Welcome to another episode of the Dr. Friday Radio Show! In this episode, tax expert Dr. Friday answers callers’ tax questions and covers various topics, including:
and much more!
Transcript
Dr. Friday 0:00
No, no, no, she’s not a medical doctor, but she can sure cure your tax problems or 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. 615-737-9986. So here’s your host, financial counselor, and tax consultant, Dr. Friday.
Dr. Friday 0:29
Today, I’m Dr. Friday, and the doctor is in the house. It is all season we are off very busy preparing tax returns, and dealing with tax questions. And this is your opportunity because I will tell you trying to reach us during the week on the telephone, email or texting can take 24 to 48 hours to get a return.
Dr. Friday 0:48
But right now, on the radio, if you’re able to get through the phone lines, you probably can get your question answered, at least get you in the right direction so that you can move forward with either filing your taxes, your questions can have to do with 2022. And some of the things that were happening in 2022. And then 2023, I do want to update anyone that may know about the contributions; they did not renew the 306 100 for the charitable contributions into 2023. We thought they might actually do that in the secured act.
Dr. Friday 1:18
So the standard deduction does not have an exception or an extra dollar amount of 300 or 600. And we’ll have a bunch of other things that we are slowly finding out now for sure what’s on tax returns, what was approved, what wasn’t. I had an interesting gentleman call me the other day about the student loans and the fact that they did take it all the way through to the first of January of 2023 for not having to pay or not paying interest or anything.
Dr. Friday 1:49
Therefore, it is our understanding at least that if you have a refund, normally they keep it. You may have a refund coming in 2022, and you may be able to get that in your pocket like you did in 2021. All right, if you’ve got questions, 615-737-9986. And I believe Brian was first in Donaldson, so let’s do it. Hey, Brian.
Caller 2:15
It’s me. Thanks for taking my call. Thanks. I have just Social Security, PVC, and a little bit of bank interest. It all totals to 27 650. Do I need to file a federal tax?
Dr. Friday 2:31
So how much of the 27,650 is Social Security?
Caller 2:36
25.596
Dr. Friday 2:38
No. So you do not need to file taxes.
Caller 2:42
You are an angel again this year. Thank you.
Dr. Friday 2:45
Thank you, sweetie. All right. Let’s talk to Kelvin in Lebanon.
Caller 2:51
Yes, I just moved from a house that had a lot of outbuildings, and I could put my storage up my construction equipment in them outbuildings. I don’t have this at this next house at this other house. So I’ve had to get a rent a storage shed for my construction equipment. Is that something I can take off my taxes?
Dr. Friday 3:17
Well, are you operating as your own self-employed construction business?
Caller 3:22
Yes, I’m a painting contractor. I just work myself. I have somewhere to put my stuff.
Dr. Friday 3:31
Right The answer is as long as you are a business yourself because I was afraid to say no, you’re a W-2 working for somebody. In that case you would not, but in your case, yes. As long as there is no private storage in those as long as everything in the storage unit has to do with running your business. It is 100% tax deduction.
Caller 3:51
Okay, I appreciate your help.
Dr. Friday 3:53
Thank you, sir. Appreciate you. All right, and you can join the show at 615-737-9986. You think I know that number after 13 years, and still sometimes I forget the last two digits anyways, and we’re talking today about taxes are going we’re now e filing everything is happening. I will tell you that we have several forms like if you receive K-1’s on your personal tax return that falls on to a Schedule E-2, then that form right now has not been approved.
Dr. Friday 4:28
So if you have that situation you may find that you’ve you can prepare your taxes, but you may not be able to E file at least it with Intuit products. I don’t know about h&r block or some of the others but Intuit products. We are still on hold on a number of forms. We can obviously send out an LLC or a corporation returns, but there are still some on-rental side depreciations that are still being held for approval. So just want to make sure we have that. Alright, let’s hit Ben. Ben in Smyrna. Hey, Ben.
Caller 4:59
Yeah, no, I might have told your screen wrong. My question was, what’s the phone for non business income or unrelated business income?
Dr. Friday 5:10
So you’re gonna, you mean like 1099 miscellaneous, which would be passive income, like other income or rental income? Or do you mean the form that it falls on for your personal tax return?
Caller 5:22
Yes, the form tax return.
Dr. Friday 5:25
Okay, so form for the tax return, you’re either going to run that under other income, which is going to fall on 1040. You’ll see there’s a line there on the front page at 1040 for other income, or even though it is, I mean, the reason we want to know the difference just for other people, that’s, that’s listening to Ben and me, because you may not know exactly what we’re talking about. Other income means there’s no self employment tax; maybe he’s worked or received some money that came in through a gift.
