Dr. Friday Radio Show – June 21, 2025

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.

G’day, I’m Dr. Friday and the doctor is in the house and we are talking live
today on this very hot Saturday.

Been working outside a little bit and that’s all you can pretty much do
without running through a sprinkler all the time.

But we’re going to talk a little bit about my favorite subject which is
taxes and maybe a little bit about money.

I did the Hank Parrott has a retirement show on every Friday morning at 8
o’clock on News Channel 5 Plus.

And so I was on last Friday and he had some interesting conversation about
he’s an estate financial planner, I should say, a licensed financial
planner.

And I thought it was interesting in the extent that he was talking about a
little bit about how Social Security and we always think about how
everything is taxed.

And one of the things we came up, and I know I’ve talked to many of my
clients, but if you’re in a situation where maybe you or most of the time
it’s our parents, but you have parents that are in nursing homes and now
you’re paying $5,000, $6,000, $10,000, $11,000 a month in care because
they’re no longer able to live on themselves.

This is when I think we don’t talk enough about how that might be.

One, it can become a very good tax deduction.

But another is also using, instead of using the cash that maybe mom and dad
have in the bank or the, you know, selling the house.

If there is money in an IRA, that might be a really good time to talk to
your financial planner.

Again, I am not a financial planner, but I do think any way we can save tax
dollars.

So if you’re spending $80,000 a year in a nursing home and you’re having to
pay that out of your own pocket, it may be the time to think about, you
know, $60,000 of that as a tax deduction, possibly, you know, meeting
itemization.

And so why take it with after-tax dollars if you actually are sitting on
pre-tax dollars?

Now, this isn’t for everyone, but it is a good tax strategy to think about.

Again, you need to talk to your financial planner because in many cases,
people are going to be inheriting.

And nowadays, they’ve limited the time we have to cash out inherited IRAs.

We used to be able to do it over our lifetime or the lifetime of the
expected person that passed.

And now you have 10 years to cash out both the Roth and a traditional IRA.

But those are huge differences.

I mean, in most cases, people are going to leave a traditional, I mean, a
Roth IRA in an inherited situation and leave it in there for the full 10
years, most people will, because why not let it grow tax-free until you’re
mandated to take it out?

You may do the opposite. You may just go ahead and cash out or do some sort
of game, we call it.

I mean, anytime we can actually spend money and convert it.

So, for example, let’s say you inherited an IRA or a 401k.

And when you inherited that, you now are going to bring in or you have a
mandate of taking so much money out.

But maybe at the same time, you’re not maximizing your retirement.

Right. So maybe you have a 401k at work or you’re just putting money into a
SEP or traditional IRA.

Any deferred situation.

Think about a dollar-for-dollar swipe.

So if you have to take $20,000 out of an inherited IRA, maybe that’s the
year that you maximize your work 401k.

So now you’ve just reduced your ordinary income by that same dollar amount.

Now you may still have to make sure you’ve adjusted your federal
withholding, but you’re not going to put yourself in a higher tax situation.

And that’s really what we’re looking at, ways we can defer.

And now you’ve just basically moved an inherited IRA into your own, which we
can’t do legally unless you’re married.

And that’s a spousal inheritance, which is totally different.

But in these situations, it really is a good time to look at your situation
and see how can we limit or reduce the amount of money we’re paying on taxes
on these items to do something.

So again, you can join the show if you want at 615-737-9986, 615-737-9986.

While we’re talking about things that are inherited, I know a lot of times
we have individuals that come in because they’ve either inherited property
or stocks, in which most of those cases, if done properly.

Now, I’ve had a situation this last week that came into my office, and I
know there is a want or a need for you to be able to transfer your property
to the people you love.

And so you think, well, I’m just going to quick claim or I’m going to add
their name to my title.

So that way you’re in, you know, you don’t have to worry about it. Right.

You’re now saying, hey, I’ve given this house. I know they’re going to get
it.

But what you’ve done is actually hurt, in my opinion, tax-wise.

You’ve hurt that individual because now their basis is going to be what you
originally paid for that house or what they can prove was the original
basis.

And in some cases, that is zero because there’s no paper trail.

You didn’t buy the house.

You built the house.

There was no appraisals done at the point that you did that.

So there’s no paper trail in which we can do anything with.

And that becomes a serious situation, right?

Because now without that information, now we have to say you inherited a
house.

And in one case I have, we had to go to zero as the basis of what you
actually, what that person actually has for a cost basis.

So they ended up paying tax on, you know, $400,000 almost.

