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In this episode of the Dr. Friday Radio Show, Dr. Friday tackles the latest in tax legislation and offers expert advice on managing your finances in light of new changes. Key highlights include:
- Overview of the Tax Relief Act of 2024: An introduction to the new tax legislation and its key components.
- Changes to Child Tax Credit: Detailed explanation of the expanded child tax credit and how it affects families.
- 100% Depreciation Rules Extended: Insight into the extension of 100% depreciation through 2025 and its benefits for business owners.
- Adjustments Based on Inflation: Discussion on the adjustment of refundable tax credits in response to inflation, including the specific figures for 2024.
- Implications for Early Tax Filers: Advice for those who have already filed their taxes and how they might be affected by the new changes.
- Retirement Savings Strategies: Solutions for retirees looking to contribute to a Roth IRA through earned income, including tips for those with unique circumstances like farm income.
This episode is essential for anyone looking to stay informed on the latest tax laws and learn strategies to optimize their tax filing and financial planning for the upcoming year.
Transcript
No, no, no, she’s not a medical doctor, but she can sure cure your tax problems or your
financial woes.
She’s the how-to girl.
It’s the Dr. Friday Show.
If you have a question for Dr. Friday, call her now, 737-WWTN.
That’s 737-9986.
So here’s your host, financial counselor and tax consultant, Dr. Friday.
Good day, I’m Dr. Friday and the doctor is in the house.
We have some breaking news.
Back on the 31st of January, we finally got a new, the Tax Relief of American Families
and Workers Act of 2024 came through.
It’s going to be interesting to see exactly how that’s going to affect some.
If you already filed your taxes, you may find that there could be some new changes.
Most of it’s going to come into 2024, but they did change the child tax credit.
They expanded some of that.
They extended some of the 100% depreciation through 2025.
And this year, if you’d already filed your taxes, you would have only had an 80% on most
of your depreciation.
So that will be a big situation.
So again, if you have already filed, they did do some things that went backwards and
we’re going to cover some of that as we move forward.
And it may affect if you’ve already filed.
Again, opened on January 29th, the tax season.
And so I guess, you know, it’s like hunting season.
I always say the tax season started on that, but you know, there is always new and exciting
things continuously happening.
A portion of the refundable tax credit is based on inflation.
So the amount of 1600, they did change that.
So again, if you filed your taxes already in 2024 for the year of 2023, there has been
some changes.
So you may want to double check now, according to the IRS, any changes that happen, they
will be count and they will be making the adjustment on your behalf.
But we all know how well that often works for many of us.
So we just want to make sure that we understand all these things that went into effect, how
it went into effect and where we’re at.
If you have questions, of course you can join the show.
615-737-9986.
And we’re going to talk about this new change that came along.
The bill that went into effect due to the Senate, there was a little quabbling of the
GOP, some wanted to extend additional tax credits of other sorts.
They agreed to push some of this in and move forward versus holding the entire bill up,
which would have been a bit of a problem.
Again, the biggest part is currently the depreciation was 80% in 2023, that extended up to 100%
up through 2025.
So if you’re a business owner or something, that could put more money in your pocket,
helping you in this tougher time with inflation.
All right, we’re going to go right to the phones.
We’ve got Joyce just in Tennessee here and we’ll see if we can help Joyce and we’ll talk
more about this new tax relief bill.
Hey Joyce, what can I do for you?
Thank you for taking my call.
We are retired, but we live on a farm, so we sell hay and that’s how we get our earned
income to put money in a rod.
But we’re getting to the age where we may not be able to do that.
And I was just wondering why it’s considered earned income so we can keep putting money
into a rod.
We have an 11-year-old grandson that’s autistic and we want to leave that for him.
So we have, social security doesn’t count, does it?
No, no.
You have to have some sort of earning and it really can’t be passive.
It needs to be earning.
So like you say, selling the hay or something like that would qualify, farm income would
qualify in that.
And even though you have a child that is autistic, I have a niece that is also, does he have
any ability on the farm to do any, I mean, you guys have a farm, I’m assuming, right?
Yeah, yeah, we do.
No, he lives with our son and daughter-in-law in a different county.
No, but I’m afraid he will never be able to hold a job.
So that’s why we’re trying to leave that.
All right.
Now, we have a pension from the Tennessee Consolidated Retirement thing.
That doesn’t count either, does it?
No, again, those are all non-passive or incomes that you’re getting after the fact.
That’s correct.
So someone either has to be agreed or at Home Depot or something through the farm would
be the only, you know, considered earnings.
Okay.
Now, if we get to where we’re getting, where we can get a pay, if we were to rent the farm
to a neighbor, will that count?
