Welcome to the Dr. Friday Radio Show! In this episode, we have tax expert Dr. Friday take on the latest tax updates, answer the caller’s questions, and talk over the following topics:
- What You Need To Know About Cryptocurrency and Taxes
- What If I Haven’t Filed My Taxes In a Number of Years?
- How To Find Legitimate and Honest Tax Resolution Companies
- How Are Double EE Savings Bonds Taxed?
- Can a Company Buy Back Your Shares?
- Can I Avoid the 15% Capital Gains Tax on the Home?
- How To Get An Offer in Compromise With the IRS
- Dr. Friday’s Tips on Getting In Contact With the IRS
- Is Loss of Income Taxable?
- Tennessee Sales Tax Holiday on Clothing, School Supplies, and Computers begins July 29-July 31
- Tennessee’s General Assembly Approved Sales Tax Holiday on Food & Food Ingredients August 1-August 31
- October 17 Deadline for Filed Tax Extension
and much more!
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.
John Haggard 0:27
Live from America’s Music City. It may be Saturday where you are but it’s Friday, all day, every day all the time with the tax doctor, the tax lady, the doctor of accounting known in these parts of America as the Dr. Friday. Ladies and gentlemen, right here she is Dr. Friday. Hello there, Dr. Friday.
Dr. Friday 0:50
Hello, John. And thank you as always for stepping into the studio for us sometimes when I can’t get in. So I appreciate it.
John Haggard 0:58
Always glad to be here we like to talk about money because you know, money is the number one cause of divorce, they say and there’s so much going on with money. It’s a great topic. So I’m always glad to be here, because you know if I can get it if I can get a tip from you. Because why do I want to pay more when I can pay less?
John Haggard 1:16
So Dr. Friday’s here to give us all the answers to those types of questions. So that’s a good deal. And folks if you are tuning in for the very first time because we have so many new people moving into Nashville from Chicago and San Francisco and New York and Philadelphia and Oregon and parts all over the place.
John Haggard 1:34
This is the Dr. Friday show. And the cool thing about Dr. Friday is she’s an enrolled agent with the Internal Revenue Service. And some of you say, “Let me run, I don’t want to run into the Internal Revenue Service!” No, she does not work for the Internal Revenue Service. But she can represent you like an attorney would in a court of law. So if you’re in some trouble, or you haven’t filed in the last 10 years, and I’ve met the dream person in my life and this person is making a lot of money and I don’t want to get him or her thrown into jail or something like that.
John Haggard 2:06
Anyway, Dr. Friday can get you out of so many jams and you would never have to talk to the Internal Revenue Service again. So when we say live, that means you can jump on the phone and ask any question at all. Dr. Friday’s got the answers here. Anything about taxes, stuff that’s been bugging you.
John Haggard 2:22
Like for example, you know, how long does the IRS have to collect money? I owe them if I have not ever received a, as Dr. Friday calls it love letter, that, “Hey, you owe this.” So we’ll answer all kinds of questions. Here’s the number to call right now only here until three. So you know don’t say, “I’ll call in a minute” because a minute becomes an hour and then you don’t get an answer. 615-737-WWTN and for the new folks, that translates to 615-737-9986. Call now.
John Haggard 2:59
So hey, Dr. Friday just said that one question right there that folks like to know is how does the IRS have to catch me if I haven’t been paying anything?
Dr. Friday 3:09
No, that’s a great question, because the IRS does have a time limit. But unfortunately, that time limit at times may never start. So they have 10 years from either a return that they have put in the system on your behalf or when you have filed a tax return. So in all honesty, you know, the IRS if you’ve never filed and the IRS has an assessed you for that tax year, the time clock has not started.
Dr. Friday 3:37
So there are people that you know, theoretically, I will say I’ve not yet in my 28 years of doing bookkeeping and taxes and being an EA, that I’ve seen anyone have to go back 25 years if they’ve never filed right now to get into compliance. If you haven’t filed, we might only have to go back six years. So maybe you haven’t filed for 10 or 20 years doesn’t mean we have to go back and file all those years. But we do need to get you into compliance once you’re in compliance then we can make a deal that deal could be offer in compromise or payment plan.
Dr. Friday 4:11
But you know, the IRS definitely has a plan for you. So it’s up to you to either decide you’re going to you know do something about the plan or you’re going to just have to wait and see what the IRS does and normally that’s never a positive situation.
John Haggard 4:26
And would you notice folks that everybody has a plan for your life and that includes the IRS. Okay, so, you know, Dr. Friday I’m gonna brag on you a moment because I just have to do this and especially for the new time listeners I’m getting ready to tell you something folks and also gonna give you a warning. Also gonna give you a warning and it’s very, very important that you get this because a lot of people will say a lot of things and when it comes down to getting it done, they don’t.
