Welcome to the Dr. Friday Radio Show! In this episode, we have tax expert Dr. Friday take on the latest tax updates, answer the caller’s questions, and talk over the following topics:
- Dr. Friday’s Advice for People Who Have a Lien
- Do I Pay Taxes on Social Security Disability Income?
- Dr. Friday’s Explains Quarterly Estimated Payments.
- How Do I Pay Back Deferred Social Security tax?
- What Is the New Tax Code for 2022?
- October 15, 2022, Is the Tax Deadline for Individuals for 2021
- Do Day Traders Pay Capital Gains Tax?
- What You Need To Know About IRS Workers
- Married Filing Separately Explained
and much more!
Transcript
Announcer 0:00
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.
John Haggard 0:28
Live from America’s Music City. 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 known in these parts of America including Nashville, Tennessee, the Dr. Friday and right there she is. How are you Dr. Friday?
Dr. Friday 0:51
That is a heck of an introduction. I don’t get that kind of introductions when I started my show. You just said something like, “the doctors in the house, start calling!” You know, not all that. You’re always so much better at that. I love it, John, love it.
John Haggard 1:05
It’s so much fun to bring the truth to the radio audience. I gotta tell you. And speaking of truth, oh, my goodness, right here the midterms coming up in what is it a couple of weeks or three weeks or something like that. But there’s also another truth, Dr. Friday, and we know that you have it or what’s available. I think the big thing on people’s minds with the way the economy is the you know, we’re in a recession, it’s just a question of how bad is it?
John Haggard 1:33
You know, it’s either depression for some people, which is really bad or a recession for some that is not quite as bad. But here’s the deal, I think what we’re all wondering is what is going to happen if you have any forecast on this or sort of, you know, you’re in the business. So this is what you live in.
John Haggard 1:52
Is there any type of projection what’s going to happen over all to the tax code, how we’re going to get hurt, or, you know, what’s in any, any direction there you can give us at this point?
Dr. Friday 2:05
Well, I think there’s a couple of things we have to keep our eyes open for. As we know, in the Inflation Reduction Act, they did do a few small tax changes. But in the last two years, there’s been quite a few tax acts that have come in effect that has a small amount of change. But I think the biggest was in the last one was the 85,000 new employees to the Internal Revenue Service, depending on which way you heard it, armed and ready to come collect.
Dr. Friday 2:35
But to be honest with you, A, I don’t I don’t see that as a major issue or problem. What I do see is in the last, I mean, I’ve been doing this 20 plus years, let’s just do that 20 plus years. And you know, many times in the earlier days, we didn’t have a problem reaching the IRS, we had resolution in the same day. We were able to reach a revenue person and find out about collections or deals. The last two to three years, we’ve waited on hold for three, four or five hours get hung up on couldn’t get their computers to work, but there’s just not been any way of really getting resolution.
Dr. Friday 3:12
And that’s what people hire me to do. You know, I mean, they want to have the ability to have somebody represent them and actually get resolution to their tax issue. And so it’d be nice to have more people answering the phones, more people even in collections. But I do think on the other hand, if you’ve been one of those lucky people that maybe, you know, kind of just filed taxes, hoping the numbers all added up, you know, the IRS has in the last, oh, I think since Obamacare. So that’s probably about the last six, seven years, they’ve been matching records.
Dr. Friday 3:45
So if you get a 1099 K, if you get 1099 R, the 1099 NEC’s or miscellaneous is or any type of income. Before sometimes people, they did things on PayPal, I mean, that’s a big one this year, John, to be quite honest, Venmo, PayPal, Stripe, all of those that are money exchange services, where a lot of times people would send money to a friend or most of my renters pay me through Venmo.
Dr. Friday 4:12
And that never reported. Now as of 2022, it starts reporting at the end of this year, you’re gonna get a 1099 for all the income that ran through that 1099 K that ran through Pay Pal, or Venmo. And if it’s not business income, or if you’ve been one of those people lucky enough to maybe have more of a little business on the side, maybe done some side work a handyman and everyone paid you through PayPal and Venmo so no one knew, guess what?
Dr. Friday 4:40
This year your business is going to be reported. And if it wasn’t business income, we’re going to have to be able to justify why it wasn’t claimed, “My parents paid it to me. I got a friend that gave it to me.” You’re going to have to be able to identify it. So really, I think that’s going to be the number one thing that’s going to change for 2022 overall. There’s gonna be some other little things people are going to be, but I can’t tell you how many people clean out their garage and use Pay Pal, or they have a garage sale and accept Venmo. And that is going to unless there’s a way around it from what I have, that is going to change for the taxes on 2022. And I think that’s going to create some interesting conversations with the IRS.