Dr. Friday 5:54
Maybe did some sort of, you couldn’t have done a service, you can’t work for it. But maybe he received it as a winnings or something like that, then he might have gotten a 1099 miscellaneous rentals, always on 1099. Miscellaneous, but if you have a hobby, so Ben, that was for everybody else. But the form you’re going to put it on is 1040 itself on page one under other income, goodness, my tongue is not working. But there is no separate form. Now you can put it on a schedule, and see if it was a business. So again, I know that may not be the case for you, Ben. But if it was like you went out, and you did some work, and someone gave you income, and they put it on the wrong form, meaning 1099 miscellaneous, that can still go to a form Schedule C, you could write off your expenses, and then that will pass through back onto a schedule one.
Caller 6:45
Okay, thank you so much.
Dr. Friday 6:47
Yes, no problem. Hopefully, I did not confuse poor been there. Let’s go to kid and Spring Hill. Hey, Ken, what’s happening, bud? All right,
Caller 6:58
I have a question for you about the mileage we’ve been listening to you. And I know I need to keep very accurate records about the deductible mileage. So when I’m driving into work, at sometimes I’ll run errands, like I’ll go to a grocery store, stop at the hardware store on the wait. So you know, save gas and that kind of thing. But obviously, that’s not part of the deductible journey. So do I have to be very detailed about the exact mileage for that? Or can I just estimate?
Dr. Friday 7:23
You do? I mean, if it ever comes into a question of audit, they’re going to want to know, every time you stopped, what were your miles for? Was it personal or business? And then, obviously, only taking the business. And I’m assuming, Ken, in your situation? You are self employed? Not an employee, correct?
Caller 7:42
That is correct. Yeah.
Dr. Friday 7:43
Okay, just making sure. So yes, you just have to, because a lot of times, let’s be honest, people leave work, you do your last job, then you run and pick up the kids at the daycare or school, and then maybe you stop for groceries or dinner, the you know, those are non business stops, you still gotta make the stop, it’s only logical to do it in one run versus going home and switching it if you have a separate car, whatever. So there’s nothing wrong with that as long as you identify it.
Caller 8:08
Okay, thank you. And then one quick thing. As far as charitable contributions, my wife and I gave over $11,000 this year. Is there a certain percentage of your gross income that makes it allowable, or what is allowable as far as amount.
Dr. Friday 8:23
50% of your income can be given to charity and taken in that year? The biggest question is going to be is do the item. I mean, even with 11,000, a married couple is like 25 or $26,000 to start itemizing, right. So you do have to have a healthy mortgage still property taxes, and sales tax, and the 11th, you have to exceed that 257 before you even get $1 of anything else.
Caller 8:48
I see. Okay, that’s exactly what I needed to know. Thank you very much.
Dr. Friday 8:52
Thanks, sweetheart. Appreciate the call. All right, you can join the show if you want. And remember, there are no stupid questions. I know a lot of times people like I would have asked, but I don’t want to sound. So first, put a fake name up there. No one’s gonna know who you are. None of us. Unless, you know, you’re all my clients. And I might recognize, you know, I’m just joking. That’s only for Milton. I know, Milton. But anyways, if you’re really seriously, you just have a question.
Dr. Friday 9:16
And you’re like, “Oh, I should know this, or I don’t know,” ask the question. Because the people that are brave enough to call into a radio station, you can’t believe how many people will not call even if they’re really curious about what the answer to possibly the question you want to ask. So again, you know, the brave people that are willing to pick up a phone and call a radio show and ask a question. You’re actually helping a lot of us because before I was on the radio, I guarantee you I would have never called a radio show. I don’t think I still have called very many radio shows. Because you never, you know, you’re like, “Oh, what if I don’t do this right?”
Dr. Friday 9:48
And that’s the thing, but some of you guys are really good at asking those questions, and it’s appreciated on my side because that helps me know what I can be talking about or what I can be adding to and making sure that everyone understands To the different forums. Now, earlier, when I was talking to Ben, we did mention some forums. And I want to say this out to all the people that have rental property, sole proprietorships, LLCs, corporations, business owners, and people in rentals. You are a business owner; they consider that a business when you rent out the property, be it long-term or short-term.
Dr. Friday 10:21
Remember, January 31. We have to have our 1099 out, which that means for all of your people that have done repairs, for people that you have worked with, for people that have provided marketing, advertising, whatever. The only people we do not have to 1099 is if that person is operating as a corporation. And the only way we know that is usually to obtain a form called a W-9, anytime and you’re sitting there going, oh my gosh, I never I’ve never 1099 anyone on your lawn, guy, any of them; you should be the IRS has been very strong about this.
Dr. Friday 10:57
So I want to push it a little bit more on my show. Because I know sometimes you get so busy just trying to work a job and manage it or your business or manage your rentals that you forget that we have to have. And the easiest way to get that information is before you pay them the first time. Because some people, I’ll be honest. There are some people, especially construction and those that will not give you that information, especially if you’re a paid them, they will not release it now, you know, the fact is, it doesn’t stop you from at least preparing 1099 for the individual, their name, their address, whatever information you can put together.