It’s rental income and that’s not really considered earned income.
So the answer again is no, unfortunately.
Now maybe you can get, I do have some where you may be able to have someone else work
the farm and they share the profits.
Okay, do a split then.
Exactly, and that way then you wouldn’t have to worry about it.
Yep.
What about we have an extra house on the farm, so rental income doesn’t count?
No, it does not, even though it’s a nice secondary little income potentially, but no.
And what about interest income?
Nope.
Again, none of that is from earnings.
I know, you’re trying.
Unfortunately, I mean.
Yeah, we might be able to get a neighbor to do it and split it.
Right.
Because we can do hay now, but I can tell our health is going down and so I was just
trying to figure out.
Oh, now what about, well, we have a 401(k) where he’s deferred income years ago and we’re
having to take an RMD.
Would that count?
No, requirement of, required distribution would not work either.
Okay.
Well, boy, that just struck out.
I know.
Anyway, I thank you for the information.
It really requires, hey, no problem.
Sorry, I wasn’t a lot of help there, but I like the way you’re thinking.
You were a lot of help.
Thank you.
Okay, thank you.
All right, let’s hit Ron in Manchester.
Hey, Ron, what can I do for you?
Hi.
Can you hear me?
Yes, sir.
Okay.
For the lady that’s looking for self-employment income, she might consider renting out personal
property.
Like a tractor or something?
I’m not sure that will work, but if you rent personal property, I do know that you have
a self-employment tax on it.
Right.
So, yeah, and that’s a great definition, Ron, that I’d say, but the difference between the
RMDs, the interest, all of those is that they’re passive, which I said, but you don’t pay self-employment.
So the only time you can give into a Roth is any income that is earned, and therefore
you pay self-employment tax.
So that’s a great example.
Yeah, that’s just for her.
I’m not 100% sure that would work, but I do know that self-rental and personal property
rental is considered self-employment or self-employment tax.
Okay, I like that.
Thank you so much.
No problem.
Thank you.
All right.
That was great advice.
Hopefully Joyce, you heard that where he’s saying potentially if it’s personal property
and you can find some way to rent that out to somebody, it is considered self-employed.
And that’s what we’re looking for, farm income, self-employed income, both follow the self-employed
side and as long as you earn up to, theoretically, I guess if you’re over 65, I think it’s 7,000.
So seven and seventy, you put $14,000 a year into that Roth while you’re still earning.
All right, let’s hit Rosie real quick and then we’ll be heading to our first break.
Hey, Rosie.
Hey, Dr. Friday.
Thanks for taking my call.
Quick question.
Can you explain sometime during the show how the new free IRS filing works?
Because from what I’ve read, we’re a test pilot in Tennessee, but it’s only for federal
and state employees and only if we have W-2s.
Right.
So I can tell you if I know that the free filing has an income bracket that it will,
I mean, you know, for anyone that’s filing for free, I want to say, and I’m going to
look on the IRS website real quick, I think it’s 65,000 and that is individual or joint,
I believe.
It doesn’t make a definition.
So you’re just, oh, sorry, just a gross income, 79,000 or less.
And then it has to be only basically W-2.
So if you’re self-employed, you’ve got rentals, even let me double check.
I’m pretty sure that even if it’s earned income credit, it doesn’t apply.
The new one does have state filings.
So if you’re in California or Kentucky or something, apparently you will get a free
state filing with that.
Other than that.
I’m sorry.
I thought, I thought that this was a brand new, like there was, there was one for the
income bracket of 79,000.
And there’s direct filing, which people have to know how to do their taxes to use that,
which that’s what I use.
But isn’t there like a brand, brand new one?
No, the only other one I know is where you can go out.
I mean, some of the it’s like AAA and some of them have, you know, services where they
can go out, but you’re right.
When I’m on the website, I’m looking at the IRS website.
They’re giving me two, one a fillable, free fillable form, which I would not suggest if
it does the math.
Maybe you can e-file it, but you’d have to really understand your taxes.
It may, if it’s only a W-2.
Second is, it says, yeah, okay, well that’s great.
But I mean, it isn’t for everyone that that one could lead to, if you don’t know for sure
where the numbers go on the forms, you know what I mean?
It may not be as simple as all I’m saying.
And then option one was an adjusted gross AGI or with the 79 or less.
That’s the only two options they’re providing to us at this time on the IRS website.
Interesting.
I’m going to look up the article and I’ll.
Give me, yeah, either email it to me, cause it’d be great to know Rosie, cause I’m all
for if you don’t have to pay to have your taxes done.
