Welcome to another episode of the Dr. Friday Radio Show! In this episode, tax expert Dr. Friday answers callers’ tax questions and covers the following topics:
- If You’re 70 and Older, You Can Make a Qualified Charitable Deduction
- Does Tennessee Charge Sales Tax on Construction Projects?
- Retirement Accounts, IRAs, and Traditional IRAs
- How To Use Qualified Charitable Deduction to Save Money
- When Is the Perfect Time to Get Your Tax Issues Resolved?
-
How Much of a Charitable Donation Can Be Written Off?
- How Do You Protect Yourself From Financial Issues?
- When Are Appraisals Required for Donations
- What To Do If You Inherit Property
- How To Do Tax Preparation and Financial Planning The Right Way
And much more!
Transcript
Dr. Friday 0:00
No, no, no, she’s not a medical doctor, but she can sure cure your tax 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. 737-WWTN. That’s 737-9986. So here’s your host, financial counselor and tax consultant, Dr. Friday.
Dr. Friday 0:32
Good day, I’m Dr. Friday and the doctor is in the house is a wonderful Saturday out here just got back from a few days of doing tax seminars. And I have a lot of interesting things to share with you, for many of this is going to be for my small business owners. But some of them will apply to actually individuals energy credits, or things that are available out there that maybe you didn’t know about. We had two wonderful speakers once a local girl here that works at Belmont, Professor over at Belmont Marilyn Young, Ph.D, CPA, she has it all.
Dr. Friday 1:06
And in one of the best speakers that I’ve seen in a long time, I’ve seen her before I enjoy having her at our seminars. But she is a wonder and what a few things she brought up just to get you guys on track because many of you have already filed your 2022. So I’m not I’m well I’m here working on on individuals that are still working on 2022 taxes, many of you are working towards 2023. And one of the new tax things, we did get a couple extra energy credits. And a couple of them are odd ones, at least I found that I one of the most the unusual ones that came out that I heard of was that if you wanted to have a certified company come into your home and evaluate your energy efficiency, then you can get a $150 credit against that bill.
Dr. Friday 1:55
Now, I don’t know what the maximum for something like that is, but the IRS will give you up to $150 on your tax return as a credit for doing this evaluation. So I thought that was kind of an interesting off the unusual because I’ve always many of you guys know that if you do windows, in some cases, if you are a contractor and 2023, they do have some contractor credits, 2500 for kind of semi grain and then like 5000 for being over the top green building. And again, there’s definitions in there. But if you’re in the industry of building homes, you might want to look and see if any of these credits apply.
Dr. Friday 2:35
These are new credits that are going to be out there for you and I in the year of 2023 through 3033. Is the expectation probably one of the more important conversations that I had with many of the people that attended that also do exactly what I do some I should say exactly some do. Only offering compromise or IRS negotiating. Many of us do taxes as well as that. And we’re all being bombarded. And I’m sure many of you are I know I’ve been talking to my sister the other day and she said she was getting phone calls and she’s never been self employed about the ERTC up to $26,000 per an employer for their tax number comes from a maximum credit of 2100 per employee and 2020 and 5000 in addition for employees and 2021.
Dr. Friday 3:26
Okay, so what people aren’t telling you is that right now that some of the changes the consolidated appropriation to x change this, that even businesses that got PPP can qualify, but the ER TC is basically extended through third quarter of 2021. For most businesses, that was the end right, so no further than third quarter 2021. And so if you closed your business, keep in mind now I am going to say this, I don’t know if this is the direct rule or law but if you closed your business in 2021, you would only qualify for 2020 and there would be a possibility of decline in some of the rules in 2020 was you didn’t qualify if you took PPP you didn’t qualify for it.
Dr. Friday 4:17
So there are a lot and I’m going to tell you my firm does not handle ERTCs, I think there are specialty for companies out there but more importantly there is a huge according to the IRS. There is a huge scam going on out there where people are getting ERTC money put through the IRS, you’re getting a check thinking that you’ve done everything correct. And then the IRS is sending back notices and they’re starting to do this for the people that got the early ERTCs that you weren’t qualified for any of it. So guess what? The company that you went through that might be a scam that said, “Oh, you qualify for all of this.” Now you’re going to have to pay back not only the money money that you receive, but all of the money the IRS sent you, in some cases 15-20% paid to the company that that got the money in the first place.
