you file your 2020, assuming that you’re making $75,000 or less, assuming you’re single, or 150, if you’re married, then you will get that credit, even though in 2018, you may have sold the house, it won’t have any effect, you’ll still get 100% of that credit.
Do they have a slot for that on the form?
Dr. Friday 31:47
Yes. Line 30.
I haven’t filed them. But I’ll do that. Thank you.
Dr. Friday 31:53
No problem. Thanks for calling. Appreciate it. Alrighty, and I do appreciate all the phone calls. Remember, you have to be brave enough to call. I always tell us about we’ve been at this for 10-11 years now. And before I ever got on the radio, I had never actually called a radio show in my life. Even after I’ve been on the radio, I think I’ve only called. Well, Dr. Electric show a couple of times just to bug him. But also, one or two other radio shows in my entire life. So I think anyone that calls a radio show has to be brave enough because what questions you’re asking, I really do believe there are other people listening, I know when I always listen, you’re always like, “Oh, yeah, I’d like to know the answer to that question.” So I do appreciate that because again, it’s not always easy to pick up the phone and, and ask questions. But if you want to join the show, you can 615-737-9986. We are taking your calls. Again, if you haven’t received what we’re calling, recovery rebate credit, that’s what you’re going to see when you do your tax returns the word “recovery rebate credit,” which is also known as stimulus checks. So if you haven’t received them, or you’ve only got a portion of them, you will be able to get because just like Bruce, when he called, let’s say that maybe because he sold that house, maybe they only gave him $800 instead of $1200. Right? Well, in that case, he would still get the other $400. Assuming that in 2020, his income was lower. So you know, it will depend on what the situation is, and just how to how you’re going to deal with it is really what it comes down to how it’s going to be dealt with. All right. It looks like a phone call coming in. But before I take my next break, let’s get Lisa line one. Let’s hit Lisa. Hello, Lisa.
Hi, I’m going back to the dependant question. My dependent turned 21 at the end of 2020. I have been claiming him as a defendant. But I heard earlier you recommending because of the credits, perhaps not to. I did not get the stimulus for him because he’s in college, should I claim him when I’m finally highly in like 2020 or not?
Dr. Friday 34:17
So it’s gonna come down to this if he’s in college, then the likeliness is you still qualify for college credits. Assuming that your income or and or the child was in college at that point, you’re going to have higher credits than what the stimulus is. So you know, in all honesty, my answer would be you need to do your taxes and see, but if you qualify for college credits, and the child is still legitimately a benefit to us, why wouldn’t we claim him?
Okay, well, I didn’t know. I don’t even know what the credit is for college. So because he didn’t get the stimulus and it also would be better to do without.
Dr. Friday 34:58
You’re scaring me, Lisa. Hopefully, He should be giving you a form called a 1098T every year. If again, if any college kid is in college, the college will present a form called a 1098T. You would use that to on your tax return and you would qualify for college credits for each year that he’s in or she is in college.
Okay, all right. And that’s better than the stimulus?
Dr. Friday 35:22
Okay. Perfect. Thank you.
Dr. Friday 35:25
No problem. All right. Let’s see what Deb has to say. Hello, Debbie.
Well, pretty much the same thing. My daughter is going to be turning 24. This is her last year of college. She’s turning 24 in March. I want to know if I can claim her this year. But also she wants to plan on just going for her master’s while she’s home. She doesn’t work. She’s never filed taxes. She doesn’t make money. We support her completely.
Dr. Friday 35:56
She can’t file on her own. I mean, in that kind of situation she is definitely your dependent. I don’t know if you’ll have a lot of college credits left at this point. I don’t know, when she started college. You know, I mean, obviously, after the first four years, there’s not much credit left. But that being said it is just as easy. But she’s the dependent of yours no matter what, that you don’t have a choice in that.
She’s still a dependant even though I don’t get college credits, maybe after this year?
Dr. Friday 36:26
That’s correct. I mean, without a job, there’s no, there’s no tax return.
Yeah. Okay, because my husband’s on disability, and we only have one car. So it’s just hard for her to get out, like do the job thing.