I mean, as much as I love doing taxes, I mean, it’s silly for someone that just has a W-2
or you know, very simple return to pay someone, you know, a hundred bucks to do their taxes
when they could do it for free.
I mean, that’s a lot of money.
So I’m with you on that.
Yeah, the article I read, yeah, the article I read said a direct file with a fillable
form only 2% of the taxpayers do it.
And that’s why I do it.
Cause I I’m retired CPA, so I can do that.
Okay.
Yeah.
So you understand it, but I mean, you also know, you know, and again, I think that would
be, I mean, but I think it’d be more difficult for a lot of people just considering the mistakes
that walk in the door in my office where people have done it.
So yeah.
And I can tell you’re not working, but I mean, if you do have the background or understand
them and I have people that still print the forms, actually fill them out and then come
us to us and see how, you know, then we put them in electronically.
But so there are people that do, but still 79 or less.
And that’s if you’re married or single, that’s tough because married couples are more up
to exceed that.
I’m going to pull up that article.
Yes.
Send it to me.
And Tennessee as a pilot program.
Okay, cool.
I’ll do that.
Send it to me.
Okay.
Thanks Rosie.
Okay.
Thanks for calling.
Okay.
So we’re going to get ready to take our first break.
And if Rosie gets that information, I will share it guys.
But there’s more than one, because again, sometimes the income bracket locks out some
of my clients, even if they could do them.
And if you have to go buy the software and do it yourself, not everyone has the aptitude
to do that.
So, um, but if there’s another pilot program out there, we will push that and see what
we have.
Meanwhile, we’re going to take our first break and we’ll be right back with the Dr. Friday
show.
All right, everybody.
We are back here live in studio.
And I did want to put a heads up.
I do know that VITA with United Way is another place.
If you want someone to help you do your taxes, they are out there doing taxes as well.
Um, so if, uh, if you want to look up on the internet, well, United Way and tax prep or
VITA, V I T A, you can probably find locations that might be in there.
Cause I know in 2020 and 21, I think they didn’t have as many locations, but, um, I
believe they’re back at it full force.
So, um, if you have a need to have someone help you, I don’t know if they have any limitations
or anything like that, but, um, that being said, they’re a good organization.
So if you need someone to help you do your taxes for free, also know farm, uh, farm credit
does some taxes, uh, in some of the areas as well.
So just saying it’s great to have, you know, a tax person.
And I will not, I will say this as a caveat to all that this is for simple tax.
If you have someone that you need, you’re doing rental properties, you have investments
into stocks or you’re buying and selling stocks, or you’ve got K ones, or you’ve got a little
bit more of a complicated tax return, then yes, I think you need to have someone like
myself, an enrolled agent, a CPA, someone that is going to know and understand taxes,
not only doing the taxes correctly, but also in case someone sends you a love letter, we
all know the IRS likes to do that.
They can be there to help explain and help you understand what the problem is and help
you get the resolution.
And sometimes when you go to some of these other organizations, they’re good about preparing,
but a lot of times they’re not there to, to be year round.
So it’s not always easy to get help in some of those situations.
So just saying, uh, but again, you need to file taxes, number one.
And if you’re not sure you need to file taxes, um, it’s, it’s a pretty straight mathematics
situation.
So, um, our office can help you or again, you can call any of those organizations and
they’ll tell you, you do not always have to file taxes under certain circumstances.
Taxes are only required if your income is at a certain or you received your income at
a certain point.
So, um, you know, you have that situation and you know, it comes up to, uh, where you’re
at.
So if you want to join the show, you can 615-737-9986, 615-737-9986.
Taking more of your calls, um, a portion of the 2000 can be applied to refundable credits
up to inflation rates, about $1,600 in 2023.
And for taxpayers who want to more children, the refundable portion is limited to the excess
of the balance of the tax credit amount from which taxpayers would otherwise be entitled
to base.
So the number of children or 15% of which the earned income exceeds over $2,500.
That is the child portion of the refundable child tax credits.
Um, so some of that is changing and we’re going to get a little bit into how some of
that and some of this, um, applied to 23, 24 and 25.
Again, prior to this 23 was not in on it.
And so, you know, you want to make sure that you, if you filed your 2023 tax return, you
might want to just revisit, um, based on some of the new numbers and new changes.
Most people will not be affected by these, but I often find individuals that file on
January 29th this year or before that are people that usually are expecting a very large
income refund or, uh, should say a refundable tax credits and all that.
And so, you know, they’re looking and it’s possible that you left a few dollars on the
table.
Possible.
I can’t say it’s, it’s perfect, but possible.