John Haggard 4:55
But Dr. Friday, a moment ago if you were listening said this offers in compromise. And as an enrolled agent, remember, that’s not working for the IRS, that’s working for you. And that’s a certified deal. You don’t just send in 50 bucks and sign a form. I mean, you got to go through some pretty rigorous training to do that. So you’re looking at a situation where, well, I’ll just give you an example.
John Haggard 5:18
Dr. Friday, I won’t mention any names, we would never do that. But this person, this client, oh, this is what the IRS said over $1 million. Now, I gotta tell you something, would you be able to sleep at night if somebody you know, if the IRS said, “We’re gonna come get your house, we’re gonna come to get your car, we won’t come get your firstborn, we’re gonna get you know, we’re gonna get our money one way or another. We don’t care how long it takes.” Might even throw you in jail if they can.
John Haggard 5:44
So that particular case, and this is just one of many. All cases are different. There’s no like, Okay, what she’s going to tell me means I’m going to be able to reduce my liability 90%. It doesn’t always work that way with it in that particular case, Dr. Friday $1 million, right there about that client owed, how much did you get that settled for?
Dr. Friday 6:04
Right around 100,000. Because that’s when we talk about getting compliance, or letting the IRS do your tax returns. That’s a great example of an individual that hadn’t filed but the IRS had done all the returns. So they started doing collections, as if he had no write-off, nothing.
Dr. Friday 6:22
And you know, in in business, anyone knows that we’d all love to have a business where we didn’t have to worry about, you know, doing that. But all of us have overhead costs of some sort. And you know, that that’s important to keep track of that. But anyway, so that his case, we got down to a little over $100,000. And, and now he’s in compliance all the time. So that was a great situation.
John Haggard 6:48
All right. And so folks say, “Well, gosh, you know, what, a million dollars, I ain’t in any kind of trouble like that.” I’ve got some other cases, Dr. Friday, think you’ve had somewhere, you know, 50,000, the IRS says 20,000, give us a couple of examples.
Dr. Friday 7:00
I just had one, John, that just got approval. And they owed about 157,000, they worked in the nonprofit, they built the nonprofit, they were, you know, good, honest, hard working people. But you know, life happens sometimes. And this was multiple years, and it got away. And we just got it settled for, I believe it was $14,000.
Dr. Friday 7:25
And they, of course, they’ll stay in compliance now, because this is something that they never wanted to happen in the first place. And, you know, I just want to say, you know, you people hear this, and they always equal, “How can you possibly get in trouble like that with the IRS?” And that fact is, you know, it’s, it really doesn’t take much. Divorce, you know, you had a bad year or two. And if you’re self employed, sometimes, you know, you have to pay your own taxes, and you get 100% of your income.
Dr. Friday 7:51
So it’s something that happens to a lot of people and it’s one of those things, you get a handle on it, you can get it fixed and you know, move forward. And now you don’t have that pressure of owing 157,000. And it took us almost 18 months to get this one through the IRS is not moving quickly. But they are moving. And this was a great resolution.
John Haggard 8:15
Alright, folks, that also said, I think about that was over 100,000 is about 14. So you do the math table. 14%. Could that be my case? Well, maybe maybe not. It depends. I mean, there’s, there are lots of things that Dr. Friday goes through to try to determine whether she can do that or not for you.
John Haggard 8:35
I was gonna say with the one warning, and Dr. Friday says this on her program, and very, very important, because guess what’s going to happen come January, folks. You’re going to hear all this, “Tax resolution service,” you know.
John Haggard 8:49
And a lot you know, one of those companies, I can’t remember who it is doesn’t matter, we don’t want to libel anybody or slander anybody but you know, they take money up front, like five grand. And you know, “If you’re in trouble with the IRS, you call us and you find out it’s five grand,” and they want that money up front or they’re going to take it okay, you agree on your credit card, $552 a month for six months, or eight months or nine months or whatever. And tell us about some of the horror stories that you’ve heard on that kind of thing, Dr. Friday?
Dr. Friday 9:16
Well, I mean, I can’t say probably at least once a month, on the average, some months multiple sometimes. But I have someone that has went into those resolution companies, and most of the time they’ve never met anyone. It’s all been done over the phone and the person lives in California or Texas. And they basically that’s exactly I mean probably one of the biggest or craziest one.
Dr. Friday 9:38
Back a few years ago, there was an IRS scam going around telling people that they owed IRS debt and they that they were gonna bring the police to their door. And so I had a client that called one of these resolution companies. And the first thing just like you said, John, they said, “We can do this we need $2,500 up front, and we’ll find out and deal with this issue.”
