Welcome to another episode of the Dr. Friday Radio Show! In this episode, tax expert Dr. Friday answers callers’ tax questions and covers the following topics:
- The Importance of Paying Quarterly Taxes
- Do You Need to File a Tax Return Every Year?
- How Do You Write Off a Bankrupt Company’s Stock in Taxes?
- How to Calculate Your Capital Gains Tax
- When Must You File an Extension?
- IRS Postpones Implementation of $600 Form 1099-K
- What Does IRS Require for Mileage Tracking?
- CA Implements New Automatic Billing for Late Tax Returns
- What You Should Know About 1099-PATR
- How To Do Tax Preparation and Financial Planning The Right Way
And much more!
No, no, no, she’s not a medical doctor, but she can sure cure your tax problems or 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. 615-737-9986. So here’s your host, financial counselor, and tax consultant, Dr. Friday.
Dr. Friday 0:29
All righty, I’m Dr. Friday, and this is the Dr. Friday show. And this is our season, as we all know, and love, taxes, taxes, taxes, that is what we’re going to be considering not only talking about what happened in 2022, because once you’re in front of me, there’s very few things we can really do for the year of 2022. But we also need to consider some of the things that might be changing for 2023.
Dr. Friday 0:55
Now, we talked a little bit and I have some people that have, even in our office, we talked about the 1099k, I do want to reiterate that taxpayers should receive a 1099k from a third party by January 31 2024. Now, that is going to be a new, they move that date from 2022 to 2023. So tax year 2023. If you are selling things are using Venmo, PayPal, any of this cash apps, don’t be surprised if you get that was changed. It’s anyone that exceeds $600. Or I think it’s like six transactions. It’s a very small amount of what you want to do. The IRS has also put a newsletter out reminding people that if you were from some of the states, I know California because we have quite a few Californians here.
Dr. Friday 1:50
And if you received some of the inflation credits, they actually sent out with one of my clients that I’ve been doing forever. It just went directly into her bank, she did not even know she was getting it. She’s pinging me like why did I get this refund? I’m like, you know, it says that it’s some sort of inflation. Abbreviation we call it found out that this was some sort of rebate. But keep in mind, they are going to probably tax that on the federal side, we’re still waiting to find out to be quite honest with you, in the standard miles rate right now is 62.5. That’s pretty sweet.
Dr. Friday 2:28
So, you know, again, tracking your miles and tracking them correctly, not just, you know, not just putting some numbers down on a piece of paper or saying hey, I think I put like 40,000 miles on my car this year isn’t going to fly when the IRS is wanting to have the actual information. So what we do want is we want you to use something like mileage IQ. You can also do things like any of the ones that you use to do, like I use mileage IQ, you can do any of the different ones that are available out there still like mileage IQ best.
Dr. Friday 3:07
Because that way, then you have the ability to run a report, it shows every time you start every time you stopped, you can program it. So you can say this was commuting or this was actual miles. That’s what we want to be able to do because without commuting, and you know, again, you can hear a lot of different things. But I will be honest, a bit of this 25 years, I’ve handled quite a number of audits, especially when it comes to miles. And, and even self employed individuals do have commuting that they have to take into account.
Dr. Friday 3:42
So if you’re not sure you’re knowing how to do this properly, if you’re not sure if you’re tracking your miles because it is probably as far as the self employed, because there’s so many Lyft and Uber drivers. This is one of those areas, I find that people walk in, they’ve done their own taxes, they walk in, and then they’re like, wait a second, the IRS has reviewed my taxes and they’ve disallowed all of my miles until I send them a proof of miles. And then there’s like I sent them the details that I had and they disallowed that information.
Dr. Friday 4:15
Well that mean that’s a it’s their prerogative, but there is a format in which the IRS would expect to receive the information if you’re being audited on that on mileage rates. And last year, of course, we had a split year where January through December, sorry, January through June was one rate July through December was another rate about four cents. I think it was like 58 and a half up to 62 and a half. So, big difference and a lot of people are throwing more into the second. You know, there has to be some actual paperwork to do it.
Dr. Friday 4:52
Otherwise, you’re going to get yourself into a situation where you’re going to get in trouble and that’s what this show is trying to help Help people understand what the IRS IRS expectations are, and then how and what we need to do to try to make it a better situation. So we do have a large number of Californians that have come to our wonderful state. And since for some of you may or may not know, I lived in California for a number of years, been here almost 25 years. But anyways, some interesting things that they’re going to be doing. There’s a lot of extra taxes when you live in California.
