Welcome to yet another episode of the Dr. Friday Show! Halloween is right around the corner but Dr. Friday will never get tired of dispensing wise tax advice for free each week! Dr. Friday, together with media personality John Haggard, answers great tax-related questions from callers and listeners and also talked about the following pivotal topics, including:
- Federal Department of Labor’s New Tax Laws for Small Business Owners
- Advice on Handling IRAs in a Divorce
- How to Inform IRS That You’ve Moved States
- IRS Is Simplified per Diems – What Is It?
- The Responsibility of the Executor
- Large Real Estate Losses
- Can Car Mileage Apps Help?
- When Do Tax Accountants Charge?
- What to Do When You Owe IRS a Million Dollars?
- Claiming Your Daycare
- Is Newspaper Subscription Tax Deductible?
- Is Charitable Contributions Tax Deductable?
- What an IRS Enrolled Agent Does?
- Is Alimony No Longer a Deduction
- What’s an IT IN Number?
- Nashville’s Real Estate Market Boom and Tax Advice
- Can You Borrow Against a Rental Property to Purchase Another Property?
- It’s Your Job to Tell the IRS Where You’re at When You Move
- Certified Return Receipt
- The Obamacare Tax
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 Dr. Friday Show. If you have a question for Dr. Friday, call her now. 737 WWTN that’s 737-9998. So here’s your host, financial counselor, and tax consultant Dr. Friday.
John Haggard 0:29
Live from America’s Music City ladies and gentlemen! It may be Saturday where you are. But it’s Friday all day every day all the time with the tax doctor, the tax lady, the doctor of accounting. We know her in these parts of America is the Dr. Friday and right here she is live. Hey, Dr. Friday!
Dr. Friday 0:48
Hey, John! Thanks for sitting in. I appreciate it!
John Haggard 0:51
We always have a lot of fun here just telling the truth and helping folks get out of trouble. And anytime you can do that’s a good thing or to stay out of trouble, right?
Dr. Friday 0:59
That’s a good thing, too. I like to stay out of trouble.
John Haggard 1:01
Staying out of trouble is always a good thing. So we always like to open the show with any breaking news from Washington other than the impeachment thing, and then listen to that and all this other stuff that has to do with tax accounting in any way or is that all been shoved to the back for now?
Dr. Friday 1:19
Is he also have federal Department of Labor has come down with some new tax laws which, if you’re an entrepreneur, you know, we have to comply with state and federal laws. And it’s a small group, but for me, many of my clients have employees that are on salary. And there is a minimum that you have to pay and the certain criteria that they have now settled saying that if you have a person that you don’t want to worry about overtime that they have to basically make. Right now, the law up until December 31st is 400 and, I believe, it’s 75 dollars. They can be as long as their supervisors, they have control over two or more employees, they can hire fire. There are some rules that you can not have to worry about tracking overtime in everyday situations. Well, they’ve just changed the law that that same employee now has to be $684 as of January 1st. So that’s a big jump for people that were making less than $500. Now making $684. So it’s almost $200 jumps per week. So that’s going to be a big change for small business owners. They have not passed the minimum wage increase yet, but that is still very strong on the table.
John Haggard 2:35
All right, folks, so get ready for that. It’s nice to have that advance warning because if you have been had an employee making that lesser amount, now you’ll have to pay them overtime, right Dr. Friday? I mean that’s the way you do it.
Dr. Friday 2:48
Right. If you decide you don’t want to do the salary any longer, you will have to start making sure they clock in, clock out, track their hours. And, you know, which is one of the reasons we like the idea of salary for the individual sometimes especially for supervisors because sometimes they’ll work 38 hours, next week they may work 42, you know. And there’s some flexibility in there on the right type of person. But this is a big jump and many of them become hourly employees unless the employer is ready for that big jump.
John Haggard 3:18
There you go, folks, you’re listening to the Dr. Friday show. We are live from Nashville. And that means when you hear that word live, that means you can jump on the phone right now. Get all the tax advice you could possibly want. Dr. Friday would always tell you why give your money away to the IRS or make a mistake that might take you a couple of years to get it back, why not get it right the first time and done correctly the first time? So if you’ve got a question no matter what it is, maybe it’s child support or maybe it’s something that, you know, you haven’t paid taxes in the last five or 10 years or let’s say filed and you’re thinking oh boy, you know if I come out of the woodwork now they’re surely going to put me in jail. But anyway, whatever question it is, there are no dumb questions when it comes to your taxes. So the numbers to call right now 737 WWTN, 737-9986.
