Another episode of the Dr. Friday show is here! In this episode, Dr. Friday talks about taxes, representation, and the following questions:
- New Changes To The PPP Loan
- How To Do Taxes As A Small Business Owner
- Get Help With QuickBooks
- Is It Too Late To Apply For A PPP Loan?
- Why It’s Important For Someone To Represent You
- Is The Stimulus Check Taxable Money?
- Help With Tax Preparation/Representation
- Will There Be A Second Stimulus Check 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 0:30
Good day, I’m Dr. Friday and the doctor is in the house. We are here today to talk about my favorite subject as an enrolled agent licensed with the Internal Revenue Service. What I do is taxes, top taxes, live taxes, love taxes. So if you have questions concerning your tax preparation, remember July 15 is the new deadline. So if it comes to time and you need to be able to do something with your taxes, you need to be able to go in there and see what you can do to make it happen for you. But otherwise, the phone number here in the studio 615-737-9986. We are taking your calls and let’s go ahead and hit Joe since he was nice enough to call. Hey, Joe.
Hi Dr. Friday. Thank you for taking your time on Saturdays to come in here and help us out. Here’s my question. We have terminated about 10 days ago at my job. The new company came in and gave us positions now. I’m going to need to do a 401 rollover. My old 401 daily access in the new one is like fidelity. Do you do 401 rollovers for people? Should I come in and see you?
Dr. Friday 1:52
I don’t sweetheart, thank you for even asking. No, I did the tech side. So thank goodness you’re not taking the money out. As a rollover, there’s really not a lot of things to worry about to the extent that they’re going to re-ask you to reallocate, possibly. Are you going to take plan one plan to plan three? I’m not sure how old you are and what your situation is, but I’m assuming they’re going to have you when you do the rollover reevaluate since you’re going to a new company. Other than that, as long as you’re not taking any money out, there shouldn’t be any tax situation.
Excellent. One more thing, Dr. Friday. I snail mail my taxes every year and sent them in on April the 14th. I haven’t seen anything was about eight weeks ago. So they’re probably that far backed up. Would you agree?
Dr. Friday 2:44
Yeah, I’m getting quite a few phone calls on this to be quite honest with you. Thanks for bringing it up because it’s probably other people listening to asking that same question and the answer is yes. I am working with the idea that especially with snail mail, as you know, I love to say but if You mailed it, it can take 60-90 days for that to actually get processed. But even people that are filing they’re finding delays longer than the 21 days. So just be prepared to wait a few a bit longer as my suggestion.
Dr. Friday, have a blessed day. Thank you again.
Dr. Friday 3:18
Thank you appreciate the phone call very much. All right, let’s go ahead and continue this with Dallas.
Hey, Dr. Friday. I just helped a mother in law redeem some stock price, and she got capital gains and I looked online and I got some confusing information about when you pay that capital gains tax. Do you pay it right after you get the capital gains or do you wait till you file the next year?
Dr. Friday 3:49
Great question and it’s gonna be capital gains is kind of unique only to the extent that if you helped your mother. I’m making a wild guess that you are that she over the age of 65, possibly retired that there is a zero percent capital gains. So I don’t know how much but assuming that she doesn’t meet that zero percent and she is going to owe some taxes, then you need to be making a quarterly or an estimated payment within the 90 days of receiving it.
Okay, well it was all stocks fee.
Dr. Friday 4:25
So all-stock but she had a basis in that stock, right?
Yes, she did. She ended up with quite a bit of money over the years about 75% of what she redeemed came in.
Dr. Friday 4:37
Do you know about just a ballpark of how much money she might have earned?
Dr. Friday 4:45
Okay, all right. So she’s way above because a single person I mean, she only made about 30 or 40. And she lived solely off so security, it’s possible she could have stayed under it, but that that dollar amount, she needs to go ahead. In fact, she’s gonna get hit with the higher capital gains because she’s gonna get hit with the 3.8% Medicare tax on top of the 15 so she needs to be looking at 18.9% tax on that.
Okay, she’s 88 years old.
Dr. Friday 5:20
Age unfortunately has no bearing on taxes. I’ve got more than one that comes in is there some point I should stop paying taxes? Or would love to say yes. If you need some help with estimating, it’s easy enough to throw it into, you know, whatever her taxes were in 18. She may have had very little or no tax but the throw it in and see if it triggers anything like AMT tax. Sometimes capital gains can be a little more frustrating.
