Welcome to another episode of the Dr. Friday Radio Show! In this episode, tax expert Dr. Friday delves deep into the complex world of taxes, offering clarity, guidance, and solutions for listeners. Here are some of the topics she addresses:
- Nonprofit Tax Compliance: Understanding the IRS regulations for nonprofits, particularly the importance of filing the 990, 990-EZ forms to maintain nonprofit status.
- Charitable Contributions: Insights on verifying the legitimacy of charities, especially for online and overseas donations, and ensuring they qualify for tax deductions.
- Personal Tax Situations: Addressing unique tax scenarios that arose in 2023, including inheritance taxes and selling properties with shared interests.
- Tax Basis Tracking: The importance of accurate tracking for tax basis in properties to ensure correct capital gains tax payments.
- Gift Tax Concerns: Guidance on gift taxes and how to navigate them, especially in anticipation of potential tax law changes in 2026.
- Estate Planning: Emphasizing the need for wills and trusts to ensure your assets are distributed according to your wishes and not left to default government plans.
- IRS Representation: Offering advice on dealing with the IRS, including the significance of having an enrolled agent for representation in tax issues.
- Tax Planning for Life Events: Discussing how life changes like marriage, divorce, or job switches can impact tax liabilities and the need for proactive tax planning.
- Year-End Tax Strategies: Tips on year-end tax strategies for individuals and businesses, including adjusting W-4s, managing investment losses, and maximizing retirement contributions.
- Tax Loss Harvesting: Strategies for leveraging investment losses against capital gains for tax benefits.
- Retirement Contributions and Distributions: Guidelines on required minimum distributions from retirement accounts and the impact of various types of contributions.
- Updating Personal Information: The importance of keeping personal information up-to-date with financial institutions and the IRS for accurate tax record-keeping.
- Tax Record Retention: Advice on how long to keep tax records and the best practices for storing them securely.
Join Dr. Friday as she navigates these and other tax-related topics, providing valuable insights for effectively managing your taxes.
Part 1: 0:00
Oh, no, no, no, she’s not a medical doctor, but she can share cure your tax problems or your financial woes. She’s the How to girl. It’s the doctor Friday show. If you have a question for Dr. Friday, call her now. 737-WWTN that 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. We are here live in studio today. So if you have any questions, you can jump right on the phone 615-737-9986 – 615-737-9986.
I want to touch on a couple things that have come up this week. One of the big things I think the IRS and it really just depends on when your nonprofit started, you have three years if you have not filed a 990 in or 990 or 990 ez, they will discontinue or dis basically remove you from the nonprofits. I’ve had a couple phone calls this last couple of weeks on this situation. So if your nonprofit has received that love letter saying, you know we’re determination has been removed for your exemption, you do need to deal with that issue. You cannot continue to be a nonprofits, you can’t continue to take money if you’re if you don’t have in good standing. And that’s something for people that are giving money irs.gov You can just up in the search put in charitable content, charity, charitable nonprofits, that’s where it says nonprofit, sorry. And under that you can search for any nonprofit that you’re giving money to.
Because if you’re giving money to something that’s online, many of those organizations are not legitimate nonprofits. Also keep in mind that if you are not going to have if the money is going overseas, if it’s going to a family that you’re trying to help, those are not legitimate nonprofits. So you know, you want to make sure that if you’re going to plan to give it or take it off your tax return, that the are legitimate or even in good standing. I mean, if you think Well, hey, it’s our local church. Now, many times churches actually kind of fall in this little protected zone, but many other organizations that you give to wounded warriors, a great organization, any of those kind, you know, if you’re never sure you can go to irs.gov up in the search box nonprofit, and look up that organization so you can see what they have and where they’re, you know, what’s going to be and if it’s going to be a legitimate tax deduction, at least if you give with the idea that you know, it’s not, then who cares? But it is sometimes on those organizations that aren’t the same way.