And by the way, if you have never been to the Dr. Friday website, www.drfriday.com, right now she has tax tips that are posted there and actually runs tax tips one-minute quick advice that you hear weekdays on this station. But if you don’t get a chance and you’re too busy, you can also go on the website. And we’re going to hit some of those questions today some of the most common ones that folks ask and you can get all the answers there as well. Once again the phone numbers to call now’s the time to jump on the phones we always find they get very busy because. you know, tax questions are sometimes not all that simple. You can’t just answer them in 15 seconds or so. So get on the phone 737-WWTN, 737-9986. We didn’t get to this one though the other week Dr. Friday and this one can be something that folks want to know about. You know someone is in the unfortunate situation of a divorce, in the middle of a divorce. And there are IRAs, you know IRAs, anytime you’re cashing those in or doing whatever, there are some tax consequences. Are there some tips or you know, some quick advice that you would give on handling IRAs in a divorce?
Dr. Friday 5:20
Absolutely. The first thing I would do is to make sure that if there is a choice between a Roth IRA, or what we refer to as a standard IRA. A standard IRA, we defer the taxes and we don’t have to pay the taxes till we take the money out. A Roth IRA taxes have already been paid. So if there’s a choice, whoever keeps that is going to have tax-free money. So make sure whoever is your attorney that they’re looking at the entire package. Second thing, if you get a settlement from your spouse be at him or her, the IRA is taxable money. Now if you get it through a divorce, there is sometimes no penalty. There is a possibility of not if you buy a first time home for $10,000. Little things like that. But if you decide, “you know what I’m going to take the hundred thousand my husband gave me and I’m going to go buy a house!” That does happen.
And I’m going to go pay cash for the house and not pay tax on the hundred thousand dollars. Good old Uncle Sam gonna come back and put a nice little lien against that home that you had tax-free. So just keep in mind that if that money is sent to you, you must pay taxes on it. So don’t just go and invest it because you’re thinking, “Well, I need money to get on my feet, I’m gonna have to re-establish myself, I’ve got children I have to… doesn’t make a difference. The IRS still says that it is taxable money. So when you’re making that settlement, make sure your attorney is looking at what is going to be something you can live off with now and how much you have. It’s very important. I have a price three cases I can think of in the last year that came in that situation where they took their retirement that the husband had paid out of the settlement and they’re all in IRS issues at this point.
John Haggard 6:57
There you go, folks, the advice is here. Now’s the time to get it. Listen to the radio or call 737 WWTN, 737-9986. We’re only here until 3. That means T-51 minutes to go. Don’t put it off get on the phones now. So let’s go and bring Dave on to the Dr. Friday show. Dave, you’re speaking with Dr. Friday.
Yes. Hello. I have lived out of state for a long time. I retired in California get a small pension. I’m back in Tennessee working full time. How do I inform the IRS I’m now a resident of Tennessee?
Dr. Friday 7:35
As long as you have lived here six months and one day and you file your taxes. You’ll file it as a full year, then you will have. That if you did live in California though, or any less than 30 days during that time period, you will still pay a state income tax. They don’t abide by federal law. So just keep in mind, you have to live here pretty much the full year or at least 11 months not to pay a state income tax to California, but the Fed, as soon as you file your taxes, your address would be updated. You can also file an address update with the IRS if you wanted to do it sooner than filing your tax returns.
Ok. So I would say a state tax on a pension from California?
Dr. Friday 8:17
Theoretically, yes. California doesn’t have an exclusion for pension-like some states. So if the income is high enough, I don’t know how much it is. But since it’s California and the cost of living would be a little different, it could become taxable. Yes.
All right. Thank you.
Dr. Friday 8:33
John Haggard 8:33
I appreciate your phone call. Here’s another question that folks asked about and looking at the show notes here, Dr. Friday. It says the IRS is simplified per diems for lodging meals and incidentals are going up. What does that mean, exactly?
Dr. Friday 8:48
So the IRS, if you go to irs.gov, and you want to see what the per diem is for a specific city, or if you’re an over the road truck driver and you’re self-employed. Now, keep in mind, they simplified it in one way by not allowing employees to take per diem. The other way they did it was that they’ve actually put out a new set of per diem numbers on the IRS website. So if your boss or your company provides you a per diem per city when you travel and they will reimburse for it, that’s where you can find how much those rates are. But employees on W-2s can no longer for at least the next five years take per diem on their tax return or the 2106. Only the self-employed can still comply with that.
John Haggard 9:32
So that means the employees are losing out on something?
Dr. Friday 9:36
John Haggard 9:37
They are losing…
Dr. Friday 9:38
Yeah, well, I mean, many employers allowed the employees to take it off on their tax return and that was the benefit for doing it. They did not have a reimbursement plan set up at work unless your employer sets up a reimbursement plan and they reimburse you for the per diem and then that has to show up on your W two etc, etc. It is not a legitimate deduction any longer.
John Haggard 9:59
Wow! They’ve lost that the deduction. That could be worth a couple hundred bucks…
Dr. Friday 10:03
$40,000 from the truck drivers that live on the road, yep.
John Haggard 10:06
Wow. Wow. All right back to the phone lines we go. Let’s bring Penny onto the Dr. Friday Show. Hi, Penny.
