Welcome to the Dr. Friday Radio Show is here! In this episode, Dr. Friday takes on the latest tax updates, answers the caller’s questions, and talks over the following topics:
- Dr. Friday’s Tax Tips For the Tax Season
- The Changes in Tax Laws
- Where Can I Find My Stimulus Payment?
- Can I Take My IRA Out Without Penalty?
- The Difference Between E-Filing and Paper-Filing
- Don’t Leave Tax Money On the Table
- How To Get Back on Track With the IRS
- Taxes For Individuals Are Due April 18
- What If I Received Two Stimulus Checks In 2021?
- The Difference Between Sole Proprietorship and LLC
- Should I File An Extention For My Taxes?
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
Good day. I’m Dr. Friday and the doctor is in the house, it is a beautiful Saturday outside, thank goodness, I had time to go out and do some yard work because it is gorgeous. So hopefully you guys are enjoying this weather.
Dr. Friday 0:43
And also, it’s our favorite time of the year. It’s tax time, we are in the midst of the most, but seems like the busiest tax season, I don’t know if it’s just every year gets a little different. But definitely a busy tax season for us here. And I’m sure for a lot of you that are listening, that you are also kind of buried and trying to get your own tax documents together.
Dr. Friday 1:02
We have all the changes that are happening with the tax laws, of course, having to make sure we have the advanced Child Tax Credit, we’ve got the stimulus payments, and all those are posted. And I will say many times I have a number of people that have walked in the office and they’re like, “I got this letter, but I don’t remember seeing 1400 I didn’t get it.”
Dr. Friday 1:21
But I have them go back and start in March and work their way through the system. And so far every person has found their $1,400. So in the case that if you’re thinking you’d or may not have received your stimulus from last year, the final, well, I should never say that because you never know. But the third stimulus, which was $1,400, would have happened from March through the end of the year is what I tell people, basically it would have been March, April, or May in most cases.
Dr. Friday 1:49
But to go back through and see and make sure it is also the same situation where it comes down to your the money where you were you supposed to get it you should have received a letter saying how much you received because some people may have earned too much money and did not receive it. And in other cases, that it may have gone into a bank account that you don’t think to look at like savings, it should be in the same bank that you might have had for a refund or draft for auto payments with the IRS. Just keep that in mind.
Dr. Friday 2:21
All right, let’s hit the phone lines. We’ve got Steven in my town Spring Hill. Let’s see what Steven has to say. Hey, Steven.
Hey, how are you?
Dr. Friday 2:30
I am very good. How about you?
Okay, I have an odd, I guess a slightly odd situation. My late father-in-law had a rental property, he essentially got into the long story with a divorce. But I’ll try to keep that out of it. But essentially, the estate didn’t have a lot of money and was upside down on this rental property. We got the mortgage company to agree to a short sale. That was done in January of 2021. So this year, the 1099 C shows up and it’s completely wrong. Like basically shows almost the whole amount instead of the amount owed minus what they were given.
Dr. Friday 3:20
It would be most likely it’s a 1099 S and I know we all have, there are so many freaking 1099. But it would have been a real estate sale. And what they’re going to show on there is the amount that was the original sale, not what he received. But it should show the total amount of what the original sale price was, then you’re going to on the Schedule D.
Dr. Friday 3:41
You would show the 1099 S original sale, then you’re going to back out all of the original costs, the closing costs fees, because what the loan on a property doesn’t necessarily mean that that was what he paid. I mean, someone could have gone in refinance took more money out, but they may only pay 100. But because of the appreciation they get, you know at 200 I don’t know you know this situation.
Dr. Friday 4:03
But you need to know how much he paid originally for the house, even if it was a mortgage or whatever. And then the closing costs fees he paid at that time. And then when it’s sold, there would have been closing costs fees at that time, and sounds like he should be a negative it should be that he’s upside down that he didn’t sell it for as much as he paid for it. Or if I’m misunderstanding at least the difference will only be what he would have had in capital gains.
Yeah, I guess so.
Dr. Friday 4:31
Yeah, it’s a little bit there are a few more moving parts than just, yeah, so what you want to do is kind of start with a 1099 S and I’m not saying it’s not wrong. What I’m saying is it should be what the price was when on the closing dock. So how much do you sell it for? It should be what’s in that box. If it’s not you need to call the closing agent and see how it really has nothing to do with what your father would have received or did not receive.