Dr. Friday 5:09
So let’s not play around and say, “Oh, wait, I’m just gonna go after. And if I can get it, it’s free money.” It is not free, you have to pay tax on it, you have to go back to the tax year in which so if if you’re getting ERTC for 2020, and you get it for 2021 quarters, you will be amending 2020 and 2021. I don’t care what anyone else is telling you out there, there seems to be a lot of false information. The truth of this is, according to the IRS is that the year that it affected, you have to go back and you have to file that against that year, there are some penalty waivers that are available out there possibly doesn’t mean everyone’s going to qualify.
Dr. Friday 5:49
But theoretically, you could pay penalty, interest and taxes on the money in the year it happened. So keep in mind, if you are a pass through company like an LLC, or Sub S Corporation, or C, a Schedule C, then you are Mindy not only the business return, but your personal tax return. And most cases, the the tax is usually falls on to the personal tax return anyways, very, very important information, don’t just get on the phone, give person a bunch of your information, they go out get a bunch of this stuff, there’s, you know, up to three years of of getting you these tax credits, and then they disappear. They’re not here to recommend you or to do anything, and you are now stuck having to pay back money that you didn’t even get all of so again, if you want to join the show, maybe you have a story or situation that something similar has happened this weekend, again, Thursday and Friday.
Dr. Friday 6:45
At the seminar, we heard lots of stories about different situations that have been happening with the IRS good bad. You know, obviously, in many cases, bad. But if you have a situation where you’re dealing with the IRS, or maybe you’re dealing with this employee retention tax credit, ERTC, give us a call on the station 615-737-9986 is my number here in the studio. And we can talk about that. Or if you’ve got something where you’ve maybe you haven’t filed taxes for a number of years, I will tell you now is the time to get that because they are going to be making they did get some funding in the last bill that just got passed. So the IRS will be getting some money towards collection, most of its going to be going towards advancement. But those advancements is also on how they’re going to collect better.
Dr. Friday 7:40
So, you know, if you have not filed and you’re really wanting to get your taxes in line, you’re really wanting to get straightened out with the IRS. Well, guess what, now’s the perfect time. Now when tax season is not here, and we’ve got the ability, and these kinds of things don’t happen quickly, I always try to tell people because so often people will come in and they’re like, well, I need to get this done, I’m gonna go buy a house, right? I want to I want to get married, and you have all these tax issues, you best plan that’s going to take you 12 months, maybe even 18 months before you will have true resolution, be that through either an offer and compromise payment plan, combination thereof, a partial payment plan, or even bankruptcy, these are all options out there for you. But you really do need to understand what you have.
Dr. Friday 8:27
And that’s one of the things that my firm does versus so many. And once you hear him on the radio, the first thing you do is you call those companies and I know they put a lot of money into marketing and most of us smaller companies do not. But the fact is, you’re going to meet me you’re going to be dealing with me, you’re not going to be dealing with someone that buys the lead from the company that advertises on the radio, they’re not going to ask for our company’s not going to come out and say, well, we need $5,000 And then $500 a month, that’s not going to happen unless we have some serious resolution and problems that we’re solving.
Dr. Friday 8:59
If we’re on the right track and we’re moving, then you’ll know exactly what it’s going to cost and how you’re going to pay again, we’re going to be partners in this for at least 12 months if you’re doing any kind of serious resolution. So you have the ability to get your life back in order. And we want to stay with you because it you know, once we get that resolution, guess what? You have to stay current for five years. So do I want you to fall off the wagon once I get you back in there? No, I want to keep you going in the right direction. I want to make sure that you’re moving in that right direction so that we don’t ever have to deal with the IRS again, that we’re actually filing and paying and dealing with whatever tax issue comes up on the normal basis than having to go back 5, 6, 7, 8 years.
Dr. Friday 9:43
Because in most cases we only have to go back six years. That is what the tax law says. But that being said, if there has been any kind of of the government filing tax returns on your behalf statutory tax returns, sorry. Or if you have had some other tax issue that’s come up, even though it’s outside those six years, we need to deal with all of it, you don’t want to be waiting, there are time clocks. But keep in mind, some of the things that people do to try to avoid paying tax also delays the time clock. So I mean, I have people that may be filing something just now for something in 2007.
Dr. Friday 10:26
Because they filed that eight years late. And now they’re, you know, they haven’t hit the 10 year clock. And so it doesn’t mean that you are going to just be able to 10 cents on the dollar I don’t like people to I mean, I know they always advertise, oh, I save somebody and everybody I know everybody that was at our thing could tell somebody about how they saved someone, they owed $100,000. And they only had to pay 15,000 or 5,000, or $25.