Hi. I have a question. My mother in law passed away two years ago my husband is the executor of her estate. There is about $30,000 sitting in the checking account that we have not been able to disperse to the family. Because the IRS has sent a letter saying that she failed to sign her 2015 tax return. And we have sent all the documentation because she is deceased. So we have waited for over a year and a half to hear something. And my question is, what happens if he goes ahead and distributes this money and then the IRS comes back and says, “Well you owe something or she owes something.” Will they come after the executive?
Dr. Friday 11:17
Yes, the executor has the responsibility. He cannot distribute that money. Knowing at this point he has knowledge that there could be doesn’t know she owes money, but there could be an IRS issue. He needs to make an appointment with you that go downtown Nashville. If you live in this area, if you live somewhere else, Memphis, whatever. Go ahead and make an appointment with the tax advocate’s office. He needs to bring his documents and he needs to find out they’ll open a case for him. They can get in there and handle and close that faster than anyone. So he needs to get a tax advocate and you can Google it or call my office on Monday. I’d be more than glad to give them the phone number, depending on where he’s at and go ahead and start the paperwork. It’s called a 911 form and he needs to file one of those get them involved because they can help him resolve that.
Okay, she had an accountant. Can he do that?
Dr. Friday 12:08
No, probably not because the power of attorney probably expired at the time of her passing. Your husband has the executorship of the estate now.
Okay. All right. Thank you.
Dr. Friday 12:19
John Haggard 12:20
Alright. Thanks, penny. Folks, you’re listening to the Dr. Friday show we’re live from Nashville. By the way if you are ever outside the listening area of this radio station, if you have that smartphone and you download the I hearts app and search WWTN, you can listen to any program on this radio station, the doctor Friday program here or anybody else 24 hours a day, seven days a week. Now we do this t minus because we want you to realize an hour goes by very very quickly. So I’m going to tell you, T-44 minutes. Now’s the time to get the tax advice right now but you got to call this number 737 WWTN, 737-9986. John Haggard in the studio, Dr. Friday on the telephone with all the tax answers and advice for you and your phone calls. All next here on Supertalk 99.7 WTN.
Alighty! Welcome back everybody it’s segment number two of the Dr. Friday show. Live from America’s Music City John Haggard in the studio, but Dr. Friday right here on the telephone giving you the answers to all of your tax questions. The number to call if you’re new to Nashville or new to the area, here it is 737WWTN, 737-9986. Now is the time to call. So back to the phone lines, we go. Let’s bring Ed on to the Dr. Friday show. Hi, Ed!
Hi! How are you doing?
Dr. Friday 13:46
Great, how are you?
Dr. Friday 13:51
What can I do for you, Ed?
Okay. I work for Metropolitan Government and retired in 2010. And they call me back, work part-time for about five and a half years. And I just recently retired again. And my question is I went to the Social Security office and asked them if they could update my Social Security. And they told me that, that they automatically check it every couple of years and then they would automatically be updated at some point in time. And I was just… this sounds terrible. I was wondering if you had any opinion on it or knew about it.
Dr. Friday 14:33
Now, and that’s pretty much the truth. They will periodically recheck it to see if you have any additional income. But the likely news is, it will have a minor effect because I doubt you we’re making as much money when you get back to work part-time than what you may have already made in the prior 10 years that they took the highest 10 years of your, your collective life right? 40 quarters for 10 years. So it may not have made it different because just because your work doesn’t mean you’ve increased your Social Security. They take the highest 10 years that you’ve earned money. And this may have been it, but I’m just assuming that because they wanted you back part-time, it probably wasn’t going to be your highest part of 10 years.
Okay, well, actually, when I went back I went into a different category and they charged income tax and everything on Social Security.
Dr. Friday 15:26
Oh, yeah, I mean, no matter what if you’re if you’re collecting social security and you’re 85 years old, and you decided to go, I mean not pertaining yourself but if you go to work and you’re even if you’re collecting they will always make you still pay into Social Security and federal withholding. That does not change but I’m just saying it may not increase any of your Social Security benefits when you go collect them or if you’re on them, I’m just that’s all I meant is that it may not have been enough to offset your already collectible amount because they base your social security on your highest 10 years of your working life.
Okay. Well, I sure appreciate it. Thank you.
Dr. Friday 16:01
No worries. Thanks.
John Haggard 16:03
Alright, I appreciate the phone call. T-37 minutes as we count it down. Now’s the time to get on the phones get the answers to your tax questions. 737WWTN, 737-9986. Dr. Friday here with the answers. Back to the show notes, Dr. Friday. One of the almost Surefire ways to get the IRS to look at you. Now, we go pull that return and take a closer look. Folks, listen to this. The service continues to I Returns that report large real estate losses. Can you tell us about that, Dr. Friday?
