Welcome to the Dr. Friday Radio Show! Dr. Friday gives all the updates on taxes, deadlines, and the following topics:
- The American Rescue Plan Passed
- Make Sure Your Tax Software Is Updated
- Do You Need Help With Tax Representation?
- The third Stimulus Coming March 15- April 15
- Child Credit Increased To $3000
- Stimulus Check for All Dependants On Tax Return
- Additional Money To The PPP Program
- Can My Stimulus Money Be Applied To Debt?
- Have The Right Documentation For Filing Your Taxes
- Unemployment and 1099 G’s Payment Is Taxable Income
and answers other caller’s questions!
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 at 615-737-9986. So here’s your host, financial counselor, and tax consultant, Dr. Friday.
Dr. Friday 0:30
Good day, I’m Dr. Friday and the doctor is in the house. Oh, boy do we have fun to talk about now. They did pass the American rescue plan, and it’s going to make changes for any of you that were on unemployment, we may have to be doing amended tax returns, because they’re going to allow the first $10,200 to be tax-free. Obviously, if we’ve already filed your taxes, we’re going to have to get that amount back. Also, if we’ve got issues with getting the next stimulus check if you haven’t filed. Let’s go ahead and hit Dave from Colombia, he may actually open that conversation about some of the problems people are having. Hey, Dave.
Hello Dr. Friday, thanks for taking my call. Earlier this week, I prepared my 2020 with the fillable form provided that the IRS online. I went ahead and transmitted that to the IRS at the same time I owed about $350 in tax on that forum. So I went ahead and direct paid it to the IRS so they have $350 of my money. The next day, the IRS got back to me and said they will not accept the E filing because they couldn’t verify my 2019 AGI. That’s because they haven’t processed my 2019 return yet for some reason. So my question is this, I can mail in 2020. I know that’s the fallback. But for the 350 that I’ve paid, do I reflect that as a credit on the 2020 return or I just leave the taxes owed showing 350?
Dr. Friday 2:10
Well, once you can confirm that the money I would probably wait, make sure you know the money has come off. Because if you did it through the form, and they didn’t accept the form, it’s possible that they didn’t accept the direct payment. But if you went to the IRS separately, then yes, it would be a credit. I would correct the return to show that the payment was there, and then zero would be due.
Okay, now they did get the money, I’ve confirmed that. So the question is there a tax owed? I sent it to either one address that you are paying taxes on or another address, you’re getting a refund, which address do I send it to? If it’s zero taxes owed?
Dr. Friday 2:48
It would go to the one where the refund.
Okay. All right. Okay, that’s what I’ll do.
Dr. Friday 2:55
No worries. Thanks, mate. Appreciate the call. And yes, we are going to be running in all kinds of those situations where some of the programs do require. And this is often a problem people have is if you haven’t filed or for some reason you file but you did it by mail in 2020 for the year of 2019. To this day, we are processing are still getting information on people that we filed in this was as late as October, and we’re just getting letters now. So the IRS is still in the process. If you filed your 2019 and it hasn’t been processed or you know that they’re sending you information, resubmit. Ideally, if you have any kind of proof of filing on on it on time, would be the opportunity to basically make sure that that information is attached, you might want to write a second copy on the top, something that’s going to make it go through the situation so that you have what you need. But make sure you go ahead and just recertify this time you certify mail or something along that line to get that information to them. That’s my suggestion, at least, you might not want to keep waiting because I think a lot of those are sitting someplace but not being processed. We’ve had to resubmit that information. Alright, looks like Richard has somewhat the same kind of situation. Hey, Richard, what’s your issue?
Yeah, I got a reject from IRS and going through turbo taxes. I submitted it. They tell me that the AGI is not correct that I have to go on to the website, irs.gov website and request a transcript. When I did that, I didn’t get I got a transcript I got was incomplete. I don’t know what to do now.
Dr. Friday 4:53
So when you pull the transcript, it wasn’t it did not show your actual filing of information.
It shows the filing, but it didn’t show an AGI.
Dr. Friday 5:02
Okay, so did you file electronically last year? Did you mail it in Richard?
Last year I mailed it in.
Dr. Friday 5:10
Yeah. And we’re running into this a lot. So my suggestion would be at this point, you’re going to be a little bit like the last caller, where you have two options. Some of our software does not require us to match AGI from the year before, because we use a different type of information. But if you’re requiring to use that you’re going to have to mail it in. You don’t have a choice.