Dr. Friday 4:57
Because again on a short sale, sometimes those cases were actually physically upside down, meaning we had the house it was worth 200,000. We sold it for 175. So we lost 25,000 in that scenario. But, you know, if, if you need help give us a call, or I can walk you through a little hard on the radio, obviously, because I’m throwing a lot at you. But, but there is you wouldn’t need to know how much your father in law, or if at the time he was married, but what did they pay for that home originally? And then since it was a rental, there’s also another step, which is the recapture of depreciation. And then what did he sell it for urine need all of those pieces to be able to put together the tax return?
Okay, thank you.
Dr. Friday 5:41
Okay. No problem, buddy. Talk to you later. Thanks. Bye. All right. That’s probably an easy one. All right. Let’s go to Don in the Boro. Hey, Don, what’s happening?
Hey, how are you doing?
Dr. Friday 5:54
I am awesome. How about you?
I’m not too bad. It’s a beautiful Saturday here. I got a quick question for you. So, I’m doing a relative taxes who did it paper return last year. And I’m going to E file. I know I got the AGI correct. I have a copy of the return.
Dr. Friday 6:16
They did buy paper last year. I’m gonna stop you right now. If they did buy paper last year, the likeliness is it’s still not processed. So under the AGI put zero. I’m gonna try to E file.
Okay, that will do.
Dr. Friday 6:31
Alright, boss. Thanks. Yeah, that’s something the IRS came back with. I appreciate the call, Don. But that’s what the IRS came back with on all of us, because a lot of us in some cases, you know, we get new clients. And obviously, our software doesn’t have to work with AGI. But the IRS came back and said specifically because we were and this was back when there was like 10 million, I think the last I heard was six, they may be down to 4 million returns that were not processed, and especially paper returns, guys.
Dr. Friday 7:01
I am, oh, we need to stop doing paper returns. I know some of you guys. You know, that’s the way you’ve always done it. It’s the way it is. But in all fairness or all honesty, the IRS is no different than a lot of us, it’s a lot easier for us to receive email texts, and, and faxes, because they convert into digital files for us than it is to try to receive an envelope full of, you know, of just paperwork because a lot of times there’s just tons of paperwork we have to go through.
Dr. Friday 7:28
So the IRS the same way. So if you have the option, like maybe having this young man that you have in the family, someone that maybe is comfortable with filing taxes, and it’s you know, some of these tax returns are pretty straightforward, but have them do them and he files them if you still want to pay them with a check if you owe money.
Dr. Friday 7:49
Again, I’m not overly excited about that, because we had two cases in my office alone where the checks were mailed. But in neither case did they certify them which if you’re going to mail a check, make sure you get tracking. So you have proof that the IRS received it on time. Because if they lose that check, they’re not going to wait for penalties or interest.
Dr. Friday 8:08
Because you said that you mailed them a check, it’s not going to happen. So you need to make sure if you’re going to mail money to the IRS that that money is certified so that you have proof that they’ve received it in their office on time, which means this year by 4/18.
Dr. Friday 8:25
I’m not a big one that goes with the whole thing that says that it needs to be, you know, it used to be when I first started my practice 20 plus years ago, we used to go on the 15th of April and mail out a ton of stuff, we would wait until 10 o’clock at night, wait in line and send out a ton of clients checks and paperwork. Well, now that’s not the case.
Dr. Friday 8:47
If they look at if it’s due for 18, you need to have it at their location by 418. Again, 99% of you guys listening, I’m hoping that you would go to irs.gov, click on Pay, and send the money electronically, either through your cheque or through a credit card, and pay it online. So you have documentation that it was done on time and that the money was received. But if you are a paper check kind of person, be sure you mail it out a few days in advance, and you send it certified so we have proof of when it was received. If we don’t have the IRS I don’t care we have tried the arguments.
Dr. Friday 9:23
Well, you know, we put it in the mail. But if you don’t have proof of going in the mail, and that check is not received or processed on time. Because even if you put it in the mail and they get it three or four weeks later, somehow by you know, whatever, then they’re gonna say that you filed it late, you don’t have any proof that they received it on time. So very important. Those penalties you know, for failure to pay on time, can be Well, I think it’s basically 5% a month up to 25%.
Dr. Friday 9:52
So, you know, doesn’t take long to be at 25% of what you owe and that was penalties just hurt and that doesn’t include the interest. That’s all 8%. So, you know, tax penalties with the IRS, are not something you want to play with, you want to make sure that you have the documentation to protect yourself. So E-file if you can pay electronically if you can. And if neither of those is options certify tax returns, and payments, at, you know, to the IRS, so we have documentation.
