Dr. Friday Radio Show – January 6, 2024

The Dr. Friday Radio Show
The Dr. Friday Radio Show
Dr. Friday Radio Show - January 6, 2024
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Welcome to the Dr. Friday Radio Show, January 6th, 2024 edition! In this insightful episode, Dr. Friday, a seasoned tax consultant and financial counselor, navigates through the complexities of the tax season. The show delves into various tax-related topics, including the implications of real estate transactions, capital gains tax, and retirement account distributions. Additionally, Dr. Friday provides personalized advice to callers on issues ranging from tax deductions and inheritance taxes to Social Security and Medicare impacts. This episode is a treasure trove of valuable information for anyone looking to make informed decisions during the tax season.

Key Highlights:

  • Real Estate Insights: Dr. Friday discusses the tax implications of buying and selling real estate, offering expert advice on how these transactions affect tax filings.
  • Capital Gains Clarifications: Callers receive detailed explanations about capital gains tax, especially concerning the sale of long-held stocks and assets.
  • Retirement Accounts and Taxation: The episode covers the tax treatment of distributions from traditional IRAs, including the tax liabilities arising from such withdrawals.
  • Social Security and Medicare Considerations: Dr. Friday addresses questions about the taxation of Social Security benefits and the potential Medicare implications of increased income.
  • Interactive Q&A: The show features interactive segments where listeners call in with specific tax queries, which Dr. Friday addresses with her expertise.
  • Small Business Tax Tips: Valuable information is shared about business tax filing deadlines, the importance of updating business licenses, and other regulatory compliances.

Whether you’re a taxpayer seeking guidance on personal finance, a retiree grappling with tax implications, or a small business owner, this episode offers a wealth of knowledge to navigate the tax season confidently.

Transcript

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No, no, no, she’s not a medical doctor, but she can sure cure your tax problems or your financial woes.
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She’s the how-to girl. It’s the Dr. Friday Show.
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If you have a question for Dr. Friday, call her now. 737-WWTN. That’s 737-9986.
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So here’s your host, financial counselor and tax consultant, Dr. Friday.
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G’day, I’m Dr. Friday and the doctor is in the house.
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It is that time of the year where it’s going to start getting a bit more crazy.
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Tax season is upon us and we have just finished up, it feels like, the last tax year.
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So we will be talking mostly about
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2023. Doesn’t mean that if you haven’t filed prior tax years or if you’re having tax issues in other ways
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that there might be something that we need to still address as well.
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But the important part of all this is we are ready to get going with
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2023 tax season, which is going to be a crazy one.
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Not a lot of changes from last year to this year to be quite honest if we’re looking at certain things.
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You know, tax brackets always change a little bit and itemizing.
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But I still have a large number of people that seem to be buying and selling real estate.
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And so that does have an effect on us.
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And different times and if you have some of that.
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So that will be something we’ll take.
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In fact, we’ve got a phone call from Pete in Clarksville,
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which I think hits pretty much on what I was just going to talk about.
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Hey Pete, what’s happening?
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Yes, nice to talk to you. Second time caller.
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You too. Thanks.
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Earlier this year,
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a few days ago,
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I liquidated some stock that I’ve held for
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oh, I don’t know, a good 20 years.
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And that’s going to be
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going to be held to capital gains tax.
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And I do not understand quite the sequence
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in which I would file the 1040 SE.
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And maybe you can help me out.
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And specifically,
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do I do I fill out that form after I do my taxes?
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And secondly, does the 1040 E
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get its data from like
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taxable income and earned income
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from the my tax, my 2023 tax form?
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Right. So 1040 ES just stands for estimated statement, estimated tax tax.
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So you would use it for the extent that on January 15th,
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anything that happened in 2023,
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tax law says we’re supposed to make four equal payments
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to not get hit with penalties.
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In your case, it’s a one time situation.
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So really what they’re going to hit you with is failure
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to not pay 110 percent in if you wait till April 15th.
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As far as the situation.
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So we’re really looking at 2022 when we’re talking about 1040 ES
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unless it’s just someone I want to make an estimate,
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because we know they’re going to owe quite a bit more money
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and they’re not going to file maybe until October, you know, I mean, or whatever.
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So if you have your normal job and you had your normal withholdings
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and normally you get a small refund,
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you probably don’t need to worry about an estimated payment.
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But if every year you usually do have to make a little bit of a payment,
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we’re not looking to estimate necessarily your 2023.
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What we’re looking to do is say, OK, you owe 10,000 simple math.
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You owe ten thousand dollars total tax in 2022.
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And so since we want to pay 110 percent more by the end of January,
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by January 15th to keep you with any penalty situation,
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you may need to make an extra thousand dollar payment.
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So that way you paid 110 percent.
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Is that helping?
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We’re not looking to really estimate if this stock sale has generated,
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I don’t know, a ten thousand.
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I like that number apparently today, a ten thousand dollar additional tax
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deficit for you.
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If you file on or before April 15th, you’re really not looking at a big penalty
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unless you haven’t actually paid in enough for the year,
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because every year you usually end up writing a check
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that kind of following through, Pete.
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I understood what you said, but specifically for my case, I am retired.
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OK, don’t have any earned income.
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OK, nothing. Everything’s going to be capital gains.
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Can you tell me if this capital gains is going to exceed more than 50,000
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dollars of gains, not necessarily how much you sold, but of gains?
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Yes. OK. All right.
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So we are going to require to file taxes because there’s a zero percent
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capital gains if it was under that. OK, so you’re retired.
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So you have Social Security, I’m assuming, right?
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I got Social Security, got a pension.
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I got got a minimum distribution on 401k.
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I filed jointly.
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That’s pretty much it.
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So do you usually get a refund every year?
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I mean, it sounds like you have to file every year.
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So do you usually get or do you break even or what’s your scenario
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normally before this stock?
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I got I got bit
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a few years ago in in having to pay a penalty
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for not taking out enough tax on my 401k distribution.
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By talking to you, I got that cleared up with the IRS.
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They forgave me.
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But the Achilles heel was there again.
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I didn’t take out enough taxes.
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But subsequent years following that, I made sure I did take out enough taxes.
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And that’s scheduled.
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And that has resulted that I
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I have gotten a refund for the last five years or so.
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OK. All right.
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So in theory, assuming you file your taxes before April 15th,
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then you’re not going to probably need to worry
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about making a 1040 ES or an estimated payment.
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If for some reason you think, hey, you know what?
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Some of my clients, they just extend because it’s easier.
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They don’t like to rush through the tax season.
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So then I would say you need to make an estimate.
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But in your scenario, you need to.
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And can I ask ballpark is the capital gains?
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Hundred thousand, one hundred fifty thousand.
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I mean, ballpark of what your gains are.
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Just the capital gains is like sixty eight thousand.
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OK, so assuming that the rest of your income is less than one hundred and eighty,
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then you’re going to have a 15 percent tax.
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You probably know this, but just putting that out for everyone listening.
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So that’s correct.
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You’re correct. Your taxation will be 15 percent.
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So you have two options.
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You will not be mandated and you should not be penalized, Pete,
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if you don’t make an estimated payment as long as you file by April 15th.
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Of this year of this year.
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Yes. If for some reason it gets extended because you don’t have all your documents
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or whatever, I would send in an estimate or I would send in an extension
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with that additional 15 percent of that sixty eight thousand.
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OK, so I don’t have to burden myself with all this extra paperwork
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on a ten forty.
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Yes. If I file.
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By the 15th of April, which I probably filed by the end of this month.
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Yeah. And then and and as long as my
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as long as my earned income
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and not taxed or the taxable income.
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Well, we’re really talking taxable income because obviously only 85 percent
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of your social security is under one hundred and fifty thousand for joint.
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Right. It’s actually to be under two hundred and fifty thousand.
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Oh, I’m if I was two hundred and fifty thousand
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on, I wouldn’t be talking to you.
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Well, anyways, I appreciate the call is a great question.
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Hopefully that helps.
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OK, thank you so much. I appreciate it.