Dr. Friday 11:36
But you do want to make sure that you are obviously getting the information before you get to that point, right. Because if you have to go backward and try to figure out, oh, I had tree guy cut down my tree, oops, I don’t have his information, I had a fence guy paint my fence anything over $600. And that doesn’t take much when you’re repairing something. So again, anybody running a business that has somebody that is providing other services, repairs, maintenance, sales, construction, whatever they might be, we should be sending them 1090 nines; if you have a landlord that you rent from, you should be issuing 1099 miscellaneous to them. Most of the other ones are I’ll be on 1099 in ECS.
Dr. Friday 12:22
Very, very important to have both of those out because there are fines and penalties to $500 fine for not issuing 1099. And then they can also add penalties and different things to that for not following so one or two right the first time. Then we don’t have to look over our shoulders. And even if you can’t do it this year because you don’t have it well, it’s January. There’s no excuse for any of my listeners not to go ahead, download the form called a W nine and start using it for this year. So in 2024, when we’re doing 2023, you are the one prepared to do this. It really isn’t that complicated.
Dr. Friday 12:58
You could even write it information. You know, nowadays we take pictures of checks and deposit them right. So just put the information on the back of the check or something. So you have that information, save it, and put it in for the end of the year. It’s very important. Also, again, miles in 2022 is very important. In some years we’ve had, I think it was 16 or 17. We had a split miles year. Well 2022 is a split one. So we have half the year that was at what 57.8 I think it was or 57.5. And then it’s 65. So 2022, sorry, 58.5 was what our miles was and then in July they switched to 65.5. Almost What 989? You know number, so that’s a huge jump. But we have to know your miles January through June. We have to know what your miles are from July through December. We have to know your miles if we’re doing tax preparation or if you’re doing your own tax preparation. You have to know that.
Dr. Friday 13:56
All right, we’ll take our first break when we come back. We’ll get to more of your phone calls. You can join the show at 615-737-9986. We’ll be right back.
Dr. Friday 14:14
All righty, we are back here live in a studio and that means you can join us if you want at 615-737-9986 And let’s go right to Sammy in La Vergne. Hey, Sammy.
Caller 14:33
Yeah, I got
Caller 14:37
a phone ready. If I have cash, and I just want a cashier’s check, but I want to hold on to those checks because I just don’t want the money laying around. I know you could put in a bank but that’s another story. So they don’t want the money laying around. They just want the cashier’s check. Is there expiration on how long the cashier’s check is good for, for real bank? And then the second part of that is, is there any amount that is reported? Which I wouldn’t send to it? Because I’m just given cash, you get a cashier’s check. That’s basically the two questions.
Dr. Friday 15:20
Well, I’m gonna I mean, again, so a little bit out. But my understanding from what I can even see here, expiration dates do not exist for cashier’s checks. But the caveats is many banks will not cash a check, or guarantee the funds after one year. Yeah, so even though you may have a cashier’s check that doesn’t have an expiration date, if you can’t cash it at a bank, you know, or I’m just saying, you may be limited to how long you want to hold a cashier’s check. And then I guess my concern on that question would be is, you’re going to have to fill the checkout, either to yourself or something because you don’t want a blank cashier’s check is that’s as much as having cashed anyone can take in and fill their name
Caller 16:00
in. And yeah, be to myself. Okay,
Dr. Friday 16:03
well, I’m just making sure there. But I understand I mean, at least that way, if you keep the receipts separate from the check, if somehow your house burns down, and you have cash, you can’t replace it, but a cashier’s check would be replaceable in theory.
Caller 16:17
And then, is there anything that is reported? On that, since it’s just a cash transaction?
Dr. Friday 16:27
You know, it’s a great question. I mean, I know banks, I think if you were to walk into a bank with 567 $1,000 in cash and convert it into a cashier’s check, I think they’re still under the money laundering, I think they would still have obligation to file and that’s one of the things, if I’m correct. Under this secured act, they moved it from used to be $10,000, I believe, and I can be wrong.
Dr. Friday 16:51
I’m not it’s not my expertise, but I’m pretty sure they moved it down to $5,000. So you’d have to walk in, and if you do consistently, like week after week, every every week you do $4,500, if you do that, like three or four weeks in a row, they still consider that been more than 5000 in the time period, I guess, is what I’ve been told by some other people I talked to that, you know, I have car lots, and many of them have a lot of cash that come in, and so they go in the bank and deposit it. But, you know, it’s it’s not as simple as you like,
Caller 17:24
What’s reported. But is there a tax consequence?