Dr. Friday 10:01
The problem with this issue was this person owed no IRS debt. It was a scam. These people didn’t even look into this person’s history. Like why did they owe, what did the owe before they asked for 2500? And it’s non refundable. So this person paid $2,500, to accompany, because they were terrified, “Oh, my gosh, how did I owe the IRS?”
Dr. Friday 10:25
And, you know, this was back during the COVID a little bit, so it’s hard to reach the IRS still is. So just be really, really careful. Anyone that’s taking money before they have a plan, in my opinion, meaning they pulled your transcripts and they’ve given you some outline. And, you know, I mean, sure $250-300 to do, you know, to do a consultation and pull transcripts. I mean, I can see that, but I don’t see $3,000.
Dr. Friday 10:50
What if I can’t help you? What if you have no resolution? Maybe your kids are in private school and you want to keep them there. But you know, you make enough money to make a payment plan, then a resolution is a payment plan that you will or will not do, and you don’t need to pay $2,500 to find that out.
Dr. Friday 11:05
So it’s just really important to make sure whoever you’re talking to isn’t just a sales person doing some sort of special, you know, “I’ll do this for you.” And they know nothing about taxes, because then they sell that to a resolution company that then will pick up that account. And meanwhile, you know, you’re paying commissions and fees.
John Haggard 11:24
All the tax advice is here, folks, it’s free. But you got to call this number now. 615737 Wwe tn 615-737-9986. You’re listening to the Dr. Friday show. John haggard in the broadcast studio with Dr. Friday. You are on Super Talk 997 WTN.
John Haggard 11:49
All right, everybody. Welcome back to the second quarter of the Dr. Friday show from Super Talk 997 WTN. Phone lines are lining up and lots of questions are so let’s go to Nolensville and bring Mary on to the Dr. Friday show. Hi, Mary.
Hey, how are you?
John Haggard 12:05
Fine. How about you?
I’m okay, I wanted to tell you on a short story. We did go through in those resolution places. Very recently, we had 230,000 that we owed about eight years worth. And they asked for 15,000 upfront we paid and because we were desperate are getting these letters. And so we paid it.
There was no resolution, the impact they put it through fairly quickly. I think it only took a couple of months for the IRS to come and let us know that there was a lien on the property. And we pay $600 every single month, plus we pay three to 4000 quarterly. And I guess that’s kind of my horror story. And then I wanted to ask, is there a way to renegotiate that with the IRS?
Dr. Friday 12:54
Well, I mean, there is a way of reviewing the information to make sure I mean, that may have been the best deal. I don’t know me I’m not gonna say I don’t know, because I don’t know yet. But if you want to do a review of it just to see if the quarterly sounds like you have to make estimated payments, I’m guessing the 600 I’m assuming he’s going to the resolution company. That’s my guess I’m not sure. But normally you don’t make monthly and quarterly so I would just you know, but if you want I’d have no problem at least getting a consultation. You know, all my first consultations are free. So it wont cost you anything. So least get a chance if there’s anything we can do with them. We’ll talk and see what the option is. It may be based on your current income and assets that that’s really the best that you have.
Okay, what’s your website, by the way?
Dr. Friday 13:43
drfriday.com. I appreciate your help. Thanks so much.
John Haggard 13:52
Appreciate the phone call. Let’s go up to Clarksville now and bring George on to the Dr. Friday show. Hi, George.
Yeah, hi. Hello. I have some Double EE savings bonds that have matured, I have one maturing every month now. I bought them about 30 years ago. And does the IRS required that I redeemed them upon maturity so they can get their interest growth or whatever it is and what rate do they charge? Do you have any idea?
Dr. Friday 14:21
Well, Double EE savings bonds, those are treasuries, right? So you have usually you have a maximum of 10-25 and blah, blah, blah. So normally in answer your question, it’s usually ordinary income rates and you can hold it up to five years past the date? Probably not necessary. I would because once it’s met, its maturity, you’re not earning anything, right?
All of mine have redeemed. All of mine have all of my reach 30 years every month one reaches 30 years. They’re not earning anything.
Dr. Friday 14:59
All right, that’s what I was thinking that there was anything there that you would be earning? So you’d have to I mean, in all honesty, as far as the tax rate, it would depend on your income bracket, right? So if you’re single and you’re making less than 50, or you’re married, making less than 100, including the interest on your savings bond, and then it would be 12%.
Okay, does the IRS require after 30 years that they’re redeemed?