So if you’ve got questions, or maybe you have some situation where something different happened in 2023, that maybe you haven’t had happen in 22, or earlier years, and you’re just not too sure exactly how you’re supposed to treat this situation, you can certainly give me a call here in the studio at 615-737-9986 615-737-9986 is a number here in the studio, you can give us a call and we can try to help you figure out what the next step is. Or if I don’t know the answer, I’ll send you either to someone that should or I will find out the answer one way or the other will be able to take a look and review and see if there’s a way of making whatever the situation is most important is really knowing or understanding how much money you might owe.
So I mean, many times I’ve had situations, the biggest probably is inheritance, because some things are and some things are not taxable. But also the same thing is when someone’s going to sell one of their rental properties or their second home, or a home that maybe they went into with their mother or father. And so that person’s passed away, and now they’re selling that house, but they only had half interest in in how that would work for your basis and making sure that you’re tracking that basis correctly. So that way, when you file your taxes, if there’s money due, then you pay tax on that capital gains, if there is no money due then you don’t have to pay tax on it.
But it’s very important to follow it through and make sure you understand how that’s going to work. So again, tracking that making sure it’s there and doing it is the very important part of anything you do with taxes. I mean, anytime I have a couple situations, because you know, I talked quite a bit about gifting. And, you know, I had a really interesting conversation with a gentleman that we actually called in on the radio show earlier, another time, but it was interesting to the extent that he was thinking outside of what if I give a lot Have a million dollars today.
And then obviously tax law changes, and then that person ends up with a gift tax a lifetime gift tax that could come back at you. And so making sure that you’re not exceeding certain things, but also trying to maximize those. So that way, you end up with not having a higher estate, because theoretically, in 2026, the estate tax will go down to 5 million, which for a lot of people that may seem like a lot, but when you consider retirement and the home value, and those kinds of things, it’s not necessarily a lot, and therefore, there’s gonna be a number of people, if you’re married,
might be fortunate because you can do a B, or you can have the one person you know, each of you have 5 million, so theoretically, the the family would be able to do $10 million, where if you’re single, and you have 5 million or more than you don’t really have the ability to shield it the same way. So it’s important to try to find out and I am working on trying to get someone like Russ cook, or one of my attorney, friends that do estate planning, to see if there’s anything we can be doing in the next few years to shield or protect our assets, if there’s anything that can be done, or if it’s pretty much going to be that you can’t do anything more than what the what we have already. But it’s going to be important. And also, I’m a huge advocate for individuals having either at least a will.
Right. And I don’t know, guys, I don’t sell this product, it’s not something. But I have seen too many people that have had to deal with situations when someone has passed away, and there was no Well, yet everyone knows kind of what the people’s wishes were. But that doesn’t make a difference. Because if you don’t have a well, the government has a plan for you. And it’s nine times out of 10 not going to be the plan that you want for yourself. So again, you know, something simple as as a certified Well, or whatever you have to do for Well, again, I use Russ cook and Associates, but there are many places I’m sure Legal Zoom would even be better than not having anything at all.
But going to someplace and making sure I mean, you’ve worked so hard to have everything. And you know, and then not having that protection, because you you know, you think well, everything will go to my wife, so I don’t have to worry about but no, that’s not the case. If you have children and your wife and you die without a will money, some of that money is going to go immediately to the children and the in the spouse may not get what you think should be hers or his. So again, just too many times seen it on my side of the desk that I think anybody and I don’t care how old or young you are. Because if you have children, you should have a well, because you want to tell people what would happen to the children. If you are older, you need a well, you know, I mean, there’s no age on wills, maybe there is in some ways people might say a trust. Not sure if that’s true.
But I’m gonna say that at least with a trust, it’s usually more about assets. And if you have none, not important, but if if you do have assets, you do want to also protect those in the best way to do that, in my opinion. And again, guys, I’m not talking as an attorney, I’m talking as a tax person. And a person that has helped many people have to deal with estates when the when someone has passed away. And the trust is always a better deal with a poor overwhelmed that goes through probate instead of instead of the entire decision being made in court. So if you don’t if you have a question, not concerning, necessarily that because again, I’m not an attorney, and I’m not too sure if I can answer a lot of those questions.