Dr. Friday 5:31
One of the new is for delinquent tax returns, they’ve implemented a new automatic billing process for taxpayers that do not file timely returns, taxpayers receive a reminder for filing before and after the due date of the return. The reminder may be in a form of an email notice or a text message really, at telephone call the taxpayer do not file the return, they will first receive a notice of delinquency, then they will estimate bill and they will then have a third party after the Notice of Proposed assessment in since the proposed amount will be billed and entered into a collection process, the billing can be easily avoided by timely filing your state income tax.
Dr. Friday 6:13
I think it’s very important to understand that California does consider any money earned in California, even if you are not living in California, that needs to be also addressed. You can’t just say because I moved to Tennessee, there’s no state income tax, but yet the state says you earn money there. You do need to address that. And selling real estate in California can be that way. All right. Let’s hit Lisa. Real quick on the phone. Lisa, what can I do for you, sweetie?
Hi, I got a question my son and 20 I think 2021 When I filed his return, he had a very small amount on a W 2 like maybe $1,600. And then he had a 1099 NEC for less than $400. And at the time, I didn’t realize I put it as other income. And then I’ve done some research and found out with an NAC. Maybe it should have been a Schedule C even though it was under that $400 threshold for self employment.
Dr. Friday 7:20
You are 100% correct. I apologize for my dog Rosie that’s trying to join the radio show apparently. But anyways, you are 100% Correct. What you have to do anytime we get a 1099 nec it means that what he had worked for somebody no matter how much most people don’t give them out if it’s under $600 doesn’t change the fact that you shouldn’t because self employment tax is what they’re going to be looking for on that you paid the ordinary income tax, but what you missed on was the self employment tax. That would have been calculated.
Even if it’s under $400. Yes, ma’am. Okay, so I would have to probably amend?
Dr. Friday 8:03
Have they sent anything? Have they changed anything?
No. I mean, he had only the only reason I filed it’s because on the W 2 they had withheld $39. So I just wanted to get his $39.
Dr. Friday 8:16
I mean, theoretically, I think I would wait. Unless you get a love letter. I don’t think I would go actually changing that one. Because it’s possible with his age and everything else that it’s not even going to be something that they even trigger.
Okay. Well, this year, he got another 1099 nec from this same place that he worked for just a few months during 2022. And it’s $96.
Dr. Friday 8:46
Wow, that one I don’t believe is going to kick in any self employment no matter if you put it on a schedule C or, or other income. So that one you don’t have to worry about I’m actually shocked that they seem to be one of these people that’s going to 1099no matter how much money you made, apparently.
Apparently, but I mean, do I even need to follow return for him? If that’s all we had?
Dr. Friday 9:07
No, you don’t.
Okay. I wasn’t sure if it’s meant like if you start filing a return for somebody, is it like you need to file one every year going forward?
Dr. Friday 9:17
Great question. People have asked that, but no one’s asked that a long time on the radio. Thanks, Lisa. That seriously? It’s a great question. And the answer is no, we only had the file each year that we are required to file. So you know, in some cases, people can go years and then I even have some people that no longer have to file because maybe they’re living solely off Social Security or something like that. So you know, but that’s a great question. No, you only have to file each year if you’re required to file for that year.
Okay, so they don’t come looking for you to find out if that’s the case.
Dr. Friday 9:50
Exactly. And the information is turned in, so they’re going to know that he received that whopping $96 1099, but it’s not going to be enough that’s going to trigger any information required. You’re within your mean.
Well, thats good. I appreciate your help.
Dr. Friday 10:10
No problem. Thanks. All right. And that was a really that’s a great questions, I get a quite a few people that email and call. And then one of the first things that they want to know is, you know, do I have to file this year and I do help a lot of people, seniors, especially that are on or disabled, where they live off of Social Security, maybe maybe something came up, they have a small pension, or they have a situation where they’ve collected a few dollars someplace.
Dr. Friday 10:35
And then that way, they’re able to go through and make sure they have that information. You know, that’s right, because why pay somebody or why file a tax return if it is not required. That is the important part of that conversation is that you are only required to file taxes if you actually have to file and in all honesty, I have people that choose not to file they know they have refunds.
Dr. Friday 11:00
But if your refund is $39, and you have to pay me $175, sometimes it’s not worth filing the tax return because the return is not enough. And there’s no mandate that says you have to file a return to get your refund. But obviously, I don’t like to leave money on the table. But I understand it when you have to pay somebody to pay something versus not having to do that. And I don’t know if anyone is listening. But I do need to.