Dr. Friday 10:54
But that’s not the normal everyday situation. If you have assets, if you have a good job, if you’re working and trying to just keep your head above ground, you’re going to have to make some adjustments. And most of the time, it’s individuals like myself, which are self employed, that run into issues with the IRS. Not always, I mean, sometimes people take money out of retirement accounts or they get divorced. And those kinds of things can lead to tax resolution issues. But the most important thing is we can fix it. I mean, we can help you get out of that. So you can start moving forward and build a future without having the IRS necessarily dragging you ball and chain behind.
Dr. Friday 11:32
So if you need questions on that, you can keep listening, you’ll get my phone number. But what we’re going to do is we’re going to talk a little bit more about some of the tax things that are coming up in 2023, how you might be able to start preparing, because if you have a situation or story to share with you when we get back about how somebody inherited a house full of furniture and clothing, and maybe how he could have saved himself because it was almost $40,000 with the charitable donations that got disallowed by the IRS, and how that could have maybe been stopped. Have we been able to do it from the front instead of trying to play catch up on the backside.
Dr. Friday 11:32
So we’re gonna get ready to take a quick break on our first break, you can join the show at 615-737-9986. We’ll be right back with the Dr. Friday show.
Dr. Friday 12:30
All righty, we are back here Lloyd in Studio, you can join us if you want it 615-737-9986 taking your calls talking about taxes and other issues. So if you happen to inherit a house full of maybe your mother’s or your grandparents or somebody’s furniture and clothing and the best thing to do, or many times, the easiest thing to do is to have someone like Goodwill come by and pick up before you do that. Especially if you if you do a quick walk through and you’re like oh my gosh, there are hundreds of items. They are all over the place, you know and in they’re in good shape there.
Dr. Friday 13:14
It’s not like you’re you know, we’re not talking old rundown, we’re talking very nice are really good furniture and clothing. So what you have to do, according to the IRS, is you have to get an appraisal by a licensed appraiser to come in and do the the charitable or the outline so that way when because the gentleman I represented, did everything as far as I was concerned, correct. He went to the goodwill, he went online, he took pictures of everything, he documented every item, but because it exceeded plus the $5,000 He had to have an appraisal. So I was told that this one and I’m not. I’m gonna put this as a caveat. But the fact is, if you have furniture that you can show was worth $5,000. And then you had clothing that was worth $5,000. Those were completely different types of categories. You may be able to do something slightly different, but it’s all about the proper documentation, especially if you’re over in a state.
Dr. Friday 14:17
I mean, unfortunately it happens. And when something like that does happen, your best bet is if you’re going to be trying to write off the charitable deductions that you have one of two things sometimes one person suggested heavy one of those organizations that come in and does the whole auctions. Another person said they wouldn’t touch it unless there was antiques. I don’t know that’s not my expertise. But I will tell you that I’m sure you could have somebody come in and give you a basic appraisal in writing that has something that you can use that would then be able to justify your tax deduction versus just doing what you know what’s those things?
Dr. Friday 14:54
Okay, I went online use the goodwill I said I had 20 sweaters I had 50 These I had 10 pair of shoes took pictures of all those things. So that way you knew that they weren’t just being made up. The IRS says no, no, it has to be a full appraisal. So anytime you’re dealing with something like that, where you might have a larger number than normal of anything that you may have inherited or had a situation with, again, let me reiterate, your best bet is to hire a company that is licensed, they can come in and give you an appraisal, I know you’re saying it’s going to cost me You know, I don’t know, $500. But you’re gonna get a larger tax deduction.
Dr. Friday 15:30
If you have the proper documentation, if you don’t, you end up getting yourself in trouble with some of the things that come along with the IRS and the in the situation that goes with that. So again, just you know, if you if you have that now, same thing goes with land or property or anything else, you know, if you have a situation where you have inherited a piece of land, or you’ve inherited a home, you need an appraisal, or you need somebody that can at least give you proper comps, at the time of passing, that will give you the availability and the proper way, the easiest way to protect yourself is to get an appraisal, no question.
Dr. Friday 16:11
That would be the number one way to make sure so that way, when you file your taxes, and you sell this property for 500,000, and it appraised for 450, you’re only paying tax on 50. If the IRS comes back and audits, will you be able to justify that if the situation changes and you don’t have any documents, because then the IRS can come back and say zero, there was a story that Marilyn young shared, that I thought was interesting, because the court cases that she had represented, both of them were attorneys, which obviously they can take things to the tax court a little differently than you and I will make second guess ourselves.