She just lives off of our Social Security.
Dr. Friday 5:51
Now her social security with that transaction her Social Security is gonna be 85% taxed. So on top of the capital gains, she will have some tax on Social Security.
Yeah, some of the calculators I looked said that she would owe about 40,000 or more 40 to 50,000 in capital gains. So should I just send that whole amount in?
Dr. Friday 6:15
I would definitely send that in. I’m estimating, it’s gonna be closer to 75. I mean, if her profit was $400,000.
Dr. Friday 6:26
I would say at least send him 40 or 50. Keep in mind as long as she sends 100% of the year before, she’s probably not going to get hit with a penalty, but it’s easier to go ahead and take the tax dollars out now while she still has that in there. So that way she invests or does something with it. She’s not having to worry about taking the money out later.
Okay. Thank you very much.
Dr. Friday 6:46
Thanks for the call Dallas. I appreciate it.
Dr. Friday 6:52
This is the Dr. Friday show, I’m an enrolled agent licensed with the Internal Revenue Service to do taxes and the right presentation. So if you haven’t filed taxes in a number of years, or maybe you’re working on your taxes right now, and you’re trying to figure out what needs to be done next, just give me a call at 615-367-0819. That’s the office and I don’t want to confuse you because no one’s going to answer that phone right now. So if you want to join us in the studio 615-737-9986 that’s who you can reach me right now. So if you’ve got questions, or you want to make a statement, or you’re working on something, or maybe you’re thinking about how can I avoid paying a certain amount of taxes I often have people that come in and say they shouldn’t have to pay self-employment tax because they’re already on Social Security or in the extent of selling a piece of real estate. Sometimes there are advantages to doing 1031 exchanges. Not always sometimes you just want to get out of the real estate business and do what you have to do. So it’s just a matter of what’s going to work out best for you and keeping the money in your pocket. Just as Dallas called earlier, you need to think about a portion of that money is taxes and higher the capital gains more of it is taxable. The only thing I could have suggested in that situation is the possibility and I don’t know the situation at all would be, would it be possible to have spread that out over a couple of years, but hey, the stock market goes up and down every single day. So it may be that the risks to the finances were not something worth willing to wait and sell some of the stock later. So again, not an expert on that situation. And sometimes you got to do what you have to do to make sure you’re moving forward. So if you’ve got questions on that, or maybe you’ve got a friend that hasn’t filed taxes for a number of years, that seems to be our most common.
Dr. Friday 8:43
Keep in mind, if you haven’t filed 18 and or 19 taxes, then you’re not going to be getting the stimulus check. Now if you do go back and file your 18 or 19 taxes, and at some point, you’re going to need to file 19 to reconcile the stimulus. But they’re using 18 or 19 tax returns because they’re reconciling 19, but they’re actually putting it on our 2020. So it’s very confusing. All my small entrepreneurs keep in mind, they have made some changes again to the PPP loans. So it’s important that if you have a PPP loan, you might want to revisit the sba.gov website. As of Friday, they hadn’t updated the new rules yet in there, but they said that they were going to have them on the website. So many of my clients are getting to next week, they’ll start having to ask for forgiveness. So we’re trying to figure out exactly how that’s going to work. But making sure that you have a list of all your employees. We know we have to have this name of the employee, Social Security of the employee, how many hours that employee worked, and the rate of pay and anything over 40 hours, they’re not going to be considering the basic pay. So if you had one person that maybe you doubled up or tried to pay them more money because you couldn’t really keep two people on the job, you might not get full forgiveness. But we are going to have more and more about that as we start processing and getting that information out there. As far as I know, it’s not too late to request, PPP money still, there is still some out there. As far as I know, I have people that are still getting qualified, let me put it that way, for PPP or EIDL money as they go in there. So it’s kind of important for you to if you if you’re a small business owner, and you need help, trying to keep your doors open, keep your employees in the business, or at least working for you so you can try to help them out. It’s an alternative. I can’t guarantee you that we all know exactly how this whole system is going to work for small business owners. But it’s going to be interesting, of course.