Dr. Friday 10:21
So if they come back and say they’ve never received it, you have proof. And I would document that, at least a lot of people in my profession, you want to put on the name of whose paperwork and label on it 1040 or attach behind it, if you’re sending in 12 tax returns in the certified envelopes, list of names of each person that’s got it in there, you know, each person’s paperwork that is in there, we ran into a situation for some late filings of 940 ones at one point in our office, and we have proof of filing them, but they did not have the person’s name on the label.
Dr. Friday 10:56
Well, because there were like, 90 of them in there. So we learned the lesson very quickly, that we need to if there’s more than one person if you can’t just put the name on the label, you know, in the memo section, to attach something behind that has a documented list, the IRS is getting harder to waive penalties. Even if you think you have the proof. You know, I really had one come back and say how do we know what was in that envelope? And that gets it the IRS is used to most people basically, you know, lying or I suppose cheating and that but I’m going to be quite honest with you.
Dr. Friday 11:30
Most of us like to think that the IRS would take our word ahead. I have no reason necessarily. I mean, I have a label, I have proof that there was something mailed to your office, how do you prove that it isn’t? What I tell you it is but you know, again, the proof does fall on us as the tax people.
Dr. Friday 11:47
So you want to make sure that you have the documentation that you need to have in it is where it is and when it should be. So if you want to join the show, you can 615-737-9986. We’re gonna be taking a quick break or first break for the radio. So if you want to join 615-737-9986 I’m Dr. Friday, an enrolled agent licensed by the Internal Revenue Service to do taxes and representation and we’ll be right back with my show.
Dr. Friday 12:30
All right, we are back here live in the studio. So if you have got a question you don’t have, you can call us at 615-737-9986. Let’s talk to Pete in Scottsville. Hey, Pete
Hey, I have a question. I am looking at building a house and I own a piece of property and I’m considering trading that to the people who are going to be building the house for like the lumber package and labor on that. How would I go about doing that or what ramifications are there to doing that?
Dr. Friday 13:12
Well, the biggest thing is trade the IRS considers that still income. So in theory, you’d have to have a value to it that they would have to provide to you because you would have to first pay tax on that to turn around and use it for an expense like building a house or lumber or whatever. Because we do all that with after-tax or loan money. So if you’re selling them that in exchange, you know, I mean in theory you need to report that as income.
Okay, so I would just turn that in, and then I receive a certain value from them for that?
Dr. Friday 13:55
Yep. And then you can pay capital gains or you know whatever it is on the distance difference and maybe a wash as far as I know you know, I don’t know your situation but that way then that would account for the money you paid them and then that would add to the value of the home you’re building.
Right. All right, thank you.
Dr. Friday 14:16
No problem, I appreciate the call. Alright, let’s go to Lisa in Nashville.
Hi, Dr. Friday. Question about earned income credit. It’s showing I’m doing our taxes currently on h&r Block software just to try to see where we’re at. And it’s showing our total earned income credit is only 30,000. And so the earned income credit is $2,409. And my question is, apparently we qualify to go through the process and ask the questions. I have a child that’s disabled and you know, so he’s still qualified There’s a child, you know, a dependent, even though he’s 22. So, I also get paid with 1099 and have to do the self-employment tax and all that. But I’ve never had to do quarterly filings and make payments because we always had enough. My husband always paid in enough to cover it to where we didn’t have to do it quarterly. So this year, since his salary was, well, since his salary was so low, we didn’t pay in anything. But this earned income credit, still makes us end up getting a refund back. So will that still prevent me from having to do the quarterly filing?
Dr. Friday 15:47
In theory? Yes. I mean, you know, as long as you don’t owe money, and you’re paying in enough every year, but I don’t know how your situation will change or not change. If he starts making more money, your income could go up, you know, your husband, or maybe he’s, you know, I don’t know your situation. But at this point, they shouldn’t hit you with a penalty, because you did have enough pain in and it should hold off quarterlies, it probably will kick out 1040 because they don’t know if next year is going to be the same scenario. You’re somewhat close. When you’re around 30, you’re in the midst of the prime area for earned income credit. You know, so you, you may be careful on not paying or at least setting aside a little money to have that set-aside. And I’ll be honest, I don’t do a lot of earned income. And I did not know if you had a child that was 22 disabled or not that they qualified for earned income credit. But that is something I’m taking your word on because I’m assuming the software is telling you it does.
Well, I’ve got another child that just turned 19. And he’s still in college. Okay. So that takes a child, I thought it would be the older child that was qualifying us, but it’s the younger child.