So just make sure that any of the current changes, if you went to someone and did your
taxes, then again, just make sure that those taxes are done properly and that you’re in
awesome shape to move forward and get everything done the way you want it done.
So you have no problems in dealing with that issue.
All right.
You want to join the show?
You can 615-737-9986.
Let’s hit Jerry in Pulaski.
Hey bud, how’s it going?
Good morning.
How are you doing?
I am doing awesome.
And yourself?
I’m doing good.
On taking an RRMD, does the IRS require you to kind of spread the parts you’re going to
send them in or can you wait till the end of the year and send that to them?
So that is, I mean, bottom line, easy answer is they want their share as you take it out,
but it would depend on when you take it.
So if you take it out, if you owe more than 500 over the year, then theoretically you’re
required to pay quarterly.
So it’d be easier just to have them take it out at the time that you take the distribution
then than to wait.
But it just depends if you take it out in December, you have until, you know, basically
April to make the payment.
So the first estimate.
Okay.
All right.
I certainly appreciate it.
Thank you for calling me several times.
Thank you.
All right.
Thanks, buddy.
I appreciate it.
All right.
Let’s see if we can get Nick in Manchester.
Hey, Nick, what’s happening?
Not much.
Just had a question for you.
Okay.
I know dependencies on tax returns.
Stuff like that usually don’t include wives, but my wife has been a stay at home mom for
four years and I’ve been the sole income provider for the family.
Is there any way I can claim her as a dependent?
Well you do when you click the box saying you’re married.
So in essence, if you didn’t claim her as your wife, you would be single or head of
household, which are both less than being married.
So you get the credit because you’re checking the box and putting married.
So you get a higher deduction because of that.
So you are claiming her as a dependent, just not in the same way you may claim your children
as dependents.
Okay.
So there’s, there’s no actual like tax return or like, you know, like with a child, I think
it’s the answer to that question would be is there is no child credit or any credit
for any dependent over the age of 17 basically.
So if your child is your parent or anyone else is a dependent, you won’t be able to
claim any additional credit other than what you’re getting on that situation.
Okay.
All right.
Let’s hit Tom in Nashville.
Hey Tom, what’s happening?
This is quite complicated, but I’ll try and keep it very simple.
I purchased a property like two years ago and well, it turns out it’s virtually worthless.
Structurally it’s garbage and would have to be torn down and basically rebuilt to be of
any value.
And I’m curious how that loss or if it can be spread over time, cause I’m still going
to be owning the property.
And so is there a way to spread that or how do I realize there’s losses?
In selling, right?
So the only way to realize it would be to physically sell it or to give it to a charity,
which may be the proper great property to do, not to say the charity would love it.
But you have to physically have the loss, even though you know it’s a loss.
I mean, until it really hits you and you’re able to say, okay, I sold it for a dollar
and I paid a hundred thousand.
I have a $99,000 loss.
Then at that time you will actually have the loss and then we can put that on your tax
return and you can offset other gains with that loss.
Okay.
And in the meantime, the only actualized losses would be like money that is spent on directly
on the property, right?
Theoretically.
I mean, if it’s not a rental property, then there’s really no place or a second residence.
The property taxes, if you’re itemizing could go off, but any other improvements you’re
doing to that property, if it’s not your primary or second home or a rental, it’s really just
adding to the value when you decide to either develop, rent it or sell it.
Well, it’s a primary home and a rental, the duplex.
Oh, catch 22.
Right.
Okay.
So, you know, obviously at this point, yes, if it’s your primary and it fits under the
energy credits, your best bet is the, is the rental side of the duplex would have the better
tax deduction per se, because anything you do on that half or on that share of property,
be it, maybe you do one big improvement and it’s 50/50 or based on square footage, then
you’d be able to deal with the, um, the loss or depreciate that repair over a period of
time, depending on what it is.
Interesting.
That was, that was very informative and, uh, I appreciate it.
Thanks Tom.
If you need any more questions.
Thanks.
Thank you.
All right.
Let’s see if Rosie is back real quick.
I mean, she’s got an answer for me.
Hey, Dr. Rosie, real quick.
Um, I found the article.
I’m going to email it to you and I’m friday@dfriday.com and I’m perfect.
And uh, it’s an NPR article and then I, I had, you know, links to the IRS, you know,
the, um, the, uh, internet, um, how it happens.
And so I, um, drill down and it appears that it might not be available until mid-March
and it, um, also appears I won’t be able to use it anyway because, um, it’s only 1099.
Um, it has a 1099 interest, 1500 hour cap, but it doesn’t have any other 1099 provisions
for, um, like pensions or anything or retirement.
But I will, I will email you the article.
