Welcome to the Dr. Friday show! In this episode, Dr. Friday talks all about taxes, tax representation, and the following questions:
- Is A 401K Or Roth IRA better?
- Why Have I Not Received My Stimulus Check?
- How To Do Taxes As A Small Business Owner
- How Much Of Social Security Is Taxed?
- Do You Need Help With Tax Preparation?
- Will The Stimulus Check Be Taxed?
- Get Help With QuickBooks
- Do You Need Help With Tax Representation?
And so much more!
Transcript
Announcer 0:01
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 morning, this is Dr. Friday and the doctor is in the house and we are talking about my favorite subject which is taxes and that day is coming quickly. Have we ever thought that we’d be saying July 15 as our filing date? I can guarantee you, no, that was never something that I wanted to extend as far as I was concerned. I think anytime we do we just extend the whole thing but it has happened. We are working on it and so if you need you might want to go ahead and make sure your tax appointment if you’re using all services or anyone else’s, I’m assuming that they’ve opened their calendars up again. So just make sure that you have an appointment to get your taxes completed, make sure they are done or an extension is filed. Again, extensions do not extend the amount of money that you owe, but they do extend the time that you can file the taxes, which sometimes is necessary, especially if we’re working with multiple entities and having to wait for other tax returns to be completed before we can complete your individual tax return. The Internal Revenue Service has come out with for any of you and a lot of people I know that we have about 200 individuals that receive PPP money through our firm, our systems I should say we don’t offer PPP money. But one of the questions that we’ve been going back with is, is PPP money the forgiveness? So the IRS has basically answered the question in public guidance saying to prevent double taxation, the expenses are not deductible. So if you get forgiveness for the PPP loan, whatever money that was forgiven, which most likely is going to be payroll, rent, and utilities, that you would then have to claim that you will not be able to claim those expenses. So it’s going to be a little interesting with individuals that are sole proprietors.
Dr. Friday 2:16
As you know, Schedule C individuals are able to get a percentage that is now based on line 31 of your 2019. schedule C. So the problem is, let’s say you get two and a half percent of that and you pay yourself now you’re going to have to pick that up as income because you did not pay somebody else that money, you paid it directly to yourself. I will tell you that there are many firms that have pledged to reverse this with Congress and we are waiting to see if that is going to be reversed. Otherwise, Schedule C individuals that did not pay other individuals through forms of payroll or rent. Now if you paid rent or utilities, you won’t be able to claim those but your actual payroll which is always based on total profits will have to somehow be reversed and that’s going to be the interesting part of that conversation. Now I have many people that are facing a dilemma and you may or may not be but they were unemployed. So they went to collect unemployment and then they also a Schedule C individual went to collect PPP money. So the question is going to come back as if you’re paying yourself a full wage, are you actually allowed to collect unemployment? So that’s something we’re working on as well. My answer immediately based on what the state is saying, if you received PPP money to pay yourself, the salary that you had in 2019, you cannot collect unemployment because in essence for eight weeks you have collected and do that money. So you are able to get unemployment but you cannot use the ppb money again, to cover your wages. Because what unemployment is doing. Now, if the unemployment did cover 100% of the wage loss, you may have something there. But just as a point, you may not end up with forgiveness if you had that situation. So it’s quite very important to make sure. Many of us have now, many of my clients have hit that eight-week window and we are trying to start the forgiveness process. They did extend that for individuals. Maybe you work in a restaurant and you weren’t able to hire all the employees that you wanted to because the government had kept many of those relationships closed or situations closed. They did extend it out 25 weeks or December 31, whichever comes first.
Dr. Friday 4:42
Just keep in mind PPP money even if people that receive PPP money if you are not paying, you’re still entitled to not have to pay the 6.2 of your Social Security tax that can still keep going even if you receive the forgiveness. So for many of us that have payroll taxes, as you know, 6.2% of the Social Security is something we pay as an employer, to the individuals to the IRS as part of your Social Security benefits. Employers with forgiveness on PPP aren’t pre lewd to the employment tax deferral employers can defer payments of 6.2 share the Social Security otherwise required to be made from March 27 through the end of the year, they are going to defer that pain half of it by December 31, 2021. And another half of the final half on December 31, 2022. Trying to give you again, some cash flow or some situations. So if you’re working on your taxes, thinking about your 2020, because come on guys, we’re six months into 2020. And you might be working on maybe you sold some real estate, maybe have an inheritance, and you’re not sure how that’s going to affect your taxes. Better to think about that now than it is to think about later. So if you’ve got questions or you need to have a question asked I have to do is pick up the phone 615-737-9986. We’ll be taking your calls finding out if we can help you or lead you in the right direction to make sure that your questions are being asked and answered because it’s kind of important. All right. So we’re good to go. Why don’t we go ahead and hit Ronnie? Hello, Ronnie.