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Uh huh. Thanks. All right.
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Let’s hit Renee in Clarksville.
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Hello, sweetheart. What can I do for you?
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Hi. OK, I
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accidentally deferred my taxes in November.
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So from the last paycheck in November,
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I get paid twice a week.
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I’m sorry, twice a month.
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So so for the past three paychecks, I did not have taxes taken out.
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Now, I’m OK with that because
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I’m single
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and I I have a lot of I give I give a lot to my church.
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So this year I gave about twelve thousand dollars to my church.
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So regardless, I should be fine this year.
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I was just wondering, should I do that again next year?
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Should I do it like I’m well, actually this year.
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Should I do it this year, like the whole entire year,
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even though I know that I’m going to make enough that covers the standard
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deduction, I’m estimating that I’ll make about thirty six thousand this year.
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Now, I get 36 and you’re you’re single.
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So much is yes, I am.
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I’m a disabled veteran, 90 percent disabled veteran.
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So I get a lot of non taxable income.
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Right. So you get twenty three thousand.
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And if you’re itemizing above, just keep in mind, I mean,
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obviously just in the simple math, if you’ve got thirty six thousand gross
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and you can itemize, which means you if you’re only giving twelve in charity
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and don’t mean only at your income, that’s a lot more than that’s like
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twenty five percent of your income, but of the taxable income.
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Let me clarify.
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Then then you have your do you have a mortgage, property tax, sales tax?
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All those apply. I mean, I have a mortgage.
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OK. Yes, I do have a mortgage.
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OK. And well, hopefully I’m.
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Yeah, so you I mean, you would still even if you have like twenty thousand dollars
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that comes out of that, you’d still have about sixteen thousand dollars
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that would be taxable income at the 12 percent tax bracket.
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So, you know, you’d still need to be paying my suggestions, deferring,
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which I’m not even sure you can defer.
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I mean, you’re doing it, but I didn’t know you could do that.
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Some employers may offer that.
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I didn’t know I would probably either.
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And I did taxes for years.
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Oh, that’s crazy.
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I didn’t know that was something that’s on the notes.
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Asked me about that one.
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But I would suggest actually, if you’re going to do it is like you did this year,
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go ahead and turn it back on for January.
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Do your taxes for this year. Right.
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And, you know, and then if you find out that you still ended up
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with a healthy refund, you could start deferring it again,
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maybe in October or September, you want to do the math.
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I would just be concerned with the whole year of deferral.
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Then you may get hit with a penalty for not making proper payments
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if you have to pay something.
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Yeah, yeah, no, I wasn’t.
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I do apologize.
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I should have said that I would not defer for the whole year.
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Probably at most six months, maybe even four or three months.
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Right. Yeah.
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So I would turn it back on and then do my taxes and then see,
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you know, if you’re still in the refund, I’m all for the refund.
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And like I said, I never heard anyone.
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You can’t always reduce it.
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A single and zero is single and zero.
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But you could also claim single and one just because of your itemizing.
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It’s as if you have another dependent because you give so much to charity.
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You know, you could change your withholding.
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But either way, I was doing.
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I had no idea that I deferred it.
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And I called them up. I’m like, why am I not paying?
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Why am I only paying Social Security and Medicare?
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And I’m not paying any federal tax.
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And they’re like, well, I am like, oh, well, you deferred it.
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And I’m like, well, how the heck did I do that?
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I was trying to do single and one.
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I mean, how did I defer this?
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This is crazy.
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I don’t know.
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Sounds like they somehow put you as exempt.
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But again, normally that that’s not as easy, you know, but somehow it happened.
00:12:40.400 –> 00:12:43.720
But yes. So I think you’ve got the right idea, though.
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I mean, I think the concept, again, not very many people fall into that.
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But with the fact that you have,
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you know, disposable income, it’s non-taxable that comes to you for your service.
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And thank you for your service.
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But, you know, it does work in your situation.
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OK, so just keep on keep on keeping on.
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Got it. Thank you. You got it.
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I appreciate your help.
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No problem. Thanks.
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Let’s hit Jimmy and Woodmont real quick.
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Hello, my boy, Jimmy, what can I do for you?
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Yes, I started drawing Social Security in September
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and I’ve draw September to December.
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Is that income taxable?
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I have to pay taxes on that.
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You could, depending on your other earned income or if you’re married,
00:13:30.040 –> 00:13:34.040
your spouse’s earned income and you claim and you’re filing married filing jointly.
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Up to 85 percent of Social Security can be taxed.
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Yeah, I’m single.
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And I worked from January to September.
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Right. So did you make?
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May I be nosy enough to say, did you make more than like 15,
00:13:50.680 –> 00:13:52.480
20,000 during those months?
00:13:52.480 –> 00:13:56.280
Did I make over 15,000?
00:13:56.280 –> 00:13:58.000
Yeah. Yeah. January.
00:13:58.000 –> 00:14:00.000
OK, so most likely.
00:14:00.000 –> 00:14:04.440
Go ahead, Jimmy. Sorry.
00:14:04.440 –> 00:14:06.760
Yeah, I just started drawing in September.
00:14:06.760 –> 00:14:11.120
See, I worked till I started drawing in October.
00:14:11.120 –> 00:14:13.120
I worked to September.
00:14:13.120 –> 00:14:16.720
So answer your question in the year in 2023,
00:14:16.720 –> 00:14:20.520
since you have W2 earnings or earnings and then your Social Security,
00:14:20.520 –> 00:14:22.880
it will portion of it will be taxed.
00:14:22.880 –> 00:14:28.720
OK, so. But the money I made from September to December,
00:14:28.720 –> 00:14:31.280
they will tax it from Social Security.
00:14:31.280 –> 00:14:33.680
Up to 85 percent of it.
00:14:33.680 –> 00:14:36.680
Not the amount, not how much tax you’ll pay.
00:14:36.680 –> 00:14:38.400
Depends on how much your total earnings.
00:14:38.400 –> 00:14:41.000
But they can they don’t tax 100 percent of it.
00:14:41.000 –> 00:14:43.400
They tax 85 or less.
00:14:43.400 –> 00:14:45.480
So just one of those weird things.
00:14:45.480 –> 00:14:49.120
But yes, you plan to make sure when you file your taxes, you either
00:14:49.120 –> 00:14:51.320
if you do it yourself or you give it to someone, make sure that
00:14:51.320 –> 00:14:54.000
that information is there. OK?
00:14:54.000 –> 00:14:55.560
OK. Yeah.
00:14:55.560 –> 00:14:57.920
Social Security’s done sent me 1099.
00:14:57.920 –> 00:15:00.120
So, yeah, they will. Yeah, they’ll send it out.
00:15:00.120 –> 00:15:02.440
My friend of mine just received hers the other day.
00:15:02.440 –> 00:15:04.600
So you should be getting it soon. OK.
00:15:04.600 –> 00:15:07.480
OK. Thank you. Thank you, Jimmy.
00:15:07.480 –> 00:15:09.640
All right. We’re going to take a quick break when we’re done here.
00:15:09.640 –> 00:15:10.800
We’ll get back with the Dr.
00:15:10.800 –> 00:15:12.440
Friday show in just a minute.
00:15:12.440 –> 00:15:21.360
All righty, we are back here live in studio.
00:15:21.360 –> 00:15:26.000
And if you want to join the show, you can at six one five three six seven
00:15:26.000 –> 00:15:31.760
zero eight one nine six one five three six seven zero eight
00:15:31.760 –> 00:15:36.680
one nine, we have Alan in Dixon.
00:15:36.680 –> 00:15:38.440
Put my glasses on.
00:15:38.440 –> 00:15:40.960
Hey, Alan, what you have happening?
00:15:40.960 –> 00:15:43.560
Yeah, the reason I’m calling.
00:15:43.560 –> 00:15:45.520
I’ve got a question in my.
00:15:45.520 –> 00:15:52.480
Bowsers both on Social Security now, I’m sixty five and she’s sixty three.
00:15:52.480 –> 00:15:58.320
And we’ve she worked for years and I did, too.