Dr. Friday 11:26
I haven’t found anything on the internet. But I’m often we have AARP and some of them that have free places where people can go and get their taxes completed. If anyone knows if there’s anything in the Nashville or surrounding areas that maybe we can let people know about. Because even though I’m in the business, there is a that’s it’s a lot of help for seniors and in certain individuals, it helps them out a lot. So that way, again, if anyone knows, you can email or Friday at Dr. Friday, or you can call the show.
Dr. Friday 11:56
But just let me know if you find something because I can’t seem to find any. And I’ve got a number of people looking for someone that does do it for free, because some of them don’t have computer savvy to be able to use the website that I usually send people to. All right, we’re gonna get ready to take our first break for the show. If you want to join the show 615-737-9986. Taking your phone calls, hopefully talking about your favorite subject. I’m sure it’s not as crazy as I am about it. But you know, we’d love to talk about taxes or if you’ve gotten some love letters and you’re not sure what to do with 615-737-9986. We’ll be right back.
Dr. Friday 12:55
Righty we are back with the Dr. Friday show him here. So I’m hoping I’m right. So we can see what we have here. So if you’re waiting to join the show, 615-737-9986 It looks like we have a couple of callers on the line. So let’s see if we can. Hopefully you’re hearing me. Let’s go to Steve and the burro perfect. Hey, Steve, what’s happening?
Not so much. How are you doing?
Dr. Friday 13:28
I am doing well. For a minute there. I thought I lost my connection to the radio. But now I hear you perfect. So I know I’m back on.
All right. I appreciate your service here. Got a question somehow I got myself roped into doing my inlaws tax return because they’ve heard me talk about me doing it on TurboTax and they have a very simple tax return. It’s just a couple of W 2’s and then 1099. Interests, forms but they got a form that is a 1099 PATR and I think that’s a 1099 patronage form. And well, he really does. But he does have land but he doesn’t take a farm. He doesn’t make any income off of that. But the reason he got the 1099 PATR is because his mortgage is from well, it’s Farm Credit Services. I don’t think that matters that I mentioned that. And that’s a cooperative. Now when I do the research on it, it says most dividends paid by coops are not taxable. So, I went ahead and filed his tax return and did not include that 1099 PATR. But it is a $690 dividend payment. Is that going to send a wrench lag, since it’s not accounted for in any way?
Dr. Friday 15:03
Exactly. I mean, in my personal opinion may not be enough, depending on how much money if you took it in and out, is it really making a big effect on their tax return? If you add it just out of curiosity? Is it really going to change anything? That would be my first $600? I mean, what are we looking at possibly at 10%? You know, I mean, depending if they’re in the 12/14, you know, you’re looking at possibly $60. But I’ve never heard and I’m again, normally though people ideal that get those are actually operating farms, and they’re paid either.
Dr. Friday 15:37
At one point there was some tobacco credits, there’s different things that they were paid either not to grow or to do. And so they’ve been getting them for years, right, even if it at this point. So I’ve never heard that it wasn’t taxable. Steve. Now, again, I’m not going to claim that I do a ton of farms that are not in business at this point. So most of mine, it’s just part of the income because they’re still producing and doing different things. So we do bring it in, because anything that comes on a 1099 pr patriot, I’m thinking the government’s gonna receive that, therefore, it’s going to become taxable income. Now, it’d be interesting to see, but first I, before I even worried about it, Steve, I would actually just see, what’s the difference? I mean, I have people that are older, that it may be a $10 difference, and who cares, it’s not going to change anything really.
Right. And I did run it that way. And if memory serves me correctly, it was making about a $70 difference, or 75.
Dr. Friday 16:40
Around the 12, or whatever, percent tax bracket. So you know, it really comes down to being on the safe side so that they don’t have to worry about it, because it could take two years for the IRS to match. Or let it ride. Like I told the prior person and the IRS will be more than glad to send a potentially sin, we don’t know, they may work the numbers and not see it’s worth actually following up on.
Dr. Friday 17:04
Or they could potentially send a love letter saying we’ve changed your tax return because you forgot this and they pay a plus a little penalty and interest. We’re talking fairly minimal numbers. But obviously, if you catch it now there wouldn’t be any penalty or interest.
Okay, all right. Well, I think I’ll just tell them to keep their head in the foxhole and wait for my wrist respond.
Dr. Friday 17:25
If they do, you know how to fix it, you know, either just pay the bill as it comes in, or file an amended return if you don’t feel their numbers are coming to the same that you have. Okay.
All right. Thank you very much.