Dr. Friday 16:49
One attorney basically when it’s tax court, and he had sold some art, and he was, you know, on the side, he loved to buy and sell art and just collect it. And so he gave to a charity. And we all know that if I buy something for $100, but its value is $1,000. If I give it to charity, I get to write off the $1,000 the value of that object, not so much what I paid for it. So obviously, this is a big area in which the IRS wants to audit. And so they came back and said, Well, what’s the value? He said it was 450. They said it was 250. But because he took it to tax court, they gave him zero, because he lost in tax court because he didn’t have a proper appraisal. So anything over $5,000, guys, you really do want to make sure you have an appraisal to justify anything that you’re doing on those kinds of situations. But you know, it’s better. And sometimes I know it’s not always easy, and sometimes situations aren’t always as simple as just saying, oh, right, get appraisal. But, you know, you have to take in and deal with some of those situations. It looks like we might actually have a caller coming in. Tony from Nashville. Hey, Tony. There you are. Hey, Tony.
Caller 18:12
Hi.
Dr. Friday 18:13
What can I do for you?
Caller 18:15
Yes, ma’am, I I keep hearing about you mentioning about having an appraiser done for the donation items. And, you know, I know appraisers that does how’s it you know, when you buy a house to do appraisal but I don’t know about some companies that will do the appraisal for the donation item. Do you know any few companies that you can give some name for just not just for me for the audience?
Dr. Friday 18:42
It is and everything, I’m not going to do it there is ones that come back up under you know, I mean, obviously I’m googling probably like anyone else does on that. But there are some but they’re basically considered estate appraisals. So they basically look at it from what I’m seeing here on on them. They’re looking at people that have inventory or assets, you know, and again, would that really work for you know, jewelry firms silver paint paintings, you know, I get it, you know, if they’re antiques, I’m sure we can find good appraisals. And I guess if anyone is listening, that actually knows somebody that does appraisals like this, this is great, Tony. That’s a great question.
Dr. Friday 19:27
In in our area and the Nashville area to actually call or give us some information on it because if the IRS is asking us to have values and anything excess of $3,000 and then you know moving from there then we need to be able to at least lead people in the right direction because everything I’m reading about on here are more the people that are offering the appraisals are truly more looking for the household and item. Not someone’s T shirts and shoes you know which is what the IRS is coming back to my clients saying, “Wait, you know, there was you had 40 pair of shoes, and he took pictures of all 40 pair of shoes. And he said they were valued at $5 based on goodwill.”
Dr. Friday 20:10
But because all clothing and everything got lumped together and it exceeded past that $5,000 mark, they want an appraisal. But that’s a great question to ask. And I’m gonna see if I can get us a better answer than I’m giving you right now, Tony, but thank you, I will see what I can do about finding some people that we might be able to use for those circumstances.
Caller 20:29
All right, thank you.
Dr. Friday 20:30
Thanks, Tony. All right, let’s see if Mike in Portland can help us out a little bit or maybe think it’s a different direction. Hey, Mike, what do you got going?
Caller 20:39
So with the Trump tax situation we have now you could buy a piece of equipment, just write it off, you know.
Dr. Friday 20:47
Yes, section 179. Yes.
Caller 20:51
And so you have that equipment, and then you get another one next year, you get another one. Next, you get another one, eventually, you got to start selling them.
Dr. Friday 20:58
You do, and that’s when the problem becomes. Because what happens is, if if let’s just say I have a 3500 Ram, right. And so when I purchased it, because it was a vehicle, I could depreciate, I took a section 179 and I took it all off in the first year. And so I wrote off those expenses. And now let’s say I want to sell it five years later. And then you know, let’s say it’s worth less, let’s say, I paid 50, and it’s worth 25, I’m going to pay tax on that 25,000, because I’ve already taken all 50 off of my taxes.
Dr. Friday 21:38
So when I sell that vehicle, I’m going to have to pay tax on whatever I sell it for. So that’s the same way with anybody with construction equipment or, or trucks, you know, obviously. So whenever you sell one you kind of want to go and that’s why I always tell people it works great in the first year. So So you go and buy yourself a nice big over 6000 pound vehicle, and you’re in the construction industry, good reason to have a truck, and you go use it and then a year later you upgrade it. But now you’re not going to get the full value, right?
Dr. Friday 22:10
Because you have to trade him for 30 grand and maybe you paid 50 So maybe now it’s 20,000 Eventually you’re going to probably not have a need for the big truck and you’re going to end up recapturing was what we call it recapturing that depreciation in pieces. So you are correct. A lot of people never think about the back side, all they’re looking at is that instant gratification.
Dr. Friday 22:10
Oh, I get to go buy a dozer, I went and bought this. But when you’re no longer using that piece of equipment, and there is especially right now with trucks and stuff, the value is actually fairly decent, then you’re going to actually have to pay tax on the recapture if and only people that can do this just for Mike and my purpose is business owners individuals cannot write off a vehicle for for personal use.