So it’s really important that they take that information and they do that.

They put the money in and you track it.

But don’t put someone’s name on a title.

Do it through a will.

Do it through a trust.

That way then they get that step up in basis and they’re able to then take
it to the next level.

So that way if you pass away, we get the step up in basis.

We now can be in great shape because now I can sell that house and pay zero
tax.

And that is the way we want to do it, right?

We don’t want to pay tax.

And this can be done on stocks.

stocks are the same way so if you’re a person that loves to do investing you
know when when you pass away you can leave that so if you’re thinking about
leaving money to a truck to a contribution to a charity again think about
your ira being the vehicle you use for that and you let the family or your
other beneficiaries inherit through the traditional you know non-qualified
or capital gains stock portfolios things like that because then we get that
step up in basis and then we’re at a better situation again you can join the
show at 615-737-9986 615-737-9986 you can also text or email obviously
friday at drfriday.com if you don’t want to be on the radio and i realize
this is probably not as busy. I think last weekend was fall this day. And I
think the next weekend after this one or 4th of July is around the corner
and everyone’s kids are out and camps are started and oh camps. I had a
situation with one of my people. They do a day camp with their child while
they’re working. They send the kids to a day camp. And that day camp is or
maybe at least tax deductible. So if you’ve got a child under the age of 13
that cannot be left at home or probably shouldn’t be left at home by
themselves, then you can actually put them in a day camp. Now this does not
qualify if you have an overnight camp. If they’re sleeping at the camp, then
that’s not going to work. But if you have a day camp that you send them to,
basically a daycare while you’re working, then yes, save that information.
Make sure you turn that in. Or if you do your own taxes, Make sure you use
that information.

It’s based on income, and it’s also based on the fact that both, if there’s
two husband and wife or two people taking care of both of them, we’re
working.

If one is an at-home parent, then that will disqualify that situation.

But just putting that on the table so that way you’re able to make sure
you’re maximizing our tax deductions.

And a lot of times during the summer, you know, people go to different camps
during the day.

I know my one nephew goes to basketball camp usually for half a day every
day for like five or ten days or something like that.

He loves the sport.

And so, yes, if you’re participating, if you’re a grandparent that is paying
for this, keep in mind that can be considered a gift and the parents could
still qualify for writing that off.

Same thing with student loan interest.

If you happen to be, as long as it stays under the $19,000, that can be a
gift to that.

And then they can qualify for taking it off on their taxes.

I would always suggest giving them the receipt, but it is definitely a tax
deduction.

So making sure we have what we need and where we’re at.

All right.

Looks like we’ve got enough time.

Let’s hit Charles before the break.

Hey, Charles, what can I do for you?

Hey, Dr. Friday.

I appreciate you taking my call.

My wife died in 2019, and I filed a tax return with a deceased spouse and so
forth.

Well, I went to see the IRS after getting interest, 1099s for interest and
no refund, and they told me I had not filed 2020.

So I filed it, I filed it, and now I’ve gotten a letter.

They owe me $7,000, but they said it had been too long for them to

process my

refund.

And I never heard of that.

Yeah, and that’s nothing.

You may be able to, I mean, you can argue it possibly because of the fact
that that year you were dealing with the loss of your wife.

Because if she passed away in 19, then you would have filed the taxes in 20.

2020 was also a COVID year.

So, you know, I’m just saying you could try, but traditionally there’s only
three years.

So right now we’re doing 21, 22, 22, 23 and 24 are the years that we can get
refunds.

So any other year you cannot.

When did you file?

When did you actually file the 2020 return?

Oh, about six months ago, maybe four.

All right.

So, yeah,

unfortunately, you’re not probably going to win that battle, to be quite
honest with you.

If you had filed it in 21 or 22, possibly, even though it was, you know, now
they claim you didn’t.

But I’m assuming you filed 19, though, right?

So 2020

would have been due

in 21 or no?

Yes, that’s correct.

Okay.

So they’re saying 2020 is the year they didn’t get, but your wife passed
away in 2019.

So was it

because of a

single tax return in 2020 or you don’t normally have to file taxes?

I was head of household.

I have custody

of my granddaughter.

So I was head

of household.

Gotcha.

Yeah, unfortunately, I gotcha.

So you lost out on all the earned income and possibly child credit,
depending on your age, on that.

So unfortunately, Charles,

I’d like

to tell you there’s a magic answer, but the answer is most likely you’re not
going to see that refund.

Okay, what would be

the best alibi

or excuse to give them?