Dr. Friday 15:25
I think there is a form that’s actually turned in and you will get something at the end of the you know that you’ll get something when they’ve been redeemed. Trying to figure the formulas. I think it’s a 1098. But it could be a 1099 interest.
Yeah, that’s right. I understand that. I’ll get something but what I want to know, is there a penalty if I don’t turn him in after 30 years?
Dr. Friday 15:49
I don’t think I don’t think there’s a penalty. If you don’t, you know, if you don’t cash them in, I think the penalty is your I don’t think they continue to pay you any interest. But I don’t believe the IRS has any. I mean, until you redeem it and the money’s in your bank account. Once you’ve redeemed it, it becomes income to you. If you leave them out there and you haven’t done it, then not no transactions happen. No taxable situation.
Okay, I guess if you want to get in trouble with the IRS with the IRS, I don’t think they’re internal anything internal about him? I just call them the revenue service. All right. Well, thank you.
John Haggard 16:21
Thank you. Appreciate the phone call. Let’s go to Hermitage, John, what question do you have for Dr. Friday?
Oh, Hello, I’m John. And my question is this I work for a small company, I retired in 2020. And this is a situation that’s causing a lot of headaches, they gave me a small amount of shares when I was still working for them. And it’s not even worth it. And because they’re so chaotic, and disorganized in their, you know, finance department that handles all that stuff. And they, in fact, yesterday, I got my K1, like several months late. And I don’t even want it. Do you know, the process by which a person would give back their shares? I don’t want them, they’re just not worth the hassle.
Dr. Friday 17:15
Well, I’m pretty sure you could probably turn them back in. They may actually risk I mean, depending on their bylaws, there may be a requirement that they have to pay them, you know, pay you something for them. But I’m pretty sure that you could read, you know, I’m assuming this is a private company, not a public?
Oh, no, it’s private company. Yeah.
Dr. Friday 17:34
So yes. Their main thing, and those will take them back from you. They may only pay $1 share, but they’ll take them back.
Yeah, in fact, it’s such a headache. I would give it to them for nothing. And then my wife has a quick question here.
Yeah, we’re gonna be seeing you soon to do our taxes. We’re wondering if we got a 1099 interest for $11.86 from the IRS, and we’ve ever had on any checks from them. So we were just wondering what that was for. And what do we if we never got the check? I don’t care. It’s only $11.
Dr. Friday 18:16
Yeah. So theoretically, they may have applied it to an outstanding balance. Again, I don’t know. You know, I’m winging the conversation. But theoretically, they’re saying whatever we were owed, they increased it by the $11. If we didn’t get the check, we either rolled it forward, or they rolled it backward the past debt or we’re still waiting and trying to figure out where our refund is. I don’t know for sure. But wherever it is, we have $11 more in it than we did when we originally started. That makes sense?
I’m not sure I understand but we can talk about it another time. Thank you so very much. We’ll see in a few weeks.
Dr. Friday 18:56
Alright, guys. Thanks.
John Haggard 18:58
Appreciate the phone call. Let’s bring Dan from Georgia on to the Dr. Friday show. Dan, what’s your question for Dr. Friday?
Yeah, I’ve got a question about capital gains tax. I purchased a home in January of 21. And change jobs. And I’m going to be leaving Georgia and moving to Kentucky in the process of selling the house now and then as soon as possible buying a house up in Kentucky with the new job. Is there any way so my house increased in value in the last almost a year and a half? Didn’t make it to the two years but is there a way to avoid the 15% capital gains tax on the home?
Dr. Friday 19:42
There is normal tax allows for you to avoid the capital gains if you’re married or single if you’ve lived there, of course two out the five. But there is some I’m trying to think there is a exclusion in there. Have you already taken a exclusion for homesale in the last two years? Did you Tell me other homes. Okay, just checking to see because obviously,
No. This is my first home that I’ve purchased.
Dr. Friday 20:06
Oh, and you barely got it broke in, my friend. He’s like, come on, you gotta get it. You know, that’d be one of those, I’ll need to look up. But it seems like there’s something in my head that says if due to medical or job reasons you have to sell your home seems like there’s some sort of exclusion we get to claim outside of the normal. So if you want to just email firstname.lastname@example.org, or call me Monday, whichever is easier for you. I will look it up and see if I can get you some direct, you know, IRC code on it, just so you know, but seems like there’s something there. But I want to make sure I’m not reading between the lines on it. Okay?
Okay, sounds great. I’ll send you an email.