But I absolutely am an enrolled agent licensed by the Internal Revenue Service to do taxes and representation. So that’s the kind of questions we could ask. If you have tax issues, maybe you haven’t filed taxes in a number of years. Maybe you have filed taxes, but you’re having some issues, love letters are coming in, you have some problems, and you’re looking to see if there’s any way of getting the resolution. You know, in dealing with the situation, you may not always like it I have a gentleman I’ve been working with. He’s actually one of the the most easygoing people I’ve ever worked with, to be honest with IRS issues not to say that most people but he’s willing to make all preparations and reparations to the IRS, it’s just that we’ve had a heck of a time getting the revenue officer on the phone.
And that’s not the norm. But But that being said, it is definitely a situation where you know, if you’re having to deal with the IRS, sometimes it’s nice to have someone else help in dealing with them instead of trying to do it heads on yourself. And again, as a EA an enrolled agent, that is exactly what we’re licensed to do to help give representation to taxpayers in front of the IRS. So if you’re not too sure if you’re dealing with your taxes correctly, or maybe you have even children I mean, I can’t tell you how many parents have called me and said, hey, you know what? I just found out that my son hasn’t filed taxes in 10 years or, you know, he’s just married someone and they hadn’t filed taxes in 10 years. I will suggest this if you’re in the process of getting married.
You know, I don’t I mean, again, this is from someone that is not married. So maybe this because this conversation never comes up. But it just seems like it should. It just seems like you know, you’re gonna sit down before you get married and narrow talk about how the bills are going to be paid, if you have student loan interest, or if you have credit cards, and yeah, do you owe the IRS? Those just seem like normal questions that should happen before you actually get married to somebody? Because how are you going to know much about their finances, and I’m sorry, when you get married, you are merging the finances until after the wedding, and then you find out that they haven’t filed for 10 years, that’s got to be a little bit of a shocker.
So I’m suggesting to anyone out there that has not yet married but thinking of it, maybe you don’t want to have that conversation. But I mean, if that’s the worst conversation you’re ever going to have in a marriage than I’m thinking that should be awesome. But I’m sure there’s gonna be a lot more hard. And what’s more complicated. So if you can’t have that conversation, I’m gonna be a little concerned on the big conversations that you’ve got to come up in life, how that’s going to work. So if you’re not too sure, that is a bit of wisdom from someone that, you know, her marriage didn’t last very long, so probably not the best, but I could tell you all about his finances.
Sure, that’s an important thing. All right. So if you want to join the show, it’s very easy to do pick up the phone 615-737-9986 615-737-9986 We’re gonna get ready here to take our first break. So hopefully, many of you guys are probably still out. I know, veterans day it was yesterday. But I saw a lot of people still celebrating today for Veterans Day. And, and I do want to put a big hay out to all veterans. We do a lot of work with veterans, pro bono, to help some of them that have gotten into, obviously tax situations, but totally respect anyone that serves this country. So thank you for for your service. All right, we’re gonna take our first break. When we get back, we’ll get to the phone lines and the emails again, phone number 615-737-9986, or email Friday at Dr. friday.com. We’ll be right back.
Part 2: 12:31
All righty, we are back here live in studio. And if you have a question, you can certainly join the show 615-737-9986. So I know we’re getting close to the end of the year. So I thought I might run through a few things that individuals and businesses might want to start thinking about. Okay, so the first thing would be is to make sure that your W four information is correct. So if have you moved? Have you gotten married? Have you divorced? Have your kids gotten over the age of 17?
Do you need your current employer, but have you moved or relocated and had other jobs through the year of 2023. Because if you have, now’s the time before it gets crazy, and they’ve already printed, and they can theoretically bill you to get an updated w two, now is the time to update your W two. So think about it, get your information because the W four is what they use to make the W two. So you might want to consider taking that information. So another thing you want to look at is, is there any losses you’ve been wanting to go ahead and clean up your portfolio?