Well, I would basically go with the fact that you have COVID in the year of
2020.

You had your wife die in 2019.

It sounds like you have the custody of a grandchild.

I would use all of that and just basically explain this is why it didn’t get
done.

I was in the midst of dealing with an estate, my wife passing.

It takes a

little while to get

over that.

And then still being held together enough to actually deal with a
grandchild.

And I’m assuming your wife would have normally helped if you had the child
before, you know, you lost your partner in crime in essence.

So I would use that. I would just try to write a say, hey, I understand that
this is the normal, but here’s my situation.

Can you do a reconsideration on it? There’s nothing wrong with asking.
What’s the worst they say? No.

I mean, if you don’t ask, then you don’t know if your story is going to be
good enough.

But I

would definitely document, you know, when you lost your wife, the fact that
you, I don’t know if you had the grandchild before, during or after.

But, you know, that’s a lot to have happen.

You know, I mean, to be taking care of a grandchild and to lose your spouse
is a lot in no one, everyone’s world.

And then on top of it, COVID had hit in 2020.

And I don’t know if that had

any effect

on your life at all.

But I’m just, you know, all of that would be something I would document and
just explain why you think that it would be something that you could qualify
for.

I mean, what’s the worst they say?

No, but I would

use that.

So do I send it to the regular place where I would send my return or is
there a special address?

Yes, sir.

Yeah.

Well, you got a letter saying that they refuse to send you the refund

because it’s outside the

date, right?

That’s the address I would

use.

Okay.

So they

just keep our money in that instance.

Yes, otherwise they do.

Yes, unfortunately, it’s another quirk of the Internal Revenue Service.

Okay, well, thank you so much for the bad news.

Yeah, exactly.

Thanks, Charles.

All right, we’re going to take a quick break.

When we get back, you can join us, 615-737-9986.

We’ll be right back with the Dr. Friday Show.

All right, we are back here live in studio.

You can reach us at 615-737-9986, 615-737-9986.

And Chuck is on hold, so let’s see if we can get him to join the show.

All right.

Thank you, Dr. Friday.

Thanks,

Chuck, for holding.

What can they do for you?

I

have kind of a two-part question.

So my parents,

as they’ve gotten older, we’ve decided to move them in with us.

We have a basement with kind of an apartment in it.

So they are living with us now as of a couple months ago.

And the other day we were talking, and they have no real retirement.

They have just Social Security.

My dad told me they don’t file taxes

at

all.

And I was just surprised by that.

So number one

is, is that accurate?

Number two, do they become dependents for me?

Is there any tax benefit that I can gain by having my parents live in my
house?

So, yes, they do become dependents.

If they live off Social Security, Social Security is not considered
earnings.

So, in essence, they are going to be able to be listed.

They don’t file.

There’s no requirement.

It’s not taxable.

And you don’t report their Social Security on your return.

So, and that’s $1,000, $500 a person right now.

you would get for anybody that’s over the age of 17. So it’s not petty cash.
Definitely would help with some of the expense. I’m sure they’re helping
what they can. But A, I think it’s awesome. I did the same with my parents.
Well, I mean, you know, I’m just saying I think it’s great. It’s not for
everybody, but it can work. So, but yes, you would just list them like you
would normally your children. Obviously put their age, date, and everything
else in there. And then you’ll get 500 for each of them. It would need to be
six months basically that you’ve been supporting or providing at least 50%
of their care. And if you provided the house, in essence, you’re providing
50% of their care. You know, so yeah, so they would just, you know, and why
not? I mean, they’re not being filed anyways. There’s no, there’s no
disadvantage to claiming them that I know of as far as I can see.

All right. Well, that’s good news. I like that news.

thank you no

worries thanks for calling chuck all right um so and those are you know
those are hard decisions i get it i have one guy that was hilarious he’s a
client we’ve had for you know nowadays i say 20 and 30 years um which is
awesome i guess but he um his mother-in-law moved in for like four or five
years and then she moved back out to her own she needed some help until she
moved back out.

And then like a year later, his mother moved in.

And I thought it was a unique situation because not only does you and your
wife have to get along with this other person, but most people always talk
about mother-in-laws.

Can’t say we’ve ever had one, but mother-in-laws being a handful and he got
along great.

And now she’s having to get along with his mother and it seems to work for
them.

But I know that wouldn’t work for everybody.