Caller 6:39
Hi, my question is, I just turned 66 this year. I started taking my Social Security, but I’m still working. I make about 68,000 a year. And my question is, what percentage will like to tax me on my Social Security?
Dr. Friday 7:02
So, the good news is I’m assuming 66 is your full retirement age? Is that correct?
Caller 7:07
Yeah.
Dr. Friday 7:09
So we don’t get penalized for having to earn and get back to one. Ronnie, How much did you say you were earning, besides your Social Security?
Caller 7:18
I earn about 68,000.
Dr. Friday 7:21
Okay, so you’re looking at 85% of your Social Security being taxed.
Caller 7:28
At like 85%.
Dr. Friday 7:31
Are you single or married?
Caller 7:32
Married.
Dr. Friday 7:34
Okay, does your wife work?
Caller 7:36
No, she only draws Social Security.
Dr. Friday 7:39
So she has Social Security and you have Social Security. So if you take 85% of her and your Social Security, add it to your 66 if it is less than $100,000, the whole package, your percentage is 12%. If it goes over anything over would be 22%.
Caller 7:57
So the worst-case scenario would be 25 percent or something?
Dr. Friday 8:01
Yes. I’m not even taking the 24. So I would say if you don’t mind ballpark how much you’re getting Social Security?
Caller 8:11
$2,098 a month.
Dr. Friday 8:14
Okay, so let’s just say 21 for simple math and your wife?
Caller 8:19
I’m not sure exactly what she made. She took hers early. She took hers when she was 62.
Dr. Friday 8:28
Okay, so that’s about 21,000. I knew and let’s just say 12 on her and then you’re 66. So you are still under. So I would say you’re safe to assume and you might want to even have them withhold. This is your choice, but I would say 12%.
Caller 8:48
Okay. Well, I appreciate it.
Dr. Friday 8:52
No problem. Thanks for calling. I appreciate your call.
Caller 8:55
All right. Thank you.
Dr. Friday 8:56
Thanks. All right. If you want to join the show, you can do At 615-737-9986 taking and talking about your tax situations or what you have going on, remember that you can still contribute to your IRA, for 2019, that is 6,000. If you’re under the age of 50, 7,000, if your wife doesn’t work, but you do or vice versa, if you’re, you can contribute and make more than, let’s say 14,000, then both of you or you can contribute on behalf of your spouse, that same either six or $7,000. And that now does 7/15/20. So keep in mind that you would need to do that by 7/15/20. If you have any other simple SEP all of those. I know for a fact that a SEP is something that can be extended out to the date of your extension. Many people fall in extension solely for the purpose of that, right? They solely file the extension just to the fact that you actually have the ability to deal with situations. But it’s really important to know that if you want to make or sometimes you want to lower your taxes now, I am not your financial planner. Usually, you got to go to a tax person. And we’re going to say, do a standard IRA, but the $6,000 or $7,000 in and we can have instant gratification, but I will tell you more than once when someone comes in my office and they’re in the 12% tax bracket, it isn’t necessarily the best place to invest your money in my personal opinion. So it would be best if you want to go ahead and do what you need to do. And you know, just saying but as far as I’m concerned, you might want to do a Roth situation so that way, you’d be able to do what you have and save money and then let it grow tax-free and see what you have to go with that situation versus going into an IRA deferring it and then coming back at it. Alright, let’s hit Mike real quick, and then we can maybe get back Bob as well. We’ll see how it goes. Hey, Mike.
Caller 11:02
Hi, how you doing? Good, good. I was calling to find out I live and work in Nashville in the entertainment industry and big shows have shut down because of the COVID virus. So I don’t think my work is going to come back anytime soon. My unemployment stimulus is going to be ending I guess July 25th I think.
Dr. Friday 11:31
July 31st.
Caller 11:34
Right right. So I’m either looking at having to get another job or something else. Because it’s 275 for just the unemployment and no way I can make it on that. I was wondering my work is different. I get some work through the union. I was a city manager for an AV company. Audio Visual. We’re both W2, but then I also am a cameraman and most a lot of my camera work is 1099. So I was wondering, do I qualify for a PPP loan for myself to cover my income until the industry comes back?