John Haggard 20:49
Alright, Dan. Appreciate the phone call. And Dr. Friday, we always ask this question anytime you and I are together live on the radio, and that is, you know, any crystal ball inside information or what the message boards are chatting about for people who are in the industry like you tax legislation, upcoming. I mean, nobody knows where that stuff, you know, Joe Manchin has said no ain’t doing that. Maybe they’re not gonna get any tax, you know, revisions or legislation. But I do remember you saying on the show, that when Trump was in office, the big deep tax cuts, I believe you said this correct me if I am wrong, they are set to expire sometime. I don’t know when that is can you bring us up to date on that?
Dr. Friday 21:40
So all the tax we have right now that Donald brought in or President Trump 2025 is the year that we’re looking nice coming faster than we’d like. Some other things, I actually did just come from a tax seminar the last two days. This is why John is sitting in for me very appreciated. But what a few things that we did cover was cryptocurrency, which I know not everybody is into it. But the IRS has brought some new revenue codes down.
Dr. Friday 22:10
One being that they’re definitely considering it more of an asset, meaning it’s not currency based on their code, even though if they if you’re buying and selling product, like if someone comes to me and they paid me in in Bitcoin or cryptocurrency for my services, that would be income for me, I can’t consider that a stock. But the other side of that is they’re going to be requesting FBAR, which is Federal Bank, laws are going to come in, usually done more with foreign currency.
Dr. Friday 22:42
So that’s going to increase some interesting conversations with a lot more and more of my clients seem to be dabbling in it at least. But that was probably one of the most interesting situations because like John was kind of opening up, we haven’t had a lot of movement, there hasn’t been if you’re a business owner, and you had some hardship, and you kept employees, there are still a few employee retention tax credits, we went through a lot of that, over the seminar, and those are still available, the time clock is not up.
Dr. Friday 23:16
So for anyone that may may have had employees, and maybe some of you guys didn’t even go after the PPP because you didn’t know or you weren’t sure if it applied to you, you may be able to go after this employee retention, you do have to have employees 941 employees payroll to qualify for this, but it is still a very viable process. So it may be very good to at least talk to your accountant or your tax person about.
John Haggard 23:42
And there you have it, folks right there. That’s the end of the second quarter on the Dr. Friday Show. You can join in right now, especially if you are brand new listener and you say, “What is all this stuff is tax jazz and what’s going on here?” This is an advice show.
John Haggard 23:55
And one thing about Dr. Friday who is an enrolled agent with the Internal Revenue Service. Now, you got to really pay attention to that because she does not work for the IRS. She represents you that’s what an enrolled agent is, has to pass the certifications and keep the qualifications up like an attorney would represent you in a court of law.
John Haggard 24:17
So when you hear Enrolled Agent with the Internal Revenue Service don’t think she works for because she works for you, not the IRS. And one thing we want to say about the IRS because they get a lot of bad press folks and remember that they simply enforced the code that the legislature passes as law. They enforce that law.
John Haggard 24:40
Where does that law come from? The people you vote into Office. Okay? So, that’s where all that comes from IRS. Most people are good you know, most people are good, but yeah, you’re gonna find some bad ones and we know some and just like you’re gonna find bad people doing things all over the place, but understand that they actually enforce the law. They don’t make the laws so there you go.
John Haggard 25:01
All right t-minus 28 minutes and counting that means you better jump on the phones now you see the time’s flying fast as we have fun giving you all the advice about tax issues 615-737 WWTN 615-737-9986. And one quick thing, let me just give you that email address again for Dr. Friday if you’re getting ready to jump off and gotta go somewhere email@example.com. Very simple firstname.lastname@example.org. Okay, and the web of course, drfriday.com. We tried to make it simple here, folks. All right, we’ll be right back on Super Talk 997 WTN.
John Haggard 25:48
All right, everybody. Welcome back. It’s the third quarter t minus 22 minutes and counting. That means jump on the phone now and get the answers to your tax questions. Don’t let this day go by you’re on the Dr. Friday program. And let’s go to Petersburg and bring Rod on for Dr. Friday. Rod, are you calling from the Internets Are you somewhere called Petersburg?
Oh, Petersburg. I’m on my cell phone.
John Haggard 26:19
Interesting. Okay, well, here’s Dr. Friday.
Yeah. My question is this. Two years ago, I transferred my wife’s 401 over to a Roth IRA to save on taxes and stuff since taxes are so low right now. And so she’s six years old. And when I put the information into the tax thing, and I didn’t pay taxes on it, and I talked to somebody they said, now you got to wait a year for what would have been, or something like that. Anyhow, it’s been almost two years now. And I still haven’t paid those taxes. And I’m wondering, how do I correct this?
Dr. Friday 27:08
So the year that you did the conversion, that was what, 2020?
Yes. Yes, ma’am.