Dr. Friday 16:40
Well, the fact is right now we’re in a pretty good market area. So when people say that they’ve taken a large loss on real estate, in some cases, not every case I have people that lose money, but in some cases, they’ve either sold the real estate to a family member. So in that case, it disallows losses because they say you’re selling it at a loss for the purpose of giving them an advantage, or you can’t justify the loss. So it just one of those things. It’s kind of like if you are Schedule C filer, miles can be a big trigger for an audit. I have found that the IRS does do some masking based on your profession, but real estate professionals for example, often the ones that get audited, the first thing the IRS asks them to prove is their miles. So you know, if you’re keeping miles logged and you’re able to justify it’s no big deal. But if you’ve kind of guessed and said, “Oh, you know what, I think I’ll just say 38,000 always kept it around that number. Nothing changed.” Then you probably in trouble at some point because you probably wouldn’t have no idea how to back into 38,000 miles in a year.
John Haggard 17:51
Simple enough. So keep good records. Would you recommend, you know those these apps out there, I guess you can press go and stop and it will record your mileage for you?
Dr. Friday 18:02
Yes I am I actually suggest with my clients Mileage IQ. I’m not an advocate one way or the other it’s one I use. It does work, it’s pretty simple. Whenever I’m on a business trip I can market business otherwise I just put personal on everything. I don’t do a ton of miles nowadays but that would be something that especially real estate professionals, people that are really taking miles because you’re using your personal car and anyone that says that they use 100% of their personal vehicle for business is already good. I can always tell you the feed. If you had to go to the grocery store, you had to go out to dinner sometime for personal reasons. You went to the movies, you brought clothes, so there are personal miles no matter what. And then you’ve got to be very careful as an entrepreneur even though you are your own business. Some of your miles may be considered by the IRS as community miles. So if you are, I’ve covered this many times on my show but again, if you are a person that your boss is expects you to be at a certain location… Mine for example. My office is in Brentwood. Even though I have a home office, my office where I see clients is in Brentwood. So when I leave my house and go to Brentwood which is not deductible miles even though I have a home office, it is commuting because my business hours start seeing clients when I’m in my office. So if I leave my office to the bank, that would be a business deduction, but not to see my clients.
John Haggard 19:27
All right back to the phone lines. We go. Let’s bring Ron on to the Dr. Friday show. Hi, Ron.
Dr. Friday 19:35
My question is my wife died in February. Do I still claim her as a dependent on my income tax? We did collect two Social Security checks.
Dr. Friday 19:47
Sorry about your loss and the answer would be yes. You are married in the tax law until the last day of the year. So you would still file as married for 2019 tax. Yes, sir.
Okay. That’s all I needed Thank you.
Dr. Friday 20:01
John Haggard 20:02
And back to the phone lines again we go to. Let’s see, let’s bring Frankie on. Frankie. you’re on the air with Dr. Friday.
Thank you, this is me. Dr. Friday, can you tell me how much taxes I will have to pay. I’m 86 years old, I draw $1725 a month retirement, and $2025 Social Security. I have nothing coming out. No taxes. I have no deductions. Nothing.
What will my taxes be?
Dr. Friday 20:40
Now let’s see here that looks like you’re going to be somewhere. So you said 1725 in pension, right?
Dr. Friday 20:50
$1718. Sorry, close. Okay, so that’s about 20,000… and then you in your Social Security. So are you single or married?
I’m single, 86 years old.
Dr. Friday 21:00
Yeah, so you’re going to basically a 13. So say you are going to owe taxes. You will be on the 12% tax bracket, I would say it’s probably going to be somewhere around $1200 to $1500 dollars if I was ballparking it. But you will have some taxes due to that combination.
Well, that sounds great because I’ve been paying $5,000 and $6,000 not just I worked until last year.
Dr. Friday 21:27
Okay, okay. I was like, not on that income, you haven’t. But yes, your other year, additional income probably made all the everything else taxable, but you won’t have to pay 100% tax probably, well, 85% of your Social Security can become taxable. And if you withdrawing it and working, it was putting you in a higher tax bracket. Now that you’re living off your pension, and your Social Security, you’ll find that your taxes have come way down.
Thank you so much. You are a sweetheart. Thank you.
Dr. Friday 21:56
Thanks Frankie. Okay, bye bye.
John Haggard 21:58
2:27 pm right now. Dr. Friday all the time. Supertalk 99.7 WTN. Let’s bring Robert on to the Dr. Friday show. Hi, Robert.
Hey, Doc Friday, I’ve got a really quick question. We own a business. I’ve got a friend of mine and we owned a lawn care company. We’ve been doing it for five years, but we’ve been doing our taxes ourselves. And obviously we, you know, we pay every year. But I made a suggestion to my business partner to get an accountant or a tax professional and go through a company and then I didn’t know if when they charge us because they obviously well for working. But are they going to be able to take their services as a deduction that year or the next year?