Dr. Friday 12:24
Well, you would call I mean, you have a schedule C so you could theoretically collect unemployment on your W2 income. You’d have to follow your 2019 Schedule C because they’re using the 2019 base yet for 2020. But you would have you would qualify for both. I mean, there’s no reason you could I don’t know how much you made as income or profit. It’s not just what your gross was. This is gonna be based on what you paid tax on. But on line 31 they take two and a half percent and you could possibly qualify for the PPP as well. You’re a little different than some self-employed people because they are giving unemployment to individuals that have 1099 not W2 or with both. But most self-employed individuals don’t have W2’s, so you have a nice mix. So you would actually be able to collect your unemployment on your W2 and PPP on your schedule C.
Caller 13:18
Okay, thank you very much.
Dr. Friday 13:20
No problem. Thanks. All right, let’s hit Bob real quick, and then that way we can hit the break after and he doesn’t have to hold through. Hey, Bob.
Caller 13:27
Hi, Doc. Thanks for taking the call. I am presently fully employed. And last year I had a Schedule C for some self-employment income. I was doing some speaking engagements that were shut down this year because of the Coronavirus. I had a Schedule C that was attached to my regular W2 and 1040 but that income dried up. The answer is probably no but is that in some way eligible for PPP loan for the self-employment income that disappeared?
Dr. Friday 13:59
Absolutely. You know, I mean, there’s going to be a lot of I mean, myself included, things that we had scheduled for this year that we would normally be doing to generate income as well as promotion and everything else, but you were self-employed. And as long as there is a profit involved, it wouldn’t be what you gross but what you net and if you do it for enough of your profit, then you would be able to keep in mind, they’re gonna divide that line 31 by 12 and multiply by 2.5. So if you made $1,000 is not going to be worth the conversation. But if you made $10,000, it may be.
Caller 14:36
Well, I still have, of course, my full-time day job. And this was all extra. So my income is going to be $100,000.
Dr. Friday 14:43
They’re gonna base this on what your profit was. So again, if your profit on doing public speaking is 10,000, 20,000 or 30, and you’ve now lost it due to the Coronavirus or the situation where we can’t open the businesses because of it, then you’re entitled or I don’t know if I don’t like the word entitled but you would have the ability to apply for the PPP and then possibly be able to get that forgiven.
Caller 15:07
Great. I have not been able to find an answer to that I should have called in sooner. Thank you.
Dr. Friday 15:11
No worries, thanks, Mike. Why don’t we take a quick break here and we come back we can get to more of your phone call 615-737-9986? We’ll be right back with the Dr. Friday show.
Dr. Friday 15:38
All righty. We are back live in the studio. All you have to do is pick up the phone and call 615-737-9986. You’d think over 10 years of doing that I probably know that number and I almost went brain dead there. Alright, so if you will wanna join us? All you have to do is pick up the phone. We are talking about taxes, we’re talking about PPP loans. talking a little bit about unemployment as far as the ability to realize that unemployment is taxable income. So when you’re working on your 2020, you probably need to make sure that that’s the case. Let’s go ahead and hit Leslie. Let’s keep her in there. Hey, Les, what do you get going?
Caller 16:24
On my daughter, she still hasn’t gotten her stimulus check all the rest of us have. When she goes on to the website for IRS, it says that there’s not enough information, but she’s already got her tax return. So I was wondering what happened.
Dr. Friday 16:40
Was she a dependent in 2018? Or has she always filed herself? or was she disabled?
Dr. Friday 16:48
She filed herself.
Dr. Friday 16:49
So in 2018, she filed by herself as well?
Caller 16:52
Yeah. We talked to the accountant that did our taxes and he told her that basically, just to keep waiting.
Dr. Friday 17:02
Now there’s a one 800 number she can call that will talk to you just about the stimulus check. Has she tried calling that?
Caller 17:09
She has. He gave her a number to call and it rings and rings. So she didn’t have any luck with that either.
Dr. Friday 17:18
I won’t disagree with her as far as the ringing ringing ringing. I know. I’m one of those people that try to get people the positive side of things, but I do know it’s about as frustrating as it can get. We have several cases where people have been getting notices of liens or levies and we can’t reach anyone to have that conversation. So I’m sure your daughter, I will tell you this the IRS has through September. If you go to their website, it says they will be sending out stimulus checks all the way up through September. So it is possible that her number just hasn’t come up as far as being able to get the check.
