Welcome to the Dr. Friday Radio Show is here! In this episode, Dr. Friday takes on the latest tax updates, answers callers questions, and talks over the following topics:
- Dr. Friday’s Tax Tips For the New Year
- Start Preparing for Tax Season
- Buying A Vehicle For Small Business
- The Stimulus Check Taxes
- The Advanced Child Credit
- Charitable Contributions for Married and Single People
- Cryptocurrency and Taxes
- RMD’s Are Back for 2021
- Getting Back on Track With the IRS
and much more!
Transcript
Announcer 0:01 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 0:30 All right. I’m Dr. Friday, and I am here live in-studio on this snowy Saturday. And if you have some tax questions, we all know it is tax time it is time where the forms are going to start coming in. Questions are so going to start and we’re going to have to get going and start moving in the direction we need to do that.
Dr. Friday 0:48 So if you’ve got questions on your 2021 taxes, or maybe you’re just sitting there thinking, “Okay, what do I need to get together? How am I going to get this all together? “You need to give us a call you can 615-737-9986 is the number right here live in the studio. And I know many of you guys are sitting at home listening to the show because there’s not a lot of things happening outside with the snow went to take my trash out today. And you know what they told me the garbage wasn’t coming out today.
Dr. Friday 1:21 So just saying, you know, a lot of people don’t know what to do on these snowy days. But we all do. We lead some to taxes, and we start thinking about our taxes. And we try to figure out what do we need as far as forms. Remember, we had a stimulus check, as well as the advanced child tax credits, both of those, are going to be coming in this year.
Dr. Friday 1:42 And it’s going to be coming as a letter and you’re going to need to have that even if you’re doing you’re doing your own taxes. Or if you’re having someone else do those taxes. There’s a letter that the IRS sent out and they’re going to tell you how much money you received. Because everyone’s going to be asking that question. So even if you’ve never received any the IRS is still asking on the tax form.
Dr. Friday 2:08 You know, did you receive it what letter you know how much because sometimes parents share children, sometimes you’re the grandparents and maybe last year you received it because you are grandparent this year, you didn’t. So again, you’re going to be receiving a letter and 6419 is the letter on it. And it’s going to be telling people how much you received as an advanced tax credit. On the child credit.
Dr. Friday 2:33 You also received a stimulus check for $1,400 per person in the household. That letter also is going to be coming and telling you whether you received it or not. If you didn’t receive it, you need that letter just as well because it’s gonna say you did not receive it.
Dr. Friday 2:46 Alright, let’s go to the phones. We’ve got Dan from Hendersonville. Let’s see what Dan can do for us. Hey, Dan.
Caller 2:51 Hi, Dr. Friday.
Dr. Friday 2:53 What can I do for you on this snowy Saturday?
Caller 2:57 I sold some property rental property this year to a relative. And I gifted quite a bit of the equity. So my question now is do I pay capital gains on the gross amount of property, or the net minus the gifting amount?
Dr. Friday 3:18 No. What you’re going to do, It’s going to be, let’s just say you sold it for example $200,000. And you purchased it years ago, for $100,000. The capital gains on that would be $100,000, you chose to gift some of it, you have to pay the taxes first. So that would be the scenario and then also you would have the recapture of depreciation that would have to also come if you give it to a nonprofit, that’s a different story. But by gifting it to a family member, you basically took on the tax liability before you gave them the property.
Caller 3:55 Okay. Wasn’t sure how to do that this year. So I thank you.
Dr. Friday 3:59 No worries, mate. Good job. Thanks. All right. If you want to join the show, you can 615-737-9986 is the number here live in-studio again, this year, we have the economic impact that you’re going to be receiving a letter that will start going out and it’s the third impact. It will say EIP, three on it. And the IRS is issuing a 6475 on that one and then the advanced Child Tax Payment letter that is a 6419.
Dr. Friday 4:37 These are very important, especially for some of us last year. I know I had about four or five people in fact that just had one just last week that got a change letter because the IRS said that they received more money than what we had reported. Many of my clients didn’t receive the letter or could not find the letter and So we tried to go online, we try to find the details.
Dr. Friday 5:03 But when it comes down to this year, I’m going, to be honest in my office, we’re going to mandate the lying get that letter a 6419, and the 6475. Because we need to know how much money the IRS is saying that you receive if you don’t receive these letters. Then the IRS says, hey, you need to go online, you need to go into the portal, the letter contains important information, you can advance payments can be checked on the amount you received by going to the CTC update portal available on the IRS website.
Dr. Friday 5:37 This is something again, you’re going to want to get in there. And it’s all Amin for the child tax credit, they have a separate portal. CTC, which stands for Child Tax Credit update portal, you can get an account you sign in, and we’ll tell you how much you can print that screen off. If you can’t find the letter. As far as your stimulus check, if you didn’t receive the letter, there is also an advanced tax credit.