Dr. Friday 22:46
Next year, the year which you paid them. And since we don’t do the taxes till the following year of any given time, it would be for the next year because you didn’t pay them for that year.
Okay, would you suggest actually doing that going with a tax accountant?
Dr. Friday 23:01
Well, I think let me put it this way. I think every business owner, in my opinion, you can’t be an expert at everything and taxes and business is something that really does require someone at least knows what’s your industry, what can you be taking? If nothing else, get a second opinion has someone review your taxes. Find out if there has been anything that’s been left on the table. Get the confidence that hey, you know what, we’ve been doing fine. We’re very basic. We don’t take a lot of it’s, you know, we’re straightforward, blah, blah, blah, maybe there isn’t. But if you have left something on the table, you really want to know that. So my suggestion was great, bring the last two or three years into a tax person. One that does I know our firm does it, but there are other ones probably in your area, but get someone to get a second opinion. Find out if you’re doing a good job. And if you are awesome, then you wouldn’t have to change but if there’s something you’re missing, you want to know that now not 10 years later, when you can’t make a change or getting money back. You can only go back three years to get a refund.
Right. Okay, thank you.
Dr. Friday 23:55
John Haggard 23:56
All right, folks, you’re listening to the Dr. Friday show. We’re live from Nashville. John haggard in the studio, bet you recognize Dr. Friday there with all the advice. And before we go to break, Dr. Friday, we always like to, at least I do, brag on you because I know you won’t brag on yourself, but I’m going to. And so I want to just talk to very quickly there may be somebody out there that owes you know, maybe like $500,000 or maybe they owe a million dollars, or could oh just you know, $24,000 or whatever. But you have had a number of clients one owed a million dollars. And you got that settled for somewhere about 100,000 and we say that if it sounds too good to be true, it usually is. But you’ve also had situations where somebody might have owed $20,000 and wound up paying $1200. So I guess the question is, this time of the year you hear these radio and TV commercials about all these people are gonna, you know, represent you for the IRS we go and get your money and you know, you’re not gonna have to pay anything or pay very little. How do you do it is are there tricks or like, what is it? How do you take a guy that owes a million down to about $100,000?
Dr. Friday 25:01
So in his case, it was that he hadn’t filed all of his tax returns, the IRS went ahead and done assessments. So the first thing we had to do was get him into compliance, then we had to get him paying quarterly so that the IRS knew that this guy was back on track. And then we were able to make a negotiation with him based on the fact that he didn’t have a ton of assets. Still, end up with a nice sized bill, but based on assets and explain. So really depends, and I mean, yes, there are a lot of people out there that will turn around and say straight out, “Oh, we can help you! Start paying us $500 a month, give us $2,500 down or $5,000 down and over the next eight months, we’re going to help you.” They don’t even know what they need to help you to do. Nine times out of 10 they’ve already given you that number before they pulled your transcripts told you if you have any compliance even got you to fill out a financial statement to know if there’s even a possibility the IRS can actually get the money from you. So be careful when you go to these places. It sounds so nice. They’re pretty good at the delaying and stalling, but then they also cost you money. I mean, if you owe the government and there’s no way of actually doing anything, if you want to play the game and delay, that’s one thing. But if you really want to get resolution, having someone stall for eight months is just going to cost you another 25% of what you owe possibly. So get the right person, get a good opinion and make sure that they’re not just putting you on this generic checkoff list because their job is to sell a product which is a weakness tax resolution.
John Haggard 26:28
There you have it, folks. There are scammers out there and you just heard it right there. You’re listening to the Dr. Friday show live from Nashville. John Haggard in the studio with Dr. Friday on the telephone, and it’s T- 27 minutes to go the shows half done for the day. Now’s the time to jump on the phones and get the answers to your tax questions. What’s the number? 737WWTN, 737-9986 Call now back after this on Supertalk. 99.7 WTN.
And now we go to part three of the Dr.Friday show this Saturday Supertalk 99.7 WTN. Dr. Friday on the phone with all the tax answers for you. And we will count it down for you again T-39 minutes and counting. So call 737 WWTN, 737-9986. What are you going to get? Free tax advice but you gotta call now. Back to the show notes Dr. Friday. You know it’s probably surprising, well, not to you but to some folks maybe about the deductions that people are entitled it to but don’t take and one of the things that we noticed on your website – by the way, folks, if you have not been to the Dr. Friday website, you will see tax tips right there the actual transcript the print out of what Dr. Friday says and her 60 second, one minute tax tips that aired on this radio station this time of the year during the weeks. But one of them is about claiming your daycare. What are the rules about claiming daycare, in terms of being able to actually take a deduction or and there are some parts of that, that you can’t take a deduction for?