Let me put a caveat out there. I am not a financial planner, just as I’m not an attorney, I cannot tell you if now’s the time to clean out your portfolio or not. But many of my clients manage their own finances. So if they’re managing their own finances, then we might be the time to go and look and see if it’s time to sell something because you either made some good capital gains or sell something because you’ve already got losses and it’s you know, you’re the capture them now versus the offset other gains. So, you know, we only really have about a month and a half, now’s the time because with Thanksgiving and Christmas in the middle of that time period.
A lot of financial people, brokers, bankers, let’s be honest, people are in and out of town for the next month. So double check to make sure you have that in then take a look, talk to your financial but require minimum distributions. There’s been a lot of changes, you know, if you were 7071 7273 I think it is nowadays. When you’re supposed to start taking your requirement on distribution but have that plan put into play. If you’re already 71 or two, maybe you need to make sure that you have that setup to automatically distribute less? Thank you.
tribution, I’ve had that situation where somebody has passed away. And they didn’t really realize that they were supposed to be taking an RMD out of the inherited IRA that they received. And there’s been so many different things. But the year after the person passes away the next the next year, because the year when someone passes away that the RMD is automatically given to the person that the passed away, the next year, you are on inherited IRAs, traditional IRAs, and I even think you have to take and there may be a financial planner out there that’s listening.
But I’m not too sure if you have to take RMDs out of a inherited Roth. But I do know you have like a 10 year window to take all of that out. So you might want to consider again, having those conversations now when it’s not so crazy, because financial planners go through a lot of the craziness that as a tax accountants do. And to the extent that when we’re doing taxes, it’s hard to take that time and just sit down and really have the review and the conversation. That’s why I encourage most of my clients to be coming in now till the end of the year, because it’s so much better than trying to have a conversation in the middle of February when we have 30 minutes cycles, you know, and it just isn’t very conducive to good conversation. So putting that out there. Now, you know, possibly boost your pre tax contributions, you now know, where are you at?
Did you actually have some inheritance? Or do you have an IRA where you have to take money out? Or are you had a higher distribution of some sort, considering maximizing your 401 K at work, because then you might be able to offset some of the gains against the losses, you know, you reduce your income at work, because you have less than you’re getting the money on the other side. So again, playing the game to try to keep you in the lowest tax brackets. Another thing again, talk to your financial planner, guys, but I can’t tell you now is when the phone has just gone crazy. And it’s all about doing the Roth conversions.
People a lot many people handle their own. And there’s a lot of financial planners that I work directly with. And in those situations, they call and they like okay, well, we want to maximize the 12 we want to maximize the 22 we want to maximize whatever tax bracket, how much can they take out to maximize that said bracket because we want to do a conversion up to or for that basic situation. So again, making sure that right now’s the time making sure that you know all of your information. So if you are if you have relocated or moved or done anything, and your address has not been updated, it’s going to make it hard to get your tax records.
If they don’t have the right now I know many of these organizations nowadays you can download your W TOS or your 1099 RS or your 1090 nines. But just in case, you might want to make sure that that information has been updated. Also, you’re gonna want to make sure that you have done the review on your financial situation just to make sure is there anything I can be doing right now before the end of the year to maximize or I should say minimize my taxes maximize my growth of whatever it is I want to do you know, let’s not wait to that very last minute. Because you can’t contribute to your 401 K after the end of the year. Now you can if it’s a personally held one for yourself, but that’s usually considered a SEP but if you work for an employer, they take it out of your paycheck once that final check comes through. And many times I don’t know what the calendar year this year, but most of the time your last check in December is the one that you have not the last week you’ve worked but the last check that you would receive.