Dr. Friday 17:55
Right just for some reason. If she doesn’t get it, I mean, I will tell you When she files her 2020, which I know this is way out in the future, and she could use this today But it will come to her on that tax return because everyone’s going to have to report how much money they received. And then how much were they supposed to get in a sense, and then they will. So she will get the $1,200 dollar credit and then refunded but again, it doesn’t help when I’m talking six, eight months or whatever way before she can do that. Sorry.
Caller 18:26
I appreciate you guys. Thank you so much.
Dr. Friday 18:28
Thank you for calling. Appreciate it.
Dr. Friday 18:32
All right, we are talking about my favorite subject. So we talked about the IRA. You’re going to be able to start filing amended tax returns late this summer, which I can’t tell you guys how important this is. We have always had to mail in amended tax returns, which usually takes them another 60-90 days. Right now, if you mailed in a tax return there was a statement by the IRS that they haven’t even opened up the mailroom as far as being able to address all of the mailed-in tax returns. So if you mailed in a tax return back, I think last week when we were talking several people called and said, they mailed it in in early March, according to the IRS, there was a statement made that they haven’t even opened up those returns. So your tax return if it can’t be electronically filed can take a long time to process. So they’re saying that they’re going to start hopefully accepting e-file, which is the 1040 X amended returns in late summer. So I am so freaking excited about that. I know that that sounds weird, but people, if I can make it easier for my clients, or it’s just easier for us to be able to get something done for them. It is so much simpler in life, right? If I can e file and then get confirmation that the tax return, the amended return has been accepted. We’ve been able to do this with corporate returns and partnership returns for a number of years, just not 1040. So it’s it is really great to be able to do that.
Dr. Friday 19:57
A little good news here as well. I know I’m probably a little bit of a geek when it comes to some of these things, but interest rates and tax have decreased for the third time in 2020. On overdue taxes, the Internal Revenue would charge 3% a higher 5% rate will apply to corporations who owe more than 100,000. On refunds, the agency will pay 3% to individuals 2% to Corporation. So if for some reason you overpay, there’s been a mistake, you follow him into return you the IRS does pay you interest. I mean, many people probably know that because they also get a little thing at the end of the year saying you have to pay tax on this interest income. But it is important to be able to do that hopefully none of you are dealing with Tax Court because if so, you’re gonna start doing that or they’re gonna continue doing that through remote access, which may be totally interesting. Tax on health insurance premiums has been extended health insurance companies and employers that sponsor a self-insured must pay a yearly fee based on the number of heads and the things they’ve extended that out. Originally, it was stated to end after 2019. But Congress extended through 2029. So again, if you’re a small employer or have 50 or more employees and you are offering or have health insurance through your company, we all expected that to end along with other individuals. And it did not. They extended it to 2029. So very important to be able to do that. All right, let’s hit Bob. Hey, Bob, what’s happening?
Caller 21:29
Hi there, thanks for taking my call again. I checked my Social Security wage history. I did not have the wages recorded that were on my W 2 for my company last year, what’s the best way to get them added to it?
Dr. Friday 21:43
It will happen. They have to file them by January 31 and or there are extensions, so they have until March. And then the Social Security Administration has to then get them posted. So normally 2019 won’t show up until usually all August or September in Social Security.
Caller 22:02
Great. Thank you.
Dr. Friday 22:08
It’s actually great that Bob looks at that kind of thing. Because I will tell you, I can’t tell you how many individuals that say, “Oh I didn’t have anything reported back in 2008 or 2005.” And it’s almost impossible to go back and find the information to figure out why and then you have to go back to the employer and try to get it posted or go to Social Security with proof of W2’s filed. It’s a lot of work, so watching or just checking every year to make sure that your Social Security has posted and the amount that your tax return is showing, especially for self-employed individuals. To be quite honest, many self employed people try to show as little amount of income as possible, try to reduce it down to the best thing, but sometimes, obviously for the purpose of Social Security, as well as other benefits through like loans or anything else, it’s not always the best thing to do. So just saying, you might want to consider the fact that sometimes zero profit or minimal profits aren’t going to help you. Alright, so David before the break. Hey, David,
Caller 23:15
Hi Doctor Friday, I’d like to take a distribution from my traditional IRA this year. I wanted to know if I can do that without penalty because of the Cares Act or whatever, even though I do not have any kind of hardship due to Covid-19.