Dr. Friday 4:40
That’s very interesting. Folks, you see what you learn here, most people hadn’t really heard that. Or they maybe they did, or maybe they didn’t. But that’s just one example of how the IRS is going to raise revenue. Now, if you’ve been, you know, if you’ve been sort of cheating there, and you know, not reporting income, it should be no surprise to you, at some point, somebody’s gonna come get you,
John Haggard 5:48
Might have taken them a long time to figure that out. But is there any, Dr. Friday, like let’s, let’s say, for example, that the Republicans take majority in both houses, from what you know, in terms of trying to pass new tax code? I guess that would mean that, you know, Congress has to pass it. So if the Republicans get in there in two weeks, maybe that puts the brakes on everything, what’s your thought there?
Dr. Friday 6:12
My hope is, is that they extend the Trump tax cuts, because obviously Biden has from day one said, “I’m going to overturn all of those tax cuts, etc, etc,” which are pretty drastic, because right now we’re in the 12% tax bracket, it would go to 15, 22 to 25, 28 to 32. You know, I mean, so if you’re in the 28% tax bracket, you’d be paying almost 8% higher than what you are today. So I’m hoping that they grandfather a man because they do expire in 2025. And we will go back up to Reagan’s rates or the rates prior, which is the 15% tax.
Dr. Friday 6:50
And so it’d be nice to have that as a longer term situation, then, especially since we haven’t had the recovery that Trump was working on through this administration. I mean, let’s be honest, we’re in, you can call it a recession or depression, like you said, depending on how much it’s affecting your own personal household. But if you’re a business owner, at this point, you’re doing evaluations, you’re figuring out what’s the cost, because the cost of labor, the cost of taxes, paper, tech software, computers, everything has went up. And then the last four years.
Dr. Friday 7:26
Example, the software we use, and the last four years has doubled. So you know, our prices haven’t doubled. But that’s, you know, big cost of doing our business, cost of insurance has doubled. So, you know, we have to pass I don’t care what anyone says. But as a business owner, we add all that up, and we sit there and we say, “Okay, this is what we need to be billing our clients to cover our costs of business.” And you know, in four years, I haven’t doubled my fees. Most people can’t afford to do that.
Dr. Friday 7:55
But it is still crazy, cost wise, and I don’t see it going down. I mean, gas prices. I mean, you know, going back up again, so it’s gonna be thank goodness, I don’t have to build that into my situation, but it is built into delivery costs and things. So I think people need to brace themselves for my opinion, if we don’t win the house in the Senate, I mean, their version of reducing the cost of living is to keep spending money.
Dr. Friday 8:23
I don’t know who’s graduated from where to get their economics degrees to figure this out. But it it doesn’t work that way. And I think they need to rethink their mathematics as far as the government because we are spending way too much money and there’s no way of paying it back without increasing taxes.
John Haggard 8:41
And then one other question, before we get into the common questions that this time of the year people want to know the answer to, and we’re gonna have them for you right here. If the tax cuts, the Trump tax cuts are valid through 2025, and let’s just say it’s the other way around and the Democrats retain control, they could countermand or take out, if you will, the 2025, right? And say, “Well, no, we’re not gonna wait till 2025 We’re gonna change the rules now.” That could happen too, right?
Dr. Friday 9:12
Right. Biden has had that on the table under several of his suggestions, let’s put it that way, since he hasn’t to get very far. But yes, he definitely, he did manage to increase corporate taxes for the very high, successful corporations, which affects most of our 401 K’s. So that was a real, not, in my opinion, not a win win. But yes, I mean, he would love to increase corporate tax across the board. He’s come out and said it.
Dr. Friday 9:40
He’d love to increase taxes and what he claims to be the rich, but you know, I mean, according to the IRS, a rich person is anyone making $75,000 individually married couples making 150 That is what they consider wealthy now I know he brought up the whole $400,000 married couples. But, you know, you and I’ve been around long enough John to understand if they get a tax cut in today, and it doesn’t just for inflation and that none of these do. So today, you know, we’re all making 75,000-100,000. Five or ten years from now those same people are now making 120,000-150,000. And now they’re being taxed at that new rate. So they just wait for the economy to catch up to its own self, especially with this double digit inflation we’re hitting. I mean, the cost of everything’s going up including wages.
John Haggard 10:32
There you have it, folks. So you know, seems to me just kind of economics, how much money do I want to give out of my pocket? I don’t care what party it is, who’s going to take the money from you? And if you don’t want anybody taking more of your money… so you’re saying, Dr. Friday, that already part of that tax increase that he wanted on corporations is that to Build Better inflation deal, or whatever they call that thing?