Dr. Friday 6:02 But that one, you’re going to have to they have to call because the IRS has not got doesn’t have a portal right now online for that one. But you’re probably going to want to call on that one to make sure because, again, many people one of the biggest things that delayed refunds last year was the IRS checking and matching rebate credits is what they call them, we call them stimulus checks, the same exact term or different terms, same exact thing.
Dr. Friday 6:29 And so you need to make sure again, this time, it should be coming in the mail, they said they are mailing them out. Now, so in late January, it’s a little early right now. But so just start looking, if you moved you relocated, you’re going to go ahead and figure you’re going to have to get on the phone.
Dr. Friday 6:48 So just as an interesting thing, you’re going to want to do that before you either prepare your own taxes or you go see your tax person. All right, Annie. Let’s see if we can get Annie online. Thank you. Hey, Annie, what’s happening?
Caller 7:02 Hi. I’m confused as to how to report or what can do about a house a rental house that was destroyed in the tornado. It’s not quite finished but will be soon. But my insurance did not pay what the full value would be. I didn’t have that clause in my policy. So it didn’t nearly cover the money. And I’ve had to put that money in to build the house. So I’m wondering, are there any losses that can be used?
Dr. Friday 7:36 Or this was during one of the federal turnings we had here, right? Where were we had it federally claimed as a loss. It wasn’t just I mean, it’s a tornado. I’m assuming we had. So in answer to your question, there is a casualty disaster and theft loss on your tax return the only clause that’s different than what we had for the last 20 years before 2017 was if you had any loss, does it make a difference? It was federal or not, you did now you have to have it federally designed.
Dr. Friday 8:05 So you would have a casualty loss. So what we’d have to do is the difference between what it was worth before you lost it and what it was worth after. So let’s just say it was worth 300,000. But the insurance claim back and said well, it’s only worth 225, based on the way this claim. So you’ve got a $75,000 loss that you’d be able to claim in that example. I think there’s a $500 exclusion you have to write off but give or take a few dollars, that’s what you would have to do. You would have turned it all into the insurance company, then they would have denied the difference, correct?
Caller 8:37 Well, they’re actually paying for most of up to the policy. But at the bottom, I guess what I’m saying is that most insurance policies have a clause that you can recoup your expenses up to the value. But this one I didn’t. I didn’t have this in my policy.
Dr. Friday 9:00 So let’s just say the house that you had was worth at the time of the tornado $300,000. That’s not the replacement value to rebuild it, it’s what it was worth at the time before the tornado hit it. And then because building costs have gone up a lot compared to that, you then had an insurance claim that won’t pay all 300, the difference that they won’t pay is there. But if the rebuild cost is 350 to get the same house that you would have had for 300. That’s not going to be a casualty loss. Because the insurance is only the difference of what it was worth and what it costs and what it was worth before and after. Not to replace it.
Caller 9:39 I guess what the problem is, I’ve added square footage as well.
Dr. Friday 9:44 That’s a whole different conversation. You’re making a bigger and better investment possibly than what was on the books originally. So that is an investment that you’re willing to make. So when you turn around and sell hopefully you will recapture that money at that time.
Dr. Friday 10:01 That’s not part of a tornado hitting it, you went from a three-bedroom to a four-bedroom or whatever. I’m just saying, you know. That was an additional investment
Caller 10:12 It gets complicated. Okay.
Dr. Friday 10:15 Yeah, if you have a tax person you might be I mean, this isn’t an easy one over the radio to get the total details, but it sounds like you might not have as much as I might have thought originally, but you might want to get all of those documentations together. And then that way, you could go through the casualty loss questionnaire, you know, I’m just saying and see if anything applies.
Dr. Friday 10:35 Because I don’t want you to leave something off thinking that Dr. Friday says it doesn’t sound like it’s a tax deduction. I want you to make sure you have claimed what you are entitled to claim. Does that make sense?
Dr. Friday 10:45 Yeah, that does. Okay. All right.
Dr. Friday 10:47 All right, girl. Thanks. Bye. All right, let’s hit Buck. Hey, Buck. Buck you there? Going once, going twice. Alright, let’s go to Alan. Hey, Alan, what can I do for you?
Caller 11:12 Yeah, question. I was listening to the radio today. And they said that part of the infrastructure bill that went through a couple months ago was that there is something now with regard to the IRS overseeing any kind of $600 transactions. I thought that that was in the infrastructure bill, that the bill back better bill that has stalled. My question is, number one, is that correct? Is that is that book? Is that law now on the books? And two? If it is on the books, what does that look like in the real world?