So I’m not saying that at all.

just on that to be a very unique situation. And, you know, to be honest,
there is a generation, some people are really good about preparing for
retirement. Some, not so much. Either the jobs they worked did not really
provide any kind of 401ks, IRAs, or anything like that. I can honestly say
my parents worked until they basically passed away. Most of you guys know
they worked with me, So they helped me build my firm.

But my father was a CPA.

So it was one of those deals that you could do.

But not for everybody, right?

So, you know, and if it wasn’t for the building of our business, then we
would have ended up with a situation where we couldn’t have easily been able
to achieve what we did.

So sometimes it is difficult for a certain age.

And with the cost of living going up and Social Security really not keeping
up with that for many people, they’re probably looking at alternatives.

So it’s a good one, and it can put a few dollars in your pocket.

All right, we’re getting ready to take our second break here.

No, we aren’t.

It’s only 25.

Forget that.

I’ve got another five minutes.

I am so sorry.

I was looking at the wrong clock.

So taking in somebody.

This also goes with the gentleman, the first guy that called, said he was a
caregiver to his grandchild.

But if you have your grandchildren or your own children that have moved into
the house and they are basically now your dependents because they’re either
in a, I’m not going to call it a transition, but maybe they are basically at
a point where they’re going through.

Divorce is a big time.

They need some place to start over, save up enough money, figure out where
they’re going to live, all those things.

And so they’re living with you.

The secret is you have to be providing 50% of their care, which, again, if
they’re living in the house, you’re feeding, you’re paying the utilities,
you’re paying for the mortgage, and they’re not participating in any of
that, you’re meeting 50% of someone’s care.

If they are working and paying you money or something like that, then maybe
that’s not going to be the situation.

But if they’re also working, they’re probably going to be required to have
to pay taxes anyways or file taxes.

And therefore, they’re going to be in a situation where they need to be able
to file their own and clean themselves.

Right. But sometimes they’re between jobs.

They’ve got sometimes they’re bringing in the grandchildren.

My brother had that where, you know, two of his grandchildren and his
daughter was, you know, went through divorce and had to regroup.

Now they’re doing great, but, you know, they had to figure out all of that.

So for a while, you know, they had a lot of extra people in their home.

And at that point, you know, if the daughter isn’t working because she’s
living at home trying to figure out what she’s going to do, and you’ve got
two grandchildren you’re supporting, now you’re talking about potentially,
if you’re under the age of 65, getting earned income credit and child
credit.

That’s where Charles was getting such a large refund because he had a couple
grandchildren living with him.

And he was qualifying for at least the child credit, which is $2,000,
depending on the age of the kids.

If they’re over 17, it’s only $500.

If they’re under 17, then it’s $2,000 a child.

And then if you’re over the age of 65, this is a new one I learned.

I don’t know why because I have a number of grandparents that have taken on
their grandchildren.

And just so you know, earned income credit kicks out at 65.

Just like you have to be over the age of 25 to basically get it.

You have to be under the age of 65 to qualify for it.

I think that’s an error that, in my opinion, because they’re not taking into
account a large number of people that are still working at the age of 65.

and supporting or taking care of children at that age and younger children,
not just, you know, not just older children, but younger ones as well.

All right. So if you’ve got questions, you want to join the show, you can
615-737-9986.

615-737-9986 is the number in house.

If you have children, let’s say you have a girlfriend or a significant other
that is living with you and the children live in the house with you, this
becomes a problem they are not truly your descendants and they’re not really
related to you yet you know a lot of times people will put them on their tax
return because they’re like well i’m supporting them they’re another you
know the mother isn’t working enough or doing this or whatever be careful
about that because there are very strict rules about how and who can claim
what dependent if it’s your grandchild that’s one thing if it’s your child
that’s another but if it’s someone else’s child and they happen to live in
the same house as you, be careful. Some of those rules are not going to
apply. And I’ve seen two cases recently where they have disallowed, and once
you’re disallowed earned income credits, even child credit, you don’t get
it. If you are legitimately then required or able to do it, you could lose
the right to have that earned income or child credit in there so again just
making sure if this is not your child and you have a legitimate now foster
children and all those things apply yes there are i don’t want to say
there’s special rules there’s just basic rules for that and you can claim a
foster child i think it’s awesome a that you have them and even if the
government helps getting a child credit and extra tax credits only helps the
kids in the big picture so just making sure we’re all on the same page and
you’re able to do what you want and get every dollar you can on your tax
return, but not have to be looking over your shoulder later and say, oh my
gosh, should have I taken this?

Someone told me that I could claim my whole neighborhood on my tax return as
long as I got their name, address, or name, social security number, and date
of birth.