Dr. Friday 10:52
Yes, that’s the Build Back Better. Yes. Yeah, the Build Back Better the inflation note that passed earlier in this year, it’s only for corporations that are over 10 billion, which I realized that’s a higher, bigger, but keep in mind, those companies are also the ones that we use to build our future earnings, because that’s where we buy our stock for our 401 K’s or IRAs or steps or whatever, if you if you do mutual funds, anything like that, we invest into Microsoft, we invest into Tesla and all these different companies.
Dr. Friday 11:24
So we want them to succeed. And they what they did is eliminate the section 179 for companies at that level. So they have a minimum no matter what they have to pay a minimum of 15% tax on their profits, they cannot take r&d, they can’t take anything, which is usually reused to help improve or increase their revenue in the future. It’s a tax deduction today, and they put that money back into their companies. Well, they’ve eliminated that to help pay some of the tax bill that they’re using to give money to Ukraine and different different things.
Dr. Friday 11:59
Part of it was supposed to be possibly to help with this whole. I don’t know paying people’s college bills, which you’ll hear me say more than once, that is not something I’m a fan of, you signed your name to a contract, you should pay that contract. That’s exactly what you have promised to do. If it doesn’t work out that way, then you have choices, there are ways that you can go bankrupt, you can you know, but to have the government pay your your college bill is and that means you and I and all the listeners were paying that college bill, and yet many of my clients have already paid for their kids college or their own college. You know, how far back do you go? Who gets credit for it? You know, that just doesn’t make sense.
John Haggard 12:38
Interesting thing, folks. We just like to give you sort of the the headwinds of what’s out there so that you can plan better about what’s going to come up so we’re going to get into the planning coming up next, you’re listening to the Dr. Friday show. We’re live from Nashville.
John Haggard 12:54
When you hear that word live, that’s that key trigger in your life to pick up the phones. We can answer any question you want to you know, just whatever the answer is a question would come on right here 615-737-WWTN and for Dr. Friday, by the way, she is an enrolled agent with the Internal Revenue Service and somebody says I don’t want to be talking to IRS.
John Haggard 13:15
Listen to what I’m saying here. An enrolled agents does not, can I repeat that? Does not work for or is compensated by the Internal Revenue Service. It’s just the same thing as an attorney who would represent you in a court of law if someone were suing you or if you were suing somebody else. So we’ll be talking about that a little bit too. She is a federally authorized tax practitioner, okay?
John Haggard 13:46
She’s a technical expertise in taxation, she’s empowered by the US Department of Treasury that makes it official to represent you, you sign a little form. You don’t ever have to talk to the IRS. Again, if you don’t want to. Dr. Friday, we’ll take care of all that type of stuff. It’s like again, hiring an attorney, the attorney speaks for you in court. Dr. Friday speaks to you in front of the IRS so that you do not have to deal with them if you’re in some trouble, or whatever the case may be.
John Haggard 14:15
Okay. When we come back that phone number again, especially for all the new folks who’ve moved you know, moved in from California. We’re seeing Chicago we’re seeing New York, we’re seeing even Philadelphia, this is the program every Saturday from 2pm-3pm you get all the advice you could possibly want anything at all to do with taxes Dr. Friday right here and take your calls. And that number again 615-737-WTN, 615-737-9986.
John Haggard 14:43
Call now because we’ve only got t minus 43 minutes to go time flies most people wait until the last of the program and guess what? You don’t get an answer that you need right now. So, call now. Once again, John Haggard in the broadcast studio along with Dr. Friday and you are on Super Talk 997 WTN.
John Haggard 15:06
And welcome back into segments number two, the Dr. Friday show. We’re live from America’s Music City ladies and gentlemen, Dr. Friday an enrolled agent with the Internal Revenue Service. And if you just joined us no, she does not work for the IRS. Remember that word EA you will sometimes hear Enrolled Agent with the Internal Revenue Service means that she can represent you before the IRS like an attorney would. It’s ery important for you to understand that because some people say, “I don’t want to talk to the IRS.” Well, that’s what Dr. Friday can do for you.
John Haggard 15:38
Let’s go to Pleasantview, ladies and gentlemen. Let’s bring Michelle on to the Dr. Friday show. Michelle, what’s your question for Dr. Friday? Go ahead. Michelle, are you there?
Caller 15:51
Oh, I’m sorry. Hi, Dr. Friday. I have a question about Social Security Disability. My husband was awarded Social Security Disability late in December of 2021. And they reimbursed him for the past for 2021. But he didn’t receive the check until January of this year. So I’m trying to find out if one if social security disability is taxable? And two is that reimbursed, money that they gave him for 2021 is going to show up on 2022’s income?