Dr. Friday 11:00
We all know the senate right now is working on the Heroes Act to find out if there’s going to be a second stimulus check to all the individuals or if they’re going to do a stimulus for just certain walks of life, certain classes of jobs, certain people that are not able to get back to work. I mean, we know that downtown Nashville state in the second stage decides not to open up anything downtown. So that means that all those bars and restaurants and a lot of the different tourist event centers and things like that they’re downtown Nashville, all the people that work for those individuals are still on unemployment. We’re a bit worried because at the end of July is the end of Social Security and I realize many people right now are doing okay. I mean, they’re making more money on unemployment than they were when they were working. Which you know, one way or the other is what it is, but at this point in about over 45 days, that check is going to stop And then we really hope that downtown Nashville will be open by that time to help get these people back to work. But if you have help, or you need to have a question or answer to the question, that’s awesome. We’re going to we have a phone call coming in and you can do that at 615-737-9986. Why don’t we take a quick break and then we can come back and talk to Randy and Sam and then also take any other calls that might be coming through. That way we have plenty of time to talk to him. We’ll be right back with the Dr. Friday show.
Dr. Friday 12:40
All righty. We are back here live in the studio. I’m Dr. Friday and enrolled agent licensed with the Internal Revenue Service the new taxes and representation and we are going to go right to the phone line since Randy and Sam were enough to hold to the break. Let’s start with Randy.
Hello Dr. Friday. Nice to talk to you on a Saturday, I saw you in person many years ago in reference to some back taxes, etc. You protected me, you’re my fire of fire shield or whatever, for about a year, I need to probably need to get back into your office to cover this, but one question I’ve been kind of playing the waiting game, the 10 year period, if I understand it correctly, for certain lanes to drop off. That’s one thing you and I talked about. And so I’m still doing that I’m not receiving any what you call love letters. And I know this is not a laughing issue. I have not filed my taxes for many years, which you were just talking about. My main question, Dr. Friday is if I request to a transcript from the IRS. I’ve heard that that will kind of reset starts the clock on many different fronts. Am I right in that or wrong, or am I making any sense to you at all?
Dr. Friday 14:07
Totally making sense. To be quite honest with you, I’ve heard the same things. Obviously, when we obtain power of attorney, the IRS is going to process something, therefore, it may trigger them to look at your files. That simple, where they’ve got millions of people they’re looking at, maybe they don’t look at Randy so much, because, at this moment, nothing’s come up on the computer that’s flagged him versus a lot of other people before him. So you know, it is a possibility. If we have power of attorney, we would be able to use this separate software that does go through the IRS website, but be able to pull transcripts on your behalf. You know, I’m a firm believer that keeping your head down and sometimes just letting the time run is a theory that we do work with sometimes, but you do need to get in compliance. Otherwise, the time clock gets started on other things or you’re losing refunds or if you owe more money, we’re never going to get out of that kind of cycle. So my theory would be getting caught up.
I’m sorry, Dr. Friday. That is my sense of urgency. So I should probably just call your office the first part of the week and see if you have time for me to come in and we talked for a little bit.
Dr. Friday 15:21
Yeah. No worries at all. And I’d be more than glad to at least talk and see if we can help you out, okay?
sounds good. Thanks so much. Good.
Dr. Friday 15:28
Thanks for the phone call. I appreciate it. Okay. All right. Let’s head on down to Sam from Franklin. We have Franklin listening to places. Hey, Sam.
Yes, ma’am. I’m a minister, and I have a question about housing allowance. I’ve got a small mortgage should be paid off in a couple of years. And I realized I could write off expenses that along with maintenance and things like that to maintain my house. Once that mortgage is paid off, what do I write off of? Is it fair housing that you can rent your house for, or can I write off anything if I don’t have a mortgage?
Dr. Friday 16:07
Right, you would use the fair market renting and you can usually go to the IRS website or whatever there are places where you would get what the rent would be. What the rent would be is would be what your current housing allowance would be allowed.
Okay, well, what is the fair market value is actually higher than my mortgage payment as we speak?
Dr. Friday 16:28
Well, I mean, your housing allowances, what is it takes for you to maintain. So if you had to rent that house, pay the utilities and homeowners insurance or renters insurance in that scenario, that would be the cost of your parsonage or your housing allowance.
Okay. All right. Well, thank you very much.