Dr. Friday 23:32
So that’s gonna be the tricky part. Anyone else listening, David’s talking about is due to COVID, they said that you can take up to $100,000 out of your IRA without penalty and spread the taxes on that over three years. David, if you want to email me, I will send you I don’t have in front of me right now. There are certain things we have to meet to be able to qualify I’m making a wild guess that you’re under 59 and a half.
Caller 23:58
Yes, I am under just barely, just barely.
Dr. Friday 24:03
Which is where the penalty cuts off. But it sounds like you’re still employed or whatever you did not have a direct hit from COVID lack of a better term. So you know in answer your question if you want to email firday@drfriday.com. I will send you over. I wouldn’t do anything unless you think you can meet one of these criteria though.
Caller 24:23
Okay. All right. That’s all I need to know. Thank you.
Dr. Friday 24:26
No worries. Thanks, man. All right, let’s hit Jr. Real quick, and then we’ll take our break.
Caller 24:33
Hey, Dr. Friday, I actually do enjoy your show talking about taxes. I have a question that I’m thinking I’m 59 now and thinking about retiring at about 61. I don’t know too much about Social Security and how many how much benefits I will receive from that. But I do know that Social Security pays based on 35 of the last 40 years or something. Can you explain that briefly and tell me how that will impact what my benefits would be?
Dr. Friday 25:16
Absolutely. So Social Security looks back 30 years, they take the highest 10 years, or I should say 40 quarters, so maybe took a break in there. So they take the highest 40 quarters in the last 30 years. And that’s what they use to generate how much money that they’re thinking that they’re going to pay you for your Social Security. As far as taking it early, the only downside to that is I’m not a financial planner, but from my side is it limits how much money you might have earned, and this has to be earnings. So you can earn like $18,000 a year, otherwise, you have to start paying back some of the money for early Social Security. So that would be my only question. If you have absolutely no intention of working, maybe just enjoying life a little bit, or you have pensions or something, then that’s fine. But other than that, I would say, taking early Social Security can cost you because you could end up paying back some of the money, which is a pain in the neck.
Caller 26:13
I’m not worried about taking early Social Security. I’m concerned about what I would be able to take when eligible.
Dr. Friday 26:24
Well, if you go to socialsecurity.gov, they’ll give you a printout and I’ll tell you exactly what you can expect for your inch. If you take it like today or if you were to take it at 66 your full retirement or if you were to take it at 70 which is the maximum age. It will give you all that breakdown in case you haven’t already done that.
Caller 26:46
Okay, yeah, I’ve already done that. Does that anticipate that I continue working through 66?
Dr. Friday 26:55
It does, it specifically says that you’re working up to your full retirement age. Okay. So it is anticipated unless you’re going to make more money. It’s only anticipated that you’re keeping the same amount of money. If you drop, it could go down a little bit. If you go up, it could go up a little bit. So it’s anticipated that you’re going to keep the same income.
Caller 27:17
Yeah, I’m expecting that withdraw that I won’t take it until 66.
Dr. Friday 27:22
Right. So that’s the downside is it’s looking as if your income from today at 58, or whatever you said, you were until 66 is going to stay the same, which none of us know. Right? I mean, the fact is, you don’t really know. But as we get older, sometimes we don’t earn as much money. So all I’m saying is it’s looking at it if you were to retire at 66 right now earning the same income that you’re earning today until the age of 66. This is what you can expect.
Caller 27:55
No, it’s good to help. Thanks, Dr. Friday.
Dr. Friday 27:58
Thank you. All right. We’re gonna take another break here we get back you can still reach a 615-737-9986. We’ll be right back.
Dr. Friday 28:25
If you want to join us call 615-737-9986 taking your calls. Loving this and it’s awesome Saturday out there it’s a little hot been doing a little yard work. It’s a little bit hot but it’s still nice. I’m enjoying it. So let’s go to Sarah. Hey Sarah, thanks for holding. What can I do for you?
Caller 28:50
Hey, can you hear me?
Dr. Friday 28:52
Yes ma’am.