Dr. Friday 17:27
No, no, the banks would have no, I mean, there would be no cash. I mean, though, the only thing would be is if the IRS came back and audit, you say, you know, you told the bank, you got this from selling a car, just an example, then you have to report I mean, you know, theoretically, if it was your own car, you sold it for less, it’s not a problem. It doesn’t create a tax situation, because we don’t usually report that kind of thing. I think it would become down to the consistency of how often you’re doing it. If you’re sitting on 30 grand right now. And you went to the bank and said, “Hey, I got this money. That’s how I got accumulated over doing this, this and this,” and you have one time situation, no tax obligation, and a doubt they’re even gonna look at you. I think it’s more if you did this every month for 5/10/15,000. I think that would cause someone to look at you.
Caller 18:15
Yeah, it would be a one time deal. Right? And it was properly. And is there any advantage on getting it? If you break it up? At the same time that I break it up? Rather than getting?
Dr. Friday 18:27
I don’t see why not? I mean, it’d be more the cost to you whatever check for cashier’s check costs or, you know, in some banks probably do for free if you have bank money in there. But no, I don’t see there’s any reason not to I just like I said I would separate the cheque from the receipt so that way, you even maybe take digital pictures of the receipt. So you know, if something were to happen, you could prove they were yours.
Caller 18:50
Sure. Okay. Well, thank you very much.
Dr. Friday 18:53
Thank you appreciate it. Okay, I don’t know why I just almost hit my Miko. Anyways, I have one more question that came in during the break. And it came from a gentleman named Johnny want to know, is Social Security taxable, or can it become taxable? And the answer, he probably got that from the first gentleman. Social security can become taxable. It is the provisional tax code that comes into play. So they basically take half of your Social Security, and then all of your other income, they add that together and if you’re single 25,000, married 35,000, it starts to become taxable. So if you’re getting $30,000 a year from your Social Security, so you take 15 of that, and if you’re single and you’ve got another 15,000 from other income, that’s 30 you can only have 25.
Dr. Friday 19:39
So it’s already started making a taxable so you’d have to use the provisional tax code to figure out if it is or isn’t taxable, in the case of Brian’s he had $25,000 from Social Security and only another 2500 from from you know, other income so he was under the threshold therefore he his income was or his situation was a non taxable, but each person is different.
Dr. Friday 20:05
So hopefully that helps you out, John. And I appreciate the question. So again, if you want to join the show, you can, you can do that easily. And again, we don’t care what name you give us, if you want to use your another name, because it’s really the question we’re more interested in, you can call 615-737-9986, taking your calls, talking about all things taxes, we covered the mileage situation, again, I do want to reiterate, because a lot of my listeners are also my clients.
Dr. Friday 20:40
And so any of you that are self employed, I do need to make sure that you have your miles from January to June as one number July through December as a second number. And of course, you always need in the tax system, you’d always need make a model of the vehicle, date of service, etc. So if you’re doing your own taxes, just make sure you have that information. And I will tell you, I mean miles is the number one thing usually on an entrepreneur’s situation where they are going to be audited. So you looking up and fidgeting and saying, “Oh, my, I think I did about 30,000 miles,” that’s not going to cut it. Okay?
Dr. Friday 21:20
What’s going to cut it is you actually using something like mileage IQ or any other version of that. I mean, I know, Intuit has something, there’s all kinds of mileage tracking. But like the gentleman had called in earlier, which seemed like he had a little bit of an understanding of what he was talking about. Because, you know, you’re you’re not going to put on there every time you went to the grocery store every time you went to pick up your children or, or went to the dentist.
Dr. Friday 21:43
So you’re going to need and the IRS assumes that that’s going to happen, even in business vehicles, you can say, Well, my car’s 100% business. But the likeliness is, you know, it’s not 100% business, most people at some point will stop and do something on the way home, even if they’re writing driving their company truck, that makes it that a non usage period is all I’m saying. So it’s the best thing to do. Put in a tracker so you can track your miles. If you’ve got multiple vehicles, I mean, there are different systems like one of the reasons for small business or a lot of real estate professionals that I deal with.
Dr. Friday 22:21
We like mileage IQ, because it is it’s an it’s free, and they can track and at least have a log of all the different places you can always go back in and edit that log to make sure you have I just got a text here and someone was saying, what about the 1099 Rs. So let’s reiterate again on that 1099 R is the one that you would get from eBay or Amazon, if you’re selling products on their websites, they’re going to send out a 1099 R and in the rule did change from I think 200 transactions or 20,000 to basically no number up to $600 or more, we’ll get these forms starting now January 1, 2023.