Dr. Friday 17:39
Thanks. They appreciate you listening. Let’s go to Donna in Colombia. Hello, Donna, what’s happening?
Oh, not just wondering how aggressive the IRS is?
Dr. Friday 17:54
I guess it depends on the person you’re talking to. Some people may say they’re extremely aggressive. Some will say that since they haven’t had to deal with them that they’re not so bad.
Okay. Prior to my husband and I getting married 10 years ago, he had a tax debt from my previous marriage that he had saved when they divorced. About a year and a half ago, the IRS put a lien on our house because of that tax debt, is that something we need to be really worried about? Or?
Dr. Friday 18:29
Well, I mean, there’s two things. One, you’re an innocent spouse in this situation, you are not married to him at the time that this debt happened. So in theory, if this house is held jointly, you may have a conversation about that, because they can’t put that debt on you. Which by putting a lien on the house is theoretically putting the debt on you.
Dr. Friday 18:48
So if the house is only held in his name, then there’s not much you can do on that. You know, and then I guess the next question would be is how old is this debt, you said you were married a few years ago or whatever.
Dr. Friday 19:00
But you know, the IRS only has 10 years to collect if your goal isn’t to not move and you’re pretty happy where you’re at. And you know, life is going that putting a lien against the house, as long as you don’t plan to refinance isn’t going to have any big effect against you, you know, unless you plan to sell or refinance, because then you will have to pay that debt.
No, we don’t, that’s not in the plan. Not in the near future anyway. And for some reason, I’m thinking that dad is over 18 years old.
Dr. Friday 19:32
So that would be one of those situations where you want to go to either someone that does IRS negotiating, we do it all the time, but you want to go to someone that can pull transcripts to find out because the IRS is also notorious for leaving liens on property even after the time that they have to collect. Okay, so theoretically, there would be a request that we can get the lien removed if the lien no longer needs to apply.
Okay, let me do some research and just find out exactly when the debt was assessed. They came into play, and then my give your office a call.
Dr. Friday 20:11
No problem. I look forward to thank you.
Thank you. Bye bye. Bye.
Dr. Friday 20:17
Okay, that is that next phone call. I lost my screen there. So I’m looking for real quick. Sorry, while we hit the next person, whoever that is, I can’t find my screen. Hey, this is Dr. Friday. Martha. I think Martha let’s try Martha. There you go.
Alright, cool. Bought a stock through Robin Hood. Unfortunately, the company went bankrupt, which means that stock is now worthless. How do I write that off my taxes? And what year do you write off? They went bankrupt in November. So I’m assuming 2022. But in Robin Hood, I haven’t done anything. So I don’t know. Exactly.
Dr. Friday 21:00
Well, here’s an interesting rolling that you brought up? That is great. Because let me go back to the fact that if this is in virtual currency, I know it’s in Robin Hood, which doesn’t mean it has to be in virtual currency. But a lot of people use Robinhood. for that. So my question to you is, is this in virtual currency? Or is it in US currency?
I truly don’t know. I just bought a it’s a real company. So it’s not cryptocurrency at all?
Dr. Friday 21:31
It’s not crypto, okay. All right, then the answer is for in the year in which the bankruptcy happened, you will be going and you can claim it. So in 2022, you got notice of that happening? Then you will actually be able to claim it as a total loss or whatever loss you have on that.
Okay, now, will I need a 1099? or anything? Or do I just go in and say how much I bought the stock for?
Dr. Friday 21:58
Right? Yeah, I mean, you you’ll need to justify what you bought the stock for which you have through Robin Hood, finally, right? And so that we have and then you’re going to put zero if it went bankrupt, and they’re not settling or didn’t sell through bankruptcy to someone else. And they’re doing a split or anything like that. It I mean, did they just close the doors? I mean, I’m just trying to find out that there’s no recovery, there is no no recovery. Okay, then yeah, then you can just put it and then normally on the Schedule D, which is what you use, one of the options will be for bankruptcy.
Okay, thank you very much.
Dr. Friday 22:35
Put it under that. Thank you appreciate it. Okay, so sorry, guys, I was a little rough there. Thank you for calling. And so, again, this is the doctor Friday show. I’m an enrolled agent licensed by the Internal Revenue Service to do taxes and representation, which means that pretty much if you’ve gotten a love letter from the IRS, or maybe there’s an issue with the IRS, or maybe you know, somebody, I had tell you how many parents step up when they’re kids may have gotten a little bit behind, and they’ll help out making sure all the tax returns have been cut off.