Dr. Friday 16:49
Thanks, buddy. That’s a great question. All right. So there we go. Alright, so we’re moving along. So if you want to join the show, you can at 615-737-9986. We’re taking your calls, obviously talking about all my favorite subjects waiting to make sure that we stay on top of any current tax changes. Not a lot happening at this moment, guys as far as anything that’s changed in the last few weeks or conversation. My biggest thing is this is the time IRS is just kind of reopening things are moving a lot slower. So my suggestion is to go ahead and get your taxes filed a VM file for the last couple of years. We did just get a notice that the IRS office for us to get power of attorney is back open. So we’ve been delayed for a period of time hard to represent if we can’t get representation approval. So that has reopened so anyone that we might be representing now we’re gonna have to rescind and get them into the system properly. But you know, the IRS right now I will tell you I tried to call them last week on two different occasions on just the regular phone number, I don’t know if anyone’s listening and has had different luck, but all they had was automated services available to us. Now, we all know that there is a separate number for people a stimulus, but I think we’re at least my office is getting fewer and fewer phone calls about the stimulus. So I’m assuming more and more people are getting their stimulus checks, or they’re finding out that they don’t qualify for the stimulus check. I’m sure there are still based on the IRS website and their idea that they’re going to be mailing or sending out checks all the way up through September. There are going to be people that haven’t received it, but I think a large number of people have received it. So it’d be interesting to see what happens. I have now I have quite a few people contacting me saying, “Well, if there’s a second stimulus, there’s some way I can go ahead and get my bank account so I can get it faster than I had last time.” And to be honest, guys the symbolist is not something that’s really been dealt with through the tax code at this moment. You know, so if normally if people get their refunds electronically, then you’re in good shape. If you don’t, and you prefer a check, well, that’s how the stimulus is going to come. You guys probably already had that happen this first year as it was this first stimulus, we’ll have to just see how that comes out for everybody. Hopefully, people are actually getting back to work. So that will also help with some of the issues that a lot of people are having.
Dr. Friday 19:30
So if you’ve got questions concerning taxes, obviously filing them is the first step. I don’t care if you owe money doesn’t make a difference. If you have a balance due, the biggest thing is letting the government know how much money you owe. And then starting to work on the fact that you either owe money then we need a payment plan. If you aren’t working right now we can get you probably put into a non-collectible for a little while and or delay the payment plan until you start working To get back on your feet. There is a big thing the IRS sent out this week that was just talking about if you are getting letters from the IRS since they were out of the office, it’s kind of unique. The IRS actually dates their letters about 15 to 20 days early, because it takes them almost two weeks to get the letters from the person’s desk that’s producing them or the computers as producing them to the postage to your house. So a lot of people are going to get notices. They’re telling us that it’s going to actually have a date that may or may be expired, the letters have gone out, but they basically say you have 15 days to respond and that from the date of this letter, and that may be expired. They’re basically saying that that’s fine 15 days from the date that you received it. But we do have a little bit more things we need to do. So don’t be surprised if the IRS love letters start arriving, they have done a big send out trying to get people back out there doing the things that they need to do and moving this stuff along. So that they’re able to start getting their collections and their revenue back in, which should be interesting since we still have a large number of people that are not working or haven’t worked for a period of time. So their savings or their payments are down.
Dr. Friday 21:12
So if that is you remember, if you were in a payment plan prior, they’re going to restart those payment plans as a 7/15. If you put a hold on your payment plan. If you haven’t been in a payment plan, they’re going to basically start expecting people to start making them on or around 7/15. If that doesn’t happen, you’re going to have to communicate with the IRS which is going to be challenging if the phone systems or the technology which is usually by phone isn’t working, then we’re going to have to do a lot more certified letters are proof that we’ve made to the best of our ability to contact them but make sure that you keep in touch with the IRS. The last thing you want is somebody taking a lien or levy against the paycheck that you just started getting back. I mean, and they can have the ability to take the money from your bank account. They can put a lien against your house to take a lien or levy against your paychecks. This is something the IRS can do. Normally they only do that when communications have fallen through. So if you’re having problems or you need more assistance with the IRS, you can certainly give us a call here at the studio at 615-737-9986. Or maybe even have an interesting conversation or story about dealing with the IRS or dealing with the state because we do them all the time. And we find that every person that we deal with is a little different or if you’re having problems because you know what, you can’t afford to pay it but the IRS just keeps pushing. I’ve got one where he’s trying to get a loan against properties trying to do what the IRS is asking, but nobody wants to give him a loan and rejection and they keep wanting more and more rejections to prove that he isn’t qualified to be able to do anything with it.