00:15:58.320 –> 00:16:00.480
We’re not even doing that this year at all.
00:16:01.480 –> 00:16:05.720
Do we have to send in some kind of form by tax form showing that or
00:16:05.720 –> 00:16:08.960
do they just think we just.
00:16:08.960 –> 00:16:13.160
We don’t want to have some not sent in and they’re going to wonder
00:16:13.160 –> 00:16:16.640
what happened to us, that we’ve been so regular every year.
00:16:16.640 –> 00:16:20.440
Well, yes, I know what happened.
00:16:20.440 –> 00:16:24.400
Many clients that ask that same question, because in most cases
00:16:24.400 –> 00:16:28.480
it is sort of crazy that they
00:16:29.680 –> 00:16:33.000
that people have for 40 years you file taxes.
00:16:33.000 –> 00:16:34.360
I, you know, I’ve always filed.
00:16:34.360 –> 00:16:35.240
Answer your question.
00:16:35.240 –> 00:16:38.360
No, there is nothing in there that you have to worry about.
00:16:38.360 –> 00:16:40.800
So I got a one year.
00:16:40.800 –> 00:16:44.720
Well, the reason why another reason I asked this is because every year when I
00:16:44.720 –> 00:16:50.680
I was on disability before my wife quit work, but I still had to fill out that one
00:16:50.680 –> 00:16:52.720
half of my income.
00:16:52.720 –> 00:16:56.000
I mean, my social security had to go on that form.
00:16:56.000 –> 00:16:59.120
Right. Because you were fine.
00:16:59.120 –> 00:17:00.920
Did I pay on it?
00:17:00.920 –> 00:17:04.760
Yes, you paid tax if you were filing on your wife’s tax return.
00:17:04.760 –> 00:17:08.280
You may have, depending on her income, may have had to pay some tax.
00:17:08.280 –> 00:17:12.160
But the fact that neither of you have earned income, only social security,
00:17:12.160 –> 00:17:15.840
maybe a small pension, don’t know, then most likely you don’t qualify
00:17:15.840 –> 00:17:18.240
for having to file taxes if it’s only social security.
00:17:18.240 –> 00:17:20.720
You definitely do not qualify for filing taxes.
00:17:20.720 –> 00:17:26.120
And then my wife is saying that she’s doing her insurance.
00:17:26.440 –> 00:17:29.720
I guess they would her medical insurance.
00:17:29.720 –> 00:17:31.840
They require that proven that she’s.
00:17:31.840 –> 00:17:37.520
Making this or not working or whatever, and they write some kind of forms, so.
00:17:37.520 –> 00:17:40.440
Are they going to need some kind of.
00:17:40.440 –> 00:17:44.560
So the way you’re talking, they need a tax form for her to do that.
00:17:44.560 –> 00:17:48.480
Now, she in the marketplace.
00:17:48.480 –> 00:17:52.120
For health insurance, so you’re talking about Alan, probably.
00:17:52.120 –> 00:17:53.800
I’m guessing.
00:17:53.800 –> 00:17:54.760
I think so, right?
00:17:54.760 –> 00:18:00.120
You can tell them that you are social security only not required to file taxes.
00:18:00.120 –> 00:18:02.560
And that should suffice.
00:18:02.560 –> 00:18:05.920
I have, again, other clients that have that same exact situation.
00:18:05.920 –> 00:18:08.440
So you should be in good shape.
00:18:08.440 –> 00:18:11.440
OK, well, I appreciate your time and enjoy your show.
00:18:11.440 –> 00:18:13.840
OK, thank you. Appreciate it.
00:18:13.840 –> 00:18:18.040
All right. I’m not sure what number I put out there, but my eyes and ears.
00:18:18.040 –> 00:18:20.080
I want to join the radio.
00:18:20.080 –> 00:18:25.680
Get my tongue working. Six one five seven three seven nine nine eight six.
00:18:25.680 –> 00:18:26.880
Join us live right now.
00:18:26.880 –> 00:18:32.440
Six one five seven three seven nine nine eight six is the number here.
00:18:32.440 –> 00:18:35.840
If you want to join the show and get your questions,
00:18:35.840 –> 00:18:37.360
it’s a great way to get some of your questions.
00:18:37.360 –> 00:18:39.960
And I love it when you guys call in, because I think a lot of people
00:18:39.960 –> 00:18:42.280
listening sometimes have that same kind of question,
00:18:42.280 –> 00:18:44.920
but not everybody really wants to do that.
00:18:44.920 –> 00:18:47.680
OK, so I do want to bring up a couple of things.
00:18:47.720 –> 00:18:49.840
Obviously, the end of the year has happened.
00:18:49.840 –> 00:18:52.720
So happy New Year’s.
00:18:52.720 –> 00:18:54.840
Now we’re looking at twenty twenty four.
00:18:54.840 –> 00:18:58.320
But one of the first things we’re going to be filing, of course, is business tax
00:18:58.320 –> 00:19:02.280
is due normally by the first of April or thereabouts.
00:19:02.280 –> 00:19:05.360
And they have changed the limit.
00:19:05.360 –> 00:19:10.200
So the limit is less than one hundred thousand dollars of taxes
00:19:10.200 –> 00:19:12.360
obtained by a minimum activity.
00:19:12.360 –> 00:19:13.640
You don’t have to pay.
00:19:13.640 –> 00:19:18.280
So one hundred thousand dollars is for the business license.
00:19:18.280 –> 00:19:21.280
And this is if you’re a contractor or an individual that works
00:19:21.280 –> 00:19:23.720
in multiple cities or or counties.
00:19:23.720 –> 00:19:28.040
So if you do less than one hundred thousand in a city or county,
00:19:28.040 –> 00:19:32.400
then that business license is not required to be filed.
00:19:32.400 –> 00:19:36.920
One thing I have to find out, don’t know if anyone else out there knows the answer.
00:19:36.920 –> 00:19:40.400
Do we still file it as a minimum and basically put the information?
00:19:40.400 –> 00:19:43.760
And it’s a zero tax, but we still have the minimum of fifteen dollars
00:19:43.760 –> 00:19:47.680
county or city to have to pay that no matter what.
00:19:47.680 –> 00:19:52.040
That’s what I need to find, because this normally most used to be like fifty
00:19:52.040 –> 00:19:56.320
thousand and I didn’t have very many clients that made less than fifty thousand
00:19:56.320 –> 00:19:59.520
dollars. So didn’t have a lot to deal with on that one.
00:19:59.520 –> 00:20:04.120
But one hundred thousand dollars will will be good for many of my clients
00:20:04.120 –> 00:20:08.120
to help make sure we have that information in the system.
00:20:08.320 –> 00:20:12.240
And, you know, we don’t want to pay any more tax than we have to again.
00:20:12.240 –> 00:20:16.600
So in some of these cases, you may just have a minimum tax business fee of fifteen
00:20:16.600 –> 00:20:22.080
dollars instead of paying the point zero zero one eight six tax on your old business
00:20:22.080 –> 00:20:25.040
license. All right, let’s hit Russ in Cookville.
00:20:25.040 –> 00:20:26.680
We got Russ in Cookville.
00:20:26.680 –> 00:20:28.640
Hey, Russ, what’s happening?
00:20:28.640 –> 00:20:31.160
Hey, Dr. Friday, thank you for taking the call here.
00:20:31.160 –> 00:20:34.760
I had a question here about traditional IRA.
00:20:35.120 –> 00:20:36.760
I opened it. Oh, my.
00:20:36.760 –> 00:20:39.880
It must mean maybe 30 years ago, you know, quite a ways back.
00:20:39.880 –> 00:20:43.240
Anyway, I cashed it out this year.
00:20:43.240 –> 00:20:44.720
It’s only around fourteen thousand.
00:20:44.720 –> 00:20:47.520
But will I receive something from the bank?
00:20:47.520 –> 00:20:51.240
Well, it’s been with about probably three or four different banks.
00:20:51.240 –> 00:20:56.160
Now, do they keep track of track of that or what will I receive in the mail from
00:20:56.160 –> 00:21:00.240
that? You should receive a form called the ten ninety nine R.