Thank you, Rosie.
I really appreciate it.
Thank you.
You’re welcome.
Talk soon.
Thanks for your help.
Thanks.
Okay.
All right.
Um, so we’re going to take some more calls at 615-737-9986.
If you’ve got questions or comments, I mean, it’s helpful because a lot of people are listening
now and they’re in the same situation that you might be, or they’re thinking about these
different situations.
So it’s very helpful when people are willing to call the radio show, um, because not everybody
has that DNA to, to want to do that.
So again, the phone number here in the studio for the radio is 615-737-9986.
We’ll talk, take your calls concerning obviously the 2023 taxes, but some people may be planning
for 2024.
And, um, I’m going to do some breakdown a little bit here on what we have expected with
the new, uh, again, they did pass.
A new law in January 20, a new new act, I guess you would say it’s the tax relief of
American families and workers act of 2024.
I think it’s a funny name.
American families of workers who else would be we’re in the United States.
All right.
So we’re going to take this break and we get back.
We get some more of your phone calls again, 615-737-9986.
We’ll be right back.
Alrighty.
We are back here live in studio and lucky me, I have a couple of waiters.
So let’s see if we have Brian that tilled the longest in the borough.
Hey Bri, what’s happening and how can I help you?
Uh, Hey, Dr. Friday.
Yeah.
The question is this, I work for a company that’s headquartered out of town and I have
my own office at my house that I work out of.
Is that deductible in any way, shape or form on my taxes?
No, because you’re a W I’m making a guess, Brian, that you’re a W2 employee.
Yes, I am.
Okay.
So as long as you’re a W2 under the current laws, that is not something that’s on the
table to be rescinded, which we used to be able to use a 2106 and be able to write off
expenses that would apply in that situation.
But under the current tax law, if you have a W2, there are no deductions allowed to you.
Gotcha.
That’s what I thought.
Just wanted to confirm it.
I sure appreciate that help.
Thanks.
I appreciate the phone call.
All right, let’s hit George in Mount Juliet.
Yes.
Mount Juliet.
Hi Dr. Friday.
I have a quick question for you.
I’m retired and I just, I don’t work or anything.
I just draw my social security.
And if I’m not mistaken, I haven’t had to file taxes in the last couple of years because
I haven’t made the maximum to have to file taxes.
But this year I made $30,756.
Will I have to file taxes this year?
Yes.
Okay.
And will that be on the overage over the 25?
Are you married or single?
Single, well, my wife deceased.
Okay.
Sorry.
It would be, you would have the like 14,000 standard deduction that you would deduct.
A portion, maybe a small portion of your social security would be taxed.
But theoretically, you’d be looking at probably around, I don’t know, 16, 17,000 and maybe
your social 20, 20,000 paying tax on.
That’s a quick mathematics there.
And that should probably be a couple thousand maybe.
Well, see, I didn’t, I didn’t pay, you know, I just, the only thing that run me over really
was the interest off the money I have in the bank.
Okay.
So is the 30,756 including your social security?
Yes.
Oh, yes.
I made, I made about 25,000.
I think social security, I’ve got it right here.
I got you.
So you only made like five or 6,000 above your social security.
Right.
Ah, you don’t need to file.
I made last year, I made 25,000, 800 and I’m $582.
And that was because of getting that low range that we got back in 23, we didn’t get much
at 24.
Right.
And then I, then I had 2000 on one savings account and a couple thousand on another one.
But the total for all of that was 30,756.
Okay.
Yeah, you confuse me, Georgie.
Okay.
So the way the provisional tax code works though, is we have to know how much is the
social security and how much is everything else.
So in this conversation, you’ve got 6,000 roughly of money that is not social security.
And then we take half of that and it’s less than 25.
So you do not have to file.
No filing required.
You mean, other words, not what let me give you the total total amount.
One bank account was 200, uh, $2,212 interest.
Okay.
And one was $2,960.85 interest.
And then it was 25,882 in social security money.
All right.
So what we have to do is we take the two, uh, 25,882.
We have to divide that by two, which gives us 12,000.
I’m just going to use whole numbers, which gives us about $13,000.
And then we take the little less than 6,000 that you had an interest that adds up to $18,000.
You have the ability to earn up to 25 before you have to file taxes.
Oh, see, I thought it was, I thought.
I know, I know it’s a different tax code.
It’s called the provisional tax code for people that are in retirement and live mostly off
social security.
So in your situation, you are still okay not to file taxes and may different for different
people, but for my Georgie, he is okay.
Well, that’s good because I didn’t want to have to pay for filing it if I didn’t need
to.
And of course, the only two times I never filed taxes was the last two years.