Dr. Friday 28:09
Right? The first thing you have to have is both husband and wife has to actually be working. So if you’re a married couple, and maybe mom just wants a baby or daughter or somebody in daycare, because they’re doing a lot of other good, good things are helping out doing. But if they don’t have an actual job, or dad that should say, then that’s not going to be a tax deduction, even if it’s a necessity. So that would be one thing, then if you’re both working, you do need to have someone so if you have your mom or your grandmother, watching the kids, you do have to 1099 them. You do have to, you know, send documents showing that you did pay them to actually claim that as a deduction. So sometimes, you know, Mom will take care of the kids and maybe reimburse you for her time. There’s nothing actually wrong with that. But if you’re going to claim it on your tax return, you do have to 1099 mom for that service. So you might want to see if that’s something beneficial. The last thing is it’s very minimal of what you get. So you’re allowed to claim up to $5,000, I believe, for the children. And you’re going to get, I’m sorry, I think it’s $2500 per child, and you get $250 credits on your tax return. So it’s a fairly minimal and if you’ve got a child in a Montessori or Goddard schools or whatever, daycare, you know, obviously, you’re gonna be spending a lot more than what you’re going to get in tax benefits.
John Haggard 29:34
All right, also from the drfriday.com website. If you look up there, you’ll see this question, can I claim a tax deduction for newspapers subscription?
Dr. Friday 29:45
Yeah, that’s a great question. And if you are an entrepreneur or business owner, LLC Corporation, and if that newspaper is something that you would need to have, I don’t know, maybe consider you are we talk about real estate agents quite often, but Your real estate agent, maybe you have to have that newspaper. So you can see either listings or something that is going to turn around and is a generate sales income or give you a benefit somehow through your business, then it would be a legitimate tax deduction, all dues, and subscriptions. But if you are, I don’t know if you’re a nurse and you’re buying the Wall Street Journal, because you want to stay informed. Well, that would not be a tax deduction.
John Haggard 30:28
All right, got it. You know, in this time of the year, a lot of people are thinking about charitable contributions, and there are limits on that and have been and sometimes you’re raised or lowered or whatever. So what is what’s the current tax law about that, at least for this year that we’re going to be filing for charitable contributions?
Dr. Friday 30:45
So you can take up to 60% of your taxable income. So again, if you have $100,000 income, taxable income and you give $60,000 to your church, and would all be deductible. Now, here’s something it’s kind of cool. Maybe, for some reason, you had a large charitable deduction, because maybe you had some stock or something else that was appreciated, and you decided to donate to your church because that way, you didn’t have to pay capital gains on it. So you ended up with this very large contribution because your income is in there, I had a gentleman that had similar to that, and he gave a million dollars to the church. Now that I mean, you know, this is what he wanted to do. And every year we just nickel it down, and he’s got up to 20 years to use it which you will at his income, but it is something that will rollover. So if it happens in one year, you can’t use all of it in one year, you’re not going to lose it. So just keep in mind. But the other side of that is if you’re a married couple under the age of 65, you have to itemize before charitable contributions come in which is $24,400 or if you’re single person $12,200 in 2019. So you may not be able to take your itemization if that is something that, you know, your charitable contributions because the standard deduction is higher than your itemizing.
John Haggard 32:07
All right, folks, get all the tax advice. Anything you need to know Dr. Friday, by the way, if you’d like her phone number to reach out to her, it’s 615-367-0819. And the website, www.drfriday.com, lots of great information there. And if you want to email Dr. Friday, it’s firstname.lastname@example.org. Now, one of the things you might have heard about Dr. Friday and we want to put the perception to rest because some people say well, why would I want to call her if she’s an enrolled agent with the Internal Revenue Service? And when you hear that phrase, enrolled agent with the Internal Revenue Service, you would think she works for the Internal Revenue Service. But no, she really doesn’t.
It’s, just one of those kinds of phrases that makes you wonder. So Dr. Friday if you would, you know, our perception on enrolled agent with the Internal Revenue Service, if I put it in plain language for folks like me, it’s basically that if you do have a problem with the IRS and they’ve been bugging you with, as Dr. Friday says those precious love letters, the idea being that you can have a person represent you, that being Dr. Friday, much like you would have a person representing you like an attorney in a court of law. And she can do all the speaking on your behalf. She can do all the negotiating on your behalf, and get all that work done for you. And you don’t have to deal personally with the IRS. Did I get that exactly right Dr. Friday?
Dr. Friday 33:35
You’re spot on. Yes, I am. The IRS has tested me and licensed me to represent taxpayers in the situation of – if there’s an issue or something like that. I can step up and help them. So everybody’s entitled to representation kind of like the courts.
John Haggard 33:52
All right, simple enough. Now there have been some changes and rules for the unfortunate things that happen when people get divorced. And one Is this question comes in is alimony no longer a deduction? Or can you still deduct part of it or some of it?