Dr. Friday 5:37
Unfortunately, yeah. I would definitely certify it. At the same time, I would probably attach a 2019 return copy of the rejection showing that you put the correct AGI in there because it sounds like they may not have 19 in the system as well. So you might as well get a preempt, put 19. On the top, I would put a second copy filed on this date, whatever, just so they know, and then put the copy of the rejection in the mail that and least send it all, you know, priority or registered mail or something just so you know, it was filed on time. If it comes back and they say you still haven’t filed you have some sort of documentation.
Right. Okay, I will do that.
Dr. Friday 6:20
I love your show.
Dr. Friday 6:22
Thanks for listening. Appreciate it. Thanks. Alrighty, and so we’re gonna go in a little bit further into the American Rescue Plan has brought up a little bit of information, because we also have many people coming in and they’re saying I haven’t received either one or all of them, what was referred to as stimulus checks. So the IRS has kind of got a little tricky on these guys. So every individual that may not have any back child support back educational college debts, or state debt or IRS debt, you’ll be able to get your refund built into your tax return and you’ll get that refunded, or it will apply to an open balance you haven’t done anything left will be refunded. So the problem is the recovery rebate credit that is on the tax return will apply to any child support and back that you have that is allowed to be paid by refunds. So even though the stimulus checks are said that they will not apply those to those situations, besides the first one, the first one did get applied to back child support. But the other two were not allowed to be. If you try to get it on your tax return, it is going to be applied to any back child support or anything else.
Dr. Friday 7:47
Now I’m saying this because some people are quite upset because obviously, the money was supposed to come to them, they didn’t get it for whatever reason, maybe they didn’t file their taxes on time, or someone claimed them or whatever. Keep in mind this is somewhat free money, I know it’d be nice to have it in your pocket. But don’t just leave it laying on the table, when you could actually get I mean, with the newest stimulus coming out, that’s almost $3200 an individual assuming that you’re making less than $75,000 in that combination. So you do want to make sure you’re not leaving on the table. But in some cases, it may now be applied to some debts that you have instead of going back into your bank account. All right, let’s see what Terry can help us with. Hey, Terry, what can I do for you?
Well, hi, I usually get a 1095 form for the marketplace. I didn’t get one this time, what do I do? Do I just go ahead and send it in without one?
Dr. Friday 8:48
No, because they’re gonna send you a sweet little love letter saying they can’t process because or they’ll take your daughter off the marketplace because they don’t see where you filed the 8962 whatever. You need to give him a call. A lot of times they’ll have you download a blank 1095 A from the internet, or just have a piece of paper there. And you know, they’ll tell you what’s in column one, column two, and column three, and all that detail, then you’ll just use that as your 1095 A.
Dr. Friday 9:22
You’ll need to call them and get that information. You don’t want to file without it. If you’re talking about a 1095 A you do not want to file without it.
No, it’s a 1095 B.
Dr. Friday 9:34
Yeah, Terry, you can file without that. 1095 means that you are covered with your employer most likely.
No, I’m on Medicare.
Dr. Friday 9:48
So either way, you won’t need to worry about filing that or reporting that on your current tax. Only 1095 A’s are the ones that we have to file still.
Okay. All right. I just got a letter in the mail saying that I got an economic impact payment of direct deposit. There’s nothing showing up. Is that what we’re talking about?
Dr. Friday 10:17
They’re referring to them as the economic one, economic two, and economic three. That’s probably a lot of people have gotten that letter just recently. And it’s for number two, and it’s probably for 600 on you and 600 on your daughter, assuming that she’s under the age of 17. But that if you keep reading the letter, it will say that this is showing that we have it since we have you on the list. If you didn’t get the direct deposit, please expect to check if you keep breathing through the letter. So it’s possible. Did you get all the other ones electronically? Since you’re on Social Security?
Yes, I did.
Dr. Friday 10:59
It’s possible that still pending? The reason they’re sending those letters out is so that way, you know, on your tax return, when you’re asked about the recovery credit, that you fill in that you received it, because they processed it as if you have now you have another option, which would be if it comes in cheque form. I mean, obviously, you could just shred those checks and not worry about it. But there’s no way of knowing so most of those people, if you’ve received that letter, the IRS is saying we’ve already submitted or issued those payments, and they should be coming to you soon.