I mean, I filed every year when I worked.
So, you know, I kind of made me nervous.
I don’t want to get in trouble with them, but I hear you totally off of social security.
I don’t have.
All right.
Thanks for calling Georgie.
I appreciate you.
We’re going to go to Jamie in Laverne.
Hey, Jamie.
Can you hear me, Jamie?
Laverne?
I had the wrong name.
Hey, there’s a voice.
That’s all right.
My truck, my truck stole the phone from me, but I’m here now.
I sold two pieces of property last year.
One was my primary residence, but I had it for a year and a half instead of two years.
Am I going to have to pay capital gains on that?
And my second question is also sold a piece of vacant land.
And I got a 1099 from the title company on that.
And I’m not sure if I need to file that 1099 or not.
So both of them.
I mean, no matter what, if you sell your primary home, you still need to report it.
So the IRS was knowing it’s your primary.
Can I ask when you sold the house, was there a reason for selling or just you decided to
relocate?
I mean, not for work or, you know, like advancement or something.
Yeah, we just decided to relocate.
Okay.
So you already know.
Primary home, you’re going to have to pay capital gains because you didn’t live there
two out of the last five years.
So whatever the gain on that and the same thing on the vacant land, the 1099S that you
received is saying how much you sold it for.
It should be.
And then whatever you paid for, you’d still report.
And the difference would be our capital gain on both sides, right?
So whatever you have on both sides would be capital gain.
So same on your primary.
How much you paid for any major improvements that it would have increased value.
And then what you sold it for, closing cost fees, et cetera, et cetera, get you to your
capital gains or your investment.
And how do I prove to them what I put into it?
Like if I, if I did some improvements, pay cash for that, am I just out of luck there?
You, you kind of are.
If you can get a receipt from the company that did it, you know, your guy or whoever
did it.
Otherwise, yes, I try to tell people if even if you’re paying cash, I don’t have a problem
necessarily with that.
It’s just that you need to have a receipt showing what was done and who did it.
Okay.
All righty.
We’re going to know if that’s what I needed.
Thank you.
Cool.
All right.
Let’s go to Teddy.
Teddy and is it Devin Hickson?
Maybe my eyesight’s not so good.
I need a bigger monitor.
Yeah.
Hey, Teddy.
Thanks for taking my call.
I was wondering if you’re making a, if you’re transferring money from your savings into
your check, and is that considered an income?
No, sir.
That’s just a transfer of income, a transfer of funds.
Well, that’s all I need to know then.
I appreciate it.
Wow, Teddy.
That was a good one.
Thanks.
I appreciate the call.
And I will say, even though it seemed like an easy answer for Teddy, I’ve had more than
one person think because they’ve moved money from one type of investment to another that
they’ve created a taxable, and you can sometimes, but not just from a checking to savings or
like kind.
If you have a Roth IRA and you move it to another Roth, or you have a standard IRA and
you move it to another standard again, those are not taxable situations usually unless
you keep any money out, then it can become a taxable situation on how it works or where
it’s going to come out of.
So we have that to work with.
So if you have any questions, those are great calls, guys.
I appreciate it.
And just again, anytime you have any kind of property sale, just a point of interest,
that information, even if in the case of Jamie, he said he received a 1099.
I have had many people never received 1099s.
And so it’s really important that if you sell something like that, the government does get
the information.
Title changes names.
That is all trackable.
So just so you know, it’s important to put it on your tax return, report the income or
loss and take it from there from the extent of what you want done or how you’re going
to want it done.
But make sure, and again, Jamie also had a good point.
I can’t tell you how many people come in and when we all do major improvements, just added
another building to my property, you need to save those receipts because all we have
when we start is whatever we purchased the home for, or in my case, if I built the house,
I have the original loan, what we paid for it, the contractor’s agreement, et cetera,
et cetera.
So at that point, the house was done, but then we added this and we did this.
All of those increased the value of the property, paving the driveway, whatever.
And every time you do those, if you don’t keep those receipts, the IRS doesn’t know
how you did it as far as they know you could do it yourself and it didn’t cost you anything.
So again, important part of that conversation and trying to go back is hard, especially
some of my clients, I mean, they’ve lived in the houses for 20, 30 years and it’s hard
to go back and say, “Oh yeah, we remodeled the kitchen five years ago,” or “We put a
new roof on.”
Now again, in some cases, insurance covers it and that is not an improvement if you didn’t
pay for it.
The insurance company paid for it, therefore it didn’t increase it because of your out
of pocket costs.
So this is stuff that you did out of pocket costing out of your pocket.
So then, you know, and don’t forget your closing cost fees.