Dr. Friday 23:07
Now I’m going to reiterate one thing, I’ve already got two clients that have received these forms in 2022. There is nothing from Amazon or from eBay that says that they they can’t send them I mean, I think they probably had their system put together saying, hey, we want to be able to, you know, they started getting it set up, they were set to meet the law. And then basically in January or yeah, January, whatever, at the end of December, I think it was the secured act comes in and he says, “Oh, we’re going to extend this to January, or through the end of 23 and make it effective for 23 instead of 22.”
Dr. Friday 23:47
So I think some of these companies went ahead and may have processed if you did do not, I repeat do not ignore that form, it’s very important that you actually probably put that form and process it and put it in because if you ignore it, it’s pretty much going to be a paper audit because the IRS gonna say we’ve changed your tax return, and we never like to see those.
Dr. Friday 24:10
Okay, so if you want to join the show, you can 615-737-9986 we are taking your calls. I’m an enrolled agent licensed by the Internal Revenue Service to do taxes and representation. I’m kinda like a shield between you and the IRS, but I also do tax preparation and everything else. So if you’ve got questions as to the show you want to call 615-737-9986 and we’ll be right back with the Dr. Friday show.
Dr. Friday 24:45
All righty, we are back. live here in studio and we have a few listeners. So if you want to or few listeners a few callers but you can join the show 615-737-9986. Let’s go to John in Chapel Hill. Hey, John. Hey, how are you? I am awesome. What can I do for you today?
Caller 25:11
Good. So, my uncle died and I’m not the executor. But my cousin who is the executor decided to give me 25,000 bucks. Now knowing that he paid a lot of taxes, when we settled his estate, is that considered taxable income for me?
Dr. Friday 25:35
If it was given to you directly from the estate, the answer is going to most likely be No, because they can’t distribute unless they do through like a k one or something that shows that there is actual income. A lot of times…
Caller 25:47
It was an actual check from the estate. Yes.
Dr. Friday 25:53
Yeah. So are you? Are you a beneficiary of the state of the estate?
Caller 25:58
Um, well, I guess if I got a check I am.
Dr. Friday 26:03
Well, sometimes I find some amazing things sometimes. Well, the answer to that would be is I can’t actually say yes or no, my guess would be no, it’s not going to be taxable, but you need to call him back and ask him if you are, if you should be expecting a k one from the estate to have to pay taxes. Okay. There is a possibility. Okay. Thank you. Appreciate it. Bye. Bye. Let’s say Jim and Brett would Hey, Jim. What’s happening, buddy?
Caller 26:31
Yeah, so Dr. Friday, I wanted to you had mentioned that they did not allow the $600 or $300 charitable contribution contribution this year on 23. What about the contribution from your required minimum withdrawal from a rollover IRA?
Dr. Friday 26:55
You’re talking about qualified charitable deduction or QC? Yes, sir. And answer your question. Yes. Continue if you’re fortunate enough to be over the age of 70. And having RMDs. Or I guess it was actually 70 and a half, I guess original number was anyways, as long as you’re taking requirement on distributions, please maximize those QCD qualified charitable deductions. That is a win win. And that is in it that is in law now. So that will be going forward for us unless they take it out. But right now it’s permanent.
Caller 27:28
Now, is that done? I mean, how physically as far as, like, if your money’s in an IRA with Vanguard or somebody like that, how does that actually work? Do they send that? Or did they sit, you take the money out and then send it in?
Dr. Friday 27:45
Right, what they’ll usually do for my understanding is they’ll make the checkout to whatever charity you want, they’ll mail that to you, you then we’ll give it to the charity or your church or whatever, that and then at the end of the year, there’s a report that we basically there’s a place to take it right out of the 1099 R. So when it hits the 1040, you basically have the amount less than what you gave to charity.
Caller 28:11
Right? Okay. And you could give good you give everything that you’re required minimum and withdraw up to the full amount.
Dr. Friday 28:18
100,000, you can get up to 100,000.
Caller 28:22
Okay, thank you very much.
Dr. Friday 28:24
Thank you appreciate it. And that was a good thing Jim brought up I didn’t think about it. But I always forget about this one, but qualified charitable deductions, anybody that is taking what’s called required minimum deductions, the RMDs, from your IRA, 401 K’s 403, B’s 457s, whatever, you might have your money in a certain age where required, as we know, they extended that up to 73 this year and working their way up to 75, which I personally think is great, because many people really don’t want to have to take the money out.
Dr. Friday 28:58
The downside to that is, is that when you pass away, the person inheriting may only have five maximum 10 years to decide to take the money out. And they could be at a higher tax bracket than you are. So you do need to kind of visit that and see if the money needs to go into a Roth versus a regular IRA. But that being said, if you have a charity, and many people, I have some of the best giving people I know of, and they always give money every year.