That is completely wrong.

That is tax fraud, actually.

All right.

So we’re going to take our next break.

615-737-9986.

615-737-9986.

Number here in the studio.

You can just join us.

I am Dr. Friday.

I’m an enrolled agent licensed by the Internal Revenue Service.

Never worked for her, but licensed by the Internal Revenue Service to do
taxes and representation.

We’re going to talk more about that and taxes when we get back from this
break.

I’m in studio, I guess I should say. I’m not on a studio.

Anyways, just for you that may not know who this crazy person is, I am Dr.
Friday.

I’m an enrolled agent licensed with the Internal Revenue Service to do taxes
and representation.

That’s what we’ve done for the last 30 years.

We represent people in front of the Internal Revenue Service and in front of
the state of Tennessee.

mostly IRS, obviously. We don’t have a state income tax. So normally if you
have business issues, 941s, payroll tax issues where you have a fiduciary
tax issue, state unemployment, or if you’re just dealing with sales tax,
business tax, all those, we help people all the time.

But mostly, obviously, individuals with tax issues, but businesses are a big
part. So either way, We do and have been doing that for the last 30 years.

And we’ve been in the Britwood area.

So if you want to check us out on the web, you can.

drfriday.com is the website.

And you can certainly check out and see what we have.

And if you’ve got love letters, if you’ve received something and you’re not
too sure how to respond, what’s the best way to get something, first thing
you want to do is, you know, obviously always respond.

If you haven’t done taxes for the last 10, 15, 20 years, I deal with that
all the time.

Sometimes it’s just somebody that hasn’t filed taxes the last five years.

Whatever it might be, we can help you get the information together.

We can help you accumulate what you need.

And then we can get you into compliance.

Once you’re in compliance, then we can start talking about offering
compromise, installment plan, partial payment plan.

But none of that’s going to happen if you haven’t filed your taxes.

So if you have questions on how to get started with that, how you want to
move forward with that, we can do that anytime you want.

We can sit down, get pile of attorney.

It takes a little while now.

Pile of attorneys used to be, to be quite honest with you, relatively fast.

We’re finding it to be a little less.

And I will say if you have access to your IRSID.me, I would suggest if you
don’t, get access to that.

It does make things a lot easier, a lot faster for yourself as well for us,
to be quite honest, because we can get Pov Attorney within a few days if
someone has an account with ID.me.

Otherwise, we have to do it through faxing, which just takes a while, and
sometimes they’ll reject, and then it takes more time.

So just a matter of making sure that everything is in line and that we’re
doing what we want.

And once we know what the IRS wants, then we can move forward.

I have a case right now I’m working on, kind of interesting.

They’ve been in and out of making deals and talking to the IRS and filing on
time and then filing late.

And so the revenue officer I have is already basically saying this person
has issues where they’re basically having a problem with what they’re doing.

They’re like, well, these people aren’t following up with that.

They’re not following up with what they’re promising.

They were in a payment plan, then they’re not.

they’re in this and then they’re not um so it just makes for a lot uh harder
so if you’re dealing with the irs it would be a great idea to be able to um
you know make a deal live with it and move forward i understand sometimes
life happens i had one where you’re in the middle of a great pretty good
deal but then he lost his job well if you lose your job you can’t pay the
irs i mean And the last thing you should be worrying about is paying the
IRS, right?

I mean, if you’re basically trying to survive and you’re already basically
in a tough situation, because a lot of times if, you know, there are some, I
will be honest, there are some that you basically go in and you’re basically
saying, hey, you owe the IRS 100 grand, but you’ve got 400,000 in your house
and you have two good jobs.

You may not be sitting on 100,000 to pay them, but theoretically you are.

And the IRS is

seeing that.

They know that you have a mortgage for $100,000 on a $500,000 house.

They’re not going to take a deal.

They’re not going to sit back and make an offer.

Now, there has been one or two cases where, based on the age of the people
and the ability for them to pay and the fact that they have no other
retirement other than their house, that they have been able to preserve some
of that.

But in most cases, 99% of the time, they want you to get a line of credit or
a mortgage or something out of that house.

And then you need to deal with the other people.

They don’t want to be your collection agent.

They don’t want to be dealing with your collection issues, to be quite
honest with you.

What they want is to be able to just move on and, you know, not have you as
a collector.

So they’re going to be looking at things you can.

I had another person that had five cars.

A single guy had five cars.

And, you know, they all had special meaning.

One was a beautiful Corvette.

One was a motorcycle.