Dr. Friday 17:10
Yes, the younger child is the one that’s so qualifying you. And that means next year when he hits 20, your child will not qualify.
Okay, so we need to make sure we’re holding out more for next year because he’s going to be getting pension and hopefully Social Security as well. Because he’ll be 62. So we just need to make sure that they’re going to be holding money out of those. His salary was so low that it didn’t kick in to even withholding anything because it was only $16,000.
Dr. Friday 17:46
So I’m fibbing to you right now. So apparently, just to clarify, again, I don’t specialize in doing a lot of earned income. So, but it qualifies a child that is either under the age of 19, or under 24, and a full-time student of any age for a totally permanent disabled individual. So it is probably well because you are the ones in college. So you may be getting a little for both children, you know, I mean, because one, I think you said was 19, but in college.
Dr. Friday 18:19
Yes, yes. Okay. And then you have the one that is permanently disabled. So you will be getting EIC for both of them. And as long as your 19 year old stays in college at your income, assuming that there may be some fees that are paid, you may be getting college credit as well.
Yeah, there is. That’s part of it as well. So, but I was just afraid are gonna kick me into owing quarterly.
Dr. Friday 18:45
I think it sounds like you should be in pretty good shape, as long as your income stays around that dollar amount. And again, I’m not sure about the max. But I want to say that the prime area is between like 25 and 35. If you go up to 45, I think it stops. And if you go below 25, I think it reduces it down to, you know, to a minimal number system there. But it sounds like right now, as long as your income is pretty much the same I think you’re gonna be fine without having to worry about it.
Okay, all right. Well, thank you so much. All right.
Dr. Friday 19:18
No problem. Thank you. Appreciate you. Alright, let’s hit Gene in Nashville. Hey, bud. What’s happening?
Hello, Dr. Friday, I always enjoy your one-minute moment.
Dr. Friday 19:30
Two questions. I lost my job at the end of last year. And if I That meant we went on to a health care marketplace exchange insurance program, assuming I’d land a W 2 job later this year or sometime soon I need to go in and update my income that they base the tax credit on I believe, is that correct?
Dr. Friday 19:55
Yes, sir. All right.
And before I get that why do I have two 1099 jobs that require me to drive to the location to perform the jobs. Since I have two of them, I should be able, I think to deduct mileage to both?
Dr. Friday 20:14
Theoretically, the IRS considers from our home to the first location in self-employed is commuting because you would have to commute if your job requires, again, you know, depends on the type of profession. But from that point, any driving you do after that would be considered a business.
Alright. So one of the jobs is always on a Sunday, I think you can guess what that probably is. And the other one is Monday through Friday. Last year, I deducted Sunday as a second job. Even though I had a W 2 job on Monday through Friday. What do you think?
Dr. Friday 20:50
Well, I think yes. And if it’s a Sunday job that I’m thinking it may be if you can’t write off standard miles, you could write off basically charitable miles, because it sounds like you might be working on a Sunday, maybe in a religious situation? Um, yeah. So the way I think you would be able to pull the miles and we would want the miles ideally, on 1099. You know, I mean, because that, that way, you’d reduce self-employment, as well as ordinary income tax, that’s the perfect place. So you know, but I will tell you if you’re ever audited, and that Sunday trip from home too if you’re going from home to church, they’re going to say that the church is your place of business, therefore, from home to church is community. Now, if you went from home to church, and then you went and saw some of the practitioners or people around your area that you were servicing, that would be legitimate. Just sharing.
No problem. I appreciate it. Will do more research. Thank you.
Dr. Friday 21:49
Thanks, buddy. I appreciate you. But okay, and if he may want you to know, Gene, if you’re still listening, you may want to talk to the church and see if they could put you on a W 2. Now, I don’t know if you’re a licensed an actual. Do they come? I’m Catholic, so we call them priest, Minister, or not, but if you because then we have the housing allowance, which helps a lot with my people that do service that communities like yourself, so might be something to think about with them. And I don’t know, again, it may be that you’re the music director, I don’t know. So, um, but that is an option if you are actually practicing under the ministry.
Dr. Friday 22:29
So that is a great question. And we are doing awesome here. Look at this, we’re flying through the show, we’re already almost halfway through. So if you want to join the show, you can 615-737-9986 for you that may not know who I am, we’ve been on the radio now almost, we’re working into our 13th year, lucky 13. I am an enrolled agent licensed by the Internal Revenue Service to do taxes and representation, which basically means under the tax code, you are entitled to representation.