Dr. Friday 23:06
Because before we do any kind of negotiation, we have to be in compliance, which means you have to file all the tax returns required. Sometimes it’s just the last six years, sometimes it it’ll be a lot more than that, because maybe the IRS has assessed some earlier years in which we need to address and make sure that situation is taken care of. But anytime you’re dealing with the IRS, I know a lot of people, there’s a lot of different companies you can choose. Nice thing about me is I’m local here in the Tennessee area or the Nashville area. We’re in Brentwood.
Dr. Friday 23:39
But when you’re calling first thing if you guys are dealing with any other company, just ask them what’s the process because they always start out with how much money it’s going to cost. But how do they know how much money it’s going to cost? If they have absolutely no idea because they haven’t pulled your transcripts. They don’t know how many years they’re going to have to file. They don’t know how they’re really going to negotiate is it going to be an offer and compromise a payment plan a partial payment plan and non collectible?
Dr. Friday 24:05
All of that kind of needs to be put in the front end so you know how much money it’s going to pay to have someone help you resolve those issues. All right, so we’re gonna take our second break when we get back we’ll go back to your phone calls. The number here in the studio is 615-737-9986. All righty, we are back with the Dr. Friday show live here in studio. And if you’ve got a question I have to do is pick up the phone 615-737-9986 taking your calls talking about my favorite subject, making sure that you guys stay on top of it. Many of you have already filed your taxes but for those that haven’t actually looked at their taxes yet, just remember that you the charitable deduction that you made in 2022 is not going to be above the 300 or 600 is not going to apply in 2022.
Dr. Friday 25:06
So, in the last two years, we’ve had some extra, above the line standard deduction for charity, it is not on the 2022 tax thing. So just want to make sure you have it also want to bring into effect last week, we had a conversation with a gentleman that we were talking to about QCD use qualified charitable deductions.
Dr. Friday 25:26
And those QCD are effective as of the age of the people hitting 70 and a half, even if your RMD required minimum distribution isn’t required till 73, you can start paying qualified charitable deductions at the age of 70 and a half, up to $100,000 a year, that is dollar for dollar charitable deduction. So if you usually give the church $4,000, you have the custodial write a check, you now don’t have to pay tax on that. $4,000. Again, especially right now, when people are having a difficult time, you know, itemizing because there is no itemizing for a large number of people. All right, let’s go ahead and hit Linda and Franklin, while you’re looking at Vicki. Hey, Linda. Hello, what can I do for you, sweetie?
I’m getting ready to sell a piece of rental property. And, and don’t know, the method of figuring that capital gain.
Dr. Friday 26:28
So there’s going to be two sides to your your taxes, one side is what they refer to as capital gains, which is kind of a simple calculation, I say simple. It’s never simple. Whatever you sell it for, and whatever you paid for the difference would be capital gains. Now, since it’s a rental property, you will have some additional assets that you have purchased throughout time, maybe a new roof, maybe AC, maybe you’ve done some improvements to the property. So the basic math is all improvements, plus what you paid for it, subtract that from what you sold it for, the difference is going to be your capital gains rate.
Okay, when does the depreciation [inaudible].
Dr. Friday 27:13
That’s the second part, so we have what’s called depreciation recapture, that is actually ordinary income rates, not to capital gain rates, and it’s going to come back now, how long have you own this rental?
About 10 years.
Dr. Friday 27:27
Okay, so you’re gonna take your total depreciation, whatever that might be, let’s just say it’s $4,000 a year and you’ve taken it for 10 years, you’re going to have $40,000, that you’re going to pick up at ordinary income tax rates, that’s going to be different. As we all know, capital gains are 1518 and a half 23. And I’m sorry, 18.8, and 23.8. That’s the normal capital gains most of yours. Do you know, kind of what the difference between what you purchased roughly what ballpark? Do you think your capital gains would be on that property? Just out of curiosity?
Probably about $1,000.
Dr. Friday 28:06
Okay, so then you’re going to have to add the 40 Plus that to get you to, and then whatever other income you may actually have, add that together, then you’re going to look at your ordinary income, right, be that if you’re single or married. It’s not a simple, Sorry. Yeah. If you have a tax person, I know a lot of times we what we’ll do on our side, not always good at this time of the year, but we will work up estimates a lot of times for individuals, because nothing worse than getting the money and then having to pay half of it out to Uncle Sam, because the change in your tax code, you know.
Right. Thank you.
Dr. Friday 28:43
No problem. Thanks. All right. Let’s hit Vicki in Tennessee. Hey, Vicki. What can I do?