When we buy and sell, we usually pay some sort of fees.
So it’s good to have those, maintain those statements so that you have them on file.
So if you decide to sell something, you have the records of the original purchase and all
the fees that might have been part of that because that adds to it as well.
All right, so we’re going to take another quick break here.
You can join the show.
We’re getting to the last section, but if you’ve got any questions, you can certainly
call us right now in the studio at 615-737-9986, 615-737-9986, taking your calls, talking about
taxes.
I’m an enrolled agent licensed by the Internal Revenue Service to do taxes and representation.
That is all I do.
So if you’ve got questions about that, I’m pretty good at it.
I’ve been doing it for about 25 years.
So if you’ve got a question, give us a call and we’ll be right back with the Dr. Friday
Show.
All righty, we are back here.
I’ve got to put a little bit of a caveat out there.
I’ve been saying the Tax Relief of American Families and Workers Act of 2024, it has not
been signed into the bill.
President has not yet signed it.
So I might be ahead of myself.
I saw that it had passed the Ways and Meanings and the Congress and the Senate.
So we’re waiting to see what the next step is.
Who knows, it may change, but it would give a couple hundred dollars per child credit,
refundable credit to some people.
So if you haven’t filed your taxes, you might want to hold back just to see because it’s
easier to get all your money at one time than to file early.
All right, let’s go to Glenn in Brentwood, please.
Glenn in Brentwood.
Hi there.
Hey there, bud.
Hello.
Hi.
OK, I came down in 2018 from Canada.
I’ve been working here since.
I collect a pension from Canada and I just did my taxes, well, actually, the 18, 19,
20 and 21 a couple of weeks ago in Canada.
And I got dinged pretty bad because there was no allowance given because I’m classified
as a non-resident of Canada.
I have a friend down here in Ohio and he actually he does any income that he gets from pension,
he does on his when he does the IRS thing.
I’ve never done I’ve never claimed it.
So I’m getting taxed 25 percent of everything off my pension.
So would it be wiser to just add it to what I make here?
Well, are you a U.S. citizen or a Canadian?
Well, no, I’m a permanent resident.
They’ve classified me as because I have a green card.
OK, yeah, that’s I just wasn’t sure.
So you’re you’re filing a non-resident return here.
But yes, it would be easier probably to claim it here.
And then I’m assuming your your friend is also doing the IRS.
He might be doing FBAR because you actually have bank accounts and overseas.
But I would think you would have to.
I mean, again, as a non-resident, I don’t do a lot of non-resident 1040s.
But in the case of that, I would say you would be reporting it here and then you would get
the credit for paying tax here, I would think, in Canada, since we have a treaty between
the company.
Yes.
But would it would end up by end up having to pay the same whether I did it here or there?
I don’t think so.
I think you might pay.
And again, you’d want to find out before you do this, OK?
But I think you might pay less because of the credit.
They give a certain percentage.
So I think you might actually end up paying less.
OK, well, thank you very much for the thank you.
Great question.
All right.
Let’s go to Linda in Columbia.
Hey, Linda, what can I do for you?
Hi, Dr. Friday.
I have some questions having to do.
There’s been a number of deaths in the family lately.
And my biggest issue right now is that my husband and I had purchased a rental house
in like 2014 for about twenty thousand dollars.
OK, then he passed in February of twenty one.
OK.
And then I sold the house last year in June for two hundred and seventy five.
All right.
But there’s kind of a couple of steps in there.
You guys own that rental jointly.
Yes.
OK.
So theoretically, at the time you inherited his share.
Yeah, that’s my question.
So there would be a step up in basis, theoretically.
So you’d need to know the value of the home back in twenty twenty one to be able to find
out what 50 percent of that home was earth.
So you’d have the one twenty you actually had sixty thousand and he had sixty thousand
according to tax law.
And then in twenty one, when we lost him, whatever the house was worth, you would increase
it his share because you inherited his share at that time.
So you might have a higher basis than the one hundred twenty is what I’m saying, Linda.
OK, very good that I was kind of hoping that but only on his half, only on his half.
Right.
Because it was jointly held.
OK.
And then I have another question.
My dad passed away in November of twenty two and I had a bunch of US savings bonds, the
double E series.
And I went ahead and cashed them in last year.
And there was there was a profit of it.
And I got a ten ninety nine, I guess it is from the federal government stating that there
was a profit.
But since he passed, is there a step up in that?
That’s taxable income to you.
OK, so there’s no change in that.
OK, no step up in that one.
Yeah, the main thing was that house, if there’s a house with that, because that that was a
huge chunk there.
It is.