Dr. Friday 23:06
And that representation needs to be somebody like an enrolled agent or an attorney. Either one can represent you to be sure you can get yourself out of IRS issues is that simple. So if you haven’t filed taxes for a number of years, if you haven’t, you get a bunch of love letters from the IRS and you’re like, oh my gosh, I don’t know where to start. It’s just like bury me. So I’m just throwing them in a drawer, we need to talk because there are many different options you have out there.
Dr. Friday 23:33
Some of them, you may not like, but you will hear the truth from me, I’m not going to first thing say, “Hey, you need to pay me this much money. And then we’re going to see if we can help you out.” We’re going to figure out what’s going to work out first, you know, at a reasonable fee. And then we’ll talk about how we’re going to pay for offering compromise or an installment agreement or whatever you need to know what you’re paying for.
Dr. Friday 23:54
Don’t just get on one of those phone calls with I mean, there are people, and half the time you’re talking to someone in whole different states. I mean, you really kind of need someone you can do a face-to-face with at times. So make sure you’re dealing with somebody that you can actually deal with. So if you need help, you can always call my office on that.
Dr. Friday 24:10
But right now, if you join to join the show, have you got a question about your taxes, about maybe something that’s happened, maybe you’ve inherited or you sold some property. We have done more home sales this year than I think I’ve done in the history of anyone year in the last 23 years of doing taxes. So if you’ve got a question 615-737-9986 number here in the studio and we’re going to be right back with the Dr. Friday Show.
Dr. Friday 24:45
I am back live here in the studio so if you want to join us you can 615-737-9986. I think is the name. I may have completely mutilated your name. I’m so sorry in Lebanon. Hey.
Hello, I’m here to be.
Dr. Friday 25:09
Hey, did I say your name right?
You absolutely said it correctly. So good on you for that. So here’s what’s going on. My daughter is 22 years old. And she is going to college part-time she’s working part time. But I know that she is going to be leaving the state and moving to Washington in August. Would this still be a situation where I get to claim it on my taxes?
Dr. Friday 25:44
Well, if she’s going to college there, the answer would be yes. Because that’s still considered your dependents if she is making $1,000
Yes, and she lives with me.
Dr. Friday 25:58
Right now she lives with you when she moves to Washington. Is she moving on campus or moving to an apartment where she will be attending full-time college or part-time? I mean, like you said, maybe part-time and working, how much will she be earning? Do you know?
Well, I think she’s going to with her part-time work. I think she’s probably going to make around 20,000 this year. She works as a pharmacy tech, and she works about 20 to 25 hours a week.
Dr. Friday 26:33
Well, I will say she’s making $20,000, the IRS will consider her own. She’s not your dependent. Not to say that you are not supporting her. But I don’t know if you would actually meet the 50% care, even though we both know that you probably could. But all in all, that’s the second part of that conversation would be if she’s making 20,000 Most likely she is supporting herself, even though dad’s probably sending money every week. But yeah, that’s with tax law.
Well, that makes a lot of sense. And listen, I know it’s kind of a cliche. Yes, I’m a first-time caller. But I am a longtime listener. I always look forward to your show on Saturday when I’m out and about.
Dr. Friday 27:18
Well, I appreciate it. Seriously, I always love the fact that you guys actually still listen to me. So thank you so much.
Have a good day.
Dr. Friday 27:25
All right. Thanks. You too. Alright, let’s take Jason to Nashville. Hey, Jase.
Hey, how are you doing?
Dr. Friday 27:33
I’m pretty good. How about you?
Good. Good. Thanks for taking the call here. I’ve got a question. We’re a company that’s new to the Nashville area. We started a new LLC. But even though the company is based here in Nashville, it’s a Nevada Corporation. Are you someone that can help us with our taxes? Or do we need to find someone in Nevada to do that?
Dr. Friday 27:57
No. Did you guys actually I mean, you said you’re new. So have you. We do all states. Just to let you know, I have several people that have Nevada most of the time. It’s my people coming out of California that likes to do Nevada corporations trying to work their way around that $800 a year f&e tax. But that being said, is the business actually running out of Nashville? I mean, one of the things you might need to consider is if the answer is yes, and you don’t answer on the radio or anything, but if the answer is yes, there is a foreign status. So you can keep it as a Nevada Corporation, but you would actually register here as well. That would be something we’d have to you know, we can talk about off the radio, but, um, but sure we do Nevada corporations, that pretty straightforward, actually. That’s why people love Nevada and Delaware and a couple of places like that.