Yeah, because it came back in January.
Dr. Friday 11:38
Oh, you never got the 600 or you did get it?
I got the $600.
Dr. Friday 11:43
Right. Okay. What’s the date on the letter you’re looking at?
Dr. Friday 11:51
Okay, well, that was before the new Act was signed into law. So it couldn’t be the third one. Did you? Did you get one for you and your daughter?
No for some reason.
Dr. Friday 12:11
Do you claim her as your dependent?
Dr. Friday 12:18
Okay, well, you will get the third one, and dependent on your tax return will qualify. So you’ll get that one. But I’m not too sure what the second one if you’ve already gotten the 600 I’m not too sure if that’s just your letter saying that you did receive it. I mean, I have had a couple different letters for the second one. For some reason, very few people seem to have gotten any letters for the first one proof of receiving. But again, the IRS I think is slowly trying to perfect this issuing of stimulus money. So each time maybe they’ll get this one even a little better than last time. But hopefully I helped you a little bit, Terry, thanks for calling.
Thank you. Bye, bye.
Dr. Friday 12:59
Alrighty, and again, if you want to join the show, you can at 615-737-9986. We are taking your calls talking about the new American Rescue Plan. This is number three, everyone, we are still trying to figure out how we can bail our way out of COVID. I guess. There are some new things in there, obviously, additional money to the PA payroll protection program. I have found quite a few sole proprietors did not apply. So it may be something you need to really sit down and talk about. There’s more money for nonprofit and digital news services, of course, shuttered venues, there are more grants out there for them under this one, and some more targeted disaster loans for individuals, especially in the restaurant industry, and certain things like that. So these are a few of the new situations we have going on. We’re going to take a quick break and we’re done. We’ll come right back to the Dr. Friday show. We’ll be right back.
Dr. Friday 14:03
We are back here in the studio and we are talking about taxes. As you guys all know, I love my taxes. We’re going to have a fun year this year, we’re going to be doing quite a few amended returns. We’re also going to be not so worried about who’s dependent on our tax return. So it’s gonna be an interesting year. Why don’t we go ahead and hit the phones to Jerry? Jerry, what can I do for you?
I filed the return, and it was accepted by the IRS on March 5th electronically. And you mentioned this new tax law that’s just recently been passed. Is that going to necessitate that? I file an amended return.
Dr. Friday 14:58
Yes from everything I understand. Again, keep in mind this was just signed I think like last Thursday, maybe the president signed it? Because I think the IRS came out and said they were hoping as early as the first of this week to be able to start sending out the $1400. But I don’t know about you, but right this second, my tax software is still taxing unemployment for the total amount, the tax, the American plan, rescue plan, says the first $10,200 will be tax-free. So until that has been corrected, I would say at this point, nobody amends anything, until after you’ve got fully accepted. If you had a refund received that refund, then we can go into Plan B, which will be then to recuperate or make alterations if you owed money. If you can afford go ahead and pay and then they will refund the difference. If that is something that’s feasible. If it’s not feasible, then obviously, at this moment, if you haven’t filed, like Jerry and about 100, my clients, then hold off, don’t hit the send button. Just wait a little bit. I’m assuming that these tax software are all working as fast as they can. But let’s just be honest, this was thrown at them in the middle of tax season. At this moment, my opinion is to wait. We’ll be doing amended returns as soon as we can get through in my world as soon as we get through the April 15 deadline, and then we’ll just start kicking out amended wants to get all the money back for those people that were affected by the new tax law.
Dr. Friday 16:34
No problem. Appreciate your calling. Thank you. All right, how about Lisa in Nashville.
Hey, Dr. Friday. I have a question about my son. He’s 21, he is handicapped. So he receives an SSI disability. Since he’s handicapped, we are his sole caregivers. We claim him you know, we’ve been claiming him every year as a dependent. He has not received any of the stimulus money, I guess because we claimed him. So is there any advantage to him filing himself a return even though he would technically not have any income since you don’t have to claim SSI? How would that affect us and him?
