Welcome to another episode of the Dr. Friday show! Don’t miss out on this episode where Dr. Friday talks all about taxes, tax filing dates, and the following questions:
- Do I Have To Pay Back TNTAP?
- Do I Qualify For TNTAP?
- Can I Still Apply For PPP and EIDL Loans?
- Will There Be A Second Stimulus Check?
- How Filing An Extention Will Help You
- Do You Need Tax Representation?
- When Will Stimulus Checks Be Done Sending Out?
and so much more!
No, no, no, she’s not a medical doctor, but she can share cure your problems or your financial woes. She’s the how-to girl. It’s the Dr. Friday show. If you have a question for Dr. Friday, call her now at 615-737-9986. So here’s your host financial counselor and tax consultant, Dr. Friday.
Dr. Friday 0:31
I’m here live so if you want to reach me You can call me at 615-737-9986. Hope you guys are having a wonderful Fourth of July. I know that there’s going to be some fireworks around town so hope everybody will enjoy it. In my opinion, one of the fun parts of the day hopefully enjoys the fireworks this evening. It used to be one of the days we actually spent time as a family. But now a lot more people are spending more time together than they might wish sometimes. So hopefully you are going to enjoy this day and have a fun picnic or something. The weather, at least here is actually in a really good place. It’s overcast mostly. So it’s a pretty decent day out. So if you’ve got questions, we’re down to the wire here, we’re only going to have until 7/15/2020 and then you either need to file an extension or file your personal tax returns. Remember, if you were a business, you did have to have your extension filed by the 3/15/2020 deadline. So if you haven’t filed your business and you haven’t filed an extension, sooner versus later would be the answer to that question. So if you’ve got questions, call 615-737-9986 and it looks like we’ve got someone already on the line, so let’s hit Barry. Hey Barry.
Dr. Friday, thank you. How much money Cash Money can a Father give to the Daughter in whatever period of time and is it taxable?
Dr. Friday 2:06
So theoretically you can give them $11 million and that would be your lifetime allowance at this point assuming that you pass away while this law is current, this so you would have to file a gift tax return. Otherwise, it’s $15,000 per year that has no effect on your lifetime allowance and it is not taxable. The person giving the money is going to pay the tax it has to be after-tax dollars that you then pass on to a child or a spouse or whoever you’re gifting it to. So they don’t have to pick it up. The person that gives the money would pay taxes on it before it is actually gifted.
Okay, so it’s money already earned. It’s in the bank and we’ll say a safe deposit box. It’s just $15,000 a year?
Dr. Friday 2:54
$15,000 a year per spouse or parents so if you’re married, you and your spouse can give your daughter 15 each, so a total of 30. But if it’s just you and your daughter, then you could give them $15,000 a year.
A year. Okay, and it’s just like it never happened. Right?
Dr. Friday 3:10
Well, that’s good info. Thank you so much. I appreciate it.
Dr. Friday 3:14
Appreciate the call. Thank you. That was a great phone call. It’s something that you do and you can I mean, sometimes giving. I know a lot of times people will help their children maybe give down payment for their house, or something like that. Normally, that has to be considered gifting. So if you do gift your child 30 or $40,000, and you’re a single person giving it to a child, a single child, you remember there is a 709 gift tax return that would be required if you are giving more than $15,000 to that individual from another individual, doesn’t mean it’s taxable, but it will start working on your lifetime allowance. So that is kind of important to be able to figure out what you have going on and where you have it. Another email came in this week. And I just want to make sure because lets be honest, this year has been a bit of a unique year. And some people use their 529 plans to pay for their K to 12 education for the children. And some schools actually gave refunds private schools, obviously, for some of those funds, because the kids weren’t going to school since March or something like that. So if you happen to have received a refund, and the money came from a 529 plan, as long as you put that money back into 60 days from the date of the refund, it would not be considered income, obviously, because you don’t have the deduction of going to the school. If you put the money in your pocket, just be prepared that that can become taxable income. But if you put it back into the 529 plan, as a refund, it will then keep growing and it will not be taxable to you. So that is kind of an important thing.