But the fact is, you know, the IRS.

And, you know, IRS tax law specifically says each person is entailed to one
car.

One car to get back and forth to work.

Not a motorcycle.

Not a sports car.

Not, you know, not extra.

I mean, if your only car is a sports car, your only vehicle is a motorcycle.

vehicle that will be your one vehicle so you have two options you either go
take a tote a note or you sell them because the IRS isn’t going to make you
an offer or make you a deal that’s going to not include the value of those
vehicles as if they had been sold on the street so again that is important
because if you think because well this was my dad’s car and you know this
one I you know This has always been my dream car and I’ve always had it.

I get it.

But once you get yourself in trouble with the Internal Revenue Service and
now they are on collections, they’re looking at you as if what do you have?

I don’t care if it’s something you inherited.

I don’t care if it’s something that is priceless to you.

If it’s your second vehicle in this situation, if it’s a second home, maybe
you inherited your parents’ house and you cannot think about ever selling
that house.

but you own a house you’re living in, and this is a second home in which you
have is either being rented, even if your family member is living in it
right now.

If you are the sole owner of that and you owe the IRS, guess what?

You either have to go get a mortgage to pay off whatever you owe the IRS, or
they can take that second home and they can sell it.

Unless there are documents and they have the proper, you know, so you
couldn’t sell the house initially because, you know, the person had the
rights to live there until they pass away.

And that was already put in a well.

And so theoretically, even though you might own it, you don’t have control
over it.

Yes, there are documents that allow for that.

But a lot of people just don’t do that.

And so then they end up with this situation where the IRS is looking at them
like, this is great.

Hey, I mean, I have this one.

I mean, we deal with a lot of people, you know, and one, his primary home,
and then he had his dream property and a home on it that he had been in the
process of building.

Well, I’m like, well, you have to sell one.

You have to either take a mortgage, pay off the IRS, or you have to sell
one.

And he’s like, I’m selling my primary then.

I want to keep this property.

I said, you can do that.

Because they were basically lining up to put that second property on the
chopping block, to be honest with you.

They were going to hawk that property.

The government pretty much already had the ability to do so.

So, you know, he’s like, well, just give me.

And once he put the house up for sale, the government was willing to wait
and go ahead.

They don’t care which way you want to do it.

You only have that control, though, for a very short window of time.

If you’ve already backed in and out of these conversations, you really do
need to make sure you know what’s going on, how it’s going to happen, and
where you’re going with it.

That’s all I’m saying.

You need to make sure that you have all of it.

And if there is extenuating circumstances, like I have people who say, well,
those are my kids’ cars.

You know, these kids, you know, the kids, and we have to keep them licensed
or insured under us anyway.

So we just keep them, you know, as I say, I say, well, again, even if these
cars are theoretically your children’s cars, if they’re titled with your
name on them, the government will take anything.

So that also includes bank accounts for minor children.

If your name is on a bank account with a minor child, I’ve had one.

Two of the kids, the father had the name on it, and then they came in and
levied all accounts.

Sure enough, the kids each lost their money that was in the bank.

Now, we were able to prove it was the kid’s money, not his.

But that took two months to get the money back and, you know, make it a
better situation.

So I’m just, again, just saying if you’re looking at this in the right way,
there are ways to protect yourself.

But there are also some smart ways of making sure if you have something in
your name that is not yours and you’re thinking to make a deal with the IRS.

And you have to also think if you today, you’re making a deal, I’m going to
call them on Monday and make this deal.

And you’re going to quick claim a car or a house or anything else.

And then that last day or two or even last year, they see it.

They see that information.

and if you sell it and they don’t have the and they don’t have a lien on it
and then you know you say you say well i sold that property and they’re
gonna make they’re gonna audit you for where the money went if you received
a couple hundred thousand dollars and you paid down your own house with that
money and did not pay off the irs again your house is back in jeopardy for
them and if you say well i can’t afford to to borrow then you know used to
be to be honest all we had to do was go and get three rejections from
mortgage companies. And we were able to prove that the people’s credit just
didn’t have it. I mean, they had a 490 credit, they have a 525 credit, and
there was no place to borrow. You know, and that, you know, it’s still kind
of on the books, but it’s a lot harder nowadays, because the IRS realized
there are some high end places or some high interest rate places that you
can go to get your, you know, your taxes or your loans, you know, and then
they don’t care how it works or what it’s going to do or where it’s at.

All right, we’re going to take our last break.

So if you’ve been waiting and you’re like, oh, I’ve got a question.