Dr. Friday 27:15
And you did it from a regular IRA to a Roth IRA? Correct?
401 to a Roth? Yes.
Dr. Friday 27:23
Okay. 401 to a Roth, okay. So there should have been a form called a 1099 R that you would have received? If you didn’t, you might want to pull your transcript for that year. Because if unless, unless the 401k was a Roth, and you just moved it into a regular Roth. And that doesn’t sound like what you did, but I’m just saying otherwise, like you’re thinking and the year that happened, you should have gotten the 1099 R, you should have filed taxes on it in that year.
Dr. Friday 27:54
And therefore you could have and that year, you actually had the ability to spread the taxes over three years, because of COVID if it was in 2020. So there is an exclusion out there. I’m saying but I would either go back to the company that you did the conversion with the 401k company and see if they issued. If they did, you might want to have them send you another one, because we probably need to amend 2020.
So I did I did get a 1099 R, but the coding on it was like a G or something.
Dr. Friday 28:28
They’re claiming that that was a rollover, not a conversion. But you need to override that. I mean, they may have thought that was a rollover. But as long as you know that the 401k was a regular 401k not a Roth, right? I don’t want to paying taxes twice, that’s for sure. But you know, I would there’s there is a part of 8606 in which you can fill out that would actually show that you did a conversion, not a rollover, and therefore, you know, I want to pay the tax.
Dr. Friday 28:57
So you may have to go back and amend and change the code, theoretically change it on your tax return. So that way you have it and I would definitely, because there’s probably going to be a penalty. And I think I think you’ve got grounds to get a penalty waiver, possibly if you haven’t had one in the last 31 months.
Okay. Sounds great because, because what I did put the correct code in, because I get it and I’m through my navy retirement. And then it showed me Oh, and taxes, which was correct. So you said it was a 1086?
Dr. Friday 29:32
Thank you very much. That’s what the information I needed. Thank you.
John Haggard 29:41
All right, Rob, appreciate your calling the Dr. Friday show and Dr. Friday you were just talking about here a few moments ago and maybe there’s just a kind of a brief education for folks who you know, hear about this crypto currency stuff. Should people be fooling around with that and you were mentioning that in the seminar, IRS update so that they’re gonna treat it not as income, but as an asset and this or that. And like if somebody says, for example, what do I got 10 grand, you know, throw around here, see if I can make a quick buck or a lot of danger, very volatile business, it seems like but just some general advice that you could give about crypto in its current state as we know it today.
Dr. Friday 30:20
Right? Well, I’m not a financial planner and put that caveat out there. But my personal opinion is, it’s like Vegas, right? I mean, you can go in there. And if you buy the right crypto, you can make 10 times the amount overnight, and you can also lose all of it in one swing. So whatever you’re playing with, in my opinion, in crypto, you need to be able to afford to lose.
Dr. Friday 30:43
It isn’t something that you know, I mean, again, when we’re talking 15, well, probably back in 2000. Yeah, 15-20 years ago, when some of my clients start talking about it. The IRS never even really got involved until about 2014. But it’s been around for probably since 2000. And you know, but there was some pretty interesting things. It’s not just the crypto side, but a lot of people have children and adult children that are gamers. And a lot of these gamers get paid in tokens to watch a video, to do certain things.
Dr. Friday 31:19
And those tokens then can be turned into purchasing things outside the game. I’m not talking about your 12 year old that maybe does something and he gets a token so he can go buy this in one of his games or whatever. And it’s kind of like a credit. But now these tokens are turning into actual cryptocurrency. So keep in mind if your son or child and you know I say younger people, because to be honest with you, John, most of the people I know that are probably into the crypto are also gamers and most gamers are in most cases are probably in their, you know, 40 and younger kind of crowd versus my age and your age.
Dr. Friday 31:56
But don’t I mean, I’m sure there’s an exception to that number, but I’m just saying in my experience, so most of the gamers are doing things that then they they get these tokens, these tokens turn into crypto, that is actually at the time the token turns into crypto is a transaction. So you did nothing because you sit and watch the videos, you receive a token you get enough tokens and now you’ve earned a light base coin, that when that’s when you convert those tokens to a coin of any kind of cryptocurrency at that moment, you have created a transaction, it’s no different than if John and I work all day and get someone pays me $10. It’s no different.
Dr. Friday 32:38
The difference is you guys are trying to do it in the world of gaming or crypto. But the IRS has come down. And this is what we were really studying was, there’s a lot of other ways other than someone like myself, I have a coin base wallet, I put some money in there, I brought some different currencies. I’m sitting on them, I may lose them all tomorrow. I’m not worried about that. But that’s a typical purchase and sale situation.