Dr. Friday 36:38
I hear you. I mean, I’m not saying you know, there’s isn’t other ways, but and you know, you guys, I mean, when it comes to my question, the question is plain and simple. She’s not an employee or she’s not able, at this moment. Maybe she’s just concentrating on school, that she’s not making a check. So at this point, she’s still a legitimate dependent of yours.
Okay. Great. Thanks, Debbie. I appreciate it. Take care.
Dr. Friday 37:03
Thanks. Let’s hit Keith. What can I do for you.
So I work a full-time job. And then I work a part-time job that they take taxes out. And then I work a third job, I get 1099. I drive a lot of miles, this third job. And it’s in the trucking industry, the guy 1099’s every year. And my question is, can I go to like an LLC? How do you start writing things off on taxes? I just spend a lot while I’m out on the road? You know what I mean? Would it do me any good to start an LLC?
Dr. Friday 37:42
You don’t need to go that complicated. As soon as you have 1099, you are legitimately a Schedule C, I would suggest probably starting a legitimate business, and then talking to somebody to tell you what is a legitimate tax deduction for that business and what is not. But if you have you have 1099, you have the ability, depending on what kind of profession or business it is to write off those expenses. So whatever it takes for you to earn whatever is necessary for you to earn that job. So if you’re in the trucking business, and you’re doing deliveries or using your own vehicle, that vehicle is a tax deduction to you. But there are things we need to track and how to track them. But you don’t need to open an LLC or make it complicated. You can keep it simple. Sounds like you’re already kind of a busy man.
He just pays me for my time. I drove all his equipment.
Dr. Friday 38:36
Okay, so you don’t actually have any expenses? I mean, in all honesty, from what you just said, there Keith, you’re paying you for your time. So your personal time, just like it was a W 2, you don’t have a vehicle in the race or anything else. You’re driving his equipment?
Dr. Friday 38:52
So unless you’re spending the nights are doing anything like that, like an over-the-road driver, but if you’re just a local driver.
Dr. Friday 38:59
You’re an over the road, there’s still per diems. Okay, then you might want to talk to whoever’s doing your taxes. We’re talking about the per diem that’s allowed over the road drivers. For every night that you spend on the road, there is an advantage to writing off certain deductions, because they know that there’s the cost to that for the drivers.
Can you write off mileage to part-time jobs like a second job?
Dr. Friday 39:25
No. No miles for any W 2 jobs, period.
All right, one last question. I bought a house last year and I got a form back, I paid $5,000 just in interest, you really don’t get to write that off on taxes?
Dr. Friday 39:38
Yeah, they’re automatically giving you 12,000. So 5000 is lower than 12. So I’ll take the 12.
Oh, absolutely. Absolutely. Thank you.
Dr. Friday 39:46
No problem, thanks. We’re gonna take a quick break. If Jeff and Steve can hold through the break. We’ll be right back with the Dr. Friday show.
Dr. Friday 39:56
All right, we’re back. Live in-studio, you want to join the show, you’ve only got a few minutes left 615-737-9986. And Jeff has held through the entire break there. So what we get Jeff off the line there. Hey, Jeff.
Hi, Dr. Friday, I just had a question for you. So I was actually a dependent for 2019. Because I was in college about half a year. And I started working about halfway through 2019. And I’ve been working ever since. So as far as the stimulus check goes, my parents, I think got the college tax credit for me, in 2019. Where does that fit me when it comes to 2020? And filing and getting a stimulus check?
Dr. Friday 40:55
That’s a great question. And the answer comes down to if they didn’t get the stimulus for you, my understanding is you can qualify for it on your 2020 return. I don’t know how that’s going to come down the line. You know, I’m just saying, obviously, you were dependent, but they’re saying they’re reconciling everything as of 2020. No matter what happened in 18, and 19. And the money that was given during those years, we’re reconciling everything based on 2020. So in 2020, you weren’t a dependent, you didn’t receive the money, your parents didn’t get the stimulus for you. So, again, the definition is you should be able to apply for it on your 2020 tax return. We may find out that they have changed some rules once they figure out all this happening on the system, but that is my understanding.