Dr. Friday 4:57
We also have to look at I mean, quite a few people buying and selling homes. 1031 exchanges kind of want to touch a little bit on that. Well, here’s the deal, the parents own the house that the child lives in. And so they’re doing a 1031 exchange because their child is going to want to sell and relocate to a different house. Since it’s in the parent’s name, they are doing 1031 for the other home. So they’re selling the home the daughter’s in and then doing it, I will let you know that is not considered an investment property. Therefore, even if their daughter unless they can prove the daughter is paying a fair rent and it has to be the rent that anyone else would have to pay if they were living in that house. And there is no special treatment being provided to this child, then it could be considered an investment property, but if you have a child living in one of your rentals, nine times out of 10 they’re not paying you full rent, or maybe they’re having to pay the utilities or whatever. You’re not taking care of the property the same way you would have the expectation of a stranger to do it. So I just want to make sure that if you’re in that situation, IRS comes back, they can disallow the 1031 Exchange, as well as charge you penalties and interest for not filing the proper paperwork and taking the advantage of a 1031 that wasn’t really allowed. So that’s important to know.
Dr. Friday 6:23
Make sure you’re consulting an expert on that many times. It’s attorneys that handle 1030 ones, if they say, “I’m not an expert on the tax situation,” be sure to talk to an EA or a CPA, someone that does know the answers to something like that, to make sure that you’re making the right decisions. The last thing you want to do is go through a 1031 exchange and then find out that you did something wrong two or three years later and then get hit with not only the tax that you would have paid but also penalties and interest, which we all know can add up to almost 100% of what you owed, especially for something like that. So If you want to join the show, you can 615-737-9986. Now’s a good time to also we have to get our taxes filed for 2019. Now, many people may have already filed their taxes. Not a lot of my clients, I’ll be quite honest. Kind of working my way through this weekend in the next couple in the next week and probably to get everybody filed. But that’s cool. It’s also time to be looking at your 2020 situation. In many cases, like I was just mentioning, maybe you got a refund of 529 and maybe you’re thinking because your income has been so low this year because maybe your job has created a situation not so much. In some cases. It’s not so much as a financial.
Dr. Friday 7:47
I get it, you’re not making as much money but some people are more cushioned or prepared for that their overhead is not as high. But it may be a time instead of taking money out of a 401k or retirement plan that you need to help keep you going, maybe the idea would be to sell some stock because long term capital gains especially if your income is low, which would mean a single person with the game being less than 50,000. A married couple with the game being less than 100,000 could pay zero capital gains. So don’t just reach necessarily, I mean, not everybody has different options. But if you have the option, instead of taking money out of a 401k to help keep things going, there may be a better option and that would be to sell stock at zero percent to get you to a certain situation. Now if you do if you’ve lost your job, and you do have to take money out of a 401k Keep in mind, they have waived the 10% penalty if you are not 59 and a half when you take it out. You have to meet the criteria that you have lost your job. They’re going to give you three years to pay the tax on that so you’d have to pay part of it. You Third, now a third in 2020, 2021, and 22. So those years you’ll be able to spread the taxes over those three years, giving you a little better time. So if you had to take out 30 or $40,000, just to keep a roof over your head and until the jobs come back, and maybe something also to consider no penalty in spreading the taxation might be a very helpful situation.
Dr. Friday 9:27
So just keep in mind that you know, we’ve got a lot of unique things going on. So consider your choices, make sure you file your taxes people on 7/15 and/or pay the bill because filing extensions, I do a ton of them is nothing wrong with extensions, but extensions really only extend my job, which is the paperwork, it doesn’t extend the money. Right now when people are already having financial situations, the last thing you want to do is add 25% almost immediately to your tax bill because you have a failure to pay because you didn’t file your taxes on time and then you didn’t pay the money. Okay? So you need to make sure that you file an extension. If you can’t pay, just file the extension it’s going to help save you some taxes but best that is to file the taxes or pay what you can. I know some people are sitting there going, “Are you crazy? I don’t have any money right now is a really bad time I thought I was going to have the money so I would have been able to pay.” I mean I deal with self-employed people every single day and part of being self-employed is sometimes knowing how to juggle a little bit right? But this is not the year you really want to be juggling. I also want to talk about a little bit TNTAP if you have an account if you are a sales tax, business license, or franchise excise, but I think it’s sales tax or business license. There are some additional funds available. The funds are for business owners, and if you have 0-100 is like $2500 and 100 to $500,000, gross sales, it’s like $5,000, etc, etc, all the way up to I think $10 million. They have them lump like that.