Dr. Friday 11:46 Well, to my number, from everything I had read that had not actually passed both the House and the Senate. Unless Biden’s financial requirement report leading to you know, the thing. That is not there’s nothing on the White House page, Shane, that it actually passed. It is still me I’m looking at right now. It’s still part of the House bill back better plan, the $600 IRS reporting. So looking right, this second don’t see anything. That’s actually a lot. So I’m thinking that it may have passed one place, but not the other. So it’s not a law yet.
Caller 12:22 Okay.
Dr. Friday 12:23 So I mean, they did pass something that I’m reading here, it’s something leave and pass. But that was still not passed into the law. It’s not there yet. So what it looks like as far as I’m concerned, and that conversation, is the IRS overstepping? Can you imagine every $600 transaction being reported? Can you imagine a bank taking that on? What kind of strain would that put on any kind of financial institution? I mean, I don’t know about you, but I run a business, and I’m pretty sure I put a lot more than $600 a day into that bank account. So every day, they’re gonna have to turn around and turn that somehow, it doesn’t make any sense.
Caller 12:59 So in the event that it does go through, and okay, and I’m like you. I write checks for car payments and stuff like that they’re over $600. What does that mean? To me personally, what am I going to have to do like after, you know, am I gonna get audited?
Dr. Friday 13:13 So they’re looking at only deposits. So they’re looking, what they’re looking for? Is anyone that is working, and you’re receiving cash or checks that are not reporting all their income? That’s the snooping part, right? I mean, they’re trying to find IRS people or people that are avoiding the IRS. So they’re looking at only deposits in that scenario, they’re not looking at us writing checks, they don’t care about that. They just want to see what where that cheque ends up, and it’s deposited somewhere. And that’s where the government is looking at all the deposits. But okay, get a paycheck, I get, you know, yeah,
Caller 13:45 I have a salary job. My paycheck is more than $600 a month. I don’t know what they’re gonna do with that. But I also have been outside consulting a couple of outside consulting gigs. And when I get checks, they’re in verbally more than $600. So I get one of those checks I deposited. What am I going to have to do? What’s going to be required of me? What are they going to want?
Dr. Friday 14:02 So I’m assuming what they’re going to be doing is looking at somehow matching, and just so people that are listening, the IRS already has access to all of our bank accounts. I’ve handled audits for the last 20 years. And anytime we don’t provide bank statements, they can tell us what bank you have opened with your security. So they already know our bank accounts.
Dr. Friday 14:20 But I think what they’re going to be doing is matching total deposits, theoretically, I’m not sure exactly how they’re going to do it total deposits to what we’re reporting on our banks on our tax returns. So in your case, as long as you’ve got a Schedule C for your consulting, and you’ve got your W2, everything would match and there would be no consents. It’s for the guy that puts I mean, what happens if you get a $10,000 gift from your dad or I’ve caught clients right that their parents give them gifts every year and so that money goes to the bank and that’s been reported is not going to show up on the tax return.
Dr. Friday 14:51 What if you sell a few things at a garage sale and that’s going to report it’s not taxable income? How is the IRS going to know what’s been deposited is in Income and what is being transferred from other people or other things you do that are non-taxable? I don’t know.
Caller 15:05 Okay, well, in the event that somebody was to give me $5,000, I just took their check deposited into, my account, my bank, my banking account, what does it look like for me? Am I gonna have to provide?
Dr. Friday 15:18 I don’t know. Because right now, that is not a taxable situation, your, your parents, or your brother, anyone can gift you up to $15,000 a year, right. And that can go into your bank, it doesn’t report anywhere, and they don’t report anywhere. So I don’t know how the IRS and what the threshold of $600 is.
Dr. Friday 15:35 I mean, I can understand if it was $60,000. Or, well, we already know it’s 10,000 if it’s cash, but they’re not even saying cash only. They’re saying every deposit that from what I read on the last one, if it was the cash of $600 or more, then they’re probably trying to look at money laundering per se, you and I don’t probably put a ton of cash in our bank account, we get a check, we deposit it, you know, it’s trackable from one depositor to another deposit.
Dr. Friday 16:01 So, I mean, at this point, my suggestion is to do what you’ve always done to try to make yourself audit-proof, which basically means everything that goes through your bank, you documents, you either put gift, or you put sell of the local family car, whatever it happened, put the money in the bank, other than your consulting, which is on your Schedule C and the W2 income that you have, you know, so if you’ve got an I mean, another one, a teenager that does a little babysitting on the side, is that generating, you know, $300 $400 in a year, maybe $600 is a one-time transaction? You know, it’s so vague at the moment, I don’t have a great answer for you, other than making sure that whenever you put a deposit in there nowadays, you can label those on your tax, you know, within the software, whatever label if it’s something other than something you’re going to report so you can go back to yours when they’re auditing you and report why it wasn’t on your tax return in the first place.
Caller 16:57 Okay, so on the scenario that my son’s college, I sent a check for $1,000 He deposited into his checking account, you don’t know what that’s gonna mean, in terms of how that’s gonna play out with the IRS is over the $600. Is that correct?