Dr. Friday 16:37
Okay, so here’s what you have. You have two options. If you do what’s called married filing separately for the year in which this happened, his income as long as he hasn’t earned more than $5, he will be able to file a zero, you won’t file at all, you could file married filing separately and not pick up his income, maybe a direction to go just for that year.
Dr. Friday 16:58
But his money will be taxable, because and I’m guessing that you work, I don’t know. So if you don’t have a job, and you’re both living off of his disability, than none of it is taxable, but if you are still working and he has become disabled, and so he’s now got his disability, then if you file married filing jointly, up to 85% of what he received can be taxable. And they will show it all on his social security statement for 2022 both years of Social Security received. So 21 and 22 will be combined.
Dr. Friday 17:29
You can also go back and amend 2021 and put it on that now you cannot remove him you can’t go married filing separately if you file married jointly, but you can go married, filing separately and 2022 because you haven’t filed that tax return. So you have two options. Amend 2021. Well, actually three. Two, married filing separately or three you file as you always have and up to 85% of what he received will become taxable.
Caller 17:58
Okay, well, what if I did work part time?
Caller 18:02
Right. So if you work part time, you’re gonna file and you you have two choices. Again, you file married filing separately, you just file yourself married filing separately, and you do not have to pick up his income. Did he work at all in 2022?
Caller 18:17
No, he did not.
Dr. Friday 18:19
Okay, so he’s not required by law because all he has is the social security disability, he does not need to file. So if you file married filing separately, you can put report your income, his social security will not be required to be filed upon. That may be the best thing for the year of 2022. Now, I don’t know every year, that may not be their best option, you’ll have to talk to a tax person. But I would suggest two options going back amending 2021, seeing it that or 2022. It really depends on how much money you’ve earned. And what you mean.
Dr. Friday 18:50
Because you’ve probably claimed all year on your W 2 married in zero. And now I’m telling you to file married filing separately, which is basically making you single and zero. So you may not have paid in enough withholding. But will the difference be his social security being taxed, you may pay a lot more than just the difference on your own wages that’s dependent again, you might need to talk to a tax person, but you have some options is what I guess I want you to think about. It’s not like, “Okay, well, we’ve always filed married and joint so we’ll have to do that and bite the bullet.” You do have some options at 2022 that may be different than your normal options is all I guess I’m trying to say if I’m not confusing you. Sorry.
Caller 19:28
No, no, that’s fine. Okay, so this year, we will probably do the married filing separate. I’m still concerned about 2021 If he will have to pay a penalty.
Caller 19:42
No. No. So what happens is since he didn’t get the money until 2022, they’ll send all of it on one statement for the year 2022. So you’ll have two years worth of Social Security being reported in that year. They allow us to go back into the years that the first security was posted be recorded, and we can amend those tax years. But I’m thinking you’re not going to want to do that. You don’t have to. It’s an it’s an option.
Caller 20:07
So again, I’m thinking your option is going to be when you get a statement that says he received, let’s say, 50,000, instead of his normal 25, because he’s got two years instead of one, he’ll not file anything. You’ll file married filing separately, as long as he hasn’t earned more than $5 in the year, he didn’t work at all. So that should qualify you guys to do what you want on that situation.
Caller 20:31
Perfect. Thank you so much. I appreciate your help.
Dr. Friday 20:35
Sure. Thanks, sweetie.
John Haggard 20:36
All right, Michelle, appreciate your phone call. Folks, if you’ve got a question that can be complicated with taxes, now is the time to call because we’re sitting down here at T minus 32 minutes and counting that means jump on the phone now get an answer 615-737-WWTN at 615-737-9986. And this one warning to you that we’re going to ask Dr. Friday to comment on starting about now, if not already. And certainly going through March.
John Haggard 21:08
You’re going to be hearing and reading and viewing these, “1800-1866-1877-1888 tax resolution now we’re going to do this and you know, get you your money” and all this other kinds of stuff. But we need some cash down and you know, some monthly payments and all this. And then if some of those companies are legitimate, but we do know of one, I can’t remember the name of it. But two, three, four, or five years ago time flies big national company, I think you know that the FTC or some government agency, put them out of business because they weren’t doing what they were supposed to do. What would be the advice, Dr. Friday, that you would give in that area?