Okay, thank you so much.
Dr. Friday 41:46
No problem. Thanks for holding. Alright, let’s go ahead and let’s hit number five, Mike.
Hello, Mike. Hi. Hey, how are you?
Dr. Friday 41:55
I am awesome. What can I do for you?
Great. I just got a question on as far as home improvements, like things that you could add, making your home more efficient? Is there anything that you could use for your taxes for that
Dr. Friday 42:08
Not a whole bunch, I think there’s still something out there for heat pump or solar. But it’s going down pretty quickly. Other than that, basically the IRS looks at it, anything you do for that is improving the value of your property. And therefore you’ll get the rewards when you sell it. So it’s not really a tax deduction for you.
Okay, yeah, we had to buy a new Heating and Air unit last year. I didn’t know I thought at one time it was.
Dr. Friday 42:34
There was. You’re right. There was at one time, Mike, if you brought up so many Sears, you know, efficiency that you got up to $1500 credit, but it’s not on the books anymore.
I got you. Okay. I appreciate it.
Dr. Friday 42:46
No problem. Thanks for calling. Alright, Is it Gildan? What can I do for you?
I was working on my tax returns, and we’re filing a married filing jointly. I’m using a software and we have several thousand dollars to put towards itemized deductions. And in my account, it comes up to 33,000. Even with the over the 2% limit for those that apply. Then I was wondering, he keeps me going back to the $300 instead of being able to use over 24,000. And I was wondering if you can help me with that.
Dr. Friday 43:44
Well, I’d have to look and see but is any of it medical?
No. Real estate sales tax. Mortgage interest, I have quite a bit of investment.
Dr. Friday 44:00
Oh, that’s the problem. The 2% that 2106. It doesn’t apply anymore. You can fill it out. But it doesn’t actually if you go to Schedule A it doesn’t roll over any longer. It came off the books in the beginning of 2018. 2017 was the last we had that form. Yeah, they’re no longer deductions.
Well, okay, yeah, that’s what it is. Thank you.
Dr. Friday 44:27
Thanks. Okay. Bye-bye.
Dr. Friday 44:30
Let’s hit Joe real quick. Hey, Joe.
Thank you. The Internal Revenue Service I feel like they stole my refund last year. They sent me that weird letter that said I needed to verify my ID. So I went online to do that. And apparently I don’t have debt, everything about pay cash for my credit card. I pay it off every month. So it looks like they use the credit bureaus to do that. They don’t want your car loan, your mortgage.
Dr. Friday 45:06
You’re talking about going online to verify?
Dr. Friday 45:11
You have to have a credit card or student loan or something, they need to be able to pull your credit report to make sure you are the Joe that’s supposed to be calling
Yes, I don’t, I don’t have a credit report,
Dr. Friday 45:21
You need to call, you’re gonna have to call them directly, which you might as well set aside a whole day to accomplish but you will have to do it by phone, you don’t have a choice.
So there’s not a way that you can really facilitate.
Dr. Friday 45:34
No, even myself, I can’t for those kinds of things they have to talk to the taxpayer because something’s happened in your file. I haven’t had it happen myself. But I do have a credit card. So it wasn’t too dramatic. But I had happened to myself where I had to actually prove I was who I was something is triggered in our files. I don’t know what it is, but it’s triggered in our files that makes us do it.
It’s when somebody tries to steal your refund.
Dr. Friday 45:59
That’s what I’m figuring, something like that.
I have a feeling I know what happened. Somebody tried to steal my refund.
Dr. Friday 46:05
Okay. I’m sorry, bud. All right. Well, I appreciate the call. Good luck and get that squared away. All right, guys. We’re at the end of the show here. You probably hear the music happening. And so all you have to do is call me at the office Monday morning. 615-367-0819 again. If you’ve just heard me for the first time you can check me out on the web at drfriday.com. If you didn’t get through and you have a question. You can certainly email me at firstname.lastname@example.org. Hope you guys have a wonderful Saturday. I know I will, doing taxes. Call you later.