So December 29 is the last Friday in December now some people get paid on the 15th and 30th. So the 38th would be the final one. But if you’re paid Friday or every other Friday the 29th would be your last one which basically leaves us with what six paychecks till the end of the year maybe there abouts five or six paychecks so it’s very important to take a look at that and see what your last minute you know, decisions do you need to be? i My biggest concern is that you’ve underestimated something in your taxes and now you’re going to feel like you have you know, you don’t have enough paid in and now’s the time to consider that maybe you should because December is one of those months where you also have your paid weekly you have five paychecks which I’m sure is great for Christmas, but it might be also the time to actually make some work. commendations on how you can actually reduce your taxes, right, or at least have enough paid in.
Because no one wants the Internal Revenue Service as a loan officer, I hate to tell you, but they are not good. With loans people they’ve got, now their interest rates have went up to, I think it’s like 12, maybe it’s nine or 10. And their penalties are anywhere between five and so right now it’s 10% penalty interest on the IRS is 10%, up from 5% on some of the earlier years, so that one, and then you have penalties that are usually another 5% A month up to 25%. Minimum. So I mean, look at that, I mean, you’d be paying 35% without even blinking your eye. And in some cases, they have a failure to pay failure to file proper. And then of course, failure, the file failure to pay and failure to make proper estimates. Many of my clients have all three of those 2525 25, if it’s past the time period, almost. So look at you can always have 100% in penalties and interest, by the time you’re done with hitting the maximum. So it’s just not a good place to have a good, good rep, you know, a good team a good situation.
So if you want to join the radio show you can 615-737-9986 is a number here in a studio so that we can take your calls and get your information for whatever we need to do on that situation. But you know, it’s all there for us. So what other information can we do to help reduce again, the really the biggest things for individuals businesses, of course, we also need to be reconciling our bank accounts, right for business. So we know we’ve got all of the expenses, we need to be determining at this time, because when we buy equipment, and sometimes I mean, let’s be honest, I’ve had people that put their truck quarters in a year ago, I mean, to get an actual new truck, I don’t know if it’s getting any better. But it’s it’s not it’s definitely makes for interesting tax conversation.
But so you want to make sure you have all your expenses, and that you’ve paid all your bills up. So that way you can reduce your expenses. Because most people do their taxes on the cash basis, which means the money that went in the bank, and the actual paid out of pocket expenses. Now you if you write the check on December 30, you can count that, you know, the check was issued at that time reduced. But you know, theoretically, it’s it’s, you know, some people like to play that game, I like to take all the checks that have cleared the bank, you know, because that way, then cash in cash out versus more of a payable, I wrote all my checks on December 31. And I’m taking all those off. I will say that you could probably defend that with the IRS.
But it’s only really gonna work one year unless every year you do that, because you have to continue that process once you’ve done it the first year. So making sure that you have all of your income, tracked all your expenses, your mileage logs, guys just looking around and saying, Hey, I think I think I put about 35,000 miles on my car, it sounds like a good number. I think I like the way that works out. So I’m gonna go with 35,000 It doesn’t work that way. Guys, it doesn’t work.
That way. You have to have a calendar telling where you went, why you went there and who you met is very simple. And you know, because the IRS doesn’t want to be paying you for miles to go pick up your kid from preschool, or to go to the grocery store or to meet your husband for dinner or wife, whatever. You know, they want you to know that the miles that you put on your vehicle went to potentially at least generate income or branding or something for the business that you are represented. It’s very important. All right, we’re going to talk more about this and also gets the phone lines 615-737-9986. We’ll be right back with the doctor Friday show.
Part 3: 24:24
We are back here. It was going in and a little bit to see you know, we’re back in live in studio here. Let’s go back to talking about what we can be preparing ourselves for for the 2023 tax season. And in that way, we can hopefully catch up on a few of those kinds of things. Again, really what we’re looking for is is there any way that you can pay less in taxes? Or do I need to pay more in taxes because I’ve only have 2324 25. That’s three more physical tax years and we’re almost through this one to maximize the current tax code that we know.