Dr. Friday 21:52
Right. Well, my first advice is, if this is something that you’re going to be paying and dealing with, you need someone that you can actually speak to not not somebody, I thought it was funny and Dr. Electric shows I heard you talking about there are people that take the phone calls and then they’re paid for every appointment that they’ve made. It same thing happens in this industry, they have people that call everybody that has a lien against them, and they get paid so much money if they can sell you a package.
Dr. Friday 22:21
But the problem is those individuals are not EAS are CPAs or attorneys, they are just basically have a list that their salespeople, period. They’re out to make a commission, they may not be able to do anything, I can’t tell you how many people walk in my door that have already tried one of those national organization, there’s even a couple of advertise on the radio here that they’ve tried. And I’m sure there are people that are very successful with it. But when they’re walking in my door, they’re basically saying, “I’ve already paid six, seven, or $15,000. And the reason I’m coming to you is because I still have no resolution, the government’s going to come in, they’ve got a lien against me, or they put a levee against my house.”
Dr. Friday 23:03
And you know, you’re sitting there going, “I don’t know what I’m supposed to do.” And I think what’s the best answer to that is, Jon, you need a human being to talk to that, you know, you can sit down, we can run through the information, we’re able to tell you the truth of what you have, hey, you’ve got more equity in your home, the government isn’t going to give you an offer and compromise. I don’t care what anyone tells you. You’ve got a 401k you have cash in the bank, you’ve got an inheritance, it’s on the books, there are things that’s going to mark you as being able to pay, even if you don’t want to hear those words.
Dr. Friday 23:38
And you’ve got to have someone that’s going to tell you how the IRS is going to treat you what options we have. Sure, we can delay it, we can put stalls out there, there are ways of doing some of it. But in the big picture, it’s not going to happen. And do you really want to be paying someone half of what you owe in some cases? You know, let’s just get a payment plan going and let’s make it happen. Let’s get them off your back.
John Haggard 24:00
That’s why folks, you listen to the Dr. Friday show. And again, for all those of you who have moved into Nashville and listening to the program today, first time. And don’t know Dr. Friday, over 20 years in this business as she told you a little bit earlier on the program, you need to get to know her and here’s the big thing, folks. You need somebody that you can actually see, I don’t know about you, but when it comes to money on stuff like that.
John Haggard 24:24
If you’re talking to somebody in New York or Chicago or some kind of area like that. Where are you gonna go find them if you need them? You know, Dr. Friday, you could actually knock on her front door and say, “Hey!” She’s right here, she’s live. And she’s real. So if you’ve got a tax resolution issue before you call one of those, you know, 800 and six sixes and sevens, sevens and eights and maybe they’ll have 1800 or 899 this year. I don’t know.
John Haggard 24:48
But anyway, you need to call Dr. Friday. She’s got some stories and we’ll tell you one here very quickly. Everybody’s case is different. Not everybody’s the same, but she did have a client a few years back, get a hold of this, folks. This person owed over $1 million to the IRS, not a typo, not a typo. I said one with an M, like Mary $1 million. And Dr. Friday, you got that settled for about what?
Dr. Friday 25:18
A little over 100,000.
John Haggard 25:21
A little over a 100,000, folks, I mean, 10%. Now there are ways to do that. And if we have time today, we can talk about that a little bit. But you need to get an expert in the business you see, because this is what she does. All of us or a lot of us have a job that we do. And we like to think we know a lot about what we do, but you can’t know about everything.
John Haggard 25:40
I’m always a big believer as you hire people, you know a lot more about it than you do instead of trying to do it yourself and end up getting in a real mess. All right, when we come back on the Dr. Friday show, we’ve got Beth in Columbia, Teresa in Nashville and Laura in Nashville, and we’ll take your phone calls. Anything at all to do with tax. here’s the number to call 615-737-WWTN, 615-737-9986. My suggestion to you call now. T minus 28 minutes. We’ll be out of here in about 28 minutes. So get an answer today so that you can sleep tonight. John Haggard in the broadcast studio with Dr. Friday the tax lady on Supertalk 997 WTN.
John Haggard 26:32
Right, everybody, welcome into segment number three of four today, the Dr. Friday show from America’s Music City. Yes, indeed. John haggard in the broadcast studio, but the true tax experts is Dr. Friday, and she’s here as well. Let’s go to Columbia as promised, bring Beth onto the Dr. Friday show. Beth, what is your question for Dr. Friday, you are on the air now.
Caller 26:57
Yes, ma’am. I listened to your show all of the time. And I enjoy it and wanted to let you know that. My question is, I have been on Social Security Disability for approximately 22 years. And my husband has been on it ten. We take our tax forms to tax lady have been for the past 10 years, and we have not had to pay in any taxes. She has since retired. Do we need to continue to take that in to check to see if we need to pay taxes?