00:21:01.320 –> 00:21:04.200
And it would be from the last one that did.
00:21:04.200 –> 00:21:06.560
You said you received a distribution, right, Russ?
00:21:06.560 –> 00:21:09.240
Right, right. Yeah, I just want to write one.
00:21:09.240 –> 00:21:14.600
So that should be a most of those are in by the 15th, most of the time the 15th.
00:21:14.600 –> 00:21:17.400
But they do have till the last day of January to get that to you.
00:21:17.400 –> 00:21:20.840
But you will receive a form called the ten ninety nine R.
00:21:20.840 –> 00:21:23.560
That will tell you how much is taxable, how much you withdrew.
00:21:23.560 –> 00:21:27.520
If there was any withholdings, all that good stuff will be listed on that form.
00:21:28.080 –> 00:21:33.080
OK, yeah, I would have 12 percent, but will I be taxed on like like I said, it was
00:21:33.080 –> 00:21:35.760
probably 30 years. It’s been like 30 years.
00:21:35.760 –> 00:21:37.680
I probably only put a couple of thousand in there.
00:21:37.680 –> 00:21:39.640
Will I pay tax on that?
00:21:39.640 –> 00:21:42.840
What I put in there also are just the interest I’ve earned or.
00:21:42.840 –> 00:21:49.120
Well, assuming that it is a deferred like a 401k situation and back that many years
00:21:49.120 –> 00:21:53.240
probably was, then you’ll pay tax on everything because you never paid tax on it
00:21:53.240 –> 00:21:58.040
before. But if it was a Roth situation where you put money in and it just
00:21:58.040 –> 00:22:01.760
grow into this dollar amount and it was paid with aftertax, then the whole thing is
00:22:01.760 –> 00:22:05.960
tax deferred. So do you know if it’s a traditional or a Roth?
00:22:05.960 –> 00:22:09.280
Do you have any idea? It was it was traditional.
00:22:09.280 –> 00:22:12.080
Like I said, it was OK. Many, many probably 30 years.
00:22:12.080 –> 00:22:15.640
So I just went ahead and put just put a couple of thousand in there.
00:22:15.640 –> 00:22:17.440
And I think I just left it at that.
00:22:17.440 –> 00:22:18.600
So. Right.
00:22:18.600 –> 00:22:22.200
And so all of it will be taxed at ordinary income tax just to let you know.
00:22:22.200 –> 00:22:24.800
OK, OK. Yeah, I would have 12 cents.
00:22:24.800 –> 00:22:26.480
OK, well, I appreciate very much.
00:22:26.960 –> 00:22:28.040
No problem. Thank you.
00:22:28.040 –> 00:22:30.360
Bye bye. Bye bye.
00:22:30.360 –> 00:22:36.400
So again, if if you and he did the right thing, I will just say Russ handled his
00:22:36.400 –> 00:22:40.680
because a lot of times people take money out thinking, well, may or may not be taxable.
00:22:40.680 –> 00:22:44.720
Well, it’s always safer because most of us have deferred something along the way,
00:22:44.720 –> 00:22:47.520
mostly safer to to deal with that.
00:22:47.520 –> 00:22:53.040
So make sure you take out at least 12, 15, 20 percent, depending on your tax bracket.
00:22:53.320 –> 00:22:57.360
All right. Let’s go to Pat and see if we can get her in before the break.
00:22:57.360 –> 00:22:58.840
Hey, Pat or him.
00:22:58.840 –> 00:23:07.280
Hi. I am getting ready to take out a pension plan and I can do it all in one lump sum,
00:23:07.280 –> 00:23:08.880
which I thought about.
00:23:08.880 –> 00:23:13.800
But how what’s the percentage of federal?
00:23:13.800 –> 00:23:17.600
I will have to pay on this and state for Kentucky.
00:23:17.600 –> 00:23:22.960
Well, one, I’m not a financial planner throwing that out only because I’m going to say
00:23:22.960 –> 00:23:27.160
I don’t think you should take the whole thing out at one time because we’re in a
00:23:27.160 –> 00:23:28.400
progressive tax code.
00:23:28.400 –> 00:23:29.640
So give me what.
00:23:29.640 –> 00:23:33.680
Just give me a number. How much are we thinking that the total package is just.
00:23:33.680 –> 00:23:36.360
Let’s say, for example, fifty thousand.
00:23:36.360 –> 00:23:38.080
I’m 67 years old.
00:23:38.080 –> 00:23:40.000
OK, are you married or single?
00:23:40.000 –> 00:23:41.720
I am single.
00:23:41.720 –> 00:23:44.600
OK, so you’re 60.
00:23:44.600 –> 00:23:46.360
So are you on Social Security as well?
00:23:46.360 –> 00:23:48.120
Yes. All right.
00:23:48.120 –> 00:23:52.680
All right. So we have two things we have to look at.
00:23:52.680 –> 00:23:55.920
We’ve got one, the means testing that can happen to Medicare.
00:23:55.920 –> 00:24:00.680
If you take all 50000, it could theoretically kick you over 90000 total income.
00:24:00.680 –> 00:24:05.240
If it does. And I don’t have the exact dollar amount, Pat, but then they may charge you
00:24:05.240 –> 00:24:07.280
another year more money.
00:24:07.280 –> 00:24:10.280
If it doesn’t, then you’re fine.
00:24:10.280 –> 00:24:11.920
It won’t affect that amount.
00:24:11.920 –> 00:24:17.120
You’ll be under that. It won’t be over 90000.
00:24:17.120 –> 00:24:19.800
So. OK, so then we don’t have to worry about that.
00:24:19.800 –> 00:24:25.080
Second, basically, as long as I mean, the first 50000 dollars is at 12 percent.
00:24:25.080 –> 00:24:31.360
The next for simple math, the next 55000 goes up to 20 percent, 22 to be precise.
00:24:31.360 –> 00:24:33.560
So and it’s progressive.
00:24:33.560 –> 00:24:37.080
So it doesn’t just go from zero to twelve, zero to twenty two, whatever.
00:24:37.080 –> 00:24:43.720
So you’d be looking at probably effectively probably I would just say 15 percent tax on
00:24:43.720 –> 00:24:46.640
the 50000 dollars on the federal state.
00:24:46.640 –> 00:24:48.800
I believe Kentucky’s around six percent.
00:24:48.800 –> 00:24:50.040
I don’t do a ton of Kentucky.
00:24:50.040 –> 00:24:51.040
I don’t have memorized.
00:24:51.040 –> 00:24:56.200
But so you’re looking at probably 20 percent tax between state and fed.
00:24:56.200 –> 00:24:58.920
I spread it out.
00:24:58.920 –> 00:25:03.680
Yeah. And keep in mind, you’re met and your Social Security will be taxed up to 85
00:25:03.680 –> 00:25:09.280
percent of it. So if you get 20000 dollars or whatever, 85 percent of 20000, whatever
00:25:09.280 –> 00:25:13.080
that is, I don’t have my calculator today will become added income.
00:25:13.080 –> 00:25:15.560
So, you know, so Social Security.
00:25:15.560 –> 00:25:19.600
So if we could split it in two years, you might be able to get where your Social
00:25:19.600 –> 00:25:22.680
Security is almost zero tax and you could spread it out.
00:25:22.680 –> 00:25:26.680
So I don’t know if you have that option where you can defer half and take out half.
00:25:26.680 –> 00:25:31.200
And then that way you’re maybe so that way you say I’m 12.
00:25:31.200 –> 00:25:32.840
Now, right now, I got paid.
00:25:32.840 –> 00:25:38.600
I get a Social Security and that’s like 1350 a month.
00:25:38.600 –> 00:25:41.560
Right. So that’s the total.
00:25:44.360 –> 00:25:50.520
So I’m not sure I thought I wondered if I could invest reinvested in a IRA or
00:25:50.520 –> 00:25:54.000
something and then just draw interest off from it.
00:25:54.000 –> 00:25:55.480
You definitely can do that.