Dr. Friday 11:11
So, if you’re looking or you haven’t gotten a lot of help, or you still need more help, you might want to go on to TNTAP, it’s available now I’ve had two clients call me today, even on a Saturday, my clients love me. So I do know that the process is in there, you need to have some information like your gross revenue and your sales tax number or your business license number, etc, etc. You’re going to need to have all that but you might want to go ahead and see if you can get certified for those funds. It is designed to help small businesses try to make payroll try to keep the lights on try to make rent. You know, anything that will help may help make the difference for some of the smaller businesses. So again, and there are certain types of businesses that meet these criteria. It covers a large number of individuals, but again, it is for a certain number of people, not everybody. So if you need help, or you’re looking for a possibility of getting a few more dollars on there, then you can go on to TNTAP.tn.gov and click on Tennessee Business Relief. And then there is an application in there where you can get certified to see if you qualify for relief or not. So it’s really good.
Dr. Friday 12:31
Again, most small business owners need all the help they can get. This is another way it’s not going to be a ton of money for you. But every dollar makes a difference in keeping your doors open. I haven’t yet found out if it is actually free money in essence that you will not have to pay it back or if it is something that will eventually have to be paid back. I’m working on getting that detail. I didn’t see anything on the initial application that said that it was if anyone knows exactly about the disaster fund tendency tap if it’s actually going to be something that’s repaid back or if there’s an interest rate. Anything like that would be helpful for small businesses. So let me know and you can reach us here in the studio 615-737-9986, we’re talking your calls talking about all the important things. We’ll take our first break, and we’ll get back we’ll take some more calls and we’ll talk more about some of the things you might need to know about PPP money EIDL and also the TNTAP as well as tax questions if you have them. We’ll be right back.
Dr. Friday 13:55
We are back. Live in the studio. fortunate enough to have Amy on hold. Hey Amy.
Let’s put this in the hypothetical arena. If you’ve already filed your tax return and you’re just now sending in payment for this year. Do you dare just write a check and put the little form in there and put a first-class stamp on it and mail it?
Dr. Friday 14:37
Honestly, Amy, we don’t do that. I mean, I would do one of two things. I would actually overnight it there is an address you can use for the IRS with FedEx. So you have a tracking or we would make it electronically through the IRS website or on the tax return software that we use. I would not feel comfortable with a 55 or whatever the cost of stamps is now it’s pretty sad, I don’t put them on whatever the cost of the stamp is without tracking and understanding. Because one, you get hit with a serious penalty if that doesn’t arrive, and you’ll have no proof that it was sent if you don’t have a tracking number, so if nothing else use Priority Mail, you know, just something that we give you proof that you sent it to this address at this time in an envelope, right? I mean, something that’s going to give you some possible argument to discourage because a lot of checks get lost to the IRS, at least on my experience.
Okay, so the US postal system is not completely reliable and delivering checks?
Dr. Friday 15:42
That’s my opinion. I’m sure they may have a different opinion if they’re listening, but I think it’d be better for you to have a paper trail of some sort something that requires proof of delivery, so that you would have not only the check clearing the bank but what if the check doesn’t clear until the 20th and you mailed it on the fifth or the 10th you know, at least with the delivery stamp, you would have proof that you put it in the mail on the 10th. Whenever the IRS opened it and put it to the bank, that’s their problem. You know, it was there on or before the 15th and that’s important for arguing our penalty waivers.
Okay. Thank you.
Dr. Friday 16:18
Thank you, Amy. Appreciate it. Okey dokey. So let’s see here. I do want to reiterate on the money coming from TNTAP or the Tennessee Department of Revenue under the Tennessee Business Relief. It is not a loan. You do not have to repay it back. The relief is basically based on an application. Like I said there are only certain businesses that are going to qualify for it. There are more than about 28,000 businesses expected to get it and more than 73% of them will be small business owners with gross sales of $500,000 dollars or less. This is the expectation that the state has put on the website. Again, if you’re a small business owner making $1 or more in gross sales, so it doesn’t even have to be profits. In some cases, some of the money that’s been handed out or least in loan forms or whatever else, you have had to have a profit because it was based on the profit that you had. This is not based on profits, it is based on gross sales. So not a loan. It is actually free money to small businesses that meet certain business criteria is important that you are able to meet those criteria and answer those questions, but it is the Tennessee Business Relief Program. Glad to see that there is something out there that is helping small business owners meeting eligibility. If you did receive PPP or EIDL, you can still receive this money, but you must receive eligibility notification, which a lot of you may be getting them. I don’t know who gets your emails, like, as an accounting firm, we actually get a lot of notifications from the state for and on behalf of our clients. You may or may not, but it’s important that if you get a notification that means your business has already been classified to meet what the state thinks is going to be the criteria that you need to have.