I just don’t know if I want to be on the radio.

So write 615-737-9986, 615-737-9986 is the number here.

And we don’t take, you know, you can give us any name, number, and none of
that really makes a big difference.

We’re not tracking any of it.

So we’ll be right back with the Dr. Friday Show.

All right, we are back live with the Dr. Friday Show.

We are at the last part of the show.

So if you’ve got a question, now would be the time.

Maybe you’ve got a question wondering if something’s going to be taxable, or
maybe you’re thinking about a tax plan and you’re not sure what the best way
to go about doing it, all you have to do is pick up the phone, 615-737-9986,
615-737-9986.

And then you also can deal with who is an enrolled agent.

A lot of times people always think about CPAs, attorneys, tax attorneys, But
an enrolled agent is actually an individual that deals solely with taxes.

A CPA is a certified public accountant.

They deal with accounting.

Tax attorneys really deal with the law of accounting or taxes.

And most of you are looking for someone that is on or wanting someone that
knows the tax law.

That’s what an enrolled agent is.

All right, let’s hit Joe.

He’s on the phone.

Let’s see if I can help Joe.

Hi, Dr. Friday.

got actually several questions for you.

Sure.

So the first one, as I was driving, I heard you talking about gifts to
children.

Yep.

And my son lost his job last October. And since that time, I’ve been paying
for his portion. He lives with his fiancee, paying for his portion of
keeping the household up. And I’ve been doing that just through electronic
transfers.

And my question is, is that something that’s deductible for me?

And is that something that’s taxable to him?

Right.

The answer is no.

I mean, you’re most likely not treating this as, well, it’s not deductible
to you no matter what, but you’re not charging him interest or anything like
that.

I’m assuming this is just, hey, you’re in a rough spot.

You can

give him $19,000, and if you’re married, each of you and your spouse can
give him $19,000 free.

But you pay the tax in essence, right?

You’re taking after-tax dollars, paying whatever debts or giving to him, and
he’s paying whatever.

But there’s no tax to him, and unless you’re taking money out of a pre-tax
account, which I hope you’re not, there’s no tax to you.

But there’s no tax advantage either.

Okay. And so is that, can you do that annually or is it just a one-time
thing?

You can do it annually. It’s every 12 months. They’re on a calendar year for
the IRS. So January through December, as long as your total, if you end up
going over $19,000, it’s not the end of the world. There is a required gift
tax return, still free money to, you know, you’re not going to pay any tax
most likely because you’ve already paid on whatever it is. And he’s never
going to pay tax.

We just have to say, hey, I gave my son $25,000, and I’m a single guy, so I
have to show this $6,000 in addition to the $19,000 he already got free.

Okay.

Okay, so he’s also gotten himself behind on his taxes, both federal and he’s
moved between Tennessee and Alabama.

So he’s gotten

himself behind

both federal and state of

Alabama.

Do you cover the state of Alabama income tax as well?

I do, yes.

We handle all the states, but yes, Alabama and Kentucky probably most of the
time because they’re neighbors.

I know he’s

very anxious about that.

Yeah, he can have a lot of stress.

And if he’s

unemployed right now,

it would be a good time to actually have these conversations because if
nothing else, he can be made non-collectible.

There are some things that if he’s working, we don’t have the tools.

But if you’re not able to fairly survive, then obviously they don’t have the
ability to collect.

But they don’t know that because they’re basing everything on prior history.

Okay.

And then one more question.

So at the beginning of next year, the stock that I own in my company, I’ll
start buying that back.

Okay.

Of

course, it’s taxable.

Right.

Is it okay, rather than doing like quarterly, is it okay just to get an
additional amount pulled out of every paycheck?

Absolutely.

I mean

the secret

is as long as it’s been paid in on or before those estimate due dates.

But if you do it by paycheck, I find that to be a lot simpler for people
than paying quarterlies because quarterlies are just – they’re just more
confusing for most people.

You know what I mean?

Unless

you’re self-employed and have nothing else.

But yes, I would say increase – okay, I’ve got to pay an extra $1,000.

this quarter, then just divide that by either the 12 paychecks or whatever
number of checks you have.

So, and long-term capital gains, because I’ve held these stocks for a while,
15%?

That’s correct.

As long as your income, are you married or single, sir?

I’m married.

Okay, so as long as your joint income is under $250,000 with the sale of
that stock?

That’s not going to be the case.

I mean, the stock itself

is probably going to be $200,000.

Okay.

So as long as it’s – so then it’s $18.8.