00:25:55.480 –> 00:25:59.400
You can defer it into a retirement of some sort.
00:25:59.400 –> 00:26:03.360
Normally it’s an IRA and then take it deferred into the IRA.
00:26:03.360 –> 00:26:06.680
And then that way you could take out a monthly draw of some sort and keep you at the
00:26:06.680 –> 00:26:07.840
lowest tax bracket.
00:26:07.840 –> 00:26:11.880
That would be my suggestion, but that’s something to think about.
00:26:12.480 –> 00:26:19.080
OK, OK, because if I do it like that now, but probably I mean, I could draw a
00:26:19.080 –> 00:26:23.360
monthly on it, you know, like 267 or something like that.
00:26:23.360 –> 00:26:25.200
So well, I would not have to pay.
00:26:25.200 –> 00:26:27.040
Sometimes your limitation you wouldn’t have.
00:26:27.040 –> 00:26:30.520
But if you can do it in smaller increments and put it into an IRA where maybe you
00:26:30.520 –> 00:26:34.600
have better investment options than you do in the pension, it might give you a win
00:26:34.600 –> 00:26:35.600
win situation.
00:26:35.600 –> 00:26:39.440
OK, now what did you mean about the Social Security?
00:26:41.600 –> 00:26:47.240
When you earn twenty five thousand dollars, half of your Social Security plus
00:26:47.240 –> 00:26:50.720
whatever you earn, if it exceeds twenty five thousand dollars, you’re going to start
00:26:50.720 –> 00:26:53.040
paying tax on your Social Security itself.
00:26:53.040 –> 00:27:02.160
Oh, OK, like if I took out fifty thousand and with my Social Security a year, if it’s
00:27:02.160 –> 00:27:07.320
over twenty, anything over that twenty five thousand, I have to pay half of the
00:27:07.320 –> 00:27:08.760
Social Security that I’m getting.
00:27:08.760 –> 00:27:12.360
Exactly. Which you don’t I mean, you can control that if you do it the other way.
00:27:12.360 –> 00:27:13.920
OK. OK.
00:27:13.920 –> 00:27:15.240
Thank you so much.
00:27:15.240 –> 00:27:17.320
Thank you. All right. We’re going to take a quick break.
00:27:17.320 –> 00:27:19.360
When we get back, we’ll take more of your phone calls.
00:27:19.360 –> 00:27:22.480
Six one five seven three seven nine nine eight six.
00:27:22.480 –> 00:27:23.480
We’ll be right back.
00:27:23.480 –> 00:27:35.120
All right, we are back live in studio, and I love the fact that everyone else is
00:27:35.120 –> 00:27:36.760
excited about taxes as I am.
00:27:36.760 –> 00:27:39.640
Because my phone line keeps going and this is so awesome.
00:27:39.640 –> 00:27:42.760
All right. Let’s go to Rick in Nashville.
00:27:42.760 –> 00:27:44.160
Hey, Rick, what’s happening, love?
00:27:44.160 –> 00:27:49.120
I’ve got a question about a piece of property that I sold last year.
00:27:49.120 –> 00:27:53.160
I purchased it in nineteen ninety nine and I sold it last year.
00:27:53.160 –> 00:27:56.600
Obviously, I’ve got some capital gains I’m going to have to take.
00:27:56.600 –> 00:28:02.280
However, I filled out Schedule E every year that I had it because it was it was a
00:28:02.280 –> 00:28:06.720
rental property. I had some tax loss that have occurred over the years.
00:28:07.160 –> 00:28:09.280
I never brought it forward on my taxes.
00:28:09.280 –> 00:28:14.120
Can I go back and if I go back and create a spreadsheet of each year, what the tax
00:28:14.120 –> 00:28:15.320
loss was for that year?
00:28:15.320 –> 00:28:18.320
Can I recoup it now that I sold the property?
00:28:18.320 –> 00:28:25.120
Well, in theory, yes, but it should be rolling over in your taxes, but since you’re
00:28:25.120 –> 00:28:29.920
doing them, maybe you didn’t report it because it’s supposed to be rolling forward
00:28:29.920 –> 00:28:33.440
every year, right? As a NOL that tracks through the system.
00:28:34.440 –> 00:28:37.880
It’s supposed to, but I didn’t do it that way.
00:28:37.880 –> 00:28:40.840
So what did you do with the loss every year?
00:28:40.840 –> 00:28:44.440
Well, I didn’t have a loss every year, just had a loss.
00:28:44.440 –> 00:28:48.960
But I think in 2006, it had a pretty substantial loss.
00:28:48.960 –> 00:28:52.800
But in 2006, you didn’t take it on your tax return?
00:28:52.800 –> 00:28:58.000
I took it. It’s on my tax return, but I didn’t roll it like you can only roll, I
00:28:58.000 –> 00:29:01.400
think, like thirty five hundred or something like that over every year.
00:29:01.600 –> 00:29:02.600
I didn’t do that.
00:29:02.600 –> 00:29:07.200
Well, yeah, I mean, theoretically, you have twenty five thousand dollars depending on
00:29:07.200 –> 00:29:11.360
your income. If you make less than one hundred twenty five, you can make a maximum
00:29:11.360 –> 00:29:12.760
loss of twenty five thousand.
00:29:12.760 –> 00:29:17.400
So I would say the first thing is if you want to go back and track and see, because
00:29:17.400 –> 00:29:21.640
the problem will be is proving that you didn’t already take that loss in the year or
00:29:21.640 –> 00:29:23.400
the following year that you had it.
00:29:23.400 –> 00:29:25.880
Because normally if we don’t get it, it rolls to the next year.
00:29:25.880 –> 00:29:30.080
If there’s any profits, it zeroes out those profits and it gets eaten up, so on and so
00:29:30.080 –> 00:29:33.160
on until the losses or gains exceed.
00:29:33.160 –> 00:29:36.480
Like myself, I have losses on my real estate.
00:29:36.480 –> 00:29:40.400
I can’t take those losses because my income, but it will roll forward.
00:29:40.400 –> 00:29:43.840
So every year if I make a profit on one of them, it will offset the loss.
00:29:43.840 –> 00:29:47.880
So I don’t I mean, I don’t it’s not a black and white answer, unfortunately, on that
00:29:47.880 –> 00:29:53.280
one, because those losses should have been offset against the gains in the years that
00:29:53.280 –> 00:29:58.600
followed. And if you didn’t do that, you know, theoretically, they’re going to go
00:29:59.520 –> 00:30:02.520
Those are all claims on my Schedule E for that property.
00:30:02.520 –> 00:30:04.480
I believe it’s Schedule E for that property.
00:30:04.480 –> 00:30:05.680
Yeah, no, you’re 100 percent.
00:30:05.680 –> 00:30:08.880
Schedule E sounds I would go back and see since you purchased it.
00:30:08.880 –> 00:30:12.800
I mean, if you can go back to ninety nine, that’s impressive in the first place, Rick.
00:30:12.800 –> 00:30:17.760
But if you have those, I guess the first answer would be is go ahead, do the Excel,
00:30:17.760 –> 00:30:22.720
take the positives and the losses and see how they were tracked on the taxes and then
00:30:22.720 –> 00:30:25.040
see if you have any NOL available.
00:30:25.040 –> 00:30:28.800
And theoretically, if you have one, you could argue the point that it’s available.
00:30:28.840 –> 00:30:31.680
Yes. OK, thank you.
00:30:31.680 –> 00:30:34.280
Thanks, buddy. All right.
00:30:34.280 –> 00:30:36.000
That was an interesting question.
00:30:36.000 –> 00:30:37.040
I’m not too sure.
00:30:37.040 –> 00:30:41.800
You know, I don’t think I mean, I don’t think a lot of my clients could go all the
00:30:41.800 –> 00:30:47.840
way back to to twenty nine or nineteen ninety nine and find their tax returns to come
00:30:47.840 –> 00:30:52.800
up with that. So I’m already impressed, Rick, that you have the ability to find your
00:30:52.800 –> 00:30:57.240
tax returns. I know this listening that say I have every copy of every tax return I’ve
00:30:57.240 –> 00:31:00.040
ever filed. And I know my father passed away.