Caller 28:54
My husband, recently it’s full retirement age. He drew $2,400 on Social Security, but he’s still working full time. I don’t work. I draw a disability of $1,100. dollars. His annual gross is approximately 68. And we’ve caught something of you saying about the stock market vs. Roth. Well, he does have just started a Roth. He’s in a 401 K. And but we also just started doing stuff with the stock market. What are we looking at as far as tax to also draw two pensions? That one we have tax taken out the other one we don’t?
Dr. Friday 29:34
Well, the biggest thing is based on what you’re telling me at this moment, I’m assuming, do you guys file married filing jointly, or do you file married filing separately? Jointly, okay. So he’s making another $28,000, almost $29,000 on Social Security a year on top of your $1100 times 12 and then he’s making 68. So is he having any withholdings come out of your disability in his Social Security?
Caller 30:04
No, and he literally just started drawing the Social Security and I wasn’t sure what we should do as far as that. And then if you do decide to take tax out of your disability or Social Security then once he’s fully retired, can you reverse that for no tax taken out?
Dr. Friday 30:23
Absolutely. You can do that anytime. I mean, you can contact them at least once a year if not, I mean, I have people every year we make adjustments sometimes because of different situations that happen. He has a couple of choices while he has his “real job” his W2 job, but he’s got between your disability and his Social Security on a full year. I realize he hasn’t got that yet. But he’s now going to be going into a full year soon. That’s another taxable income of $36,000. On top of his 68 besides his pensions that he’s got which may or may not be very large.
Caller 31:03
The pensions combined are like $700 a month.
Dr. Friday 31:06
Okay, so the first hundred, and like $5,000 are at 12%. But I think you’re going to be exceeding that. So my biggest concern would be having enough withholdings, even 12% on 100 is 5000, you’re looking at 40 $400 in tax on the Social Security alone. It’s 12%. And some of that may get kicked into 22%. So if you guys do your own taxes, or if you’re looking to have someone help you just crunch these numbers, you might want to give me a call. I mean, what you don’t want is that big surprise at the end of the year and says you owe $6,000 because you make capital gains, he’s got his pension, he’s got you know, all these things of coming out. 2020 may not be a huge year for you because that’s when he just started taking his Social Security so you only have a partial year with it, but By 2021, he’s gonna have a full year you have, obviously your disability. If the stock market keeps going the way it is, you might have capital gains.ll right.
Caller 32:10
Okay.
Dr. Friday 32:14
If nothing else, I would just set up a savings account or a tax account and just set aside, 12% of everything you’re making and just put it in that account as a rainy day tax fund.
Caller 32:24
Okay, so what is the sense of a tax penalty for not having enough taken out at the end of the year because we did end up on the past year, and he wasn’t even drawing Social Security.
Dr. Friday 32:36
Well, you’re looking at .5% for every month that you didn’t make a quarterly so it could add up to a hundred dollars on every thousand.
Caller 32:47
Okay. So, take 12% of what we earn monthly, and just kind of tuck it away for hopefully it’ll cover any tax we owe.
Dr. Friday 32:56
Right and then I mean, if you owed money last year, and you know what the difference is I would go ahead and send it in for this year, because then you have 100% paid in, if that makes sense what I’m saying. Otherwise, you already know that with the combination of your disability and everything else, he’s not having enough, he probably could change his withholdings on his W2 and go single and zero, which would be the maximum at least or even have a little extra so that way it’s going in every week or every bi-weekly or whatever he gets paid. He’ll have a smaller paycheck. But either way that money is going to come out at the end of the year when you have to write a big check or every few weeks when he gets paid.
Caller 33:34
Right. Okay. Yeah, because we’ve got like 15% going to a 401k and 10% to the rocks. So we’re maxed at what we can have taken out as far as that goes. Then he was he doing married filing zero, so maybe change that to single
Dr. Friday 33:52
Single zero which would give him a quite a bit more coming out. And keep in mind the Roth that he’s contributing to, isn’t doing anything for taxes. I mean, this nothing wrong. It’s a great investment. Don’t get me wrong. I’m just saying it’s not reducing the income going to the IRS.
Caller 34:06
Right. That’s why I prefer the 401k.
Dr. Friday 34:12
Well, his incomes low enough, where it probably isn’t a bad idea all in all, and it does grow tax-free. So it may be good to have the diversification just saying he has to be prepared to pay taxes now, right versus later.
Caller 34:26
All right. Well, awesome. Thank you so much.