Caller 22:59
Yeah, like a C Corp.
Dr. Friday 23:01
Yep, C Corp can do it. Yep. And I want to put out there a lot of times, especially come November and December, I’ll get all these people saying hey, I’m gonna run out and buy myself this or that, or I’m gonna go by myself and F 250 or something. And the person basically has, the person isn’t an accountant, what is the person in the county need an F 254. And if it’s your only vehicle, again, if you’re running it through your corporation, Mike, you are outside this conversation.
Dr. Friday 23:30
But there are people that tried to do it with their own vehicle. And that’s a problem as well. Because if you don’t have a second car, then you can’t do a section 179 Because it’s not 100% business use. So again, if you’re running a C Corp, and you’re in the construction or something and you’ve got a couple of different a lot of plumbers and electricians, you know, have number of trucks then then at that point, the only way you don’t usually have to pay the reCAPTCHA in most cases is if it gets totaled. Not something I want you to have happen, but I’m just saying.
Caller 24:05
Thank you very much.
Dr. Friday 24:07
Thanks, Mike. I appreciate you. All right, we got mark in the burrow. Yes, we’ll grab them real quick and then we’ll take our break. Hey Mark, what’s happening?
Caller 24:16
Hey, how are you?
Dr. Friday 24:17
I am good sir.
Caller 24:20
Got a quick question. I’ve got a great aunt that turned 100 in February and we are trying to sell her sell her house before she passes. The power of attorney is active as long as she’s alive. And we’re trying to keep the house from falling into probate. If we sell the house after she passes but the house appraised at 270 The way it sits we’ve got an upstairs that is not counted as living space because I see only height but the house would have appraised at the ceiling height was over seven feet at the 320, but they appraised the downstairs at 270. So we were asking about 285, because the upstairs is finished out, and it’s worth something. But if we were to just buy the house, would we pay your taxes on the appraisal? If we sold it later for 285?
Dr. Friday 25:21
So if you purchase the house, I mean, if you sold? Are you thinking about buying it from your great aunt? Yeah. Or is this, okay? So if you buy the house from your great aunt, you’d have to make sure because it’s a family connection, you’d have to make sure that you’re paying the fair market value. Okay, so 275 is the fair market value, theoretically, because that’s what it appraises for. And I might suggest having more than one appraisal, just because it is a family exchange, right, you don’t want to just take the the lowest, but if it’s possible, pull out the best of the best than average it, then when you buy it for 285, she’s not going to likely have any taxes because she gets the 250 exclusion. So as soon as she’s single, so she had to pay something for the house or inherited from her husband at some point in the thing. So she would actually be able to have tax free money, and then you would buy the house for the value it is and then if you sold it, you would you know, pay tax only on the gain above the 275 or 85. You paid. So that makes sense on the capital gains on the on the capital gains above it.
Caller 26:31
Would the year of the House have any effect on that house was built in 1925. And she pretty much wrote a check for it back then I think she paid 45 or $48,000 for it.
Dr. Friday 26:44
Right. Which I mean, again, she’s only I mean, if you’re paying 285 And she gets to 50, there’s only $35,000 difference, you know that she would have a potential capital gain, she had to pay something for it, even if it was only four or $5,000 in those days. And she most likely is their central heating and air conditioning. Is there any I mean, some point someone had to come in there and upgrade it if there’s any heating, air conditioning, or anything like that somebody put some money in the house at some point.
Caller 27:11
Correct? Yeah. And it needs some update. It hadn’t been shouted since about 1980.
Dr. Friday 27:16
Right. So all I’m saying is as long as her investment in the house is 35 and she gets 250. You could she could sell for 285 and pay zero tax on her side, then then you know, then you would treat it like any investment property or whatever you want it to do on your side.
Caller 27:36
Okay, all right. Very good. Well, I appreciate you taking my call.
Dr. Friday 27:39
No problem. Thanks, bud. All right, we’re gonna take a quick break. When we get back, we’ll get some more of your phone calls. 61573799866157379986. All righty, we are back here live in studio. It’s a wonderful Saturday. And hopefully you guys want to wish all you fathers Happy Father’s Day tomorrow, I know many of you are going to have a wonderful day, hopefully the the rain in the weather will hold off. And we’ll get to enjoy a little time with your kids, or, or at least maybe a zoom call, who knows nowadays with the technology.