00:31:00.040 –> 00:31:04.240
I found that was one that was filed in the in the 60s.
00:31:04.240 –> 00:31:10.680
And I thought it was cool because it was it was so small, the tax return and so
00:31:10.680 –> 00:31:12.280
different than what we filed today.
00:31:12.280 –> 00:31:16.800
But OK, so if you’ve got questions, join us live here in the studio.
00:31:16.800 –> 00:31:22.800
Six one five seven three seven nine nine eight six six one five seven three seven
00:31:22.800 –> 00:31:25.000
nine nine eight six.
00:31:25.760 –> 00:31:32.920
There’s also for for new members of LLCs, make sure you go to Tentap.
00:31:32.920 –> 00:31:38.120
They have a new where we have to fill in all the members of your existing business,
00:31:38.120 –> 00:31:40.160
LLC or corporation.
00:31:40.160 –> 00:31:44.800
Sometimes when people file the annual report, they don’t always list all the members
00:31:44.800 –> 00:31:46.480
and it is a mandate.
00:31:46.480 –> 00:31:52.000
So you might want to go back and just check and make sure when filing annual reports or
00:31:52.240 –> 00:31:59.040
your information on on Tentap that all the members of your LLCs are listed so you
00:31:59.040 –> 00:32:01.360
don’t get hit with a penalty or a fine.
00:32:01.360 –> 00:32:04.480
Again, business licenses are coming up due soon.
00:32:04.480 –> 00:32:08.200
So that one you want to file on or before April 15th.
00:32:08.200 –> 00:32:12.560
And if your business made less than one hundred thousand dollars, you may not have to
00:32:12.560 –> 00:32:16.840
file anything but just the return from that setup.
00:32:16.840 –> 00:32:20.760
And then just making sure that you have all of your information.
00:32:20.960 –> 00:32:25.480
And keep in mind, nowadays, the IRS does still I mean, they are not the IRS.
00:32:25.480 –> 00:32:31.040
Tennessee Department of Revenue is really good about putting in email notifications
00:32:31.040 –> 00:32:33.000
if people want to have those.
00:32:33.000 –> 00:32:37.440
So it does help a lot with what’s going on in the state side.
00:32:37.440 –> 00:32:40.200
Federal IRS will never email you guys.
00:32:40.200 –> 00:32:43.600
So if you get an email from the IRS, you know it’s a fraud.
00:32:43.600 –> 00:32:44.920
They’re not emailing you.
00:32:44.920 –> 00:32:49.680
They may use e-fax to be able to do something, but they’re never going to fail.
00:32:49.920 –> 00:32:52.480
They’re never going to email you or anything like that.
00:32:52.480 –> 00:32:57.080
So just make sure when you’re getting ready, if you’re making a little list of things that
00:32:57.080 –> 00:33:01.000
have to be done in the first quarter or I consider it the first quarter, basically it’s
00:33:01.000 –> 00:33:02.600
before April the 15th.
00:33:02.600 –> 00:33:08.080
Keep in mind, you’ve got your annual note for this is for businesses, your annual report
00:33:08.080 –> 00:33:14.400
usually on April 1st, your business license, April 15th, your franchise excise, April
00:33:14.400 –> 00:33:19.240
15th, your first quarterly for the state or franchise excise, April 15th.
00:33:19.240 –> 00:33:25.640
Obviously on the federal side, you also have your personal or corporate returns.
00:33:25.640 –> 00:33:31.120
Now, remember 1065s and 1120s are due March 15th.
00:33:31.120 –> 00:33:38.080
So if you are a small first time business filer and you have started a dual, a
00:33:38.080 –> 00:33:47.120
partnership LLC or an S corporation, those deadlines are March 15th, not April.
00:33:47.120 –> 00:33:48.360
March 15th.
00:33:48.360 –> 00:33:52.440
So these are deadlines where I’ll keep hitting out there because it’s very important
00:33:52.440 –> 00:33:54.440
that you actually have that information.
00:33:54.440 –> 00:33:58.000
You know what you got going, you know where you’re going with it, and it’s just
00:33:58.000 –> 00:33:59.960
important to be able to get.
00:33:59.960 –> 00:34:01.920
No one likes to pay penalties.
00:34:01.920 –> 00:34:03.120
I dislike penalties.
00:34:03.120 –> 00:34:07.080
I hate making mistakes and and I don’t like having to pay a price for it when I do make
00:34:07.080 –> 00:34:12.040
the mistake. And so if I can help you guys figure out what you do or do not need to
00:34:12.040 –> 00:34:15.520
file or if there’s a way of getting around it, that’s what I like to do most.
00:34:15.760 –> 00:34:19.800
But if you have, you know, if you’re a small business owner, especially when you’re
00:34:19.800 –> 00:34:23.880
small, I mean, most of us are so often wearing more than one hat.
00:34:23.880 –> 00:34:26.560
So, you know, we’re sitting here doing our accounting.
00:34:26.560 –> 00:34:31.320
We’re also doing the sales or we’re doing the work where, you know, and so sometimes
00:34:31.320 –> 00:34:33.240
dates and things can slip by.
00:34:33.240 –> 00:34:38.800
So it’s really important that you actually just know what you need and put them on the
00:34:38.800 –> 00:34:41.840
calendar so you’re not late and get them done.
00:34:41.840 –> 00:34:44.920
I mean, you can file your business license today if you know your sales.
00:34:45.560 –> 00:34:47.800
For January through December, get it done.
00:34:47.800 –> 00:34:52.040
It’s out of here. If you have an annual report, same thing.
00:34:52.040 –> 00:34:54.520
Easy to do. Get it filed.
00:34:54.520 –> 00:34:56.800
Move it on. Don’t have to worry about it.
00:34:56.800 –> 00:35:03.120
And then you’re able to just make sure you have the right forms and the times.
00:35:03.120 –> 00:35:07.040
But on your annual reports this time, make sure you list all members.
00:35:07.040 –> 00:35:10.000
Otherwise you could end up with a situation.
00:35:10.000 –> 00:35:14.360
You know what? If I take Bill right now, I’ll end up hitting the break.
00:35:14.360 –> 00:35:18.000
So why don’t we take a quick break just a few seconds early if we can.
00:35:18.000 –> 00:35:22.600
That way, then when I get back, I can hit Bill and we don’t have to worry about cutting
00:35:22.600 –> 00:35:26.480
them off really quick. We’re going to take a quick break and we’ll be right back with
00:35:26.480 –> 00:35:27.920
the Dr. Friday Show.
00:35:27.920 –> 00:35:40.040
We are back here live in studio and we’re going to go right to the phone lines and hit
00:35:40.040 –> 00:35:43.280
Bill and McMinnville so I can hopefully get his questions.
00:35:43.280 –> 00:35:43.880
A good one.
00:35:44.880 –> 00:35:52.120
Hey, Dr. Friday, my sister’s husband passed away this last year and he had a farm.
00:35:52.120 –> 00:35:58.720
He had some a couple of hay barns and some cattle and cattle working equipment.
00:35:58.720 –> 00:36:06.280
She’s been told that she needed to set up a basis on the day that he passed of the
00:36:06.280 –> 00:36:11.000
value of that property because she could set up and depreciate that.
00:36:11.000 –> 00:36:13.520
Is that right on a house?
00:36:13.760 –> 00:36:15.560
So theoretically, yes.
00:36:15.560 –> 00:36:18.800
I mean, in answer to your question, so she inherited the farm?
00:36:18.800 –> 00:36:21.760
Right. She’s selling the equipment.
00:36:21.760 –> 00:36:28.440
Well, she’s still we’re helping her take care of her cattle and stuff, so it’s still a
00:36:28.440 –> 00:36:30.360
functioning farm. She has income.
00:36:30.360 –> 00:36:37.960
OK, so what she does, she needs to have an evaluation no later than 60 days after the
00:36:37.960 –> 00:36:39.160
person passed away.