I was wondering, several years ago, my aunt and uncle said they got to the age where they didn’t have to file income tax. And I’m just wondering, is there still a such thing? Is not I haven’t a certain age that you don’t have to file income tax.
Dr. Friday 29:08
No, Vicki, and to be quite honest, I know I’ve had people but it’s not really an age, it’s really where they get to a point where they’re living off of like, right now, if you’re living off of your Social Security, and maybe $15,000. Above that, you may be at a point where you’re not actually having to file taxes, depending if you’re single or married. There’s the provisional tax code, but it probably was that they actually didn’t have a lot of taxable income.
Dr. Friday 29:36
Maybe they’re drawing money, again, who knows from retirements, you know, they stocks, Roth IRA, some of that isn’t always tax at the tool, total amount that we actually put into them. So that would be my answer, but answer your I wish there was because I’ve had some pretty good 7989 year olds coming in my office this last weeks they’ll pay in their taxes. it’d be nice to say, hey, you know what, if you actually make it to 89, you should get a free ride. Just say it. It would be nice.
I agree. Great. Well, that’s just one thing I had heard. And then I heard heard that it had changed in but nobody can tell me the exact date. And so you’re playing? In other words, you will get paid until what croak?
Dr. Friday 30:21
Exactly, unless, unless you have the ability to live off of a fairly low income, or you have all your money in a Roth IRA or something where the you know, where you can draw it out tax free, you and I will be paying taxes till the day
we die. Okay, then thank you very much. Appreciate it.
Dr. Friday 30:38
Great question. Thank you, Vicki. Appreciate that. So again, I’m Dr. Friday. And if you have questions, this is the time to probably join the show 615-737-9986, I got an email in talking about cancellation or discharge of debt. And the fact that I think a lot of people don’t totally understand the whole insolvent situation. So if your debt is higher than what your assets are, you are insolvent based on the IRS. And so it’s some people that is something that can be done. But not everyone.
Dr. Friday 31:20
But the last couple of years, I’ve had a large number of people settle credit card debts and things because they just weren’t making the income they were before the able to negotiate, but that becomes income when you make that settlement. So sometimes you end up with a pretty hefty tax bill even though you’ve gotten rid of credit card bill. So let’s hit mark in Clarksville before the next break. Hey, Mark.
How you doing today?
Dr. Friday 31:43
I am doing awesome. How about yourself?
Pretty good. He’s getting goodness and trees from our wonderful storm last night.
Dr. Friday 31:50
I hear ya did a little that myself this morning. So what can I do for you?
Quick question. My wife worked, you know, during the COVID and all that stuff. But anyway, she ended up falling for unemployment. Okay, it lasted like a year, she never did receive a check or anything. We didn’t really care about it. But you know, now all of a sudden, the latter part of 2021 2021 Get my years right. 2021 They sent her six months 26 weeks of unemployment. Okay, that was fine. Nice surprise. Whatever, got her taxes and everything. Well, then the first part of 2020 Yeah, 2022. They sent her another 26 weeks of unemployment, no taxes taken out. And that’s the only income that she had for the year and getting ready to do taxes? Not sure. I mean, no. 299 has come. And she did not have taxes taken out of her own employment. And I’m really not sure. Because 26 weeks mean, that’s a substantial amount of money, what we’re looking at, I think she got like five, five or $600, they pay every two weeks. So it’s like five or $600 for a substantial amount of money. I don’t want to get her content in the crack, you know, they pop up here, like your terminology, a love letter, and then I end up having to cut them a check.
Dr. Friday 33:16
Yeah, well, for one, you don’t want to miss not putting it on the tax return. I know. That’s not what you’re saying. But I’m saying Do your if you don’t have the information, she needs to call the state and at least get a statement to make sure depending on the dates and everything when they picked it up, because you do want to have that form from them so that you can you know, a document that they get emp, they’re gonna turn into the government or something and then you don’t have it, you’re gonna get that love letter saying they’ve changed your tax returns. Now we have penalties and interest.
We file separate, so okay, this will be that would be her only income at all for last year. So I’m not sure that same thing. Just call it make sure.
Dr. Friday 33:59
Yeah, depending on the fact that I don’t know, if you itemize if you do she has to care for her. Or you don’t. Okay, great. So then she can earn up to $12,000 and not have a problem. She’s not required to file at this point, under your circumstance. So you’re in good shape, and she’s in good shape, whatever the proper is to make that happen.
Yeah, okay. Great. I appreciate it. Thank you.