Dr. Friday 17:11 That’s right. I mean, that’s, you know, that’s what it says it says report payments of goods or services that exceeded 600 in the given year, but how is the IRS going to know that was for goods or services or a dad trying to give his kid enough money to make it to the next semester? I don’t know. I mean, it’s a check. I mean, it doesn’t make any sense.
Dr. Friday 17:28 So that’s where we’re supposed to be as business owners. I mean, if you have a subcontractor working for you, we 1099 I’m right. I mean, it’s, the process goes that direction only what you last thing you want to do is have to go hand your kid $1,000 Just because you’re afraid that it’s going to turn around and come through his bank somehow, and the child now has a safe under his bed with cash. I mean, that’s ridiculous. And unsafe, may I point out. So I don’t know, yes, your thoughts are the same as many of ours. And at this moment, we haven’t gotten any kind of guidance on what their thought is, other than they’re saying that it’s supposed to be for goods and services. But that’s too vague to understand what that means. And how do you know its goods or services? Or that I’m paying for, you know, anything? It doesn’t make any sense.
Caller 18:12 Since we’re all at the same level of confusion, I find an element of comfort in that.
Dr. Friday 18:16 Okay, good. Well, as soon as you figure out anything else, please don’t hesitate to call me personally, because I would love to know the answers on some of this as well, because I have a lot of clients that are also scratching their head.
Caller 18:27 Yes, because tax law is something that I spend all of my waking hours working over. Never.
Dr. Friday 18:34 All right, I do spend a lot of time but you know, when these kinds of things come out. It’s just absolutely ridiculous. And I mean, we have enough trouble with the tax law that’s actually on the books that make sense trying to explain it. So appreciate your time. Thank you. No worries, mate. Thanks. Alright, let’s hit Alan real quick. Then we’ll take a break. Oh, Brian. I mean, Brian, sorry. Hey, Brian.
Caller 18:57 Yeah, hello, how are you doing?
Dr. Friday 18:59 I’m good.
Caller 18:59 I’ve got a question about a small business buying a vehicle for a small business. I think it’s seven things. So you said you can take 100% off, would you take 100% off or less percentage?
Dr. Friday 19:12 Well, if it’s a true business vehicle, section 179 could qualify SP used 100% for the business. That’s the criteria and it has to be over 6000 pounds. It has to be an F 151 253 50 Whatever. It can’t be a Ford Fusion, you know, I mean, so it has to be a work vehicle and it has to be over 6000 pounds towing. But I would take 100 I would take the whole thing if I could.
Caller 19:40 Okay, thanks a lot.
Dr. Friday 19:41 No worries. Thanks. Alright, let’s take our first break. If you want to join the show you can 615-737-9986.
Dr. Friday 19:54 All right, we are back here live in-studio talking about my favorite subject. And it is my favorite time of the year. You know, kind of like snowmen, like when it’s snowing, tax people like when it’s tax season. Anyways, if you want to join the show, you can 615-737-9986. Just start now right now guys just get yourself a folder and envelopes, whatever it is that you want to keep your papers in.
Dr. Friday 20:25 Because those papers are starting to come in there and you need to have all your 1099 or your W2. Don’t forget those two letters 6417 I’m sorry, 6419 6475 those the two for the advanced child as well as the impact letter and then you’ve got investments, right you get your 1099 Rs. I think I said that already 1099 miscellaneous tonight, and C’s, anything that has to do with a stock portfolio.
Dr. Friday 20:51 And let’s not forget our cryptocurrency is very important because you know, what is the question it’s been on the tax return the last couple of years and more and more conversation I have with more and more clients, more and more people are into cryptocurrency. Now you only have to report if you have sold cryptocurrency not buying and holding, just like any other stock, I don’t care if you’ve purchased IBM and you’re holding it.
Dr. Friday 21:14 But if you’ve purchased a version of crypto, that brought another type of crypto and exchange there, or whatever you may have done. Remember that is all a taxable situation. Don’t think the IRS doesn’t know we need to sleep at night, guys, I realize a lot of times that you’re sitting there thinking, “Well, what how are they going to know I did this? Or who’s going to know?” I don’t know the answer. But sometimes you know what, when people walk in my office, the IRS has found out therefore they must know some of this right? Someone else gets audited.
Dr. Friday 21:45 And next thing you know you get turned in and then that’s how I’ve had more than one case come in my office for an audit they got audited because someone else got audited. And then they found out that this person had not 1099 you and you didn’t report the income. So reporting the income, especially if it goes through your bank account only makes sense, especially as we just had that conversation with Alan earlier, we don’t know what the IRS is trying to do match or figure out.