Dr. Friday 28:19
And so if you want. But meanwhile, let’s talk a little bit about if you inherit property. Now the gentleman called actually had a unique approach because he was going to go ahead and kind of buy the property out of the estate. And there’s nothing as far as from the accounting standpoint, there’s nothing wrong with it, make sure that if I would probably consult with an attorney just to make sure that you have all the documents in line so that if there’s more than one person that could inherit, they could claim that you didn’t pay a right amount or something like that.
Dr. Friday 28:51
And that can become a sticky situation. So just make sure that you actually have everything in line so that they don’t think that somehow you’re getting away with something. But it would certainly probably help your great aunt to sell that house and have it out of the way. For that situation. I will say if if she when she passes away, whatever the house appraises for at the time of her death would be tax free money to all of you. But it would have to go through probate which might be something that might not be worth, again, not an attorney.
Dr. Friday 29:26
So I don’t understand exactly how all that works. And I do know in the last year or two there has been some changes in probate as far as what used to be a small probate which is what this would have been. Now they don’t really have that and so they have changed that to be more like everybody has to go through some sort of probate situation all right. So if you inherited property or if you are a custodial and other thing, qualified charitable deduction, still don’t hear a lot about it. Even though I think if you have an older parents, anyone that is 70. And above taking qualified charity, you can qualify for qualified if they have RMD. Now, again, I know you love you’re sitting there going wait, I don’t have to take required minimum distributions till I’m 73. But the Tax Law never changed the 74 qualified chair.
Dr. Friday 30:21
So if you want, let’s say, every year, your, your parents give money or you give money to your church, and you are seven year older, and even if you’re not required to do RMDs, or requirement on distributions from your 401 K or your IRA, you can make a qualified charitable deduction, actually up to like $100,000. But I mean, let’s say you give two or 3000. This is $1. For dollar deduction, right now you give to charity, because you’re an awesome person, and you want to still give to the charities that you believe in.
Dr. Friday 30:56
But no one says that you can’t win twice, give to the charity and pay zero tax on that money. Especially if you have money in a in a 401 K or an IRA anyways, right now, if you take that money out, you put it in your bank, you have to pay tax, then you go and give the money to the charity. Well, if you’re 70 and older, and you do have the ability to take RMD, then you could take the money directly from the IRA or 401 K, send it they’ll write the check and send it to you, but basically directly to the nonprofit, then you don’t have to pay tax on it. Now, we will still report it on your tax return, we will still report it as a charitable deduction.
Dr. Friday 31:37
But it’s a qualified charitable deduction, which means that you now give your three or $4,000 You don’t have to worry about itemizing, you don’t have to worry about it being part of that standard deduction. And you get to give it over. So I mean, in some cases, I have some clients that have me calculate every year, how much money did they save, and I then tell them, okay, you saved, you know, 200 $300, whatever it is, and then they say, “Okay, we’re gonna give that much next year to the charity, they’re using it as a way of giving more to the people in the organization.”
Dr. Friday 32:09
So you don’t have to do that. But my point is, if you’re helping parents, or if you are a person that is 70 and older, and no one’s talked to you about qualified charitable deduction, you need to go talk to your custodial custodian over your IRA or a 401 K. Because they’re the ones that know or have that and they, if they say, Well, you don’t have to do require minimum distributions, you can tell them that’s correct. But I can do a RMD for charitable deduction.
Dr. Friday 32:41
Because I am 70 and older, 70 and a half and older. So talk to them, make sure that’s a good, I’m not a financial planner, guys, I’m not going to tell you, it’s a good thing. But if you’re taking the money from your checking account and giving it to the nonprofit, then it’s much better, it seemed like if you take it directly from your 401k, and give it to the nonprofit, why not just skip the whole tax situation and give it makes perfect sense to me. So if you have no idea what I’m talking about, and you have access to the internet, you can certainly look up qualified charitable deductions better yet talk to your tax person, and or your financial planner, because they will definitely know about it.
Dr. Friday 33:22
They I mean, if you have a financial planner, I’m assuming many of them have probably already talked to you about this. But again, 70 and a half was the law before that’s when you actually can start doing your RMDs theoretically, for qualified charity, you do not have to take your qualified or your quote, your RMD sorry, get my QCD and my RMD. To me letters go in here, guys. Taking your required minimum distribution until you’re 73 now, but if we can save money, put more money in your pocket or give more money to the charities. Why not do it, it doesn’t seem like that should be a very difficult decision.
Dr. Friday 34:03
But I do want you to double check that with your financial advisor as well as your custodial over your retirement account if you have a Roth that’s not this is more for traditional IRAs and traditional 401k situation steps, all those that have tax money growing in them. This is a way to get the money out without paying taxes and why not? Just seems like a smart way. Alright guys, we’re gonna be getting ready to take our last break before the end of the show. So if you’ve been holding your breath, you’re like, “Oh my gosh, I really have a question for Dr. Friday. I just don’t know if I want to call.”