Dr. Friday 29:23
But if you have an RMD, you can do it through what’s called a qualified charitable deduction, you have to go to the custodial of your 401 K or whatever your retirement IRA, whatever it is, call them and say, here’s what money I want to give to this charity. And then they will take care of preparing the cheque, taking it out and marking it properly. And then they’ll send you the payment and then you will send it off with or put it in the tithing bucket or whatever is the situation that you might have.
Dr. Friday 29:51
So that is, again, a very good way to not have to worry about itemizing at all. Just move forward and so great deduction Okay, let’s get Alan. Alan in savvy. Hey, Alan, how you gonna do?
Caller 30:11
You know, when you own your own house, and then file jointly, jointly, can you take a deduction that house for…
Dr. Friday 30:21
You can sometimes when I say sometimes because of the current standard deduction, you know, if you’re married and you need the standard deduction, I think it is 25, eight, I’m not 2012. So 25. Let’s see here. Wondering five, nine, sorry, good and have a memorize. So if you’re itemizing, which we could make up your property taxes, which if you if you own a house, you have property taxes, sales tax in our state, and then you’d have your interest and then charitable contributions, but all of that add up to more?
Caller 30:59
Oh, I see, you know, you’re only allowed to take it. If you don’t use the other thing. Is that right?
Dr. Friday 31:05
It’s one or the other 100%?
Caller 31:09
Yeah, I’ve had, I see, I paid a lot. And so many people say, Well, you own a home home, you’re gonna do good to own your own house. And I always thought what they meant by that, but if you’re only allowed to take it as you do charities, a lot of people don’t know that I do. A lot of people probably do both don’t take without knowing they’re doing both.
Dr. Friday 31:29
I mean, I hope they don’t, because I’m sure Uncle Sam has come back and corrected them. But hopefully they don’t. But in some cases, if you were single, 12,950 as the number it’s possible, you could be itemizing met as a married couple, very few people are probably itemizing it almost 26,000. That’s a lot of money.
Caller 31:48
Right, you might want to mention that the listeners a little more, just let them know used to take this and that was, that was a lot of people know that.
Dr. Friday 31:55
Well, I appreciate you. Thank you so much. Bye, bye. So again, just to reiterate what Alan I were talking about, everyone knows or most people know the word standard deduction. But maybe the confusion comes as you either can take a standard or an itemized deduction, you cannot do both.
Dr. Friday 32:14
So when we always talk about the standard deduction, 12,950 is what an individual is, and a married couple is 25,900. You have to exceed that either through medical taxes, insurance or mortgage interest, excuse me, and charitable contributions, the salt tax, which is your your property taxes, your sales tax. On in the state of Tennessee, at least, those cannot exceed $10,000, which really hurts people that live in states with income tax.
Dr. Friday 32:48
We’re very blessed here, because even though our sales tax is higher, I’ve got people in the East Coast and the West Coast that pay more than $30,000 a year and state income tax, and they’re only allowed and that doesn’t include their property taxes. And they can only take 10 of that on their tax return. All right, let’s hit Lee in Clarksville before the break. Hey, Lee.
Caller 33:09
Hey, Doctor, how are you?
Dr. Friday 33:10
I am awesome. What can I do to make your day better, hopefully?
Caller 33:15
Well, I got a question for you. I recently got married, got married in October of this past year. And I was employed from I’m going from October to December for tour for the entire year. So do I file separate? Is it to my advantage?
Dr. Friday 33:36
Well, first, congratulations. Second, you don’t have a choice to file single. If you if you get married on the very last day of the year, you are considered married for the entire year. So you have to either file married or married filing separately. Now you can file married filing separately, I’m not sure if that’s going to be beneficial, depending on how much income your spouse is making or has or whatever, I would totally suggest.
Dr. Friday 34:03
And again, sometimes in these kinds of new relationships, it might be easier just both of you file married filing separately just to keep your finances a little separate. But if that’s not the reason, I would file it both ways and find out which way is going to be the most beneficial. Because you do have the option married you if you file your taxes as married filing jointly, you cannot later go back and change your mind. So you need to make that decision before you file.
Caller 34:30
I see. Okay, so let’s be married but but to file separate.
Dr. Friday 34:36
Right. So it’s very filing separately or married filing jointly. That is your two options.
Caller 34:41
Okay. All right. You’re married. All right, buddy. Yes, because of the question.
Dr. Friday 34:46
Yes, sir. Go right ahead.
Caller 34:48
Okay. I’m 76 years old. Can I have as a savings and I R S. Amin, an IRA without having to Be concerned about having to pay taxes and penalties and things like that?