Dr. Friday 17:24
Here’s what we have to consider. So the first stimulus for any of the children, I mean, he would have been overage, so he would have qualified if he had been on his own for $1200, you guys got $500 on your tax return just because as a dependent, we receive that. So the difference between that would be what we left on the table. Second time everyone got $600. If you claimed him, he would have gotten $500. So that one’s only $100. So we’re about $800 off. The third one is going to be for any dependent no matter what age you will get $1400 for him. So now we’re just debating, is it worth for a couple $100? I mean, in all honesty, Social Security, anybody on Social Security, theoretically are probably producing at least 50% of the income taken to require for them. This is a guest, not everybody. I’ve got people that have two and $300 Social Security checks. But the majority of people get a large enough amount where you could say they’re caring for themselves and 50%. But Social Security is not considered income. He is legitimately your dependent. Don’t question that. The question is if you took him off, and you refile 2020, with him not on and he is a Social Security, only, he would get an additional, you know, $800 for it. If you have not filed your 2020 and you don’t have him, then you would not get the $500 he would qualify for all 1800. There would be a you know, 11 $100 difference, whatever that works out.
Yeah, I haven’t found 2020 yet. I have done my taxes myself for 30 years, but it’s gotten so complicated over the past couple of years. What is your availability now to call in and get to make an appointment with you? Or do you still are you still taking appointments?
Dr. Friday 19:15
And we are not. And thank you for asking that question. I wish, if they extend the deadline, again, we will be more than glad to open up longer. But at this point, we are booked till the due date of April the 15th to be able to guarantee everybody getting their taxes done. So at this point, it would be you know, we help people file extensions, but in your case, it’s a fairly straightforward return. So that you know really just comes down to do we file our child that we’ve always claimed as a dependent on 2020 and then he’ll get the $1400 because he’s our dependent and we leave the other money on the table. It’s a tough call. In all honesty, we’re filing a lot of people as individuals because they would then get the six and 12 And you would lose five.
They have a limit of how much money he can have to continue getting SSI.
Dr. Friday 20:09
This is not considered any source of earned income or gifting. I mean, this is government funding, this is not going to go against his SSI in any sense of the word.
Okay, well, good. All right. Since you’re not available, what would you recommend to look for for a tax person? Is there any certain criteria that you would look for?
Dr. Friday 20:31
I would go to enrolled agents.com, there’s a bunch of directories that you can go on, or look for someone that’s an enrolled agent only because obviously, I’m an enrolled agent, and we all like to stick together. That’s all we do is taxes. We’re not CPAs we’re not PhDs, and we’re not just tax preparers. All we do is study and do taxes year-round. So that would be my suggestion if you can do that.
Okay. It’s just hard to know who to trust.
Dr. Friday 21:05
I know. I appreciate phone call. Thanks, Lisa. appreciate very much. All right. We got to go to number three. Hey, Greg.
Hi, Dr. Friday, thank you so much for taking my call. For 2019, I filed a 4868 for an extension and made the payment that was due. I thought that I had filed the return by the 15th October 15 deadline, but apparently not. Because when I went to get the transcript, it said that it was not applicable. So I filed the 2020 returns send them to the address that the software had me send them to. Then I sent the 2019 return but to a different IRS address with a letter saying this was the first time it happened. And the reason you know why it happened, hoping that they’ll give me forgiveness.
Dr. Friday 22:10
Did you owe money that year?
I owed money in 19, but not in 2020.
Dr. Friday 22:18
A good plan to go ahead and send them a request for a waiver, which is what you did basically saying, “Hey, I’m sorry, I thought it was filed crazy year, but here’s a copy.”So that way they may based on your history. Just waive that particular penalty. But go ahead.
So the question was, should I have sent a copy with the 2019 return? Should I have sent a copy of that with the where it was sent for the 2020 return? Or does that really matter? As long as the IRS got the documents, but at different addresses. Is that going to be a problem?
Dr. Friday 23:00
It’s not going to be a problem assuming and some of the addresses we seem to have every once in a while, we’ll get a letter saying, “Oh, we’ve moved this to this die address. So we’ve forwarded your information.” Again, anytime you send any not just you, but anyone listening, if you’re sending things to the IRS try to use some form of tracking, just so you have something that says hey, they received this. I’ve had more than one agency, how do I know what’s in the envelope? Well, there’s no way of me proving that. But at least I have proof that it was filed, and it was done in a timely manner. So that would be but I don’t think there’s any problem with what you did. I think it was good.