Dr. Friday 22:55
So if you’ve got questions concerning that or anything else, six months 615-737-9986 is the number here in the studio. We’re talking about taxes. Remember, as an enrolled agent, my job is to kind of be the shield between you and the IRS. It doesn’t mean I can stop the IRS from doing anything, but what means is we they will communicate with me, instead of communicating with you, they have to contact me to make sure I have the information that they need. And then I send it to them, making them a little less threatening when it comes time to do what you need done or having to do anything that you have dealing with that issue. So it’s kind of the way it works and making sure that you actually have, you know, trying to get the information that you need dealing with those kinds of situations. All right, let’s go ahead and hit Jake right before the break so he doesn’t have to hit it, and then we’ll take the break. Hey, Jake.
Hey, Dr. Friday. I called you months ago about an audit that I was getting from the IRS. You gave me some advice. And anyway, it worked out to the point where I felt like it was they treated me fair, but I did have to make a payment. But it was right before the Coronavirus. And then she sent out a letter that said, “Do you accept this amount of money?” And I sent the letter back saying “Yes, I did.” And I hadn’t heard a thing from them since then. And I’ve called twice and left a message on her voicemail for the agent. Still haven’t heard back. So I’m wondering if I’m supposed to send the money in? Because she said I could make a payment online or I could set up payments online. And then at the end of the day, I didn’t get anything back from them. And I thought I was supposed to get something saying now it’s accepted and here’s your PIN number. I’m kind of at a loss.
Dr. Friday 24:53
Yeah, you did everything correctly. What you’re waiting for is a letter coming back that basically says here’s your new balance. do include any potential penalties whatever they may have already built those in. And then you know, if you can’t make the payment then you need to send in this form it’s the payment plan form or that at that point, you know that you could go to irs.gov and set up a payment plan but until you get that letter, it’s probably not been posted to your account meaning she has it but then she has to give it to her supervisor, the supervisor has to sign off on it, and then it goes into collections. It’s probably sitting somewhere between all that.
Probably the Coronavirus slowed all that down?
Dr. Friday 25:34
Yes. Now if you have any money that you want to throw at it, or you want to go ahead you can start sending in payments, you know what tax years this has to do with. So, any money you want to pay for it. I’m just saying if you have the ability, it’s gonna help reduce penalties later. But at this point, you’ve done nothing wrong. You’re just waiting for them and that can usually even on a normal situation takes us 30 to 60 days to get it in the system.
Yeah, I spent at least 60 days. Here’s another question. In the meantime, I filed this year’s taxes and forgot to put my energy tax credit for my solar project. So I did a 1040 X and sent that in. Is it possible, if they owe me money for that, they’ll just wash it out and take out what I owe them?
Dr. Friday 26:19
Absolutely. They will take if you, they’ll either give you the difference. They’re going to keep their share of that pay your back tax assuming that it’s in the system, and they know about it. Since you had a male a 1040 X, and I’m going to assume that the audit will be posted before that gets posted, cuz that’s going to take another, you know, 60 to 90 days.
Okay, I appreciate the help. All right. Cheers.
Dr. Friday 26:45
Thanks. All righty. Why don’t we go ahead and take a quick break here? And when we get back, we’ll go to Terry and I know a few other people are calling in. You can reach us here at 615-737-9986. We’ll be right back. All right, we are back live here in the studio, Dr. Friday, Enrolled Agent licensed with the Internal Revenue Service and we are here to talk. Alright, so while we hit Terry. Hey, Terry.
Hello, thank you for taking my call. I heard a snippet of information that for 2020 you can deduct $300 of donations to a 501 (C) (3) organization, even though you don’t itemize you can take it like right off the top of. Is that correct?
Dr. Friday 27:52
No, that doesn’t apply. That has to fall on to your itemizing, which means you’d have to exceed. If you’re single 12,200 this year or 24,400, the next year goes up a little bit more. So no, that charitable contributions still falls, the only people that actually get to take it strictly off their 1040 would be people that are over the age of 70 or 72 taking required minimum distributions.
Dr. Friday 28:21
Everyday individuals, that doesn’t apply to, no, ma’am.
Okay. Well, I’m so glad I called. Thank you so much.