Dr. Friday 33:01
But there are other ways within the world of gaming, that people are getting these tokens, the tokens are turning into cryptocurrency and cryptocurrency at that time, is usable to go shopping. That means you earn money and you need to track that basis. And that basis may be zero. So when you sell that light base coin to a Bitcoin, you have now earned $300, or whatever it’s worth. It’s very complicated probably to explain over the radio.
Dr. Friday 33:29
But I’m just saying if you are an individual that you know what I’m talking about, if you’re that individual that is getting into tokens and getting into cryptocurrency, and you’re thinking that well, how’s the IRS gonna know? Well, because the IRS has now come up with all these different systems that they’re using to track all of this information. And they’re also educating a lot of us to make sure that our clients aren’t going to get caught.
Dr. Friday 33:53
There’s already two or three court cases they were listing where the question of when does a token become income? And right now, it’s still in the court. So you know, we’re waiting to find out what the ruling will be. It could be the moment you earn that token, it becomes income that the moment that it’s converted to a currency, and that’s going to be even crazier.
Dr. Friday 34:15
So anyways, John, hopefully I didn’t overfill you with that, because it’s been it’s a pretty hot topic for us crazy people in taxes, and many of you that are out there, doing these things. It’s also it’s a new way. It’s a newfound system. And I think a lot of people are fascinated with what, what will happen and how far will crypto go in our world.
John Haggard 34:37
And just another reason, folks, you should be here every Saturday from 2pm-3pm. Dr. Friday. I mean, that’s quite it’s quite an explanation there and it’s a lot more complicated and a couple of court cases not yet resolved. So I think Dr. Friday said two things, be careful. Number two, if you’re going to spend if you’re gonna do anything, you know, you need to be able to if it’s fun 5,000-10,000 whatever. You need to be able to afford to lose it and never even think about it. What’s complicated? Dr. Fridays got the answers. She can give you the latest information. That’s why she’s here on the Dr. Friday show.
John Haggard 35:11
Folks, that’s the end of the third quarter. We’re at T minus 14 minutes and this is your last call to jump on the phones. Now if you want to get an answer to your tax question, and the number to call is 615-737-WWTN. That’s 615-737-9986. Don’t put it off. Why pay more when you can pay less? Get that advice now. John haggard in the broadcast studio with Dr. Friday on Super Talk 997 WTN.
John Haggard 35:47
All righty, everybody. Welcome to quarter number for the final quarter today on the Dr. Friday show. Super Talk 997 WTN. 2:20pm right now, Dr. Friday all the time. Super Talk 997 WTN. And by the way, the email address to Dr. Friday at any time, if you would like to email her is email@example.com. That’s firstname.lastname@example.org. You know, another question, Dr. Friday that folks will ask from time to time is this taxable or not. Damage awards? For example, personal injury? Or maybe you have sued someone and they’ve gotten economic restitution as it were plus pain and suffering and this and that? Is there an easy way to break that down? Or is it pretty complicated?
Dr. Friday 36:39
Well, the basic rule of thumb is, if it’s for loss of income of any sort, then it’s taxable. If it’s for medical purposes, you know, you’re gonna be have medical bills, and you know, hospitals and whatever, any medical expense is not taxable. So that’s kind of the rule now sometimes, you know, pain and suffering, you know, normally pain and suffering depending on how they label it sometimes that will lately will be labeled as medical, because obviously, that’s where the pain and suffering comes.
Dr. Friday 37:12
But I have seen it labeled as loss of wages. So I would definitely suggest if someone has that kind of situation, especially some of these cases where, you know, to be quite honest, you know, in the millions, you want to make sure that that is defined correctly, you know, because the last thing you want is a love letter coming from the IRS saying, “We’ve changed your tax return” because you wrote off, you know, a million dollars in medical thinking it was for medical services or paying fees for the rest of your life and you know, they pay you for versus loss of loss of wages. And most cases have both. So in most cases, there is a percentage of it, that will be taxable.
Dr. Friday 37:12
All right, there you go, folks, that’s why again, you listen to the Dr. Friday show here on Super Talk 997 WTN. If you are married out there. This is a question Dr. Friday gets from time to time. And and that question is, is there any advantage if a couple is married or would there ever be a case that it would be an advantage? Or maybe it’s not of filing as married or separate? Separate tax returns to people married, same household? Any way to save any money doing that?
Dr. Friday 38:31
Sometimes yes, there is always there are always circumstances in which married filing separately. Sometimes it’s not financial, it’s sometimes it is more, “You know what? My spouse is self employed. And you know, I don’t handle the books, I don’t know if he’s filing or she is filing everything proper. And so I don’t want to be responsible for their taxes.”