Well, and I did send it registered mail. I guess the way I can look at this, then is just to continue to check because I did set up a user ID and password on the IRS to check the transcripts. I guess that’s my way of saying that they received it then process that that LC that show up is now available.
Dr. Friday 23:58
Yes, exactly. That would be the best way to move it forward. Because they can’t give you their information until it cross-posts, but hopefully it will post you can go in and electronically file 19 if you have if I don’t know if online software allows that or not. But it is something that is available for many of us we can file 18, 19, and 20 all electronically.
Okay. Very, very good. Well, thank you very much, Dr. Friday.
Dr. Friday 24:23
Thank you. Appreciate it. Alright, let’s hit caller number one real quick. Hey, Jesse.
Hey, good afternoon, Dr. This is the first time I listen to you and I got your number. I have the $1200 my wife got six and I got six in February. Does that have to be filed on this year’s?
Dr. Friday 24:44
No, well, it’s just basically reported if you got it. The only reason you have to report it at all is just to make sure that if you only got 600 and you’re entitled to the 12 the other six would be part of your refund. It is not taxable income. So I don’t know what other software, you know is asking but it is not taxable. If you fill it incorrectly, it will show zero on line 30. If you did receive everything, if you didn’t receive all the money you should have received in the stimulus then it would fill in the difference on line 30 to give you an additional refund.
It has to be recorded on line 30?
Dr. Friday 25:22
Right, exactly, it should show zero if line 30 shows zero, then that means that you’re telling the IRS that you received all of your stimulus money.
Okay, thank you, ma’am. Thanks for answering my question. It was good talking to you!
Dr. Friday 25:36
You too, sir. Bye, bye. All right. Well, I’ll take one more quick break here. And when we get back, we’re going to get to the phones Richard, a few of the other individuals got three or four people holding. We’ll be right back with the Dr. Friday show.
Dr. Friday 25:57
All righty. We are back here live in studio. If you’ve got a question, now’s the time to pick up the phone. 615-737-9986. Let’s go ahead and hit Richard. What’s going on Richard?
I got a general question. I think I’ve got myself in a mess. So I pretty much ran GrubHub all year delivering food. Probably made around $30,000. How big of a tax mess am I gonna have myself into?
Dr. Friday 26:32
Well, the good news is Richard, if you said you’re a driver, I’m assuming you’re using your own vehicle?
Correct. When I needed maintenance things along that line, I would rent one on occasion.
Dr. Friday 26:44
Okay, so obviously, the complete or at least a portion of the rental, along with whatever miles you might have had on your vehicle is going to add up to 58.5 cents a mile. I think last year, I think it’s 57. Now, so it’s going to wipe out a large amount of your bill. So your best bet is to try to recreate if you don’t have it all saved, you need to know those miles because that’s going to be your number one deduction. So try to figure out what days if you have anything that will show where you went? I don’t know. But that would be what you need to maximize is your miles based on what you know all the deliveries you did.
Okay, so I think it’s maybe, I think it’s maybe itemized as far as my monthly report. So I’m not in the biggest mess ever?
Dr. Friday 27:37
I’m probably looking at like, $30,000 that I made.
Dr. Friday 27:46
Yeah, but probably 20 of it was gonna go back out of the car. So now we’re looking at $10,000 that you actually lived off of. I get it because you had your car, but the wear and tear on that vehicle are what they’re paying you for. At some point, you’re gonna have to reinvest into another vehicle. And that’s why you get miles. So yeah, just concentrate on all that, then you’ll do your schedule C maximize it, and then you may have some money due because you’re self-employed. We always owe money. But that will be pretty much what your worst scenario is.
Gotcha. So don’t really stress it. Just go with the flow?
Dr. Friday 28:19
You got a baby, there’s no sense in stressing.
Awesome. You made my day. I really appreciate your help.
Dr. Friday 28:25
Thank you, sweetheart. Talk to you later. All right, let’s see David on one. Hey, David, what’s happening?
Hey, what’s going on? Roth IRAs. My wife and I generally make full contributions in January that made interest every year. So $14,000, I think is what it is. Well, we found out last year that our combined income was too much to contribute to Roth IRAs. And so now we are looking at getting that money disbursed back to us. What tax implications do we have with that? And the second question is, is there a rate around that we can get that reinvested in a Roth somehow, some way?