Dr. Friday 34:28
Thank you so much. I appreciate the phone call. All right. Those were great questions. Sarah’s asking, you’ve got to re-think things are constantly changing in our tax world. People are getting married people are getting divorced. People are getting old. People are taking retirement. There’s pensions. There’s so security and right now were job losses and things like that there’s quite a few people that are on early Social Security, but what’s going to happen if you decide to go back to work and it’s going to happen people. If you’re in your early 60s and you decide okay, I need to pay this the rent or the mortgage and the lease, if I take early Social Security, I have something coming in the house to help support the household, I get it. But you know, you may decide you’re gonna stop so security and go back to work and there’s gonna be a transition there. When you get ready to do that.
Dr. Friday 35:17
It’s just a lot to think about. And it’s really good if you can think about it in more of a clear than waiting to that last minute or until you get the notice from the IRS saying you owe money. And then you’re sitting there going, “Oh em gee, now what should I’ve done, I should have saved some of that money. I didn’t realize.” I’m worried about quite a few people that it’s going to be on unemployment because I know talking to several of my clients when they decided to sign up because they were desperate. In many cases. They did not ask for any withholding tax to come out. But now several of them are actually back to work. Some of them are not on 100%. So they’re still collecting partial unemployment, and they are still working. But you know, My point being if you go back to work, and you only had a couple of months off and you didn’t have any taxes come out of that money. At the end of the year, we’re going to be looking at the potential of a big tax bill on top of a bad earning year. So, you know, the last person you want as a loan officer is the Internal Revenue Service.
Dr. Friday 36:13
All right, we’re gonna take the last part of the show. So if you’ve been holding your breath, and you’re like, “Oh my gosh, I need to talk to Dr. Friday, but I really hate talking on the radio.” Disguise your voice. We do not take names or numbers. Ask a cool question. 615-737-9986 and we’ll be right back with the Dr. Friday show.
Dr. Friday 36:46
All righty. We are back. I’m an enrolled agent licensed with the Internal Revenue Service Did you taxes in negotiations which is like offering compromises payment plans basically try to help be a shield between you and the IRS so that you can actually get something resolved. It is harder right this second to do that because the IRS is pretty much closed. As far as I’m concerned, they say they’re opening up all these different things, but try to call them at some point and you’ll find out that the practitioner hotline is not even open as far as I know. But even the everyday hotline is very, very hard to get through and you have to be willing to pretty much stay on hold forever, it seems like. I’m hoping that they’re going to get a better situation going to make things a little better than what they have been. As soon as she’s ready. Debbie, let’s go to Debbie.
Caller 37:47
Can you hear me okay?
Dr. Friday 37:51
Yes, ma’am.
Caller 37:53
Okay, I started drawing disability. You’ll have to excuse me, I’ve had strokes and my speech kind of breaks up. They sent me a bill for the IRS for tax money on my mat pay. I haven’t paid on that within 2007. And I haven’t paid him that at all. It wasn’t like 500 US dollars. But I mean, I’m putting everything I had into the house.
Dr. Friday 38:36
Well, I mean, at this point did you file your tax returns on time?
Caller 38:41
I wasn’t filing taxes, I hadn’t been working. It took me [inaudible] years to get on disability. So I didn’t work in that time. I’d gotten divorced and I lived off of the money I got from my house.
Dr. Friday 38:57
Okay, so what’s funny is or not haha funny but disability in itself no matter how much they paid you or what you had is not taxable unless you had other income. So I would say and have you received any love letters, anything from the IRS?
Caller 39:15
They send me something. They tell me is going on and get this form and I can’t remember what it was and fill it out and find why I wasn’t able to pay. At that time I had $800 a month, and I used that to pay my house payment. But they send me a letter once a year, showing me what I owe. But it was 500 and it got up to 800.
Dr. Friday 39:53
Okay, so the good news is I imagine they have you on these letters. It’s really just the notification by law they have to notify you once a year at least, telling you that you still have an outstanding balance. So they have access to your money, they could put a lien against your disability if they were aggressively trying to collect the money. You are below the poverty level. So they probably have you in a non-collectible. At some point, that will fall off. Since you didn’t file a tax return, because you weren’t required at the time, and I’m still questioning what they’re even collecting on. It will eventually the IRS only has 10 years, they may have assessed you back in like 2009 or 10 is when they probably did this. So sometime in the next couple of years. I would say that your collection date is going to fall off. Unless you get a letter that says something about intent to levy, lien any of those kinds of nasty words. I would just let it ride
Caller 40:54
[Inadudible] It was $17-18,000 back. And I think it was for Social Security. But I don’t feel good to draw Social Security. If I’m drawing disability, right?