Dr. Friday 18:29
So, example, accounting firms not on the list, probably not necessary, but restaurants, hotels, people in the music industry, all of those that are in the tourism industry, you will meet those criteria and so an additional, thousand dollars to I think $30,000 is the different amount that you have. It’s important that you can meet these criteria. Again, Tntap.tn.gov, if you should already have an account if you have a business license franchise tax or sales tax, you already know where I’m at. So look for it, see if it helps your businesses, anything that can keep our small businesses open. I am a total fan of and for. So we’ll keep talking about that. Again, PPP money is done at the moment, unless more money is released, there are no more PPP loans. There is still EIDL loans, you have to go to sba.gov fill in the application and see what comes. I’m not sure how much money they still have left and if it’s still meeting certain types of business criteria but if you’re a small business owner and you are just trying to keep your business open, I have a couple that is in really difficult situations. Obviously businesses that are in the entertainment bars with live bands and require people to attend. Those businesses have pretty much been closed down. Hotels and things have managed to do. A lot of businesses in the malls, several of my clients that work in the malls. That you know, the malls are basically closed down, people are still not really going back to the mall. So if you had a restaurant in the food court or small clothing stores, those are really suffering. So I will say if you can go to and use the services that would be very helpful to small business owners, they’re trying to keep their doors open and you know, keep a roof over their head.
Dr. Friday 20:26
So, that being said, if you’ve got questions about your taxes, it is tax season people I know it’s not April, but Hello, it’s July and we’re in the middle of tax season. 7/15 is our deadline. If you have not already filed if you have, then you should be looking at your 2020 in many cases, there have been some changes, maybe one of you have been laid off for a period of time. Maybe you collected unemployment, keep in mind, unemployment is taxable money may not be a big deal if you only collected unemployment the whole year. But it could be If you end up getting your job back for the second half of the year, job numbers are up. So a lot of people are getting back to work, which is fabulous news. The sooner we can get people back to work safely under safe situations and not have too much recourse as far as people getting sick or coming back out of this. The sooner we’re gonna actually see our economy come back. I know there’s a lot of people that are on both sides of the fence of that and that’s not what this is about, really more just about, if we don’t work, we can’t pay our bills. So it’s important that we try to get people back to work. If you need help with taxes again because maybe you haven’t filed your taxes for a number of years and maybe this is the year to do that because the IRS had put a hold on collections and everything else till the date of 7/15 I have not again heard if that has been extended since many people have not yet been able to get back to work.
Dr. Friday 21:55
Back in March when a lot of these things happened, there was an expectation that If everyone stayed at home and we were able to do this, that we would be back full, full bore ahead and everything, and on 7/15 that isn’t happening. So we’ll see if there are new extensions happening coming down the line or I know a lot of you call and email me and ask if I know anything about a second stimulus check. As of right now, again, no second stimulus check has been put into law. There is a conversation many people know there’s a conversation, but it is not something that is going to necessarily probably come in I’m not expecting anything like that until the last probably last quarter because the IRS is still sending out stimulus checks and will be until September of 2020. By the time they get all those out in there into the economy. Let’s all hope that we don’t need a second stimulus check. To keep everyone working and moving ahead. Let’s hope that the economy has recovered and able to do something with that. The 10% penalty I talked about this if you are pre age 59 and a half and the retirement account has waived up to $100,000, for distribution in the year of 2020, from 401 K’s, 403 B’s and IRAs federal government, a federal tax on these distributions can be spread over three years beginning with a year that was paid out unless the individual likes to pay the taxes all at once. Additionally, amounts re-contributed to these accounts within the three year time period won’t be taxable.