Dr. Friday 29:06
So the beautiful thing about a Roth versus a standard IRA in this situation is the original amount of money that we paid in, you paid in with after-tax dollars. So that is not going to be taxable to you. The only thing you have to worry about is the growth from January until now when you figure it out, you shouldn’t have had it in there in the first place, that’s going to be our taxable income. So I don’t know how much that is. Then there could be a penalty for over-contribution. So the concept is I know a lot of financial planners are always like, “Yeah, get it in there first. So you have the whole year.” But unfortunately, this is the kind of thing I usually I’m on the other side where people are like, “Well, we’re going to get hit with a penalty because we put money into it.” I mean, the fact is not much you can do about it. Make sure you take the money back out. I don’t think there’s any way of re I mean since it’s after-tax dollars. Again, we’re only looking at the growth. I don’t know how much you did in one year. It was a decent year, but I can’t imagine it being that bad.
It was $8000 is what we made off interest, we made all that contribution.
Dr. Friday 30:10
That was a sweet concept for $14,000, you made eight? That’s pretty good in one year, I need your financial planner. That was good. Seriously, but so 8000 and then there is I believe a penalty for putting it in there. So you’re gonna get hit with a small penalty as well.
Does the financial planner give that to us? Or do we need to log back on the IRS? on our taxes?
Dr. Friday 30:40
Right, you’re gonna get 1099 R, when it happens, it probably isn’t gonna happen until 2021. Because that’s when you caught it. So it’s gonna happen in the next year.
Cool. All right.
Dr. Friday 30:51
No worries, mate. Okay, let’s go right to number two or number five first? Hello, Michelle. What can I do for you, sweetheart?
All right. I have a 17-year-old son, who is my dependent who receives Social Security survivor benefits because this father’s deceased. Of course, he is still my dependent. They do not cover his care. I understand that the Social Security survivor benefits for him are not taxable. But he did have a small part-time job for a short period and did receive a W 2. Should I file taxes for him so that he can get whatever he paid him back?
Dr. Friday 31:45
I would and then I would go ahead and just put him on that one, it will say it, “Can I be claimed as a dependent or not?” And say yes, you know, and then that way, he’ll get his small refund. Social Security benefits won’t come into play? Not for a small amount. And then with the new stimulus, of course, you’ll get the $1400 on him, because he’s your dependent. So that’s why I would do it. Yes, Michelle.
Thank you so very much. I enjoy your show so much.
Dr. Friday 32:14
Thank you, sweetheart. I appreciate you. Alright, let’s go to number three. We got Richard. Hey, Richard, what’s happening?
Hey, so I did not file taxes in 2020. I’m wondering how I can claim my stimulus?
Dr. Friday 32:29
Okay, so do you mean you didn’t file taxes in 2019? Or you haven’t filed taxes yet for this year, which is what we’re finding now is 2020. Or you don’t need to file because you didn’t have any income in 2020?
I had minimal income in 2020. But I did not file in 2019.
Dr. Friday 32:44
Okay. So you have to file 2020 most likely, because you may have gotten the first stimulus, but I don’t think you probably received the $600. Am I correct? Or did you get either of the stimuli?
I haven’t received any stimulus payments whatsoever.
Dr. Friday 32:59
So great question. I get this a lot. So I appreciate you calling and asking this question. Because I’m sure there’s a lot of people. So anyone that hasn’t received any of their stimulus must file a 2020 tax return. Even if you have no reportable income, it is going to be online 30. It’s called the Recovery Credit and you’re going to click that or if you’re doing it on paper, you’re going to go to line 30 in your case, if you’re single 12 106 100. So the total amount refundable to you would be $1800. Also, it puts you on the list for the new one that’s coming out, which they say as early as next week would be an additional $1400.
Dr. Friday 33:45
All right, sweetheart. Thank you. Appreciate that question. Thank you very much. Thanks. Alright, let’s go to number six. Is it Jenny’s?
Yeah, thank you for taking my call. I built the house, I’m like five months shy of the two years, I would have to own it to not pay capital gains. But I have a chance to sell it and make quite a bit of money. So I was wondering, what if I took the money and put it all into the next house, does that even out the tax thing?