Dr. Friday 22:11 But if you’re filing all the income going through your bank, it’s something you’re not going to have to worry about. Because you’ve already done everything that you were supposed to do. Or you know, now I have one client that thinks that he’s not being turned in because he hasn’t cashed the checks at his own bank account. Don’t believe that I think if you’ve got income coming in, you need to report all income, it just makes life so much simpler. Alright, since I had a few crazy thoughts the first time I show you know, I’m gonna go ahead and take a second break here so I can get back onto my own little time clock I like to have. So if you guys want to join the show, you can 615-737-9986 this is the Dr. Friday show and we’re gonna be right back.
Dr. Friday 23:00 All right, we are back live in the studio. Again, you can join us here if you’ve got questions, or if you’re starting to look through your tax documents, or again, probably one of the biggest things we’ve had this year, maybe even last year a little bit, but definitely in 2021 a lot of real estate sales. Some people, you know, doing 1031 Some people selling your primary residence. Unfortunately, when we lose a loved one, sometimes we inherit less fortunate but we inherit properties.
Dr. Friday 23:29 So if you’ve got questions, you’re not sure how that’s gonna affect your taxes, you can join us here at 615-737-9986 For all of you that may just be tuning in for the first time. My name is Dr. Friday. I’m an enrolled agent licensed by the Internal Revenue Service to do taxes and representation. I’ve been doing this radio show now for about 12 years. And so if you haven’t filed taxes, many times people’s life happen. And you get behind on taxes or you’re receiving love letters from the IRS and they’re telling you nasty things and you’re like I don’t know how to deal with it.
Dr. Friday 24:07 And I will be the first to tell you that we’ve had since March of 2020, especially. So over almost two years now we’ve had a very difficult time really getting some resolution on many cases, it’s taking a lot longer sometimes it’s taking us two or three tries to get it and it’s not just the IRS, it’s just the way you know, everything got behind tax returns weren’t processed on time, things were happening in different scenarios.
Dr. Friday 24:35 So just saying it is something that we need to just, you know, deal with, make sure it’s happening and, you know, don’t ignore the letters that are so important in these kinds of situations. I’ll be honest with you, if you ignore the lettuce, then all you’re going to do is you know you’re going to make yourself or get yourself in trouble because you know, then the IRS is going to find other ways to communicate with you And trust me, those are never the way you want them to be. So if you’ve got questions or you want to have some help with some of those, all you have to do is join the show 615-737-9986.
Dr. Friday 25:20 We are taking your calls, talking about my favorite subject again, we’re getting ready to do 2021 taxes. Last year, we had the American rescue plan act, are they an RPA? 2021? Obviously 2020s non-employment compensation, of course, they waive the pit portion of it in 2021. That is not on the books. Probably one of the biggest things that we had was the advanced child tax credit.
Dr. Friday 25:46 That happened in 2021. That was difficult, you know, you know, just another thing we’re going to be dealing with. So if you have questions, if you need help, obviously, this is the show or if it’s a little bit too hard to actually do it on the radio, you can always email or call us. Those numbers will be put out there for you in a minute. All right, let’s see if Donnie is on the line. Donnie in Murfreesboro. Hey, Donny.
Caller 26:09 Hello. Oh, going pretty good.
Dr. Friday 26:15 Okay, can I help?
Caller 26:17 Yes, yes, you can. I hope my wife passed away this year. We’ve been married for over 50 years. And I just wondered about settling in our state. I just wondered about how can I claim or all my income taxes passed away? Less than six months? A year? What?
Dr. Friday 26:41 Yes, sir, you are considered married for the year, if they passed away on January 1, you would be considered married for the year that person passed away. So in 2021, you would file your taxes as you always filed them. Um, you know, as far as married, and then 2022, you would be mostly single at that point, but 2021 will not change.
Caller 27:04 Okay. Well, thank you so much. I was concerned about that and know how to, you know, go about it.
Dr. Friday 27:11 Yes, sir. Well, I can be of any other help. Let me know. Sorry for your loss.
Caller 27:15 Sure. Thank you.
Dr. Friday 27:19 All right. So if you’ve got questions, you can certainly call in. If you don’t want to use your real name, that’s okay. I don’t care about the real names, guys, or fake names. It’s not a problem. Really just, you know, when you guys call in a lot of times, it helps other people that are listening, because you’re not the only person out there to having these particular issues or dealing with these particular situations, it just sometimes feels like you might be, so you just want to make sure that you have everything you need when you’re dealing with that, again, the phone number here in the studio 615-737-9986.
Dr. Friday 27:56 And the child advanced tax credits. I also wanted to point out that as of right now, they are not going to be giving a check come January, right. I mean, the advanced child credit only went through for the year 2021. That was part of the build-back better. They were trying to keep it out there. Personally speaking, I think it’s a good thing. I know, it’s great to have that extra money coming in. But we seem to have a lot of people that have either changed or are not able to work. And so I think maybe we’re giving a little too much security to individuals that maybe need to be out working. I don’t know, be of opinion on that. You can certainly join the show. Alright, Buck, I think you’re back online. Let’s see what I’ve got for you. Hey, Buck.