Dr. Friday 41:16
No. I mean disability, you can only draw you draw disability until you hit your full Social Security age. And then obviously at that point, you will switch from disability on to Social Security, but you can’t draw both. Unless you have a deceased husband or something and maybe there’s a possibility I’m not an expert on that. But no, as far as I know, if it’s in your name, you can only collect one of the two Deb.
Caller 41:44
Okay, well, I thought that was right. But I didn’t know I took care of a veteran and he drew his VA check for Social Security. And so I didn’t know.
Dr. Friday 41:56
Yeah, VA is different. Now VA is a different system. So you can have VA and you could have a disability or you could have VA, if you were on Social Security, those are separate situations. So you could have both. But assuming that you’re not a veteran, you would just basically be collecting disability until you hit full Social Security age. I would just say if you need it, you could always send us a copy of the letter if we’d be more than glad to look at it. See if there was anything you need to do. Otherwise, I’m gonna assume, since they’re not doing anything, as far as trying to do any kind of serious collections that you’re okay, Debbie just let it ride. The IRS will eventually forgive that debt.
Caller 42:35
Just like disappear in the wind?
Dr. Friday 42:38
I know. Yeah, but don’t be too scared about it seriously. If they wanted to make a collection on it, they would have sent you something they have access to your disability. I have people that have their disabilities levied all the time, so just let it ride, and then if a letter comes in and says they have the intent to levy then you want to pick up the phone and call them and explain that disability is all you have. You’re living off $800 you’re in poverty level, they would then put a hold on your account for collections. It’s pretty simple Deb. Okay?
Caller 43:08
Okay, thanks a lot.
Dr. Friday 43:09
I understand when your only income is coming from some source like that it is always scary. So, just want to make sure we have everything squared away there for her. If there’s something that comes up, you just let me know. And I’ll be more than glad to take a look at it. All right, guys. We’re coming to the end of the show. So if you want to reach me, it’s very easy. You can go to my website, drfriday.com. If you want to set up a tax appointment, click on “schedule.” If you want to know more about who I am or what an enrolled agent is, click on the links and they’ll tell you a little bit more about what we’ve been doing. I’ve been operating here for more than 22 years. So we have the experience as well as just the longevity of being good at what we do and it’s really pretty a small little niche. I do taxes, representation, and we do have a bookkeeping firm my brother runs associated with Dr. Friday tax and financial firm. So if you’re a small business and need help with your bookkeeping, payroll, that kind of thing, we can also link you up and help you do those. If you want to reach me by phone at 615-367-0819. Most importantly, if you have questions or you need help or you’re just not too sure where to get started, I am always willing to at least give you a shout as far as, “Hey, this is the attorney I would call or this is who I’ll be contacting Social Security.” I don’t have all the answers but there’s usually someplace we can start and move so if you want to email me It’s very simple. friday@drfriday.com.
Dr. Friday 44:54
Remember tax season is going to be here before you know it July 15 is the deadline for filing taxes or extensions. Remember extensions do not extend the amount of money you owe. So you want to make sure that you’re only dealing with what you owe. Not so much the paperwork but if you don’t file the extension and you don’t pay the bill, well now you got penalties for failure to file and to pay so lets at least get the extension filed and then we can deal with making a payment plan if that’s what it is but don’t just ignore it file the extension. It gives us at least a little bit more room to negotiate than doing nothing and keeping your head in the sand and saying. If you haven’t filed back taxes if you haven’t filed 16, 17 or 18 or remember the IRS just put a thing out there are billions of dollars for 2016 unclaimed so there’s a lot of people out there that have not filed their 2016 tax return that is due to a refund. If you do not file that by 7/15 that is July 15. You will lose the refund from 2016.
Dr. Friday 45:59
So if you need it to file your 2016 tax return or you need help just getting caught up with the IRS is what I do every day guys so I can help you. You can go to the website drfriday.com click on the schedule and set up an appointment or give me a call at 615-367-0819 is my direct phone number. Again you can also email tell us tell me what you need, what you’re trying to deal with. And if I’m not the expert for you that I can at least send you in the right direction. That email is friday@drfriday.com. I hope you guys are enjoying this wonderful Saturday. It’s a great day out there and help Happy Father’s Day to all of you that are fathers.