Dr. Friday 35:04
Well, if it’s a Roth IRA, it grows tax free. And at your age, you can take it out whenever you want, as long as it’s met the five year contribution, because you’re already over 59 and a half. So if you have an IRA, that is a Roth, you don’t have to worry about taxes or anything else. Otherwise, you do have to take RMDs at your age from a standard IRA, which could make a taxable,
Caller 35:28
I don’t have one I didn’t know if I could start one without having
Dr. Friday 35:32
I have my my understanding, as long as you have earnings, which it sounds like you did have some, as long as you have earnings, I’m pretty sure under the inflation act or whatever they changed, and I’m not gonna I’m gonna put a little caveat Lee, I’m not a financial planner. But I think you can read, you can now contribute to a retirement plan, even if you’re over the age of, of 70, or 72, or whatever, the RMD age for different people. But you might want to double check that with a certified financial advisor, just to make sure I’m right on that one.
Caller 36:02
Okay, thank you very much. Next. What percent of a donation? Can I claim? As admin, for example, I gave $2,000, let’s say for to a church. Can I claim that dollar 2000 and only 5% 3%? \
Dr. Friday 36:28
You’ll be able to claim all 2000 But just like the earlier listener, you would have to first meet itemization. So as a married person, if you’re filing jointly, that’s going to be 20. Actually, yours even gonna be higher, because you’re over the age of 65. So you’re like, almost at 27,000 as a married couple, or I think it’s like 13, five or 13, six or something for a single it mean as married filing separately on yourself?
Caller 36:54
I don’t I don’t mica item as a qualifications.
Dr. Friday 36:57
Okay, so you’re not gonna get any of the charity this year.
Caller 37:01
Okay. All right. Thank you very much.
Dr. Friday 37:04
Thanks, Lee. All right, we’re gonna take a quick break, we get back, we can hit Tom in the burrow, and any other ones that are on hold. We’re with the doctor Friday show and we’re going to be right back.
Dr. Friday 37:20
All righty, we are back live here in studio. We have about five, six minutes left there abouts. Maybe a little bit more. So we’re gonna go to Tom in the burrow. And then we’ll see what else we have going on. Hey, Tom, what’s happening? Maybe it’s not Tom. Someone had a question. Reclaiming lost money from the US?
Caller 37:44
Hey, Dr. Friday. Been listening for a long time first time have need to ask a question. Cool. So what the case is? The first stimulus my that came out, I believe was in early 20. They use your income from 2019 to determine eligibility, is that correct? Right. 100%. Okay, well, I’d file my income taxes, actually early for for 2019. But apparently, they weren’t processed by the IRS. By the time the first stimulus came out, and I was over the, I believe was $150,000 threshold for married filing joint. Okay. And subsequently, you know, my income for 2019 was well under that. So, what they did apparently was used my 2018 earnings, which were well over the $150,000 threshold. So, my question is, now that they have actually processed my 2019 and it was below that, do I have recourse to claim that first stimulus payment?
Dr. Friday 38:55
So I guess I may have missed it, but in 20, because what happened is it was it actually happened in 2020. But they use the 2019. So when you filed your 2020, you are able to claim if you did not receive it, it because of either your income was too high in 19. But in 2020, they use that as the final ruling. So was your income under over in 2020?
Caller 39:17
Oh, it was well under but about the very first.
Dr. Friday 39:21
The very first one happened in 2020, actually, because, yeah, filing our 2019 returns because obviously it was March 20 or something they came down with the whole COVID it started. So they were using 19 Because many people hadn’t filed their 20 I mean, obviously we’re in 2020, which we went to filed until 2021. So when you filed your 2020 though, you had the ability on that form line 31 to claim any stimulus you did not receive in 19 or 20. So you need to amend your 2020 return if you’re looking to get that stimulus money because that’s the only way you can get it.
Caller 40:00
Sure, yeah. Well, $2,400 is $2,400.
Dr. Friday 40:04
It’s well worth it. No, it’s well worth the money. You just said there was actually two checks. There was a 600 and a 1200. Maybe it was 1200. Anybody who was the first one who Yeah, maybe was 12 and 12. Anyways, either way, I think it was six and 12. And then we had 14, I think it was a three payments that were that came out, but it’s either 1800 That you were getting, if it’s just you by yourself.
Dr. Friday 40:27
And if 12 if 2020. For a single person could not be over 75,000. A married couple over 150. And if you fit those criteria, man, because that means neither of you probably got it. And now you’re talking possibly $3,600 of unclaimed stimulus money. And the only way to do it would be have someone amend your 2020 return to get it.
Caller 40:53
Okay, yeah, we got the second and third stimulus, but we didn’t get the first.
Dr. Friday 40:57
The initial the first one. Okay, it’s right here, but 24 got it?
Caller 41:00
Yeah. All right. Well, I’ll get my accountant to look at it and refile my returns.
Dr. Friday 41:07
That sounds like a good plan. All right, buddy. Thank you. All right.
Caller 41:10
Thank you have a great day.
Dr. Friday 41:13
I’m going to go with the next caller. And I think it’s Tim.