Caller 28:44 Yeah, I was both gonna check. She is like 67. She’s still working. I’ve got a little part-time job. And we got the stimulus check. Will we be taxed on that?
Dr. Friday 29:01 The stimulus checks are not taxable. No, sir. Now, obviously, your little job will have a W two hopefully, or 1099. And whatever that will be. And then, of course, you said she was on Social Security.
Caller 29:13 Yeah, yeah. Yeah, I get that retail my part-time job.
Dr. Friday 29:18 Yeah, the stimulus itself is not taxable. They will ask you on the tax return if you’ve received it or not, but that’s only to make sure that they’re counting for the money getting to the people not it doesn’t become taxable. Okay, thank you very much. Great, great question. Thanks, Buck.
Dr. Friday 29:33 All right. We are live here in the studio and if you want to join us at 615-737-9986 Let’s hit James in Hermitage. Hey, James, what’s happening? I am doing pretty well.
Caller 29:49 Good. I had some of my teeth done. I was in an accident that cracked all my teeth they were I had a molar pulled l and I had implants put in. I spent $48,000.
Dr. Friday 30:07 Now, was some of that reimbursed to you, James?
Caller 30:12 No, it’s never covered any other dental it only was enough to cover the medical.
Dr. Friday 30:19 Gotcha. Well, whatever is medically made out of pockets. And 48,000 would qualify you to itemize, most likely, unless your earned income is extremely high. Then you should be able to turn that in on your schedule A along with any charity, your property taxes, mortgage interest, anything else that might be usable.
Caller 30:41 Oh, that’s great. So what about home insurance? Is that something you can write off if you’re itemizing?
Dr. Friday 30:50 Not home insurance. No, just property taxes and mortgage and mortgage and mortgage insurance but not the home insurance? PMI?
Caller 30:59 I don’t have any of that anymore. Just yeah. But that’s great. So, okay, so I just need to schedule and itemize.
Dr. Friday 31:06 Yes. That will put a little bit more money in your pocket. Yes, sir.
Caller 31:12 Okay, thank you, everyone. Thanks, James. All right.
Dr. Friday 31:17 All right, let’s see here. We’ve got Frank. Hey, Frank,
Caller 31:23 Yes, Dr. Friday. I listened to you every week. And I always want to get in touch with you about different things. But are you at but anyway, my question to you is two questions? I have a lot. I have $80,000 in it. And I’m, I’m in my at MIT for four years, I would like to take out some 35,000. And I’d like to give it to my daughter who lives overseas to buy an apartment, how will I get the money over to her? And how much can I take out without paying taxes?
Dr. Friday 31:56 Okay, so you said you had a lot? Like a or did you say it was like, where’s the money sitting right now, Frank?
Caller 32:03 In a Roth.
Dr. Friday 32:04 Oh, in a Roth. Okay. So theoretically, a Roth grows tax-free. So and you’re already at the age, so you could take 35,000 out of your Roth for zero, okay? Not going to cause you a tax issue. So you could take it and I would actually talk to your banker, because then you could have it transferred electronically, to your daughter’s bank. Like I have people in Australia, you know, we can just move money electronically through there. I’m assuming she has a bank. So yes, and usually there’s a 15 $20 fee or something like that, but that’s the safest way because then they can make sure it’s routed to a legitimate location. You don’t want to transfer it, you know, or put a check in the mail.
Caller 32:48 Okay, so I was told that you have to take 15,000 I can take 15,000 My wife can take 15,000. But that’s not true. I can take it all.
Dr. Friday 32:58 You can take it all out. Yeah, you could take it all out, you can send your daughter 35 There’s a form called a 706. It’s a gift tax return, it’s not going to cost you $1. And well, I mean, maybe preparation if you have a tax person, but all it’s gonna basically do is take the first 15 off. That’s not reportable. Everything above that you put on this form, say I gave it to my daughter, it’s an advanced inheritance in essence, does it make a difference? You know, it’s really tracking right now we’ve got 11 million, so unless you send her $11 million, you don’t have to really worry about any tax just coming out of a Roth.
Caller 33:33 Oh, thank you. The other question I have. Let’s see his money now. I heard your comments about the $600. How would they go the effective common man?
Dr. Friday 33:51 Well, it’s gonna I think what Alan and I were talking about is that it’s going to affect everybody because $600 going in, in being deposited into anyone’s bank account is a small enough figure that a large number of people receive that money. My fear is, is that people will stop using bank accounts thinking that somehow they’re going to be audited because they deposit money that wasn’t necessarily from goods and services. You know, right now.