Dr. Friday 34:22
No problem. Thank you. Thank you. Hey, you too. All right. So we are talking to Dr. Friday and I think I’m not sure if I’m hitting buttons over here. But is it Frank? That’s next? If it is, let’s go for it. Hello. Hey there, buddy. What can I do for you?
You cut out on me, so I didn’t know who you were calling for.
Dr. Friday 34:51
That’s all right. Hopefully. I didn’t do that on purpose. I think sometimes to make things go and is this Frank Yeah. Okay, I do for you.
All right. According to my age, I was full retirement is 66 year and two months. I’m 67. Now, that’s when I started rolling Social Security. Abreu, you know, all of last year, plus worked full time, both smaller time. I was told that if I make a certain amount, which we can’t seem to figure that part out, my tax rate would jump from 12% to like 24%.
Dr. Friday 35:47
It would jump up to 22%.
Okay, well what’s that total income threshold then?
Dr. Friday 35:54
I guess my question to you is, are you single or married? Sorry. I didn’t hear that answer.
Dr. Friday 36:03
You’re single. So, basically the first up until you make $50,000, it’s going to be the 12%. And then 50 To like, 110 is going to be 22%.
Okay, so I’m gonna have to pay the extra live here. Alright, you answered my question.
Dr. Friday 36:23
Thanks, buddy. I appreciate it. All right, we’re gonna take a quick break here again on the Dr. Friday show. Sorry. Thanks, Frank. We’re gonna take a quick break here on the Dr. Friday show. And when we get back, we’ll hit the few more of your phone calls. You can join the show at 615-737-9986. We’ll be right back.
Dr. Friday 36:57
All righty, we are back here live in studio, we’ve got a few more minutes of the show. So if you’ve been waiting to ask a question, now is the time 615-737-9986. We’ll take your calls, talking about all things taxes. I had a situation this this last couple of weeks. And I thought it was an interesting one, when it came to wash sales.
Dr. Friday 37:24
Did you know that if you have a wash sale, you’re prohibited to take the loss if your spouse or a corporation that you have controlling substantial interest in within 60 days of the other sale. So wash sales are basically someone that buys and sells you have to buy and then sell and then wait 30 days or 31 days basically to buy it again. And if you’re actually doing it and your spouse does one and the other, the IRS is coming down saying wait a second, we’re not allowing that to happen to make sure that it comes through the way it’s working in there.
Dr. Friday 37:58
So it is an interesting ruling there that we have. I would say I didn’t know for sure off of that in the past. So if you are trading or handling stock sales for yourself or trying to use a corporation, and doing them separately thinking you may have found a loophole. I think the IRS may have found it. Let’s go to Roger and see if we can help him. We’ve got a few minutes here. Hey, Roger, what can I do? Yeah. Hi. Hello, Dr.
Friday. Yeah, just a question. My wife is on disability income and my son gets the SSI, I’m a full time employee. I’ve been adding her income and my income together and filing taxes on that she does not currently have any taxes taken out of her disability income. So I’ve been paying the taxes on that. Is that correct?
Dr. Friday 38:46
Yeah, I mean, she can have some additional but since you’re married and you’re both a team, many times that’s that’s what happens even when one goes on to actual social security. Many times the one working will have the extra money coming out of their paycheck versus having it coming out of Social Security. That’s but as long as you’re doing it the correct way, which is including her Social Security up their disability in her case, up to 85% of that will be taxed, not 100% but 85% and then you will end up paying tax on whatever the total tax bill is.
Okay, how did you come up with the 80% I’ve been paying like adding the hurt gross to my girls.
Dr. Friday 39:27
You’ve been paying your taxes too high. IRS can only tax 85% of her disability or Social Security. At any point, you don’t pay have to pay on 100.
And then the SSI for the minor child the same way.
Dr. Friday 39:42
Do you don’t put that on at all? That’s not taxable income. That’s a benefit.
Okay, that’s the question that I had.
Dr. Friday 39:50
So his his His will or the minor child will not go on your tax return at all, even though they’re still dependent. It’s not taxable. Your wife’s will go on the tax return at As social security or disability, and you will add 85% of it under your income, not 100.
Thank you very much. So I’ve been paying too much.
Dr. Friday 40:12
Sounds like it sounds like you’ve been overpaying. And good old Uncle Sam hasn’t corrected you yet. So you might want to make sure that you do it yourself because they’re not very good at that. But yeah, hopefully that helped you, Roger, thanks for the call.
And thank you very much for your service to the community on tax questions.