Dr. Friday 34:21
No. And that’s what you need to do some math before you make that decision. So we don’t have on the tax laws any longer for us to reinvest into the next home. The tax law is an exclusion. So it basically says, If you sell a house and you’re single, you can sell it for whatever you paid for plus $250,000 for zero tax, if you have to live in that house two out of five years. So if you didn’t live in it for two years yet, and you sell it, you’re looking at long-term capital gains somewhere in the ballpark of anywhere but I don’t know your income or anything but the least amount could be zero. If you have no Other income and capital gains keeps you under 50,000. If it goes over 50,000, with your combined income, you’re at 15 until you hit 200, and then, etc, etc, all the way up to 24%. So I would sit down and really do the math to see if I have to pay tax on this gain, how much am I losing versus living in the house for another five months, or whatever it is, and then selling I get it, the market is crazy right now. You’re going to get the money now, and I can’t guarantee you’ll get it in five months. But I have that from your tax standpoint, I would sit down and advise anyone that’s my client. Let’s look at the two sides and see if it’s enough to make it worth our while to pay taxes instead of living up to the exclusion.
Okay, all right. Thank you. I appreciate it.
Dr. Friday 35:49
No problem. Thank you. All right. We’ll try to hit Tracy real quick number four. Hey, trace.
Hi, how are you? Thanks for taking my call. I tried filing on Thursday, it was rejected. And the message came back that my AGI was incorrect. It told me that if I received my refund late in the year, then I didn’t get it until December. Last year that I need to do zero for my AGI. I did that and it rejected it again. And I have looked at my transcripts for the previous year. And the amount that I have entered as my AGI is the correct amount.
Dr. Friday 36:50
Well, this is a wild guess because several of the listeners today have had this exact same problem. In some cases, they’re pulling them in, they’re not seeing even the copy of 2019. You apparently do have the transcripts in the quick I mean, in the online, and you’re seeing it and you are putting your adjusted gross income in there. It’s not matching. It makes you wonder if there has been a change in your tax return. In the past before COVID. In the craziness that we have, the easiest answer would have been for me to tell people to call the IRS and they can give you your AGI that was showing in the system. We don’t have that availability, you can’t reach anyone at the IRS if you want to as far as I’m concerned. So two options, one would mean that you’re going to have to pay somebody the other is to print it out and certified to the IRS. It will delay any mail tax return could take you to know another three to four months possibly to process. If you have the time, I would say trying to call the IRS would resolve it so that you can hit the send button because I’m going to assume somehow they’ve changed on a couple of you. I mean, and you guys are just a small pool of all the people probably having this exact same problem. But the only answer is right now is to see them go to someone a professional because most of us don’t need the last year’s AGI to make it work. Or you’re going to have to mail it in or call the IRS and see if you can get what they’re showing as AGI that’s our options. Not very good ones. But that is what they are.
Yes, I just filed her taxes. And it was rejected telling her that her Social Security number is invalid.
Dr. Friday 38:43
Well, does she definitely put the same name on it that was on her Social Security card?
Dr. Friday 38:53
I mean, obviously, you’ve used her in the past on your tax returns, and they did not reject it. So I guess I would double-check to make sure there is not a typo. That is the number one reason for those rejections for that type. The second would be to, you know, again, she would have to mail her return. When we get those rejections, we even have to do that with a copy of the Social Security card showing that the name is correct.
All right. I’ll let her know that. Okay, okay.
Dr. Friday 39:23
Thanks. No problem. All right, we’re gonna take a quick break. This is our last break. So if you’ve been holding up and thinking, “Oh, I don’t want to call.” Well, maybe you should call 615-737-9986. We’ll be right back.
Dr. Friday 39:40
Going fast. We only have a few more minutes left online, and we’ve got the phone lines going, and let’s go to number one, Dave. That’s an easy question. I think Dave, what’s your question?
Well, my wife and I bought a stolen car. The very next day the police confiscated it, and of course, we’re out the thing. Is there anything I can do with that on my taxes?
Dr. Friday 40:04
Nope. Unfortunately, nowadays for any kind of casualty loss that we have, it has to be a federal disaster to even qualify.
Dr. Friday 40:15
Sorry, my love. All right. Thanks for calling, sweetheart. Appreciate you. All right, Bill, line three. Hey, Bill, what’s happening?
My daughter is in the National Guard. She lives in Virginia, and she had to sell her house because she has no one to keep it while she’s deployed. Does she have any type of exemption with orders deploying her?