Dr. Friday 23:31
So there are some really cool little niches if you’re having a tough time or you need to have a little bit money, you might want to think about the implications of maybe doing something with the 401k. Again, you will have to make some elections and you’ll need to talk to your tax person or if you do your own taxes, because whatever you choose in the beginning, in some cases people may take the money out and be able to repay it back in three years. Some people will be able to spread the taxes out in the three years instead of doing it all at one time. There’s some, again, some really cool things. And here’s another idea for kids or grandchildren who are working this summer, you can contribute to a Roth IRA for him or her if they have earned up to $6,000 in 2020. So maybe grandma and grandpa instead of buying certain things, because I don’t know about my nieces and nephews, but sometimes they’re a little spoiled. Instead of maybe putting all the money aside, you could put money into a Roth IRA. It would not be tax-deductible for you. But as long as that person has earned that much money, the money can go in an IRA, remember, it will grow tax-free for the rest of their lives. And so if a 16-year-old put $6,000 away in an IRA theoretically over his lifetime, assuming that would probably become worth over $100,000, over you know, the next 60 years before that person hits retirement. So the idea is to continue to contribute to that.
Dr. Friday 25:04
So maybe a wonderful gift that you can actually keep on giving for them, and they can use some of that money for college too if they wanted to. But not everyone’s going to go to college and not everybody is going to use it or need it. I mean, quite a few kids can do some pretty cool things. I have several of them that have managed to find grants and other ways to fund their college. So I think you need to be open-minded and figure out what you have gone there. All right, so hey, I know it’s Fourth of July and it’s hot outside and you’re probably playing but if you have any questions, you know, it’s tax season. I’m working. Other people should be working, no. Do your taxes. Give me a call at 615-737-9986 again, 615-737-9986. We’re going to talk about maybe getting things discharged and how that can affect your taxes. When we get back from this break. We’ll be right back.
Dr. Friday 25:29
All righty, we are back this fourth of July day, feel free to join us at 615-737-9986. And we’ll go right to the phone lines Dallas on line one. Hey, Dallas.
Hi Dr. Friday. I’ve talked to you about capital gains and how to pay the capital gains tax this year. By quarterly. I went ahead and ran to try to get TurboTax to print out the, whatever it is.
Dr. Friday 26:42
1040 ES, yes.
Yeah. 1040 ES. And the first two had a due date of July 15. So that means the first payment I have to make is before July 15, which I’ve already sent off.
Dr. Friday 27:00
Well, normally, as you know, Dallas in the past, if you’ve made quarterly, we’ve always had April, June, and September, but because everything was delayed, they delayed the first two payments. So you have to make your first two-plus if you had a balance due for other people, everything on 715. So thanks for bringing it up, because that’s actually great for people to know if you didn’t make your payment on time. You still have time this year. But yes, your first if you made it honor before that’s fine, Dallas, but your first one and the second one would be due on 7/15.
And I want to make sure I did it right in that even though she made the capital gains all in February or March. She doesn’t pay the whole thing. She pays it quarterly and so they’re therefore the other half of the money is paid in quarter three and quarter four times.
Dr. Friday 27:45
Yes, that is fine as long as she makes him in four equal payments based on theoretical estimates are based on four equal payments from the year before her a year before was probably much lower because she didn’t have these capital gains in the first place. So she’s already probably met some of the criteria so the answer that question is yes make it in four equal payments is perfect.
Well, I sent them only the second payment with twice as much money. I didn’t send them…
Dr. Friday 28:13
There wasn’t a first one, you just made two payments at once, and then you’re gonna make a third and a fourth right?
Yes, I’ve got some notes to mail out at that time. Also, I wanted as a retired postal worker, I did want to help your fans of who we’re talking about getting certification when they mail off a letter, they can go into the post office and ask for certified mail and they will be able to track that and get a notification on the internet. And they’ll have it on their receipt where they buy the postage at the post office. So they can track everything that they send.
Dr. Friday 28:49
Perfect well I just wanted to have something stuff the IRS because they’re renowned for losing it not necessary the post office but once it gets to the IRS and it takes them three months to cash the check you’re gonna be in trouble and that no one else so good to know Dallas. Thank you.
Okay, it’s only about $4.50 or not for a first-class envelope certified.
Dr. Friday 29:10
Perfect. All right. hope she’s still listening. Thank you, Dallas already. All right. We’re gonna go on to the next one. We got Eric in Brentwood.