Dr. Friday 40:30
No worries, I appreciate Yeah. All right. Let’s see here. If you have another person, if there’s a call 615-737-9986. We’re taking calls here. Again, if you have questions, if you’re doing your own taxes, then nothing wrong with doing your own taxes. The biggest thing is I want to make sure hopefully, by doing this radio show for the last 13-14 years, is to help you think about some of the things that are coming down. Most people have a fairly simple tax return. Just like you know W 2, maybe you have an SSI, Social Security or disability, all of that.
Dr. Friday 41:08
But if you’re doing it by paper, guys, you might want to double check at least call in like Roger, and just make sure the numbers are correct. So that way you’re not paying taxes, because I love to tell you that IRS will clean or correct all those things. But I have found over the years that that is not always the situation. So we do want to make sure that you are doing it because we don’t want you to spend $1 more than you have to for dealing with the government and all that.
Dr. Friday 41:34
So if you’ve got questions, you can join us now, if you are in the midst of preparing your taxes, keep in mind that you know I know a lot of people love this point you should have most of your documents, I will tell you that I’ve had a number of people not not you know either had to reschedule push it back because not having all of their 1099 B’s. Of course, K ones don’t often come out until after March 15.
Dr. Friday 41:59
If you have your own partnership, small corporation, Sub S Corporation, then keep in mind that those have a deadline of March 15. So again, this is for partnerships, LLC partnerships, or sub S corporations, those all have deadlines of March 15. If you don’t have your paperwork, if you haven’t filed your taxes, or you know, a lot of times people like to file their business with their personal, you do need to file an extension.
Dr. Friday 42:32
Otherwise, you could get hit with a penalty. Very, very important that you take a few minutes fill out the 7004 form I think it is. And you can do that electronically. If you’ve got a tax person, hopefully they’re already filed that for you. And you’re able to make sure that you have that documentation. Remember, again, anytime I suggest filing an extension that does not extend any money do now with pass through companies, most cases, partnership LLC partnerships, or Sub S corporations, those are all passed through those all get K 1’s, those K 1’s go to the individual, the individual pays the federal tax, we do usually have a state income tax, franchise excise, I guess I should say. But you don’t have a federal tax usually due on those situations.
Dr. Friday 43:20
So if that’s the case, just keep in mind, a lot of times people file taxes file extensions file that information and an extension is great, it gives you the time to make sure that everything is done. So you’re not filing amendments or corrections. But also with that said, I want to make sure that if you are an individual that is waiting for documents, and you have to file an extension myself, I usually have to file extensions. It doesn’t stop you from making proper quarterly and or paying all the money that you estimate to be due on or before the April 18 deadline this year.
Dr. Friday 43:56
You don’t it just because there’s an extension, you’re not extending the amount due even if you think you’re going to oh, why not start making monthly payments on the money even if you’re going to wait till October, every time you send in a little extra money for that year, you’re going to get a head start now I will tell you we do have plans and and ways of handling if if you’ve got multiple years in which you owe money, there is a process we want to use right?
Dr. Friday 44:23
The past is the past you can’t change your past and you haven’t paid those taxes. It is what it is. But what we do want to do is start start fresh start paying your taxes forward. So if right now, I want you to be prepared to make your April 15 or April 18 tax estimate for the year of 2023. You need to be making those and if you’re working with our firm that a lot of times instead of making quarterly we’re actually having people make a monthly sometimes semi monthly.
Dr. Friday 44:51
It just depends on how often they get paid and how easy it is for them to get the money out longer you wait if you have to wait for three months before you transfer That’s more money than if you can make a weekly or bi weekly deposit with the IRS and get used to not living off of 100%. A large number of this is people that have either sold something and ended up with a very large capital gains. And or it’s somebody that is self employed, come on, we all we get 100% of our income.
Dr. Friday 45:22
Therefore we have a partner in business, our partner in business, in most cases is taking 25% of our profits. It’s just the fact it’s no different than employees in many cases. But in our case, we have to make sure we don’t forget that partner in business because otherwise they’re going to be more than a partner. They’re going to be bugging you and trying to get other things taken care of.
Dr. Friday 45:44
So I just want to make sure that if you’re self employed, LLC Sub S Corporation, if you’re running your own business, even if it’s under another entity, you are responsible not only for your taxes of what you have, but if you have employees, fiduciary taxes, making sure that you have trust fund that you have taken care of all of those taxes as well.
Dr. Friday 46:04
All right, you can reach me at 615-367-0819. Check me out on the web at drfriday.com. That’s drfriday.com. Or you can email firstname.lastname@example.org I hope you guys are actually working on your taxes. Get the envelope police started and you’re enjoying this Saturday. It’s beautiful outside. Call you later