Dr. Friday 28:30
Appreciate you. All right. Let’s keep moving on. And let’s go to Ed. Hello, Ed.
Dr. Friday 28:39
What’s happening in life?
Thank you. Last week, you told a number to call for the IRS to find out information about your stimulus. I couldn’t stop the vehicle quickly enough to write it down, and I missed it.
Dr. Friday 29:01
Did you get your pen and paper?
I got it ready now.
Dr. Friday 29:05
Okay, it’s gonna be 1-800-919-9835
Well, I certainly am grateful. This should be a nice short call. That’s all I need. Thank you very much.
Dr. Friday 29:38
Thanks for holding through. I appreciate it.
Dr. Friday 29:45
All righty and we’re moving along here. If you’ve got questions, you can join the show. I know we’re getting down to the last bit here, but 615-737-9986 taking your calls talking about my favorite subject, taxes. Hey, we’ve got another Ed on the line. Let’s hit Ed. It’s a good name. Hey, what can I do for you?
Well, I have a friend who lost a rental property in the March 3rd tornado. They asked me, because I do a lot of real estate work, about a 1033 exchange, not a 1031 but a 1033 casualty loss. It’s out of my wheelhouse, so I thought I would call you.
Dr. Friday 30:32
So did he get insurance money that was for more? Did he make a gain on it with the replacement value?
I’m not sure about the numbers. I think she needs to find out what some of the parameters are and where to go to find out some of those. Some of those questions need to be asked. So one would be insurance settlement.
Dr. Friday 30:57
Right. It’s basically It’s very similar to 1031 from you and my plant standpoint, the differences are this is from casualty loss. So she would still have to say, let’s just use simple numbers, I paid 100,000 for the home, now it’s a rental. So she’s been depreciating it, there would be recapture of depreciation, but the insurance company came back in and gave me 125,000 for replacement value, or whatever depending or even the hundred thousand since she basically had. There would be no difference because she paid 100 she made 100. But, if she got replacement value, like my house, if there’s a 15 or 20-year-old home, I paid 100, then now the insurance company came in and gave me 200,000, I would have capital gains. So that’s where she would want to do, in essence, the same as 1031, which would be to defer it by having to go out and buy another piece of real estate.
The amount of the insurance check, enter into this, or is the appraised value?
Dr. Friday 32:02
It’s the insurance check, it’s physically what she put in her pocket. So, the insurance check is like the buyer. I mean, in the essence of how we look at things sometimes so look at whatever she got on that insurance would be what she physically sold it for. Because that’s the replacement value.
There’s no deadline like the 45-day rule in 1031?
Dr. Friday 32:29
There really isn’t. It says from my from and I’ll be honest I’m looking at some of this because I don’t do a lot I do more 1031 than I do 1033’s even though we did have several disasters, obviously right for the Covid-19 and we’ll get more into some of those. But, it basically says that was 1031 this one you have within 365 days it looks like and we can get more specific for her if she needs to. Well, when did she when was she Hit with this disaster was it back in March with the one that hit here in Tennessee? Okay, so that would be the biggest thing it basically she can get it says here it can give you a two-year extension on the replacement period so it looks like there’s a lot more time on this one she would have then what you would have had on 1031.
Great, I will pass that on.
Dr. Friday 33:24
And if she needs more information or if you need to just email me and I can send you this IRS link but it tells about it so that way you have something maybe to pass to her to read.
I will email you something on Monday.
Dr. Friday 33:37
You got it. Thanks, sir appreciate the phone call. All righty and we are living here guys. So if you’ve got any questions and I love those ones because be honest with you 1031/1033’s, we don’t have a lot of people we don’t live in disaster zone so I don’t deal a ton with them. But it is a wonderful loop in the tax code that might equivalent to instead of putting all the money back in your pocket and paying taxes, possibly wanting to reinvest or rebuild. I mean, obviously, if she rebuilds it for the same property, she may be able to do that. But if there’s a total loss, who knows. There are a lot of moving parts, so we’ll probably have to get a couple of different information to put it on their tax return. All right, you want to join the show 615-737-9986 is the number here in the studio. So if you’ve got questions, or want to make a statement of some sort, you can do that easily enough by picking up the phone and giving us a call, but if you need help with doing your taxes or anything else, you can also check out the website at drfriday.com. Also, set up your tax appointment there. Alright, let’s go ahead and hit this caller real quick. Hi, Cory.