Dr. Friday 34:07
Nope. So if you are, if you divorced after December of 2017? 18? Goodness, time flies when we’re having fun. 17, I believe. You will, you are no longer able to write off your alimony and it’s no longer taxable income. Now, this does not affect anybody that was divorced prior to this. So if you have been claiming your alimony, you’ve been divorced for 10 years, that is still in play. None of this has to do with brand new divorces and alimony received during that time.
John Haggard 34:42
All right, now there’s another number out there that’s kind of similar to a social security number, and it’s called an ITIN number which may be expiring this year. What is an ITIN number?
Dr. Friday 34:56
So an ITIN number is for individuals that may live in this country but maybe they were not born here so they don’t have the ability to get a social security number. It is normally somebody maybe they’ve come in under an educational visa or something and then they want to get some work. So that it replaces a social security number for individuals that are here working but that are not US citizens.
John Haggard 35:21
Got it just as simple as that folks T-15 minutes ago. We are going into the final segment number four of the Dr. Friday Show. So if you’ve been sitting around saying well, I’ll call her in a minute, now’s the time to jump on the phone and get that advice at 737-WWTN, 737-9986. John Haggard in the studio, the Dr. Friday on the telephone with the answers to your questions. All next on Supertalk 99.7 WTN.
And the rock and roll continues on the Dr. Friday Show super talk. 99.7 WTN. John Haggard in the studio here behind the microphone but Dr. Friday is on the phone with all of the tax answers. So we go into the final nine minutes. So if you’ve got a quick question, now’s the time to call 737 WWTN, 737-9986. And you know this one thing too, Dr. Friday. They were been folks, as you said earlier, it’s a hot, hot real estate market here in the Nashville metro area. And can you give us a quick primer on folks who are either enjoying a game which hopefully they are as opposed to a loss from the sale of their primary home? What should we be looking out for tax-wise?
Dr. Friday 36:39
Well, that’s a great question because this is always something I get to give a little good news on, which is not always the case in my world. Um, if you have a primary home and you’re single, and let’s say you’ve paid $200,000 and you’re going to sell it for $400,000, that would be and you’ve lived in the home two out of five years, that would be a zero tax situation. Meaning you would not have to pay tax on that additional capital gains that you received on at home. It doubles if you’re married. So if you’re married couple, you would have an exclusion up to $500,000 to be able to use towards, you know, obviously. And it’s not one that you have to go and buy another home for this exclusion that one time was on the tax law that is not the current tax law. So again, if you sell a home, and it’s $500,000 above your original purchase, or 250, if you’re single, it is free money to you to do whatever you want. You do not have to reinvest it into real estate.
John Haggard 37:39
Interesting, because for years the law was you had to, right?
Dr. Friday 37:44
Yes, the law used to be prior to this one was you had two years to repurchase another piece of real estate to keep the exclusion. Soyou had to go buy more real estate to do it. Now. It is your money. It is an exclusion and you’re able to do what you want with. So it’s a wonderful exclusion? Many people take advantage of.
John Haggard 38:04
There you go back to the phone lines. Let’s bring Jerry on to the doctor Friday show. Hi, Jerry.
Dr. Friday 38:12
What can I do for you, Jerry?
I was on social security and working at the same time and now I have made too much money? What would they do to me?
Dr. Friday 38:24
They’re going to make you pay back $1 for every $2 you earned over. And for those that aren’t sure what you’re talking about, if you are under the age of your full retirement which, for many people right now, it’s 66, 66.5, something like that. And you go on to Social Security, you can get those security but you’re only are able to earn like $17,400, and half of that is your Social Security. So if he’s earned too much, they will basically turn around and say, “You know what, you made $5,000 too much so we’re going to charge you $2500 or $1 for every $2 and you’re going to have to write them a check or they will take it from your Social Security benefits.
Okay. What if I stop my social security? When will they take the money out, when I started back? Or will it like, does it accrue when you’re not drawing it?
Dr. Friday 39:20
No, what they’ll do is turn around and start collecting you as if it was, if it was an IRS debt, they will collect through your payroll or through your refunds if you have some with the IRS. They’ll request you to start a payment plan. They’ll collect just as if it was the IRS not being paid.
Okay. All right. Thank you.
Dr. Friday 39:42
No worries, mate. Thanks.
John Haggard 39:43
All right. Back to the phone lines, we go. Diane, you’re on the air with Dr. Friday.
Yes, hi, Dr. Friday, I was calling. If you have a rental house, and it’s completely paid for, and can you borrow against that to purchase another piece of property?
Dr. Friday 40:03
Absolutely. The IRS basically does, I mean, they prefer the property to be the loan against the other. But the fact is a lot of people do that. So as long as you can prove that the money that you borrowed against the first property is a rental property anyways, went to the other. Because you’re going to want to take the interest off of the new property, probably not the old property. That’s my opinion. You can do it, either way, it’s tied to it. So you can do it one way or the other. But the bottom line is you want that interest to be tax-deductible, which you can absolutely you can borrow against one property to purchase another.