I really enjoy your show. learn a lot from you. Every time I listen.
Dr. Friday 29:34
What can I do for you, sweetie?
Okay, this is a withholding question. I am retired and TCRS, Tennessee Consolidated Retirement System and Social Security. I didn’t have this much withheld this year. So my question is doesn’t matter what place you take your withholding out of social security or the VCRs, I think it’s probably irrelevant, but I just wanted to check with you.
Dr. Friday 30:05
It’s a great question and it is irrelevant for the purpose of the government as long as they’re getting their 12% or whatever tax bracket you’re in. As long as they’re getting it from one of the two, you can make that choice and sometimes Social Security I think is a little difficult sometimes to get the withholding, you know, if you want to change it at all, I’m not too sure how Tennessee consolidated is, but it doesn’t make a difference, whichever is easier for you to make the adjustment on.
There are no tax advantages your way?
Dr. Friday 30:33
Okay, one more quick question. I had a roof that depreciated earlier than its lifetime. So, can I write off the remaining balances that that depreciation on the roof?
Dr. Friday 30:52
Right when you list the new roof, you would zero out the old one, so whatever was left, you would be able to take 100%
Okay, so like it says five years left on that route, you could take the balance so that depreciation, right?
Dr. Friday 31:05
Okay, very good. Thank you so much.
Dr. Friday 31:09
Thanks, Eric. Appreciate it. All right, let’s work our way straight down the list and you can go to Frank Okay, let’s go to Frank. Hello Frank.
I have two questions. The first question is, I have a full-time job but last month doesn’t change. I want to prepare 2018 and the guy who helped me prepare the taxes to you know, add Uber or income into the taxes. Then the IRS wrote me a letter saying that we’re missing this income and they have to verify it. So I asked my tax preparer about the W2 but he couldn’t find a W2. I gave him Okay, so now the question is I have to send these taxes, property taxes to amendment on to IRS. So I just recall just got the taxes Monday the door to not have to. So what should I do?
Dr. Friday 32:08
You have to do what’s called a 1040X. And you have to add in the schedule C Uber as a Schedule C, you would have received a form from Uber. Usually, it’s all a 1099 K or maybe 1099. Normally you print it right off of Uber and it will say this is how much money you made. This is the fees we took and this is how many miles we tracked. You know, so you would actually add that to the existing tax return on 1040 X, and then that would mail them the additional money do or maybe you have a refund because sometimes Uber drivers really don’t make a lot of money on paper.
Yeah, well because what we did was because I don’t send them money I’ll be owing them $6,000
Dr. Friday 32:53
because they don’t know your miles. They’re not taking any of your expenses. All they’re taking is what Uber turned in as $1 amount to them. You have miles you have the wear and tear in your vehicle either actual or miles that you’re going to write off against that. That would bring that down the amount due to the IRS and you need to do that schedule C for the IRS to understand where the money is supposed to go.
Okay, and then my second question is paycheck protection came out. So I was wondering what was my options to refer to my employer because I still have a job. Do I talk to my employer or Uber?
Dr. Friday 33:39
You will have to file through your employer PPP is closed now. So you won’t be able to file the Payroll Protection Plan situation you’ll need to go for unemployment on your W2.
Okay. All right.
Dr. Friday 33:53
Thank you, Frank. Appreciate the phone call. Alright, looks like we got Barry next if we can go, Barry, number five. Yes. Hey, Barry.
Hello, Dr. Friday. Hey, I just asked you about $15,000 a year for my daughter. Is her husband included in there? Is he anything to me?
Dr. Friday 34:12
He is something to you, not always by choice sometimes. Yes, he is actually considered a part of your family so you can give husband, wife, children directly $15,000 each. If it’s a minor child, you may have to put it in trust, but in theory 15,000 for each person. Get kids to look at the money you could spend. No, I’m just joking.
I speak to us. Thank you very much. All right,
Dr. Friday 34:41
bye. Bye. All right. Let’s get Jerry in Columbia.
Well, I got a question. First of all, Happy Independence Day. My question is, I understand this better some changes to the IRA distribution when you hit 70 years old. Now I hit 70 in March. So I’m wondering what those changes are and how that impacts me?