Yeah, perfect. Yes. So you’re exactly right. We were do come from the California area. And then so that’s what we’re doing. So that’s perfect. I will definitely be in touch with you and thank you very much.
Dr. Friday 29:02
Yeah. And Jason, just so you know, you might need to make sure you give us a call early in the week because of LLCs. If their partnerships do have to be filed by March 15. Or they’re late. We can file an extension. They don’t have to actually have to the returns, but you do need an extension filed by the 15th If we can’t get it done on time, okay?
Okay, great. Thank you for that.
Dr. Friday 29:24
All righty. And that’s all for all my listeners if you have a partnership, 1065, an 1120 s. Some corporations 1120s, 1041s, and even some 990s, if they’re working under calendar years. Those entities usually I do, definitely, the 1065 1120s are due by March 15, which that’s like 10 days from today. So if you haven’t yet filed, then you need to make sure an extension has been filed.
Dr. Friday 30:01
Now we are in our office meetings, we start filing extensions in February just to cover ourselves. If we get them done, who cares, you did an extension and you filed your taxes on time. But in many cases, if you don’t, the penalties can be quite stiff to be quite honest, several $1,000. So you want to make sure that you have someone file the extension so that you don’t get hit with a penalty, then you have theoretically until September to file the return but we do have to make sure f&e is filed by 415. So there are certain dates and deadlines that you want to live up to and you want to make sure that you’re hitting those.
Dr. Friday 30:36
So you have some interesting situations, so just don’t want to be late. All right, I do want to share something that came in from the IRS we always get these news releases. And this may be helpful. Not so much for us here in town because of the open offices in Knoxville but maybe worth the drive to Knoxville. If you’re having some serious problems face facing the IRS help available in more than 30 cities on Saturday, March the 12th. One week from today, guys, one week from today, the Internal Revenue Service today announced that many tax assistance centers will offer face-to-face Saturday help without an appointment from nine to four.
Dr. Friday 31:14
And if this is something you’re you really need to do a face-to-face with the IRS. You might want to get in the car and drive up there but nine to four and I’m pretty sure they are not going to stay open later. Being open on select Saturdays is offering people to get the help that they need when they need it. So the IRS wage and investment division commissioner and tax experience officer can Corbin who knows what many taxpayers work during the week and have obligations that they’re unable to do. People can also ask about reconciling advanced child tax credit payments, you receive help resolving tax problems pay tax bills on the IRR, or deal with an IRS audit.
Dr. Friday 31:55
If the assistance from the IRS in place specialized in these events is not available, the individual will receive a referral to a staff member that they can then get help. Guys, I’ve been doing this for 20 plus years and if you feel like I do sometimes when you really need a face a human being to deal with the issues, this may be the section that the time or the place that you want to do this because it is or may come down to a very important situation there are in the office they have opened for us in Tennessee is in Knoxville.
Dr. Friday 32:30
So if you want more information on that you can, you could probably email my office that’s not a problem we’d be more than glad to help you find that information out. But again, the official information that we have is in Knoxville and the address in Knoxville, Tennessee and it’s only Knoxville nothing in Nashville this at least this Saturday at 710 Locust Street, Knoxville, Tennessee. So again next Saturday from nine to four, if you have IRS issues that you really just need to talk to a human being that office is open, I would definitely suggest planning to get there early. I would picture people lining up to be able to get in to talk to people and expect to spend the entire day doing it.
Dr. Friday 33:16
Because I mean, I know how many times I have sat on the phone for hours and felt like I have not done anything all day because I didn’t get any resolution either the people I talked to didn’t have the ability to help, or I got hung up on or I waited three hours and they say they don’t have the ability to you know they’re too busy. Someone will get back to you. It is a bit frustrating. So this may be one of those weekends where you decide you’re going to drive to Knoxville and you’re going to try to find face to face, somebody prints out something for you so that you could make it work. It’s very important that you get that kind of resolution if you can. So again that’s next Saturday nine to four at the Knoxville location.
Dr. Friday 34:01
So if you have a friend or you need more information, I’ll be more than glad to forward you this email we received from the IRS to share that information. If you want to join the show or you’ve got a question 615-737-9986 taking your calls talking about all my favorite subjects, which is taxes and all the things that go along with it. But if you know you have children that you’re filing taxes I do usually suggest people have heard me say this before, if you’re claiming the kids, maybe you need to file your taxes before you file the kids that’s not always the case.