Hello. I have a question about starting up a new business. Hopefully in the next three months or so I have a new business going on and it’s going to be from scratch. I’m just kind of curious as to some pointers really to handle taxes and money, I guess. Best apps I know that you do Quicken, Is that something you would recommend and so on?
Dr. Friday 35:22
Oh, can I ask just a little bit about the type? Is it a service-based business is it? What kind of business is it gonna be?
It’s gonna be a food truck concept. Okay, and throughout middle Tennessee.
Dr. Friday 35:36
Okay, awesome. Love them. Okay, so did you set this up as a certain entity or you were running it as a sole proprietorship right now?
As of right now, it’s going to be a sole proprietorship.
Dr. Friday 35:46
I agree. I think right now that’s what you probably want to start out as just to get it. Now make sure because you’re either buying a truck and having to fix it up a little bit or maybe you’re lucky enough to get one that you don’t have to do any changes. But make sure all the costs, your business license, the cost of the truck, the cost of the inventory, all that needs to be tracked. Now you can use something as easy as QuickBooks or Quicken or you can do Excel. I don’t care as long as you’re able to go back and find the receipts and tell us what they were for. Right? Also, miles because you’re going to be there hauling this trailer with some sort of vehicle or drives itself. Because we do quite a few. So you need to track your miles if you’re going to be going around to different places in back home or whatever, so all of that would be deductible miles. Are you going to have help in the truck? Are you going to be getting some helpers or is it going to be just you?
It’s going to be me and my wife as of right now.
Dr. Friday 36:44
Okay, awesome. All I tell most Mike because sometimes these guys will pick up day labor to help them out. You know, when they have bigger, try to avoid that unless you’re using your children because you could get yourself into tax issues, but I would do so properly. Right now, make sure you’re making some money and then probably have a conversation with an LLC or corporation depending on what your bigger picture is. But first, let’s make some money before we can worry about it.
Right? I gotcha. Okay, thank you.
Dr. Friday 37:14
All right. Thanks for the phone call. I appreciate it. All right, we’re gonna take our last break here and if you want to join the show you can at 615-737-9986. We’ll be right back.
Dr. Friday 37:38
All righty, we are back. It’s Saturday out here. Hopefully, you guys are all having a good time enjoying yourselves having a bit of sunshine out there and know myself I’m enjoying a lot of yard work. I get to go out and play in the yard. But if you have questions about taxes, this is the show and let me tell you were down to the last few minutes. So if you have questions on the show now would be the time 615-737-9986. Again, if you’re a small business owner and you need help with doing things with your taxes or with your bookkeeping, you need to give our offices call, we have our certified QuickBooks advisors, which means basically, we do everything in QuickBooks. So if you need help with that, or if you just have questions about like the gentlemen called, I think it’s always awesome when someone’s starting a new business. It’s not easy to give direct advice, obviously, over the radio. But if you’d like to set up a time to go through and make sure that everything is set up the right way, you’re moving forward and you’re able to do things the way you want growing your business the correct way. We’d be more than glad to sit down. Remember our first hour is always free. We want to make sure that we are doing our consultation and making sure everything is moving in the right direction. So if you have questions about that or anything else you can always go to my website, drfriday.com, click on appointments and go for it.
Dr. Friday 39:04
Alright, let’s talk to Jared. Hey, Jared, what can I do for you? Whoops, we lost Jared. Jared hung up. All right, I scared him off, apparently. So if you want to call back, you can otherwise we’ll keep going here. Again, if you have questions about setting up a business, what type of entity doing things yourself, making sure that you’re filing all of your tax forms on time, very important. If you don’t do it on time, let me tell you, there are lots of little penalties that can reach up, and sometimes, you know when doing your own bookkeeping or your own taxes, there’s nothing wrong with it. But you know, sometimes what you think you’re saving, you may be losing and either not taking good tax deductions or taking deductions you shouldn’t and get yourself in trouble with the IRS. Who knows, you have to wait and find out because those love letters will eventually come if there is a problem with reconciling your taxes. So if you have questions about that, why don’t we go ahead and see what John has to say. Hey, John.
Hey, um, you know that guy who just called who is starting a business?