Dr. Friday 28:51
Well now’s the time to call 615-737-9986 is the number and we will take your call talk about taxes or if you’ve got a parent that maybe has a question about their situation or maybe your inheritance that’s usually a big one or maybe you know For someone that hasn’t filed taxes in a number of years, and you just have a question like, they don’t even know where the first document is, guess what I can help you with that I can help you recreate the last number of years that we need to recreate to get back on track. That is something we’re really, really good at. But again, right now we’re gonna get ready to take a quick break here, get back, we’ll talk more about some of the different advantages to different tax breaks that might be available, also give you some information and how you can get an appointment with us at our office, as an enrolled agent licensed by the Internal Revenue Service to do taxes and representation.
Dr. Friday 28:51
That’s really all I do, guys, it’s really a very small window of information that I’m going to offer you. But if you want to join the show, 615-737-9986 this is the Dr. Friday show and we’ll be right back.
Dr. Friday 36:03
All righty, we are back here live in studio for the next so say 10 minutes. So if you’ve got a call you’d like to make, you can 615-737-9986 taking your calls talking about my favorite subjects, mostly taxes and money, obviously. But how that affects us and how we can keep more of it in our pocket is really the purpose and how to make sure that when we do make decisions or do things that we’re actually protecting ourselves.
Dr. Friday 36:37
So I just want to make sure that when you’re making decisions for yourself or for an estate or if you’re an executor, or executor x of an estate that you do want to make sure that you’re documenting and making sure all that information is coming through properly. And that you don’t end up with having to deal with other issues. Unfortunately, we’ve seen especially I hate to say it but if you don’t, all my best, and we put this way, my best advice and again, not an estate planner, not a financial planner, not an attorney.
Dr. Friday 37:09
But if you have a choice people plan everything you can to the best of your ability, leave your wishes, in my opinion, in a trust, because then you don’t really have to go through probate you do the poor overwhelmed does get probated. But basically, it just says everything in the trust will be distributed. So there’s really no distribution or information in a in a trust that has to be disclosed, which is one of the things I like about a trust. But more importantly, you know, it’s it’s easier for the people that are left behind. Because when you have someone left behind, it just seems like money can make things very uncomfortable for a large number of people.
Dr. Friday 37:50
So, so often when something happens, there’s always someone that feels they didn’t quite get as much as the other person or they don’t feel like they’re being treated the same as someone else. And I mean, the advantage of coming from the size family that I always talk about yours no, I have a very big family was the fact is, let’s be honest, our parents took care of us great when they were living. But when they passed away, we didn’t have to worry about having hundreds of 1000s of dollars being split between age children, siblings, grandchildren, great grandchildren, it would have been a nightmare. So maybe not having quite so much as a good thing. But if you do if you’re blessed enough to have a good distribution, Itami repassing.
Dr. Friday 38:34
Make sure that’s documented. Well make sure your wishes and the only way that really happens, in my opinion is through a trust. Again, not an attorney, not telling people to go out there and get trust. I am just saying that make sure that whatever you have, make sure that setup well because we’ve had too many come in this last week or two where there’s been just situations that could have been controlled better had the person that passed away, actually really known what was going to come and we never do, right. I mean, it’s not like we have a book that says oh yeah, this is what’s going to happen on this day. That would be so awesome. In some ways.
Dr. Friday 39:09
So if you have tax issues, if you know someone, and if you’re thinking about getting married, one of the first things we have a couple cases and we’ve had a couple in the past first thing before you decide to get married, and I’m always shocked when it comes to this. But you know what, you should really have a conversation. What’s your finances? Like? Do you owe a bunch of money on credit cards? Oh, yeah. Have you filed your taxes? Or do you owe the IRS because even though you marry someone that owes the IRS, it’s not like the IRS can come against you. You didn’t owe it when you before you married them. But guess what?
Dr. Friday 39:47
They can take the money you bring into that house and say well, you know what? Now you’re 5050 on all utilities even if the person you married is paying all the bills and you get to use your money the way You want, the IRS doesn’t care about that your money becomes part of the household deduction. Therefore, you are, in essence going to help pay for those IRS tax debt. So if there’s any section of the conversation before you decide to just go and get married, or if you’re planning your future, having those financial conversations, guys, it’s so important. I’ll be shocked, seriously shocked how many times people come in, and they find out, you know, years later that they married someone that had not filed taxes for a number of years.