Dr. Friday 34:41
I mean obviously as long as you know what you’re doing you make sure you check the proper box on the children’s tax return so that way then you can claim them as your dependent doesn’t hold you up. I think the only year that was really bad with that was 2020 when a lot of college kids went online not realizing when they went in and read Just for the stimulus, that they ended up with a situation that they were actually filing zero tax returns. And that messed up my parents, at least the deals or the cases that we’re in. So, again, that was more like a 2020 issue.
Dr. Friday 35:16
But you know, every year, so always seems to be a bit of a challenge. So if you want to join the show, we’re going to be down to our last section, but eight minutes after we take this next break, the phone number here in the studio is 615-737-9986. Maybe you have someone that has as I said, you’ve sold something, you’ve inherited something, and you’re not exactly sure how it’s gonna affect your taxes. So she with real estate sales, because some of that is not black and white, you always hear long term capital gains 15%. But we all know that’s not always true.
Dr. Friday 35:53
So we’re gonna take a quick break, we’ll come back, we’ll take two of your phone calls. And I’ll go ahead and take a quick break right now. This is Dr. Friday, and we’ll be right back.
Dr. Friday 36:01
All right, we are back with the last part of the show. So if you have any questions now be the time 615-737-9986. And Kathy was nice enough to hold the break. So Kathy is in Tennessee. Hey, Kathy.
Hey, how are you doing?
Dr. Friday 36:27
I am good. What can I do for you?
I am the administrator of my sister and brother-in-law’s estate. And I found their 2020 taxes in 2021. And then sent them in April got them back in September because I did not find them correctly. sent them back in September and every I still go on RF and still nothing shows up. Should I wait? Should I send them back in certified mail?
Dr. Friday 37:01
I would, I would send them back in certified mail. But I will tell you, they probably have the first one. But at least this way, if you didn’t send it certified, I would be you know this way, you know they’ve received them right for the second time. And you can just hold on to that receipt. And so that way, just put in the paperwork. And because it could take them another six months to process those returns.
Dr. Friday 37:26
And we have the same problem. So we just always make sure we send them in like you said certified so that way we can just put them away. Because right now I’m finding that any two returns that we mail in are taking at least six months, we sometimes will get a letter two to three months asking for more time to process reading, they really haven’t done anything. They’re just looking for a bit more time. Yeah, so that would be my suggestion if you were my client.
Okay, let me ask you one other thing because these have not been processed. And I’ve gotten a couple of things where some debt was written off, but you know, it’s considered income. So, do I need to go ahead and file on that? Because I received those in 2021?
Dr. Friday 38:11
Well, you’re gonna need to file a different return. You know, because the first-year return wasn’t for 2021. Right? Or was it 2020? So your need to file another one for 2021 on the 1099 Cs or 1099. I think that’s what it is, where you got a credit card that waived in, they turned it in now. Not knowing your situation, there are hardship filings, they can waive the tax on those depending on if the person had the ability to pay or not. You may want to look into that to make sure you don’t pay tax or pay on, you know, pay on credit cards that you got waived because you couldn’t afford or they couldn’t afford to pay them. And then you know, so there is exclusions for those for some people, not for everybody. Sometimes people get a deal, but theoretically, they didn’t have enough debt according to the IRS but or cash flow. And it may be in your case, though, it sounds like there could be extenuating circumstances where the cash flow or the debt was too high to cover.
Okay, okay. All right.
Dr. Friday 39:15
But yeah. Thanks, Kathy. I appreciate it.
Dr. Friday 39:22
Bye. All right. Let’s hit Pete in Nashville.
How are you doing Dr. Friday?
Dr. Friday 39:28
I am doing awesome. What’s happening, bud?
I got about four or five quick questions. Okay, first, the $300 deduction. Yeah, charitable. Is this the last year for it?
Dr. Friday 39:46
Right this second it did not get extended past the 300 for individual 600 for married it is not impermanent tax law. So, I would suggest if you’re working on 2022 for tax Planning. I’m gonna think they’re going to keep it out there. But I don’t have any guarantees. So, plan accordingly.
Okay, and then the RMD age limit is 72? Not over 75 right?
Dr. Friday 40:16
Not yet. I mean, I haven’t read the whole build-back better thing, but I’m thinking they’re going to want to do it earlier not later. So I don’t think they’re going to take it to 75, no.
Okay, and for the RMD distribution, on your tax form, I say, the 940 distribution that covers all that, then 401 K and 453, and all that.
Dr. Friday 40:43
Right, anything that falls under like an IRA, but yes, they will all fall on that. And I think the other one is like annuities and pensions. The one below it.
Everything will fall under that, right?
Dr. Friday 40:55
That is correct. All the others. Yes.