Caller 41:18
Yes, ma’am.
Dr. Friday 41:19
Hey, Tim, what can I do for you?
Caller 41:21
How are you today, ma’am?
Dr. Friday 41:23
I am doing good. Thank you.
Caller 41:26
Great. My son is in partnership with a gentleman needing to upgrade their vehicle. And he didn’t know if that was a tax write off anymore in the interest of vehicle anything like that. They’re gonna have to do with new work to do.
Dr. Friday 41:42
So that’s a great question for a lot of listeners. So a thank you for asking the question because I know everyone, there’s like these rumors going on, hey, you can go buy a vehicle, you can write off the whole thing. And it’s a tax deduction, everything you do with it. Theoretically, the tax law says a the vehicle has to be used 100% for business to be a business vehicle.
Dr. Friday 42:01
Most people use their primary car and do both personal and business with it. So if you’re doing that, if you only have one car, you can’t have a primary business car. Second is if he has a truck that he only uses for business, he could write it off theoretically, but he may find out depending on how much he’s paying and repairs maintenance miles at 65.5 cents a mile may actually do it. So there’s two ways of doing it. Tim, you’ve got actual which we cover the depreciation of the vehicle, the inch interest that he has to pay the insurance the mile of the petro put into it, the oil changes.
Dr. Friday 42:35
Or you take mileage, which is at this point 65.5 cents a mile. And he tracks business miles only. You know, he does have the ability, they could buy it in the name of the business. But if this is a small startup business, they have to have commercial insurance on those trucks. And again, I’m not an insurance person, but that could be a little more expensive than what they’re really wanting that help at all. Hopefully, okay, we lost him, I think overwhelmed him a little bit. I’m sorry about that. But miles in, in auto expense, again, is one of the biggest things the IRS is auditing. So I want to make it very clear when you guys all hear someone says, oh, I buy a new truck every year and I put it in my business and I write it off. I mean, in all honesty, after the first year, you have to recapture the depreciation of the first truck to actually put the second truck unless you’re driving two trucks.
Dr. Friday 43:35
And there’s only one of you, which would seem a little weird to have two vehicles, but I don’t know the business. There are certain businesses that will obviously do better. I mean, if you drive a dump truck, yeah, that’s gonna be a business vehicle. Because you’re making money. When you’re driving the dump truck, I doubt you’re going to the Home Depot and your dump truck and pick it up your kids at school. I mean, I can be wrong. There could be people that do that.
Dr. Friday 43:57
But all I’m saying is when it comes to your vehicle, if you’re using it for personal use at all, it is not 100% business use, therefore you need to reevaluate. Either you take actual or you take miles, but you have to stick to it for the lifetime of the vehicle. So you can’t say well, this year I’m doing miles in next year, I’m doing actual doesn’t work that way. And you have to also understand how long you’re going to use that vehicle if you’re buying a pickup truck, in most cases, unless you already bought a pretty old one, that trucks gonna last a while.
Dr. Friday 44:30
So you’re gonna put a lot of miles on it for maybe what you pay. Now we all know that US vehicles are costing us a lot more today than they did five years ago. But you need to evaluate and if at all possible, talk to your tax person. If you’re in business, you should have someone that’s going to be able to help you with these kinds of questions. I can’t tell you how many times we’re crunching numbers to see okay. Is this a good thing? Are we going to actually benefit? It’s not always as black and white and sa, “Oh, I’m gonna go spend 20,000 on a truck and then I write it off.”
Dr. Friday 45:00
That’s a even if you write it all off in the first year, then what do you have the next year because now you have to track your receipts. And on those receipts, we need to know if this is a pickup truck or F 250, F 350. Whatever, you have to know what the miles at the time you get the gas when the miles every time you need to put those on the receipts you need to put the vehicle you need to track that information and do something like mileage IQ.
Dr. Friday 45:24
So again, guys don’t just fall into that, that if I have a vehicle, I’m going to be alright to go do something because I’m going to be quite honest with you. It’s not going to happen. Alright, so we’re wind down the show here. And if you guys want to reach me, you can at 615-367-0819 that is the direct number to me 615-367-0819. I’ll be answering that phone on Monday.
Dr. Friday 45:51
You can also email me friday@drfriday.com. friday@drfriday.com. Again, I am an enrolled agent licensed by the Internal Revenue Service to do taxes and representation. That’s what I do. So if you have back tax issues or maybe you’ve gotten some love letters from the IRS and you’re like I don’t know what I’m supposed to do, or you even tried to do it yourself and you’re not making headway. I might be the person you need to talk to to see if we can help you get resolution get into compliance. I know you guys hear that for 15 years on the radio compliance compliance but if you’re in compliance, the IRS is more apt to work with you. So if you need help 615-367-0819 Hope you have a wonderful Saturday call you later.