00:36:39.160 –> 00:36:44.120
I mean, at least the values, because then she can use that as her basis of what she
00:36:44.120 –> 00:36:45.120
inherited at.
00:36:45.120 –> 00:36:48.040
And it does need to be from an outside party.
00:36:48.040 –> 00:36:53.240
I mean, something like this, in my opinion, it needs to be either an appraisal or auction
00:36:53.240 –> 00:36:58.160
company, someone that can come in, put the date, you know, the listing of the valuation,
00:36:58.160 –> 00:37:01.720
the fair market value, you know, all of that needs to be listed.
00:37:01.720 –> 00:37:06.760
And there’s a lot of little things that she has, you know, I mean, and big things.
00:37:06.760 –> 00:37:08.600
Hay barn, even cows.
00:37:08.600 –> 00:37:12.320
I mean, you know, depending on the market, you know, those those prices can go up and
00:37:12.320 –> 00:37:13.840
down quite a bit.
00:37:13.840 –> 00:37:20.840
So if she’s going to keep it or even if she decides later to sell it, she needs that
00:37:20.840 –> 00:37:25.080
basis. Otherwise, she inherited at zero if she doesn’t do this.
00:37:25.080 –> 00:37:31.320
So she needs to take that time, either get somebody from the area that knows how to,
00:37:31.320 –> 00:37:36.240
you know, maybe Google is my best answer to see if you can get an appraisal for farming
00:37:36.240 –> 00:37:40.320
equipment or existing farms, you know, because you’re not looking at a house appraisal,
00:37:40.320 –> 00:37:42.480
really. You’re looking more at a farming appraisal.
00:37:42.480 –> 00:37:46.720
And, you know, there is the thought of maybe calling in.
00:37:46.720 –> 00:37:48.360
They may give it to you. And I don’t know.
00:37:48.360 –> 00:37:51.920
But there’s a lot of when I go to auctions and things, many of them have a lot of
00:37:51.920 –> 00:37:53.920
farming equipment and different things like that.
00:37:53.920 –> 00:37:55.800
So they may be able to help with that as well.
00:37:55.800 –> 00:37:59.600
Well, our father also passed away last year.
00:37:59.600 –> 00:38:02.960
Now, we both inherited some.
00:38:02.960 –> 00:38:07.600
She had a rental house and a farm on it from our father.
00:38:07.600 –> 00:38:15.600
And then I’ve got equipment and cattle and a couple of hay barns on property that he
00:38:15.600 –> 00:38:21.680
left for me. Is that I need to set that up for a deduction?
00:38:21.680 –> 00:38:25.920
You need all of that. And they need to go back to the within 60 days of the date of the
00:38:25.920 –> 00:38:31.520
person passing away and then using that as their date to pull it up in their databases to
00:38:31.520 –> 00:38:36.520
get appraisal for how many heifers, how many cows, if it’s dairy cows, babies, whatever,
00:38:36.520 –> 00:38:42.600
along with barns and equipment, you know, and the land, because all of that has a basis.
00:38:42.600 –> 00:38:46.560
And without it, you know, you what do you have?
00:38:46.560 –> 00:38:50.360
And then eventually you’re either selling it or even if your children inherit, there
00:38:50.360 –> 00:38:51.880
still needs to be an original basis.
00:38:52.640 –> 00:38:54.440
OK, I just want to share.
00:38:54.440 –> 00:38:59.240
I know I’ve bought property with barns and buildings and stuff.
00:38:59.240 –> 00:39:05.400
And I know if you buy it, you can set it up to depreciate it because you have an expense
00:39:05.400 –> 00:39:08.040
on it. But I didn’t know about inheritance.
00:39:08.040 –> 00:39:12.040
Yep. Same thing. You actually have a value because you get a step up in basis.
00:39:12.040 –> 00:39:16.720
So whatever that property, everything included was worth, part of that will be
00:39:16.720 –> 00:39:18.240
depreciated as a working farm.
00:39:18.240 –> 00:39:21.760
OK, OK, I appreciate it.
00:39:22.160 –> 00:39:23.440
No problem, buddy. Thanks.
00:39:23.440 –> 00:39:26.040
All right. Let’s hit Bruce really quick at White House.
00:39:26.040 –> 00:39:27.840
Hey, Bruce, thanks for holding.
00:39:27.840 –> 00:39:33.840
Hello, I got a granddaughter, 31 years old, last year.
00:39:33.840 –> 00:39:39.720
Oops, looks like we lost him really quick.
00:39:39.720 –> 00:39:43.840
I don’t know what happened, but Bruce, if you can call back in the next minute or two,
00:39:43.840 –> 00:39:45.600
I will try to get you back on.
00:39:45.600 –> 00:39:50.160
But it sounds like he has granddaughters and he wants to know at 31 if he can claim
00:39:50.160 –> 00:39:54.400
them. And if you’re listening, Bruce, I’m going to answer that particular question just
00:39:54.400 –> 00:39:55.400
to see if it helps.
00:39:55.400 –> 00:39:59.560
OK, so first, are they really a dependent?
00:39:59.560 –> 00:40:02.160
Are they making less than five or six thousand dollars a year?
00:40:02.160 –> 00:40:07.360
If not, if they’re actually 31 and not working, not too sure.
00:40:07.360 –> 00:40:10.200
Maybe there’s great grandchildren they’re taking care of.
00:40:10.200 –> 00:40:15.000
But if they’re living in your house, you’re providing more than 50 percent of their care
00:40:15.000 –> 00:40:18.680
and they’re not working to make any money on their own, then you can claim them.
00:40:18.680 –> 00:40:23.120
But if they are making five, six, seven thousand dollars, then they are theoretically their
00:40:23.120 –> 00:40:26.240
own person. I don’t know how they would live off that dollar amount.
00:40:26.240 –> 00:40:29.760
That’s not the point. The IRS says it’s time for them to be on their own.
00:40:29.760 –> 00:40:31.520
And therefore you would not.
00:40:31.520 –> 00:40:35.440
You would get a credit of five hundred dollars.
00:40:35.440 –> 00:40:40.640
So the the adult credit or the dependent credit is five hundred dollars.
00:40:40.640 –> 00:40:44.680
That’s what you would be receiving on on those children or those people.
00:40:44.680 –> 00:40:48.520
And you have to I think you have to have earned income because if it’s if you’re living
00:40:48.520 –> 00:40:53.240
solely off Social Security, I’m pretty sure it won’t kick in because it’s not a
00:40:53.240 –> 00:40:55.280
refundable or fully refundable credit.
00:40:55.280 –> 00:40:58.200
So I would do taxes both directions.
00:40:58.200 –> 00:41:02.920
But if your granddaughter is living with you and she’s 31 years old, maybe she’s going
00:41:02.920 –> 00:41:07.240
through a divorce or something, then they have to live with you six months in one day.
00:41:07.240 –> 00:41:10.040
So they would have had to move in last June.
00:41:10.040 –> 00:41:14.480
And then you need to give them more than 50 percent of their care, meaning that they
00:41:14.480 –> 00:41:17.600
didn’t bring any money into the household to help take care of themselves.
00:41:18.560 –> 00:41:19.960
If that’s the case, you can’t claim them.
00:41:19.960 –> 00:41:24.520
But 31 would seem like they’re a little bit older, but they may not have been able to
00:41:24.520 –> 00:41:28.280
work. And if that’s the case, then and they did live with you for more than six months
00:41:28.280 –> 00:41:31.960
in a day, then they would qualify as a dependent of yours most likely.
00:41:31.960 –> 00:41:34.560
So hopefully I didn’t see you back.
00:41:34.560 –> 00:41:37.040
And I’m sorry, Bruce. Sometimes that happens.
00:41:37.040 –> 00:41:39.800
But hopefully that answers your question.
00:41:39.800 –> 00:41:45.680
If not, you can always contact my office on Monday morning at 615-367-081.
00:41:46.080 –> 00:41:51.800
That’s the direct number 615-367-0819.
00:41:51.800 –> 00:41:55.800
And I can answer your question directly to you off the radio.