How much of a percentage of the rental property will they loan you?
Dr. Friday 40:45
Normally it’s 60 to 70%.
Okay, what’s that variance there? What’s, you know…
Dr. Friday 40:53
Well, I’m not an expert in part of its going to be – I don’t do real estate mortgages, but I do know I own a couple piece of real estate and, in my case, they’ll give me 70% of the loan to value. But I do have some clients if they have multiples or if they you know, depending on the type of rental property it is mine are usually commercial. You know if they… I have heard people say that they’ve been able to get 60% but I’ve only ever seen 70% of loan to value
Loan to value. Okay, thank you so much.
Dr. Friday 41:23
John Haggard 41:24
Appreciate the phone call. 2:53pm, Dr. Friday all the time Supertalk 99.7 WTN. And this does happen Dr. Friday to some folks. They say, “Look, you know, I moved and I sent a letter to the IRS and now I’ve just realized it’s about a year and a half or two later and I didn’t get that correspondence and so forth. Am I liable for what they’re telling me I owe!”
Dr. Friday 41:50
And the answer, of course, is yes. Of course, the IRS says it is not their job to find you it is your job to tell where you’re at. So if you move and you do not notify the IRS and and there’s been court cases on this, where the IRS may have received a letter from you with a new address but it wasn’t on an address change or on a tax return form and so you soon well I wrote a letter to the IRS and told them I changed my address and it was on all my correspondence, but they never updated it. That is still your fault. So you either have to file an address change form I don’t know the number of right the second or you have to file a tax return with the correct address on it one way or the other is the only way the IRS will take it make that your new address. So it is the taxpayers responsibility to contact the IRS. It is not the IRS responsibility to find you.
John Haggard 42:48
You know you have always said on your show that if you are going to contact the IRS anything the mail always send it certified return receipt, right?
Dr. Friday 43:00
John Haggard 43:01
So do you run into a situation like this where somebody said where the IRS says, “Well, okay, you’ve got a certified return receipt document here but what you said, or receipt rather from the US post office, but what you had the envelope or whatever, it’s not there, you said it’s there’s not there.” How did how do you reconcile that kind of a situation?
Dr. Friday 43:19
And I will tell you. 99% of the time, the IRS will, if you can send them a receipt showing it was sent on time, somehow they lost it. They will normally give you a waiver for penalties for late filing or something like that. Or an extension if you had to mail the extension in and you have proof that the extension was mailed on time, then normally they will give you consideration on that because you made the attempt and you’ve got documentation showing the attempt was made. There’s no way of you knowing what ended up on someone’s desk and you know, they don’t try to hold you to that.
So that’s why I use certified or registered letters because at least you have an argument or a discussion. So many people just put it in the mail and all the local the stamp on it. And the fact is at that point, you’ve left yourself open, because the government does not have to. I mean, they don’t know. I mean, right. I mean, how many people come into the office every single day to the Internal Revenue services swear they nailed it, they mailed it, they mailed it, you know,. There has to be some documentation proving it otherwise, they just can’t just take your word for it.
John Haggard 44:30
All right, about one minute to go. Just in case we’re confused still. The Obamacare thing and the tax and if you don’t this and that. What’s the latest in all of that?
Dr. Friday 44:38
It is not something we have to worry about for 2019 for individual mandates. Employers still have to comply but individuals that may not have health insurance in 2019 will find that there is no penalty. That being said if you are in the marketplace, and you still have a 1095-A if the government is still supplementing part of your insurance that will still need to be provided and still accounted for by on your tax return to make sure that you are still reporting the right amount of income for what they’re subsidizing for your insurance payments.
John Haggard 45:16
Alright folks, you heard it all the tax advice and you can get a lot more of that tax advice if you like. And I’m going to give you the contact number and information for Dr. Friday the tax lady, and the website. By the way, if you have not been there, valuable resources for you, www.drfriday.com. You’ll see the tax tips there and the transcripts so you can read it for yourself. If you’d like to phone number to Dr. Friday, here it is 615-367-0819 and the email address for Dr. Friday is email@example.com. That’s firstname.lastname@example.org. Did you know that 1000 years from today you will be alive? And the question is, where will you be alive? Did you know that many people are just 12 inches away from heaven? That’s the distance from their head to their heart. They believe in Jesus Christ in their mind, but they have never accepted him in their heart. And that’s the big deal right there. The biggest decision you will ever make in your life is where you are going to spend eternity and you get to choose where that’s the good news. If you don’t know if you’re going to go to heaven, I can help you settle it right now. Just say after me, Jesus, I invite you into my heart. I proclaim you my Lord and Savior. Forgive me of my sins. That’s it. God willing. We’ll see you next week. Everybody on the Doctor Friday Show, Supertalk. 99.7 WTN.