So a lot People are thinking, all right, well, if I can pay more in ordinary income, because it’s at 12%, to 22, to 24, versus 15, to 25, to 28, which will be what happens after 2025, or in beginning of 2026, then, you know, they’re trying to figure out Roth conversions. Like I said before, very popular right now, because a lot of people are trying to figure out they rather pay lower taxes now than potentially what could be higher taxes, we don’t know what the next tax codes gonna be. We really don’t all we know is what is expected, because right now, the current tax code will expire December 31 2025. And that leaves us to believe that inheritance tax are going to go down, gifting is going to go down. And so interest or tax ordinary income tax rates will be going up.
So all of that following so you know, you might want to have those conversations with your team. When I say team, you know, your financial planner, your tax person, as well as your attorney, are you doing everything you can to preserve to maximize whatever the current tax thing that you want to do? Or maybe right now, you know, all you are is work in a freaking job. And you’re like, every year, I still owe tax taxes. And you’re sitting there going, Why? Why do I always owe more taxes, even though, I will tell you first thing is, are you working two jobs, because if you are taxed, tax code still doesn’t do a very good job in taking out enough taxes, or it takes out way too much depending on how you set yourself up. But normally, it’s a single person working two to three jobs.
And every year, they end up owing money. And the reason for that is is because the tax code doesn’t do well with multiple jobs, even if you’ve only worked one at a time. But when you went and got another job, when you started at that job, that job started with the lower tax bracket, the 0%, up to 12, blah, blah, blah, up to the number you end up with. And if you’ve done that two or three times, when you add all three checks together, you’re in a much higher tax bracket than what the tax code was allowing for on those checks. So if you are an individual that is switching jobs, and you’re sitting there going, Wait, I’ve already earned $40,000 At this point, and I don’t want to be started with zero, I’m gonna end up owing taxes, then you might want to have an additional tax come out of your paycheck to compensate for the fact that the tax code isn’t going to be your friend. Same thing is when what probably one of the most obvious is in the year in which people get divorced.
Because if you get divorced now in November, and you signed the papers, and you’ve been claiming, during January through single for this part, no, you are single at that point, when you have signed the papers, you are legally divorced, you are now single, or you are now head of household. If there are children. Either way, it changes from what you were claiming earlier. So if you’re going through working through a divorce right now, my suggestion is to adjust your W four to compensate for the fact of what’s coming down the line. Because if it happens before the end of any year, it can happen. I’ve had people that have signed the papers on December 30.
They just wanted to have a new year resolution, I will not be married apparently. And so they sign those papers. And of course, they had not thought necessarily through the process of saying well, if I wait till January 1, I would have still legally been married, been able to claim married, or the children or whatever possibly versus, you know, getting divorced and then being legally single. At the end of that year, even though you were married for you know, 99% of it doesn’t make a difference. Tax law is pretty straightforward in that. So when you’re going through these life change situations, it is very important to mostly make sure that your finances are following through with those. You don’t want to have something where you’re thinking, Okay, I’m going to do blah, blah, blah. And now I did this and how is that going to affect your finances?
I know you don’t always want to have everything to do with money. It’s not like life is totally about that. But my job kind of is about how to keep more money in your pocket when it comes to taxes. There’s the common things right? I mean, but you have credits, earned income credit, college credits, green credits, energy efficient credits. Many of those you have the catch up contribution credits that you can get or contribution not really credit. But you know, if you are trying to contribute money and you’re over the age of 50, you know, now you can put 6500 Or I think it’s actually if you’re under the age of 50 $6,500 is the IRA possibly or 7000? I know Know that you can contribute to a IRA or sorry, you can contribute to a 401 k $27,000. If you’re over the age of 50. So you need to talk to your financial person, because maybe it’d be better to use a Roth than a traditional IRA, you may pay a little bit more today, but how much will you be saving over the next 1015 years, whatever your life expectancy before you have to start taking money out for retirement, how much of that and it grows tax free. So again, don’t just make decisions based on what’s going to save tax dollars today, because sometimes you need to look a little bit outside of that window and say, Okay, well, taxes are lower.