Yeah.
So I would try to get some estimates and see if you can work that out, you know, from twenty
one and then get yourself a basis.
OK.
Yes.
Thank you very much.
Let’s say Jack in Springfield real quick.
Hey, Jack.
OK, I’ve got a similar question.
I had a deal last year.
We inherit.
Well, actually, me and my brother inherited my mother’s estate and had a piece of property
there and we sold the property last year.
Excuse me.
Last year.
And but it was a lifetime estate for her.
Now, do how much tax implications because we we inherit, we actually the death was last
year and we sold it last year.
So at the time your mama died, you would have the value of the home.
I’m just going to use a number, Jack, for examples.
Right.
So at the time Mama passed, that property was worth two hundred thousand dollars.
And then that same year you sold it.
So the value is pretty much the same.
But let’s just say you sold it for two hundred thousand.
That means you’d have a zero capital gains.
OK.
I was just wondering because we actually she dated it.
You know, it was a lifetime estate for her.
Right.
So she I was wondering if we would have to go back to the time that she gave us that
lifetime estate.
No, lifetime estates usually require that you can’t sell it.
You’re locked out.
Yeah, right.
We’re going to get it.
So at the time of death is when we take those over.
OK.
One other quick question.
The thing with eBay this year, what did they ever decide to do on that?
They stuck to the twenty thousand two hundred for twenty twenty three.
This coming year, twenty twenty four will be five thousand or two hundred transactions.
Two hundred transactions or five thousand twenty twenty four.
What did you say?
Yes, sir.
Twenty thousand or five or two hundred transactions.
I didn’t do nearly that much.
OK.
All right.
OK.
All right.
Let’s see if we can hit Rebecca in Tennessee real quick.
We got two minutes.
Rebecca, what do you got for me?
Yes.
I’m back.
I got a settlement with back pay from Social Security and then I got a settlement from
work for my disability.
And my question is, should I have been charged taxes on the back pay from Social Security?
That’s my first question.
And well, my second question, I owe twenty thousand dollars and I’m on disability.
So what are my chances of getting IRS to settle?
Because I’m wanting to get married, but I don’t want them to put a lien on his house
or anything.
So that’s a concern.
All right.
Well, first question, Social Security disability.
It would depend on how much other income you made.
If you only got Social Security disability, period, it’d be zero no matter how much they
paid you.
But since you got a settlement from your employer at the same time, theoretically up to eighty
five percent could be taxable.
OK, of your Social Security.
So I don’t know the story on that one, too.
They cannot put a lien against your new husband’s house if you’re not an owner on that house,
because he does not become responsible for your tax debt.
I would suggest talking to an enrolled agent or someone and see if you can get it all resolved
before the marriage just makes life a little easier because you may have to file separately
just to keep your debt off of him and not in the sense.
But his refunds could end up going back towards your debt just the way it’s filed, unless
you do an injured spouse or innocent spouse, depending.
So there is some windows on that one.
But other than that, you probably just need to talk to someone to see how much you would
owe in the combination of taxes.
OK, thank you so much.
Thanks.
Appreciate it, Rebecca.
OK, that was a fast one.
And we only have about a minute or so left here.
So again, I love it when you guys call in.
I appreciate that.
And some really great questions.
So hopefully if you weren’t able to get through or I wasn’t able to get to your questions,
you can email Friday at DR Friday dot com again Friday at DR Friday dot com.
And then we’ll do our best to get back with you.
I will tell you, it’s a very busy time.
So we’re a little slower than we normally are.
And then also, if you want to reach our office, you can call Monday morning at 615-367-0819.
Hopefully any of my returning clients make sure you call if you don’t have an appointment
yet.
We’ll get you on the calendar.
615-367-0819.
If you have no idea who I am and you’ve just kind of turned on the radio and you heard
this crazy lady talking about taxes and you’re like, oh my God, you can check us out on the
Web at DR Friday dot com.
That’s DR Friday dot com.
Again, I’m an enrolled agent licensed with the Internal Revenue Service.
I do taxes and representation.
That is what I do all the time.
I’ve been doing it for almost 25 plus years.
It has been I enjoy it.
And there’s always a lot of changes and things happening, just like I kind of jumped ahead
on that tax relief of American Families and Work Act of 2024 because it has 2023.
I was hoping they passed it.
They had not passed it yet.
Apparently has not been signed by the president.
So we’re going to wait and see what comes of that and you know where we want to move
with it.
But if you need help with tax issues, you haven’t filed taxes in a number of years,
you need help with resolution.
Give our office a call again at 615-367-0819.
Hope you guys have a great Saturday.
Cop you later.
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