Dr. Friday 40:36
And boom, guess what surprise, the Uncle Sam has finally decided to come back and have a conversation. And now of course, they own a house together, they’re married. I mean, it’s, it is so much easier, so much cleaner, to be able to resolve any of those issues before you decided to get married. Because now we would have only that person’s income only that person situation. And we wouldn’t have to worry about the person that you are marrying and bringing in nails, same thing if you’re dealing with credit card debt, or anything else. So that’s one of the my my big advice for individuals out there is to make sure you have that conversation.
Dr. Friday 41:16
And just because, you know, it doesn’t seem like they could be I mean, there’s no certain type of person that gets in trouble with the IRS. Okay, it’s not like, well, only, you know, bad people or self employed people or anything, there’s every walk of life, every type of person has IRS issues. And so it’s not so much a type of person or a situation that happens. I will say, I guess sometimes it is a situation, Sometimes life happens, and it becomes hard to pay the IRS. And since the IRS isn’t at your door every single day with their handout, like your landlord and your utilities and your car payments, that it’s easy to kind of let that one slide in, you always had the best intention to try to go back at it. But now before we start getting too much information from the IRS too much additional, they’re really working on electronic ways of doing things.
Dr. Friday 42:07
And that’s going to be able to speed up some of the communications and some of the things that they do. So best thing you could do. Go ahead, sit down, let’s have this conversation, let’s find out what the IRS knows. Let’s find out if there’s even a tax issue two cases last week, two and just the last week, both of them had filed in years, figured they had big IRS issues they’d been moving around to didn’t know each other just two completely different situations. And we get the power of attorney we pull the power of attorney, no problems, no issues, IRS has done no assessments, they don’t have any.
Dr. Friday 42:44
And in fact, the one gentleman ended up losing some money for a refund. That was in 2019, I believe, and then he ended up getting his 2022. But that was it. I mean, the other gentleman is gonna probably because he hasn’t filed in six years, we might have a few dollars due. But we only have to do the six years. And then that will make it up that will be all they have to deal with. And there won’t be any huge collections, there’s not going to be any huge drama, it’s going to be okay, you know what, we are compliant, we don’t have to worry about the IRS coming back about a 2012 stock sale that never got filed.
Dr. Friday 43:21
Possibly we don’t need to open that the IRS has said just get your act together. You know, let’s let’s find out what we have and do what we need to do. That’s what we want to do, guys, we want to take the time, go through all of your information. Let’s say you did have a 2012 issue that you didn’t file it on or you filed on it. But you know, it’s been out there and you did it late. Well, you know, that’s why they have what’s called an offer and compromise and offering compromise.
Dr. Friday 43:51
A lot of people here the fresh start. I’ll be honest, I will be honest with you, will you? Will you qualify or not? I don’t know. But there are many ways for us to find out the easiest way people is to either get you to complete a 433 or to contact us so we can actually go through all that information. See if you apply if you have equity in a home, do you have a 401 K? Do you own five cars? Do you have collectibles, there’s many things we have to address before something comes down the line. So when it you know when it comes into these situations, your best bet is not to pretend that you’re the ostrich with your head in the sand. If you’re getting the love letters from the IRS, sell them maybe that you’re a non collectible and maybe you should just stay in non collectible.
Dr. Friday 44:38
Maybe you’ve got a collection agency that’s calling you now because the IRS has hired collection agencies to contact you. Is that a good thing or a bad thing? That’s the kind of things we can help you with we can help you understand what you have going now how that we can resolve the issue. And then what’s the way to move forward because let’s be honest, you can’t move backwards. You can’t change into the past, that is what it is it happened. Let’s clean it up. Let’s move on.
Dr. Friday 45:05
And then that way you can move forward building a better future and not worry about liens or levies or seizures or any other nasty word that we can come up with. All right, so if you’re interested in doing that, get in with me. 615-367-0819 is my direct number 615-367-0819, again, is my direct number. You can also go to friday@drfriday.com. Again, friday@drfriday.com is my email. And of course, if you have no idea who I am what, you know, who’s this person I just turned on the radio.
Dr. Friday 45:49
She’s talking about offering compromises and she’s talking about IRS issues and taxes and you know, I just needed to get a good tax person, then you need to check out the web. drfriday.com. Again, drfriday.com. I am a licensed Enrolled Agent, which is the only person that the IRS has ever licensed to be able to do taxes and representation. So if you have questions, all you have to do is pick up the phone guys. I’ll be there. 615-367-0819 Monday morning 615-367-0819 or friday@drfriday.com. I really hope you guys are enjoying. Again, Happy Father’s Day. Call you later.