Dr. Friday 27:32
Can I ask, do you have pensions or IRAs or any other income other than that?
Caller 27:40
We do not.
Dr. Friday 27:42
Then no. By law, anybody that is living solely off Social Security, social security disability, as long as you have no other income. And even if you had an income of like a W2 for like $12,000 or whatever, you would still not be required by law to file a tax return for an individual or married couple. So you don’t need, I mean, there’s no reason for spending money or anything else. I don’t know if she charges you if you go to one of those organizations, either way, you are not required unless something changes where you start selling something or generate some income from another source. Other than that, then by law, you are not required to file at all. There’s really no reason for you to keep doing it.
Caller 28:26
Okay, thank you. And I appreciate your time.
Dr. Friday 28:30
Thanks Beth, I appreciate it. Have a good day.
John Haggard 28:32
Aalready. Back to the phone lines we go. Let’s go to Laura in Nashville. Laura, you are on the Dr. Friday show, you’re on the air. What’s your question? Hey there, Laura.
Caller 28:46
Oh, hi. There it cut off the name. I didn’t know who you’re talking to. Sorry. I am beginning to learn more about day trading. And one of the things that I am curious about is taxation. I know it’s gonna be short term capital gains. But my question is, is there a good software to use for keeping track of my transactions? Do I need to file quarterly, annually? so forth and so on? Thank you.
Dr. Friday 29:16
No worries. That’s a great question. Sorry, software unfortunately, I’m probably outside that. I mean, I do have some day traders. Most of them seem to be working right through TD Ameritrade or Fidelity or whoever their brokerage house is. They then turn in all of the basics. If you’re buying puts or any of those you can well far you’re going into some of this.
Dr. Friday 29:38
I would definitely suggest doing quarterly. I do realize that yours is a little bit more ups and downs than maybe a typical business owner is because one period you can make a million dollars the next period you can lose 2 million. But theoretically by law you have to base estimates are really based on the year before. So the IRS code says that in 2021, you may you owe the IRS $20,000. In the next year, you have to make for equal payments, or in other words, you know, $5,000 four times to be in compliance.
Dr. Friday 30:14
So, the problem with that is, is one year, you can make money one way or you can use lose money. Well, that’s what we like to do. So whatever the requirement is, for example, $20,000, make sure that’s made. And then we set aside so much based on our gains and losses that we can configure it every quarter or month. So if we owe another 50,000, there’s no penalty, because we made the four equal payments based on the 21 tax return, anytime that comes back and bites us is when you had a really bad year. And you’re, and then the next year, you have a really good year, and then the next year have a really bad year. So the high years, you can end up paying $50,000.
Dr. Friday 30:53
And you didn’t need to pay that much. Sometimes we have to adjust those. But all in all, that’s what the tax law says. And I would definitely try. Because the last thing you have to do is come up with, you know, a big chunk of money and pay penalties when not necessary. So this is your first year as a day trader, is that correct? I haven’t have not begun yet. I’m going to start a course later on this fall. And this is one of the questions I wanted to get clarified. So you’re definitely going to want to be doing it on a quarterly basis.
Dr. Friday 31:24
But you may not, the first year you do it, you may be keeping it in a tax account in your bank, more than sending it off to the IRS because I’m not a big fan. I don’t want the IRS sitting on $50,000 if I only had to give them 20 because then I either waiting for a refund rolling it over. I mean, you know, but I do want to pay in enough where I don’t pay penalties. I don’t want to have to pay a penalty, I’m sitting on money that I’m not earning any interest on. You may be able to make money if you’re a good day trader, you know, but for most of us, it’s sitting in the bank anyways.
Dr. Friday 31:56
And we’re getting point zero 1% or something in interest. So why is it given the government and deal with that, but yeah, so but great, great plan and good thinking ahead. Because the first thing you want to really do any business owner listening or starting a business, you need to set up a tax account. And all you know, and based on your in your case is a little different because a business owner usually draws a salary and takes up certain amounts of money, you may be flipping that money over and over for making profits. You know, because day trading just continuously and you have to make sure I’m sure they’ll explain it to you.
Dr. Friday 32:29
But there’s something called a wash sale. And if you’re buying and selling the same stock all the time, washed losses are not acceptable. And therefore you may think you’ve lost money, but you’re paying tax because you can’t take your wash loss in the same year it happened. So just so that we could talk more about once you’re into it, but there are some, like every business, there are some loopholes that you could end up you know, thinking “Oh, I lost this much money.”