Dr. Friday 35:12
Well, the biggest impact is if you hit 70, in March of 2020, you don’t have to take your RMD or what we refer to as required minimum distribution till the age of 72.
Ah, very good.
Dr. Friday 35:30
Right? And then the second is if you are actually taking rmds if, you know if somebody is already on the requirement on distribution situation in 2020, you’re not you do not have to take your requirement of distribution, because they’re trying to help people with the core of it, and some people don’t need to take it. So you were not required if you had to take it. But in your case, Jerry, you’ve got two more years to let that money grow. You know, I think they’re trying to keep people’s money in the market so that you know, right now, some people took a hit right? I mean, going on, right? Anyways, you do not have to do anything for another two years or a year and a half whatever.
Oh, great. Yeah, that’s great. Well, thank you very much. I really appreciate all your information. I listen to you often. Thank you.
Dr. Friday 36:14
Thank you, Jerry. I appreciate and that was a great question. Thanks for asking. And it really was I forget sometimes about some of those changes. So if you are, if you taking a requirement on distribution. Now, keep in mind what’s kind of cool is even though you’re not required to take required minimum distributions to change from 70 to 72, you can still do qualify charitable distributions, which is still your RMD. But what’s neat about that is let’s just say that you always give your church you’re 70 years old, 70 years or older. You’re taking normally a requirement on distribution. You give so much money every year to your church, whichever church it is, and instead of taking it from your pocket, and put it In the basket, you can have it come from your IRA, put it in the basket in a check form. And guess what? It’s now become completely tax-free money. You want to talk to your financial planner about that. All right, we’re gonna take our last break, we come back, we’ll hit a few more of your phone calls again. 615-737-9986. And we’ll be right back.
Dr. Friday 37:44
This is the last part. So have you been holding your breath trying to figure out? Should I call or should I not call her? Well, calling is not for everyone. I always think it’s a pretty brave person that usually wants to call a radio show. So I totally appreciate all the people that call because when you guys call, it’s amazing. How many people will email or ask those questions or say you know, I was listening to this question asked this question is really very nice of you to do that. But if you’re a little bit more like me and you want to just email you can Friday@drfriday.com, then that way, you can email your questions or just check out the website DrFriday.com you can email on that as well. Okay, so as you guys all know, I’m an enrolled agent licensed with the Internal Revenue Service to do taxes, and representation is really all I do guys. So when it comes to doing those things, and right now, it’s been crazy. It’s been difficult to try to get power of attorney for my clients. It’s been difficult to try to get phone calls into the IRS. You know, after 20 plus years of doing this, you find that you’re a little spoiled because up till now we’ve really had what seemed like we didn’t have as much access to the IRS as we would have Light, we had a lot more access than we do today. So I just kind of want things to go back to what we had prior to all this so we can actually start helping individuals try to figure out what they need to do and how they need to do it.
Dr. Friday 39:14
So before the last break, I told you, I was going to talk a little bit about student loan debt or discharging debt period. Okay, so if especially right now, right now your income is really low, your debts are high, maybe it’s time to consider should you call your credit card company, call your student loan company and talk about discharge? Because taxpayers whose liabilities are greater than the fair market value of their assets. Now, keep in mind, the fair market value of your asset would be your home, but and your cars and all those kinds of things. But if you have a mortgage that takes most of that, and then you’ve got student loans for 100,000, etc, etc. You could be upside down, right? Your liabilities could be higher than you’re assets and that can be anything excluded, excluded in income for forgiven debts up to the amount of the insolvency. So whatever you’re upside down, we’re able to go and show them that you can’t afford to pay this. So in some cases, people rent, right. So there they don’t have a lot of assets, but they have a lot of student loan interest. And so we are able to make a deal. Sometimes people will negotiate to make a deal. And at that time, they’ll get to 99 from the 299 C to be precise, and they’ll get this discharge and you have to find that on your tax return. Now, this one couple went to court and they actually took it all the way to Tax Court, which I’m not too sure who was representing them because apparently, they filed all this but then they forgot to tell the government that they had $300,000 they transfer it into their son’s bank account, but they continued to use that money to pay for household expenses. The transfer itself from the parents was figured into the insolvency but You can’t be taking the money back and using it for your lifestyle. It’s just not possible. So in that particular case, you got to be smart. Okay, you can’t be silly.