And least we know, for the next three years, maybe I should be looking at what I can change. Now for the lower tax percentage that may be higher, later on in life. We don’t know again, it’s all a game, we’re gonna have to play. Alright, so we’re gonna get ready to take our last break here for the show. If you want to join the show, you can at 61573799866157379986. Again, I’m an enrolled agent licensed by the Internal Revenue Service to do taxes and representation. That’s what we’re talking about anything and everything that has to do with either preparing or, you know, defending taxes that we’re taking on our things. So if you’ve got a question, join the show. We’ll be right back with the Dr. Friday show.
Part 4: 31:35
All righty, we are back here live in studio. And if you want to join the show, you can at 615-737-9986, I had a text come through and I was asked how long do you need to keep your tax records, it is officially seven years, you should keep your tax records, I will let you know it does not need to be in paper format. It can be digital, you don’t have to have everything in filing cabinets any longer, you can have it scanned in, but you need to have seven years. If you are a business, you need to be keeping a minimum of seven years because theoretically, you could they could go back up to 10 years to audit you three years for the state audits licenses.
Five, so you just want to keep all of those records. And that also goes for companies that have closed their doors, you can’t just because you close your doors doesn’t mean the IRS cannot come back and audit you had that happen actually for a client. And they can they can audit you without a problem. And so you just because your doors are closed doesn’t mean the audit doesn’t exist. So you want to make sure you’re keeping up to seven years, I would suggest digital format keep it in something like Carbonite or someplace where you have a second backup in case something happens to your computer, you’re able to pull up those forms anywhere or keep it on some sort of, you know, external drive that you can put in a safe or something.
So you don’t have to have filing cabinet after filing cabinet of paperwork. One of the questions that also came in, apparently they’re listening and texting more than calling they The question is, what about for an estate or someone that has passed away, I would always suggest to keep the last couple years of taxes for anyone that has passed away, just to be able to have I’ve never actually had any kind of audit for someone that had already passed away, I can honestly say in 25 plus years, I have not had to represent an estate for an audit of an individual that they were, you know they had passed away. But I am sure there are situations in which you should be keeping as an executor, you should be keeping all the bank statements of the trust account along with any other documentation that would show distribution or anything like that.
So you can account for all money in and money out for the sake of the IRS. So again, just making sure that you’re tracking and keeping track, have all of your own personal information and doing what you need to do. So just putting that out there making sure that you have that thanks for texting that question over. So we’re not till about five, six minutes left to the radio show. And we’re going to kind of stick to the same forum that we had started with the show, just making sure that you’re tracking all of your tax credits that can help you again like earn income credit the child credit the American Opportunity Tax Credit planning, obviously for your estates, I’ve already covered you know wills make sure you have a pourover well you have pls for medical as well as financial. I do not suggest and this was something that an attorney suggested to me so I pass this on to you do not put you your children’s name, and bank accounts just to make sure they have access to the money, just in case, if you provide them with a power of attorney, if something happens to you, they can go right into the bank. And then they can have access to the accounts that you have provided the power of attorney.
Or you can even have that on an account with the bank. So if something happens to you, the problem comes is if you have your name on your children, or your children’s name on your account. And these are children over the age of 18, or 21, depending on which state you live in. But they can if they get into a situation, that divorce or an accident, a lawsuit of some sort, that bank account that has their name on it can become a part of the settlement or the situation. I mean, I had one where I mean, it was documented in the courts. But there was one where the parents bank account because the son who was getting divorced, the wife said, Well, his money here, he’s got more than one bank account. And those bank accounts were not his they were his parents. And it took a lot to prove that he did not have any money in those accounts.