Dr. Friday 40:43
Do you mean for the selling of the house?
For capital gains on selling the house yet?
Dr. Friday 40:48
Yes, if she’s in the military, and if she had to sell it. I’ll tell you I’m not totally an expert. But there are some exclusions to that capital gains situation, she would need to probably get herself an enrolled agent or someone that you know is doing her taxes, but there should be a waiver for that exclusion of the two years on a five.
Okay, that’s what I need to know. Thank you.
Dr. Friday 41:16
You got it. Yes, sir. Thank you. All right, let’s hit Judah.
My question was about my stimulus check. I know that this time around, if you have debt, like the debt collectors could possibly take your check? I do have credit card debt that I haven’t paid off yet. I went to a collections agency. And so I was what when I checked that website today, it said that it was going to be in my bank account on the 17th.
Dr. Friday 41:50
I don’t know. I mean, again, I know you may have a judgment, I don’t think the IRS debt. Usually what we deal with back child support student loans, and back IRS debt or state debt. Those are the ones I know of that would normally keep the money. So if you have just somebody with a lien against you for credit card debt or whatever, I don’t believe they can keep your refund for that. I think they can get a judgment against you and make life more interesting than you want. But I don’t think they can touch your refunds.
I mean, that just be crappy. Because I could buy a pound with it at that $1400.
Dr. Friday 42:31
You got it. Put it to work. No problem, buddy. Thank you.
Dr. Friday 42:36
Bye. All right, let’s hit Phil up. Hey, Philip.
Hey, how are you doing? I’ve got a strange question. I have an estate that I and three other siblings saved? We sold a part of the property in December. I didn’t know I had to give them I was out of state, I had to give away the property at the time, and but the executors who are going to give me the appraisal, and they wouldn’t do it. So how can I use the realtor? Real estate appraisal for my taxes? Or will I have problems?
Dr. Friday 43:23
Well, I mean, you need to have some sort of proof back to the date when you did inherit it. So a real estate appraisal, if you can get like kind, a lot of times they can give you some you know, like-kind appraisals, that works perfectly find any of those and I would suggest all four people using the same appraisal. You know, I mean, so that way everybody is on the same page.
Yeah, that’s what I was told when they use the same price. But they refused to give that to me. So I just had to go. I got appraisal data from a realtor and I went, I was in the middle of a run as an appraisal they give me.
Dr. Friday 43:58
It seems like a fair assumption. I’m not too sure. I mean, if this was in a state, theoretically, the executor, whoever that is, can not give you that information. But that’s outside of this conversation. You did what was at the best of your ability, and that’s what you need to do.
Okay. All right. Thank you very much.
Dr. Friday 44:16
No problem. Thank you. All righty. Well, time is flying everyone. And I know this is a crazy season again. So I do want to reiterate, the American Rescue Plan did pass. According to the IRS, they are going to be in the process of issuing those forms. And those stimulus checks the additional $1400 and it will be for all dependents on your tax return. As we know, up until recently, it’s only been for child dependents, which are children that are under the age of 16. There’s a whole bunch of other good things I guess you could say, depending on your definition of how we’re taking on additional debt. But there are some new things in here. As far as the child credit, they’re going to increase that to 3000. They’re increasing the age to 17. There’s a bunch of other things that will be affected. But the biggest thing is if you received unemployment in 2020, and if you have filed or not filed, you may need to make sure your software is not taxing the first $10,200. That’s going to be huge for a lot of people, many of my clients, because many of them did have some, I mean somewhere as little as one or $2,000 up to $20,000. But anyone would get that first exclusion and in some cases, people have withholding so you had a couple of $1,000 and you took out $200 in taxes well now that’s tax-free money so that money may be refundable to you. So just make sure that you have already if you’ve already filed make sure that the first return has been accepted. Second, make sure the tax software is already updated because right now mine is not updated. If you need help or have questions about taxes. I will do my best to get back to you.
Dr. Friday 46:03
The phone number of my office is 615-367-0819. Email is a great way to get me we are running a few days behind but I am working weekends to get caught up and that is email@example.com. Catch me on the web at Drfriday.com. I hope you guys have an awesome Saturday. It doesn’t look like too bad a day and enjoy this coming tax season. Call you later.