Dr. Friday 41:09
The other thing I want to talk about really quickly is installment agreements is only for those who can’t pay their taxes in full. So I mean, again, Tax Court came back to this one couple, it says a couple who owed 1.1 million tax has asked the IRS for an installment plan to pay the debt over six years when reviewing the company, couples financial and returns the IRS appealed this because the company, the couple had $7 million in the bank. So again, guys, the IRS, I mean, you don’t really want to take them for granted and think that they’re just so silly, that they don’t look into offering compromises. We do quite a few offering compromises. And out of those offering compromises, probably at least half of them go through a review, maybe they all do but the bigger ones sometimes go through a physical review where we have to almost go through a second offer and compromise To make sure that the information that was provided in the original offer and compromise is still good. By the time the offer and compromise are ended, which could be up to two years later, it takes us a while to get offering compromises through the system. They’re great when it happens.
Dr. Friday 42:16
I had a situation now where a client of mine did not comply. Now, keep in mind, if you make a deal with the IRS, the IRS says, that’s great. Now you have to be in compliance for the next five years. And that means paying all of your taxes on time and if you’re self-employed, paying quarterly taxes. One of my clients decided that they weren’t going to pay their quarter lease. And I noticed just two days ago that there was a letter back from 2002, which we already had in an offer and compromise, coming back and saying that they owed money. So nine times out of 10 because the client did not comply with what the agreement was that they signed off on over two years ago. That they are now going to end up in a situation. So this is serious, you can make good deals with the government, but they are also going to be serious about making sure you’re in compliance with what the government wants you to do. So you can’t just kind of wing it. Self-employed people, one of the reasons they get in trouble is because they don’t pay their quarterly fees. We forget that we’re in partnership with the IRS. It’s that simple. That’s what you have to look, I’m self-employed. That’s what I always say, 25% minimum of every dollar I make needs to be set aside for good old Uncle Sam, or the state of Tennessee because one of the two of them are going to need part of that or all of that money. So you need to know that so when you’re doing your budgets, or you’re planning or anything else, you need to figure out if you need to make $1,000 a month, you need to be making more like $2400 a month because, you know, I mean $1,000 a month I mean, you need a more like $1500 dollars to cover that extra money that you’re going to be paying in taxes, self-employment tax business licenses, franchise excise tax, sales tax, whatever you might be doing. Those are all part of doing business.
Dr. Friday 44:08
Alright, so if you want to reach me Monday morning, we still have openings on the website for tax preparation and you can go to Drfriday.com. Click on schedule and you’ll see our openings that are still available. We can help you file extensions and do your taxes afterward as well. You can also email firstname.lastname@example.org. The easiest way to probably reach me or you can reach me on phone 615-367-0819 Now keep in mind we are talking it’s busy now. Okay, so tax time, phone numbers may take about 24 hours if you want to reach me that same number 615-367-0819 you can text go ahead and text is a little faster to get to me or you Email because those will be the two fastest if you’re looking for a tax appointment, or if you need a consultation, maybe you haven’t filed taxes for a number of years, or maybe you have received quite a few love letters and the IRS is getting ready to start causing more than just the irritating mail. They’re going to be leaning levies or whatever we offer.
Dr. Friday 45:17
Our first consultation is always free so we can help you if we can. Because there’s nothing worse than just making a phone call that company says Oh, if you owe IRS more than $10,000 guess what we can help you. Not always true. Sometimes you do have to make the payments. Guys sometimes your assets are higher than what you owe the government you meet you know, you need the honest truth not something that’s gonna say yes and pay us $500 a month and we’ll help you and they don’t even know if they can because they haven’t gotten power of attorney. They haven’t gotten your transcripts. They don’t even know your situation, but they’re gonna start billing you Come on. So if you need help, you need to deal with the government or you just need to get caught up so that you can move forward, maybe make a deal after that. Then you need to give us a call at 615-367-0819 or email email@example.com again. You can also go to the website Dr. Friday comm find out who I am learning a little bit more and if you need an appointment, you can go to our calendar and click on schedule and pick up a few days I think is basically closed off after the 15th. Right now we’ll open up some more days for people that want to file after the extension. If you need to find out more about what you can do as far as making a payment plan or a deal again, make an appointment or give me an email and I’ll be more than glad to explain to you exactly how all of this can work out for you and what we need to do.