Dr. Friday 38:53
So if you file married filing separately, you don’t sign off on that tax return you are not liable for those taxes, not from the IRS. Now keep in mind, I say that and here’s the caveat to that is if you’re living together in the same home, and you are the major breadwinner and even though this person is audited, and you may never get audited, but you know they owe money because every year they owe money on taxes and there’s a tax problem. If you are a W2 or a person that handles their money much better being in the same house with that person even though you’re not legally liable for the tax.
Dr. Friday 39:28
The IRS says, “Wait a second you have someone living in the house is earning money. We’re not going to give you the same deductions than if you were by yourself or having to you know, pay these things.” So in essence your income is going to require you’re going to have less deduction therefore you can pay the IRS more money.
Dr. Friday 39:46
And to be honest with you, John, I was teasing I did a couple speaking at this tax seminar and one of the biggest ones is the the marriage penalty. We all you know obviously totally believe in marriage, so don’t you know anyone listening think that Friday is anti marriage. But the tax code does penalize married couples prime example is the capital gains on capital gains if you have a capital gains is holding an asset one year and a day, pass whatever the date. And so a single person can earn or stay in the lower tax bracket of 15% under 200,000.
Dr. Friday 40:24
A married couple is 250. So, you know, why isn’t it 400? I don’t know. But there is one and there’s many of those tax penalties that can happen. And probably one of the biggest mistakes that happened with married filing separately I would say is if one person itemizes the other person has to itemize.
Dr. Friday 40:45
So a lot of people think they found this loophole where my husband itemize because he pays all the mortgage and the property tax and then I’ll take the standard deduction. That way we get more by filing separately than what we would have gotten if we were married together for that deduction.
Dr. Friday 41:00
The IRS has already come down many, many times guys that is not married filing separately, and they can disallow not always going to get caught. But it is not the proper way to do taxes. If your spouse is itemizing married filing separately, you must itemize, which means you may only have $1,000 instead of the standard deduction of 12 or 13. So you need to look at that if you’re doing your taxes correctly.
John Haggard 41:23
All right, folks, again, just another proof. You know, there are caveats, as Dr. Friday says, or there can be exceptions to rules. And if you did not hear this at the beginning of the show, now it’s very important for you to listen to what I’m about to say.
John Haggard 41:40
Dr. Friday is an enrolled agent with the Internal Revenue Service. That means that she can represent you like an attorney in a court of law. She does not work for, she’s an enrolled agent with but does not work for the IRS. Very important because if you have tax problems, and it’s you know, you lose a lot of sleep, a lot of weight, you know, can mess up your health, you need to call Dr. Friday, she’s an EA, that’s an enrolled agent.
John Haggard 42:06
Again, she’s had cases where people have over a million dollars and settled for 100,000. And another case 100,000 down to about 4,000. Every case is different, no guarantee. But you need to call Doctor Friday. So here it is her phone number is 615-367-0819. Also, you can email email@example.com and on the web at drfriday.com.
John Haggard 42:31
Did you know there two ways to thank God for what he’s done for you and your life? You might say, “Well, I don’t believe in God.” Well, if you are alive right now you are alive for two reasons and only two reasons. His mercy keeping you from what you deserve, and His grace blessing you with what you don’t deserve. Ephesians 2:8-9 In the Bible says, “For you’re saved by grace through faith and this is not from yourselves, it’s God’s gift. Not from work, so no one can boast.”
John Haggard 42:57
You know, all sins gotta be paid for we know that whether you’re Christian or not, it doesn’t matter. And we’ve all sinned and will continue to sin. Even Christians, yes, we do continue to sand Christ came to earth to pay for all of our sins past, present and future. But the only way you can spend eternity in heaven, instead of hell is to accept the free gift of salvation by proclaiming Jesus as your Lord and Savior.
John Haggard 43:19
And if you’d like to accept Jesus right now, very simple. You can pray this prayer. You don’t have to do anything else. To yourself out loud to say, “Jesus, I just want to invite you into my heart. I proclaim you my Lord and Savior. Forgive me of my sins.” Now words alone don’t mean anything, folks. But if you just prayed that prayer, and you really mean it, you do have eternal life in heaven. If you truly meant what you prayed, you now have the Holy Spirit in you who will lead you and guide you and convict you and say, “Hey, get back on get back on the track here?”
John Haggard 43:54
And why take a chance that Jesus is not real? The last time I checked mortality is 100%. Everyone dies of physical death, but you can choose where to spend eternal life. Alrighty, God willing, we will see you next week. John Haggard saying blessings from the Dr. Friday show here on Super Talk 997 WTN.