Dr. Friday 40:09
I am so proud of him because I did not do what he’s done. I started a new home construction business. I’ve been in business for 40 plus years. And as a W 2 employee, and I got to a situation where I could actually go out on my own and build houses. And I founded my company and got started with 50,000 of my own dollars. And of course, that got eaten up with workers comp and my liability insurance and everything else and I started building homes and which is what I can do. I’m a genius at that. I’m a great problem solver. I’ve done this for my whole life and I’m not a businessman. That way.
Dr. Friday 41:00
Everyone’s got their strong suit. Good point.
Well, here I am two years in, and I’ve built and sold a couple. The first one didn’t really make anything on it. The second one is closed in here real soon, and I will make money on it. But here’s the point is, is that I haven’t done the tax work. I set up as an LLC, right at the end of 2017, funded the company started up, and then the first sale didn’t happen until I went 2018 with homes under construction, had private loans, all those things worked. And I didn’t do the quarterly filings. I took a little bit of money here and there. I have some security coming in as income you know, so I was just stealing the money. I was just taking draws out to augment that you know what I’m saying? So, here I am, and we’re going into the next tax season here of 2020 and is there a way to for you guys to forensically rebuild my books? I mean I understand it’s going to cost me money but I guess it could I get I guess sit down with you guys and then you look at what I lay it all out in front of you and then you say, “Oh, brother, but I can help you.”
Dr. Friday 42:23
Right. Absolutely because the beautiful thing is most of the time at least I’m going to think that most of that information is that you actually use the bank account use the credit card we should be able to go backward and recreate and since you’re building homes and it sounds like you’re building them over a period of time you’re not going out. It sounds like you’ve done one or two of them so we shouldn’t have huge all of it went into one house or into another house. If you sold it well then we know we have a business income on the first one and it sounds like you’re getting ready to have a business and but we can certainly help you and also get you set up on QuickBooks if you’re not using it, or whichever, but you know, get you set up so that you can actually start doing it through there. And that way you need to make sure Uncle Sam’s a partner in your business and all of our businesses to be quite honest and you need to make sure you take that accountability to make sure you have that information. So yeah, we just give our office a call, we’ll be more than glad to help you get started, make sure we got everything filed properly. So you’re not looking over your shoulder.
Well, I can’t sleep at night. I can build the hell out of the house, but I can’t sleep at night. And so I’m too ashamed to tell my peers what I’ve done. You know, I’m just ashamed.
Dr. Friday 43:44
You shouldn’t be there’s a lot of people that have done the same things and as you say sometimes, most business owners fall into businesses that I always say they don’t always end up doing business. And so there’s a lot of moving parts when it comes to business. But if you give my office a call job, we’ll be more than glad to get back on track, so you can talk trade on building houses, and we can help you stay out of trouble.
And then you could take on like my bookkeeping areas. I mean, I understand all this money is not going to be a problem. I don’t think because things are going well. But well, I’d like to think that building a house is pretty important. But this whole book side of it, those three letters, IRS just scares me.
Dr. Friday 44:31
Well, give our office a call. We’ll be more than glad to help you out.
I’m going to do and thank you for taking my call. Thanks.
Dr. Friday 44:38
No problem, John. Thanks. And so if you want to reach my office at 615-367-0819 let’s see if we can get Bill in really quick.
Hey, Bill, thank you. Quick question. Like a lot of people have gotten the $1200 dollar stimulus check. Is that subject to income tax?
Dr. Friday 44:57
No, sir, it is not.
Great. Okay, thank you very much.
Dr. Friday 44:59
It will not be taxable at all. Thank you. All right appreciate that phone call you can reach me again at 615-367-0819 is a direct number to our office on Monday morning if you need more information you can go to Dr. Friday.com You can also book appointments by clicking on schedule, or find out more about who I am. I know I’m on the radio but you might not know who I am. Or if you’ve got questions and calling the radio show is not the easiest way to do that, you can also email those questions you can email Friday@drfriday.com. Again, if you have questions and you want to reach me at 615-367-0819. I hope you guys are having an awesome Saturday and the weather stays nice and strong for all of us to get outside and maybe enjoy a little the fresh air we can keep going and if you need help with taxes, bookkeeping or representation before the IRS again, call my office, email me or go to the website. I hope you guys have an awesome Saturday and we’re going to a calculator and keep yourself safe.