Okay, and my last question is, when doing your taxes, once you get to your taxable income, and you go to the table, does that amount in the booklet does that match what they have on the E-file when they calculated automatically?
Dr. Friday 41:14
It should, I will be quite honest with you, love. It’s been a number of years since I have done any kind of book calculating, you know, we’ve pretty much gone on to the computer so it should I mean, I would say there’s a slight rounding difference because I know when people do paper returns, a lot of times they’ll do dollars and cents, not saying you do or don’t. But the IRS only does it and hold dollar, so anything that’s 49 cents, or below would be, you know, the smaller, and then anything over 50 would go up to another the next number, they don’t use change. And so the same thing when we pay, but other than that the slight rounding difference other than that you should be spot on, I would think.
Well, you know, like, if you had like 30,000? And the first what 20,000 is like 10%, you got 10? And you got 12 right?
Dr. Friday 42:06
Well, you actually have 12. But you know you had the first I mean, depending on where you’re at looking at the tax return, the first thing you will have is your standard deduction that you back out, right? And then you get to the actual AGI, the actual taxable income. And at that, you know, it is theoretically a progressive tax code, right? So I mean, you might be in the 12% tax bracket, but your effective tax rate may be 4.5 of your actual adjusted gross income.
Dr. Friday 42:34
So I’m I don’t think if you just take that number and multiply it by 12, I think you’re going to overpay the taxes. But if you’ve got a book and I don’t do they still make the old books where basically says if you look on it, and you take your finger and you go across, I’m single was zero. This is what my tax that’s still printed. I honestly didn’t know that. I may at one point. I know, they stopped mailing them out to some of my clients, but I didn’t know if you could actually order one. So yeah, that book should be correct. It should be correct without a problem.
Okay. Thank you.
Dr. Friday 43:07
Hey, no worries, man. I appreciate you. Alrighty, so we are getting to the end of the show. And so when it comes to this, I’m just going to give you guys some basic information.
Dr. Friday 43:17
First, I am Dr. Friday, an enrolled agent licensed by the Internal Revenue Service to do taxes and representation. So again, if you’re in a situation where you need help, either dealing with back taxes, dealing with current tax issues, getting letters. I had an unusual situation last week where someone came in, and she didn’t owe any money, but a tax levy had been put against her because they thought it was because of something else. And it doesn’t make sense. So making sure that the IRS is loving you for your money not taking money off of your paycheck just because they can and I know, in this case, they tried for two different days to stop it. But you know, there are ways there are offices.
Dr. Friday 44:01
The tax advocate office is an awesome organization. I know everyone doesn’t love the IRS or I don’t know if love is a strong word. But you know, the fact is we have to learn to live with the IRS and the situations that go with it. But if you have a situation where you cannot deal or you’re in the midst of someone trying to take your paycheck, I definitely tell you right now you need to make sure that you are following up with the IRS. And if you can’t go to the tax advocate office, they and you can’t always walk straight in but there is a 911 form you can Google it, it will give you the possibility or the ability to fax over a form to their office and they will get to it as fast as possible. I know they’re probably running 30 or 45 days behind. But when you get someone you will actually get a human it is it’s a nice way of trying to resolve the issues sometimes when we can’t resolve them ourselves.
Dr. Friday 44:56
So also if you would like to reach my office, you can call Monday morning at 615-367-0819. You can also email email@example.com. I will tell you if you’ve called, I’m probably running about 24 hours behind and returning phone calls. So if you call them Friday, I’ll probably get to you by Monday. And the same thing with emails, I will probably try to get through all those this weekend.
Dr. Friday 45:31
But if you need to get to me again firstname.lastname@example.org, or call 615-367-0819. You can also figure out who I am by going to drfriday.com on the internet, it will tell you a little bit more about who I am, I will tell you the calendar is full at this point. So if you’re on there looking I don’t, there may be one or two slots open but most of them are probably fully booked.
Dr. Friday 45:56
So if you are a returning client to Dr. Friday Tax and Financial Firm, again, we will always have an opening for returning clients. So just give us a call on Monday and we’ll get you scheduled or if you’ve left a message we’ll get back to you and get you scheduled for a tax appointment. I hope you guys are truly enjoying this Saturday. It is an absolutely beautiful day outside. It’s so nice to actually have some of these I think it kind of makes you feel like springtime is coming.
Dr. Friday 46:24
So I hope you guys enjoy this Saturday. And I hope that you just you know have a good time. Stay safe. And if you like listening to our show again next Saturday we’ll be live here and like we say, call you later.