Dr. Friday 32:56
And I had a gentleman who is day trading and 2020 during the COVID thing made about $1.2 million in profits, and 600,000 of it was wash sale. So he actually ended up with 1.800 he had to pay tax on and then of course the wash will come out but not that year. So anyways, it’s can be painful if you’re very successful.
Caller 33:21
Thank you so much.
Dr. Friday 33:23
No problem. Thanks for calling.
John Haggard 33:25
All right, ladies and gentlemen, let’s go back to Nashville again and bring Theresa on to the Dr. Friday show. Teresa we appreciate your patience there. And you were on the air now. What’s your question for Dr. Friday, Teresa?
Caller 33:39
Oh, hi there. Thank you for taking my call. I was wondering about the quarterly estimated payments as well. Think one was due in September. But if you miss the due day, can you just go ahead and and pay anyway just anytime?
Dr. Friday 34:00
Absolutely. If for some reason something comes up and you’re just not able to or you are unable to make it as soon as possible is you can close 915 was the due date. But if today you hear about it and you’re like, “Oh my gosh, I forgot” then make it today or send it out today. So it posts because that was because they penalize US based on how long between the periods by the basically day and 30 day cycle so better to get it in earlier than wait till the next one which is January 15 or there abouts. And then then you have 90 day late instead of maybe a 30 day late.
Caller 34:34
Okay, alright. That’s what I was wondering. Thank you so much. Thank you.
John Haggard 34:41
All right, Teresa. Appreciate your listening to the Dr. Friday show on Super Talk 997 WTN this note folks about the IRS and you’re gonna wanna listen to this, okay? The IRS simply enforces the code that the legislature passes as law and they enforce that law, we wouldn’t want to imply on this program that the IRS are bad people. I mean, they’re bad people in any organization. But by far and large, I think Dr. Friday would say the same thing. Irish are good people. They’re people like you and me. That’s just what they have to do.
John Haggard 35:11
But you have to understand that they just enforced the law. Now, where does the law come from? That comes from who you elect. Who you elect. So if you don’t like a particular IRS law, or whatever they are, or somebody who may pass a laws on an IRS law, but the law that they enforce and you don’t like that then vote for people who won’t write that kind of legislation? Right, Dr. Friday?
Dr. Friday 35:19
That’s exactly correct. Yeah, I’d like to reiterate. I’ve got very good friends that work for the Internal Revenue Service, more than one of them has helped me settling cases and doing things so no, they’re doing their job. Their job is not one that many of us want to do, maybe. But yes, it is Congress that tells them what is the law that they have to enforce. It’s just enforcement.
John Haggard 36:06
There you go, folks. So again, you know credit where credit is due because sometimes they get a really bad rap. And so Dr. Friday, just set the record straight. Alright, that’s the end of the third segment, only one to go. I told you that it’s going to fly by and boom, bam, it just about has t minus 14 minutes. This is the last call now is the time to call if you want to get an answer to your tax question, no matter how complicated pick up the phone and dial it press it now. 615-737-WWTN, that’s 615-737-9986. When we come back, right after the break, we’ll take your phone calls. John Haggard in the broadcast studio along with the tax lady. Dr. Friday, you are on Super Talk 997 WTN.
John Haggard 36:59
Alrighty, folks, here we go. Segment number for the final segment today for the Dr. Friday show. John Haggard in the broadcast studio with the tax lady, Dr. Friday back to the phone lines we go. Let’s go to Nashville, and bring Justin on to the Dr. Friday show. Justin, what question have you got there for us?
Caller 37:17
Hi, I was wondering if you’re someone who chooses not to file taxes every year and you wanted to get back on track with your taxes, how would you go about doing that?
Dr. Friday 37:27
I would get power of attorney, I would pull all your transcripts get all your taxes, we have to go back six years to be in compliance. So we would go back six years. And then once we do that, file those and then if you owe money set up either a payment plan offer and compromise, not collectible, and then every year make sure you file from that point forward so you stay in compliance. It isn’t really overly complicated.
Dr. Friday 37:49
And most individuals if you’re self employed, it’s a little more tricky because you have a lot of 1090 nines and coming up with expenses are a little bit more difficult. But as an individual, if your W 2 are very small, self employed person, we can get those done really quickly and get you into compliance. It set up a payment plan and you’d be back on track with no time.
Caller 38:09
Awesome. Thank you very much for that.
Dr. Friday 38:12
Bo worries. Thanks for calling.
John Haggard 38:14
All right, Justin. Appreciate the phone call to Fayetteville. Let’s bring Joe on to the Dr. Friday show. Joe, what question have you got for Dr. Friday, you’re on the air now. Go ahead there, Joe, you’re on the air? What would you like to ask?