Dr. Friday 34:17 I can’t I just can’t see how that’s going to be reportable. I can’t see how the government’s going to be able to track what came in like you giving your daughter that money versus her earning it somehow through a job. I don’t know how they’re gonna know the difference. So let’s hope that we don’t even know, but I’ll keep you guys informed as I get closer and closer to understanding what the purpose behind that is. Okay.
Caller 34:40 Oh, good. That’s good. The other question I have is this, I have Pfizer, and I want to get some of this sell some of this stock, but I and I know I have to pay taxes on it. But I don’t know how much I paid for it when I bought it. And I bought it way back in 1980 86 or 84.
Dr. Friday 35:01 There is a way of going back and seeing if you’ve got a good brokerage house or a good tax person, they can go back and try to recreate to the best of your ability, the original purchase price versus what it’s worth today. And then like you say you will pay long-term capital gains on the gains of that.
Caller 35:17 Okay. All right. Dr. Friday, you are just wonderful. I mean, keep up the good work for the people.
Dr. Friday 35:23 Thank you, sir. I appreciate you very much. All right. Why don’t we take a quick break, and then we come back, we’ll get to Marsha and Carl and Roy. But this is the Dr. Friday show. And we’re gonna be right back after this break.
Dr. Friday 35:44 All righty, we are back live here in the studio and we’ve got Marshall, Roy, and Carl online. And it looks like Carl, you’ve waited for the longest. So let’s get Carl from Gallatin. Hey, Carl, what’s happening?
Caller 35:59 Okay, I’m 70 years old, my wife and I recently sold a piece of property in the Davidson County, Nashville area that we had lived in for close to 40 years. And we went in with our son in law and daughter who was retiring from the military, they were stationed in England, and we went in with them and bought a piece of property that had two dwellings on it out in the countryside, they sent us $150,000 to go in on the purchase.
Caller 36:27 We used some of the money that we got from the sale of the house in Nashville, and the rest of the money came from the $150,000 They are now listed on the deed, they’re not listed on the mortgage, I took out the mortgage, just in my own name, we paid two thirds down on the property and owed 1/3 on it. So the mortgage is around $200,000, the property was 600,000. They gave us $150,000. Well, that $150,000 shows up on us only his income.
Dr. Friday 37:03 No, no, that would have been an investment that they made. So that, you know, you might want to document because just so if something happens, God forbid or whatever, you have documentation and your children have it as well. Obviously
Caller 37:18 When they wired it from England, they stipulated that it was for the purchase of the real estate, when we received it, when we received that wire and put it in our credit union, the credit union documented that it was for the purchase of the real estate.
Dr. Friday 37:35 And you’ve got the real estate to show it. So all of that is all pecking order perfectly. So that’s not a problem at all, as far as that investment. So yes, that 150 is not going to be income to you in any sense of the word. It is you know, it’s no different than me going and sending my broker 150,000 To buy stock. I mean, in essence, it’s the exact same kind of transaction.
Caller 38:00 Okay, thank you very much.
Dr. Friday 38:01 No problem. Thanks, Carl. All right, let’s hit Marcia, in Manchester, the big town of Manchester. Hey, girl.
Caller 38:09 All right, my question. Can you hear me? Yes, ma’am. Okay, my question is, and I hope I don’t get upset about this. My daughter passed away this year, we live together and we own the house together. And it was in both our names. So that if even one of us that is automatically the go to the other one. My question is one, do I have to pay taxes on the insurance?
Dr. Friday 38:37 Well, I have some good news that if there’s such a thing that can ever be said about this kind of situation, life insurance 99.9 times is is tax-free money. So life insurance, which is what you’re talking about, is not likely going to be a taxable situation, you also would have received a 50% step-up in basis. And both of you own the house. So if later you decide to sell it, her side would have been stepped up to what the value of the home is today, or at the time.
Caller 39:09 I talked to them earlier. So I had gotten my broker to send me a paper showing what a house was worth.
Dr. Friday 39:18 Beautiful, beautiful. I mean, that’s, I mean, I know, it’s never good time to ever talk about those things, but that’s exactly what you want to keep. And then the life insurance is not going to be a taxable situation for you.
Caller 39:28 So I’ve done. I don’t have to pay taxes on the house.
Dr. Friday 39:32 No, I mean, there won’t be any taxes on the house because you didn’t sell the house. Right? You’re still living in it, right? Yeah. So all you do is a document so if you do sell it later, under the current tax law, you’ll sell it single with 250 markups, but your value of the home would be higher than what you originally paid for it because of her passing.
Caller 39:52 Okay, but I do need to pay taxes on her 401k
Dr. Friday 39:56 Yes, ma’am. Any kind of financial 401k Ira if you cash them out, and you almost have to nowadays, that would be a taxable situation. Yes.