There’s a

$3.8

tax.

So you’re looking at $18.8 until you get over $500,000 combined.

If the combined is over $5,000, then you’re at $23.8 for everything that
goes above that $560,000 or whatever it is.

Okay.

Because I was very surprised.

My oldest sister’s TOA, we sold her house, and I was expecting – I was
holding aside money for 15% long-term capital gains.

She’d had the house 30

years.

Right.

And I was really surprised when her tax

guy gave me what she owed and that the long-term capital gains was
significantly more.

Well, that’s only because, again, depending on the situation now, were you
paying that through a trust or did you pay that individually?

Yeah, no, I paid it on her behalf.

She has, you know, she has accounts that had sufficient money for that.

So I was just paying it on her behalf.

Okay, yeah.

So, yeah, but I mean, again, depending on her house, she sold it.

But, I mean, obviously, if she’s single, she only had a $250,000, so she may
have had a lot of equity built in the home that she had.

Yeah, she had it for 30-plus years.

She

built it for

$300,000 and sold it for, you know, a lot more than that.

Yeah, exactly.

So, all right, well, hopefully that helps.

We’re going to grab one more person before the end

of the show.

Thanks for calling, Joe.

Appreciate it.

Let’s

hit Paul if he’s still on hold.

Yeah, this is Paul.

Hey, Paul, thanks for holding so long.

Let’s see if I can get your question answered.

Okay.

Did he tell you what it is or do you want me to

ask?

No, but yeah, please tell me again.

Okay.

Yeah, I’m getting ready to sell a home, and I’m a retirement age, and I
thought they used to have a one-time exemption on the sale of a house that
you wouldn’t be taxed on, and you only got to do it once, whenever you did
it, you didn’t do it any time.

No, that’s gone

for about the last 10 years.

The new or current tax law is if you are selling your primary home, you have
to live in it two out of the last five.

They give you a $250,000 exclusion for a single person and a $500,000
exclusion for a married couple, plus whatever your basis was, whatever you
originally paid for it.

And

if you did a major improvement or something.

My wife just died.

I’m getting ready to sell it because we were doing it up to sell.

You get

to claim her still.

So you’ll still get her credit or her step up either way.

So what did you

pay for it roughly?

Just give me some basic numbers.

$250.

Okay.

What are you selling for?

I think about $1.3 million.

Okay.

So you’re going to have an exclusion of, again, did you do any major
improvements during that time?

Oh, yeah.

I did all kinds.

I had an elevator

for her and added a big garage on, and then I added up the new master suite
that actually looked at the lake, right?

All right, so you need to go back

due to the best of your ability, if nothing else.

Ideally, just go back and see if you can recreate what that additional,
because right now you’ve got $750,000 excluded against the $1.3 million, and
there’ll be some closing cost fees.

But you also will qualify if you did an elevator and other major
improvements.

That increased the value of the home.

All of those things need to be added in plus the

$250 that

you had originally paid.

I did the electrical on it, you know, a new box and everything with new
fuses.

Right, which I know that can be $34,000.

We did all the bathroom completely

with all new wiring from the duds out, right?

Yeah, all of that.

You need to consider all of that because new electrical, that’s $30,000,
$40,000.

I just did one of my rentals that was old.

And I mean, I don’t know what you pay, but I’m just saying all of that needs
to be reconsidered and put back into the numbers.

So that way you have, you know, the information correct.

So, you know, go through, add it all up together.

And then but the one time exclusion is gone, unfortunately.

OK, so I need to dig out the old checkbooks and go through them, right?

Yes. If you have those and you have the

ability to do

that, that is ideal.

yes

yeah i do have those so that’s good you’re

a smart man yeah and i would just take the time go back through pull up all
the things because you’re the one that only one that really knows you know
what what was the original house and what you now are selling for um

you’re

still going to have a decent profit but um but at least if you can come up
with those new numbers that would be awesome

yeah well i’m just going to use it for retirement money so that’s all there

you go Yeah, but we don’t have to pay tax if we don’t want to.

Right?

We don’t what?

I said we don’t have to pay tax if we don’t have to.

No, yeah, we’ve got to avoid that as much as possible.

Exactly.

Thanks for calling, Paul.

I appreciate it.

All

right.

Thanks for your time.

Bye-bye.

All right.

We are winding down the show.

We’ve got about 30 seconds, so you can reach me on Monday, 615-367-0819,
615-367-0819.

You can email Friday at drfriday.com or you can check out the web at
drfriday.com.

As we say in Australia, cop you later.