So it isn’t as far fetched as you might think it’s important to be able to protect your children and vice versa, your parents. And the best way to do that is again, as far as I’m concerned power of attorneys, they can do everything you need. And I would definitely suggest talking to an attorney to make sure you’ve got the right kind of power of attorney for whatever it is you want. And we use 2848 power of attorneys to deal with the IRS. But that’s all they do is IRS issues. But you can also have power of attorneys for many other situations. And you want to make sure that you have those. So again, just making sure that you’ve got your estate set up that you’re harvesting any kind of tax losses that might be out there for you that even if this year, you can’t use it all in many, most tax losses will roll forward to the next year. So again, very important that you’re able to take that through and do what you need to do. But follow that out and make sure that you now’s the time to do it.
Same thing is if you haven’t maximized your retirement accounts, think about, you know, the $6,500 or 7500, that’s when an IRA for people over the age of 50 is 75. So 6550 years or younger, 50 years or older 75, you can put into a traditional or a Roth IRA, you get the 401 K plans that you can actually contribute 20 to an IRA, and then later find out that you need them. And then you get hit with a penalty for early withdrawal along with having to pay additional taxes. So, you know, don’t don’t just set side, I mean, so I was trying to tell people about spending money in a business, I had a long conversation with a gentleman that owns I don’t know, three or four businesses. And he was saying that, you know, every year he likes to go and spend as much money as you can on equipment. And I’m like, well is the equipment generating more income. Because, again, I know no one likes to pay taxes.
But if I go spend 10,000, and I’m in the 25% tax bracket. So now I’ve spent $2,500, or I’ve saved $2,500 in taxes, I still had $7,500 $7,500 that I spent just to save 2500. So when you’re talking please for me means people you want to save, you’re never going to be at the 100% tax bracket. But now sometimes there is advantages if he needs that equipment. And he said most of the time, the equipment makes the job easier. He’s upgrading them and he’s doing what he needs to make his nowadays employment is harder trying to find people so a lot of the equipment he’s buying makes it easier for a smaller staff to run and do the same things that he was doing before with a bigger staff but less equipment. So I think we’re all seeing more and more companies, you know gearing up I mean, you go to restaurants now you put your own order in and then you pick it up at the counter, they don’t have anyone that’s really doing the taking the orders or any of that any longer at many of the restaurants. And I’m not surprised it’s getting harder and harder to find people to do the work. I’m not sure where everyone is, but it’s getting harder and harder. All right. So we are winding down on today’s show.
So if you need to have someone to help you as an enrolled agent, you need someone that’s going to be able to represent or help you get straight with your taxes or you’re not even too sure where to get started. And you’re like I need help because I like to be straight with the taxes. But I don’t know even know how to do that. How far back do I need to go? Where do I get the paperwork, etc, etc. You need to give me a call. It’s that simple initial consultations, always free. We can’t help you. I’m not billing you. So if you need help with anything, just give us a call 615-367-0819 That’s my Direct number 615-367-0819. Again, if you’re having tax issues if you need help doing something with your your back taxes, or if you just need some representation, because you’ve already went through an audit or something along those lines, and you need some assistance, any of that, it’s pretty straightforward.
All you have to do is give my office a call on Monday morning, 615-367-0819. Also, you have the website, Dr. friday.com. You can set up your tax appointments, you can also download our tax organizer. There are different things that we’ll tell you about who I am and 25 years of doing the business and how we’re going to help you hopefully get straight with the IRS and also learn a little bit more about what is a true freshstart offering compromise. And not just one of those organizations that said, oh, yeah, we can help you pay us some money and we’ll get started.
And they really can’t help you because there’s really only a few things you can do and maybe an offer and compromise you don’t even qualify for. There’s no way of really knowing unless somebody’s actually doing the work and not just collecting the money. So you need to make sure you have someone you can contact and you know how to deal with that situation. If you want to email me it’s Friday at Dr. friday.com again Friday at Dr. friday.com One more time in the office 615-367-0819. I truly hope you guys have an awesome Saturday. The weather is beautiful. Thanks to all the veterans we have a wonderful country.