Caller 40:06 All right. Thank you so much, man. Do I probably report? Do I put the income insurance on my taxes at all?
Dr. Friday 40:13 No place, no place for that. And you’ll get a 1099 R on the 401k.
Caller 40:19 All right. So much.
Dr. Friday 40:21 No promise, we thought Thank you. Alright, let’s get right in Franklin, Kentucky. Hey, Roy.
Caller 40:28 Hello. Gambling deduction, I won $16,000. And I lost 15,000.
Dr. Friday 40:41 Okay, so right now, the way that works is you’re going to do a Schedule A for 14,000, which if you’re married, and you don’t have any other deductions, you’re not going to be able to claim any of the loss. If you’re single, the standard deductions are about 13 or whatever it is right now. 12,800 something so you might get a little of it. And then what about claim 16 on the front of your 1040.
Caller 41:07 What about home insurance interest and all that? What about if I got that?
Dr. Friday 41:11 Well, if you’ve got a mortgage, you have property tax, you have charitable contributions. And if it’s high enough medical, all of those would also fall on that Schedule A so it might help a little bit.
Caller 41:23 So you can’t claim the whole 14,000?
Dr. Friday 41:26 Yeah, I mean, there’s it’s all part of this, the itemizing so right now, the itemizing so high, it’s very difficult to get, you’re not gonna get 14 on top of the regular standard deduction, which is what you’re kind of looking for, or we would love, right? Because I made 16. But I spent 14, I should only pay tax on two in the normal world. But that’s not the way gambling works. Not like a business.
Caller 41:52 Okay. Thank you.
Dr. Friday 41:53 Thank you, sir. All right, guys, this is getting close to the end of the show. So let’s go ahead and see about giving you some basic information. Again, my name is Dr. Friday, I’m an enrolled agent licensed by the Internal Revenue Service to do taxes and representation. So if you’re looking for someone that knows how to do taxes, or if you got tax questions, I might be the place you want to go shopping. And that number to call would be 615-737-9986. A lot of times it’s difficult to ask questions on the radio. I know that, personally.
Dr. Friday 42:30 And so if you’ve got a question or situation and you’re not too sure what to do, the easiest thing to do is email me Friday at Dr. friday.com. Again, I realize people haven’t filed taxes for a number of years, how far back do you really have to go, I can let you know that if you can’t find your tax documents, as far as I don’t know where to find anything.
Dr. Friday 42:51 So I don’t know how to file the taxes, we can help you recreate those tax documents to the best of our abilities, which is what the tax law says. So then we can actually help you try to get those taxes filed on time and in the right person. And if you’re late, well, let’s get them filed.
Dr. Friday 43:06 So you stop looking over your shoulder because you can’t buy a house without having tax returns, at least most people can’t. We can’t get a mortgage at least very difficult to get kids student loans if they’re in college without a tax return. So you don’t want these things to stop you from living or doing the things you want. Get straight with the IRS, it’s a lot easier than you might think. And sooner you do it easier it is to start moving forward in the direction you want to do.
Dr. Friday 43:31 So again, if you want to reach me, it’s 615-367-0819. You can also email Friday at Dr. friday.com. If this is the first time or if you have if you’re a returning client, you don’t have a tax appointment, you need to call us ASAP because our tax calendar is just about full and you can get if you’re a returning client, we always have time for you guys. If you’re a new client. You can see if you can find a position for that.
Dr. Friday 44:01 Again, if you’re looking for a position for a tax client appointment, you’ll need to go to the website drfriday.com. Click on the calendar, make an appointment we’ll be more than glad to try to help you out and get everything done as an enrolled agent. You know keep in mind we do offer and compromises we do payment plans, we help you maybe even become non-collectible there are different paths for different individuals and it just matters on what your situation you’re not the same as every other individual so it’s easier to say well my neighbor did this or my purse this person my friend got this much money back why didn’t die because everybody’s taxes are slightly different.
Dr. Friday 44:42 Everybody pays in under different circumstances. Some people got more advanced some people don’t. You need to understand how does the tax going to affect you. That’s the important part of this conversation. Not what your neighbors getting, not what your brother or sister received back as refunds. What is it going to do to you again, you need to help to understand your tax situation, you can pick up the phone at 615-367-0819.
Dr. Friday 45:07 We’ll answer the phone. We’ll get back to you on Monday, or you can email friday@drfriday.com. Or you can check me out on the web. That is drfriday.com. Again, drfriday.com. As an enrolled agent, you are entitled to representation. So make sure that you know what your tax representation should be and how and what you have if you’re getting your taxes done. And someone’s not asking you all these questions that you hear me asking on the radio. Make sure that you ask them questions. You know, there’s nothing wrong with that.
Dr. Friday 45:39 All right. I hope you guys are having a wonderful Saturday. I wonder hopefully the snow will melt and we’ll be able to get moving. Call you later.