00:41:55.800 –> 00:41:58.560
Not everybody likes to be on the radio.
00:41:58.560 –> 00:42:03.360
And, you know, sometimes those questions can be difficult for what you have.
00:42:03.360 –> 00:42:07.560
So another caveat back to Rick, who has all the farming.
00:42:07.560 –> 00:42:14.560
I did look up in the IRS does require a fair market value based on the IRS ruling.
00:42:15.560 –> 00:42:20.240
Or regs, I guess you’d say under 26, which basically says it has to have the market value,
00:42:20.240 –> 00:42:24.280
any changing of hands or anything that’s happened, selling, etc., etc.
00:42:24.280 –> 00:42:30.560
So you I think if you inherited all this, you may have the attorney that handled the
00:42:30.560 –> 00:42:36.840
estate. If there was an attorney, they may have already done some appraisals or listings
00:42:36.840 –> 00:42:39.440
to do it just to make sure the estate was under.
00:42:39.440 –> 00:42:44.400
But right now, with the estates being over what, 11, 12 million, most people don’t have
00:42:44.400 –> 00:42:49.480
to worry about those appraisals as they were, or if they bring them back down to the
00:42:49.480 –> 00:42:50.960
one million dollar mark.
00:42:50.960 –> 00:42:54.720
That will definitely create a whole different conversation in our lives.
00:42:54.720 –> 00:42:57.880
All right. So let’s cover what we need to know.
00:42:57.880 –> 00:43:02.080
If you’re a business owner, you need to start thinking about getting a few things filed
00:43:02.080 –> 00:43:04.440
out of the way because you know how crazy it’s going to get.
00:43:04.440 –> 00:43:07.280
So doing business licenses, annual reports.
00:43:07.280 –> 00:43:09.000
Don’t forget those annual reports.
00:43:09.000 –> 00:43:12.160
It’s so easy to do, but it’s an easy thing to do.
00:43:12.160 –> 00:43:15.560
Just go to Tennessee Secretary of State right on the front page.
00:43:15.560 –> 00:43:17.280
This is file annual report.
00:43:17.280 –> 00:43:21.240
Click it. Put in your number or look up your name of your business.
00:43:21.240 –> 00:43:22.360
File the annual report.
00:43:22.360 –> 00:43:26.920
Make sure you put in all members of it so that it’s all up to date and properly
00:43:26.920 –> 00:43:30.800
recognized. And then you can go from there and do what you need to do.
00:43:30.800 –> 00:43:35.640
Then the next thing, obviously, is start getting your paperwork together.
00:43:35.640 –> 00:43:38.880
I already know Social Security has sent out.
00:43:38.920 –> 00:43:43.800
Maybe not all of you have received it, but I know for a fact that Social Security has sent out
00:43:43.800 –> 00:43:48.280
their statements. So some if you haven’t received it should be coming out very soon.
00:43:48.280 –> 00:43:54.400
W-2s. And if you worked at multiple locations, take a few seconds, put an envelope, a
00:43:54.400 –> 00:43:58.960
manila envelope together, write down the places you work to make sure you have all of the
00:43:58.960 –> 00:44:02.720
W-2s before you go out and try to file your taxes.
00:44:02.720 –> 00:44:05.720
Because what we’re going to do, we’re going to get a letter back that says, hey, we’ve
00:44:05.720 –> 00:44:09.880
changed your tax return because you didn’t report something.
00:44:09.880 –> 00:44:14.240
And that usually happens when someone has either worked a job that they forgot was the
00:44:14.240 –> 00:44:18.800
first part of the year, whatever, and they don’t remember it or that they actually sold
00:44:18.800 –> 00:44:20.560
stocks. That’s a huge one.
00:44:20.560 –> 00:44:26.280
A lot of times people think, well, I paid on taxes already, took money out of a 401k or an
00:44:26.280 –> 00:44:30.360
IRA. And since they withheld taxes, a lot of times people think they don’t have to report
00:44:30.360 –> 00:44:32.600
those taxes. Not the case.
00:44:32.960 –> 00:44:36.720
Everything eventually almost, I mean, from my world, I mean, I’m sure there’s not
00:44:36.720 –> 00:44:41.480
everything, but anything that’s a taxable source, even if they withheld taxes, needs to
00:44:41.480 –> 00:44:47.400
be. 1099Cs where they’ve actually done collections and maybe you negotiate with a
00:44:47.400 –> 00:44:48.440
collection company.
00:44:48.440 –> 00:44:52.320
Have one on my table right now where they didn’t realize it was going to become income.
00:44:52.320 –> 00:44:56.040
They saw the form. They just didn’t realize that that was a tax form that they need to
00:44:56.040 –> 00:44:58.240
file. It is it is taxable.
00:44:58.240 –> 00:45:02.000
So sometimes when you make these deals and it sounds like so great, you know what?
00:45:02.320 –> 00:45:08.240
I owed fifteen thousand dollars to the Visa company and negotiated down to a thousand
00:45:08.240 –> 00:45:11.360
dollars. So I save fourteen thousand dollars.
00:45:11.360 –> 00:45:12.760
And then guess what? Wham!
00:45:12.760 –> 00:45:16.800
At the end of the year, you’ve got a 1099 for fourteen thousand dollars.
00:45:16.800 –> 00:45:21.560
Now that puts you in an income situation instead of only a credit card company, which
00:45:21.560 –> 00:45:26.600
really has a lot harder time collecting as far as I’m concerned than the IRS.
00:45:26.600 –> 00:45:27.880
It is much easier.
00:45:27.880 –> 00:45:33.080
So be smart. Don’t just make a deal with somebody just to to think that you’re saving
00:45:33.080 –> 00:45:36.320
money. Make sure you think about how much this is going to cost me in tax dollars.
00:45:36.320 –> 00:45:37.880
And do I have that to pay?
00:45:37.880 –> 00:45:40.920
Because do you really want the IRS as a loan officer?
00:45:40.920 –> 00:45:42.800
I can guarantee you the answer is no.
00:45:42.800 –> 00:45:44.920
All right, guys, we’re winding up the show.
00:45:44.920 –> 00:45:57.600
So if you want to reach my office, 615-367-0819, 615-367-0819, direct
00:45:57.600 –> 00:45:58.800
number to my office.
00:45:58.800 –> 00:46:03.320
You can always email Friday at DR Friday dot com.
00:46:03.320 –> 00:46:05.200
That’s F-R-I-D-A-Y.
00:46:05.200 –> 00:46:07.840
That is my first name for all of you that wonder about Dr.
00:46:07.840 –> 00:46:11.920
Friday. So it’s DR Friday at DR Friday dot com.
00:46:11.920 –> 00:46:13.920
Or you can just check us on the web.
00:46:13.920 –> 00:46:17.640
DR Friday dot com is the website that you can go in.
00:46:17.640 –> 00:46:21.480
And then, of course, if you’re an existing client, hopefully you’ve went in.
00:46:21.480 –> 00:46:23.080
But if not, you’re just remembering.
00:46:23.080 –> 00:46:25.280
Set your tax appointment up now.
00:46:25.280 –> 00:46:27.040
Go ahead. The calendar’s in there.
00:46:27.320 –> 00:46:29.080
Go ahead and set up your tax appointment.
00:46:29.080 –> 00:46:32.680
So that way we can make sure that you’re on the books for me to do.
00:46:32.680 –> 00:46:35.800
Other than that, guys, I really hope you guys are in.
00:46:35.800 –> 00:46:36.680
It’s cold outside.
00:46:36.680 –> 00:46:37.800
So stay inside.
00:46:37.800 –> 00:46:39.800
Enjoy. Get your paperwork together.
00:46:39.800 –> 00:46:41.320
Organize everything.
00:46:41.320 –> 00:46:45.520
And then that way, when the busy season, the forms start coming in, it doesn’t
00:46:45.520 –> 00:46:46.360
get so crazy.
00:46:46.360 –> 00:46:49.480
As we always say in Australia, cop you later.
00:46:49.480 –> 00:46:51.900
(rock music)