Caller 38:29
Okay, I’m a sole proprietor. I’ve got a installment amount do statement from the IRS for deferred payments of employers share of Social Security tax. I didn’t know I deferred it. What’s the deal with that?
Dr. Friday 38:52
Joe, you’re not the first to tell me that. I don’t know who filed taxes. I will tell you in my office, I kind of refused to do that. Because in 2020, you are allowed to defer the installments of self employment tax. I just thought that was kicking the can down the aisle and just no way of knowing in the future if we’re going to have any more money and we had today but forever filed your taxes elected to do that.
Dr. Friday 39:16
And then they set you up in this installment which is do 12/31 of this year, you have to make the second payment of that. So, you know, if you’re not sure I would go back to my 2020 tax return. And I believe it’s on the schedule too. Don’t hold me to that I have to look at that not in front of a computer but go back and it should say that you know there should be a zero under your self employment tax where it’s usually says self employment. It will say zero and normally as you know being a self employed individual every year you face plates, self employment tax. So if you’re not sure did you make the first installment because that could be a problem too. Did you pay it? The first one was due 12/31 of 2021.
Caller 40:05
Right. They paid for Security tax for December 31, 2021.
Dr. Friday 40:14
Okay, so how much do you owe in this one? I mean, is it same zero? Or do they say you have a balance due?
Caller 40:21
It says paid due December 31, 2022 is 209.
Dr. Friday 40:29
That’s interesting. Well, it means that you either paid either you got a love letter and versus calling or doing anything. You went ahead just wrote a check, because you were like, “Okay, the government says I owe it. And I’m paying it.” Because it says zero due.
Caller 40:43
Okay, I have not paid this one yet. Since it’s not due till 31st of this year.
Dr. Friday 40:49
You did pay the other one, though. Right? The one in 2021? Because it says balance due is zero?
Caller 40:56
Not that I know of.
Dr. Friday 40:57
You know, yeah, that’d be questioned, I’d probably go back to the IRS and find out because we should have, theoretically, you were able to pay 50% in 2021 and the other 50% in 2022. I didn’t know there was another deferral. But if there is, and they may have kicked it down to 2023 on you. But I’ve had several cases come in where they’re like, “I didn’t know why am I paying this now? I thought I paid my taxes. I answered your question.” If you look at your 2020 tax return or talk to whoever prepares your taxes and have them explain if it was deferred or not, I guess it’s the easiest answer on that one. Did I do your taxes?
Caller 41:39
No, I do them myself. No, I just do my hand. Oh, I’ve got a bunch of forms that I had to file. Would that be on Schedule 2 of 2020 tax?
Dr. Friday 42:03
Right. And you would have also had the SEreport that you would have had to file and it would be showing zero, if you filed it SE on the you know, that follows through from the Schedule C.
Caller 42:14
Right. Okay. All right. Thank you.
John Haggard 42:19
All right, Joe. We appreciate the phone call. Now, folks, we’re gonna get to that question that we were talking about a little bit earlier. And that is really the first thing people want to know, Dr. Friday, and especially after today’s show is do I need to file taxes? Or maybe a better question is, when do I don’t need to?
Dr. Friday 42:36
And that’s a great question. Because there are many times and I will tell you, I have people that call me every year. And they’ll go through what they have in pensions and in Social Security and everything and they’ll say, “Do I need to come in this year Dr. Friday?” And you know, we make that determination. But it is a fairly simple thing. If you are a single individual and you make less than let’s just play it safe, you make less than 20, oh sorry, single individual make less than $12,000, you do not have to file unless you have got that through self employment.
Dr. Friday 43:09
So if you have a 1099, or a 1099 K, you still do but if you have a W 2 $12,000 or less, and there’s nothing in box two, there’s absolutely no reason to file. If you only live off of Social Security, social security disability, or VA benefits, you do not need to file. If you’re married, and you’re filing jointly and your combined income is less than $25,000, you do not need to file. If you’re filing married filing separately. This is the tricky one. Because a lot of people think, “Well, if I’m married filing separately than I would have to as long as I made less than 12,000, I don’t have to file.” Nope. Wrong answer.
Dr. Friday 43:51
$5 married filing separately. If you’ve made $5 or more you have to file because the problem is they don’t want to know what your spouse made. And they have to add those together when it comes time to turn in the information. So that one’s a tricky one. And you want to make sure you use it correctly. And I say earn does not mean that that person is on Social Security. If they’re only on Social Security, VA or something like that, they do not need to file they have not earned $5 or more.
John Haggard 44:21
All right, simple enough, folks. What a great hour with Dr. Friday. It’s every Saturday from 2pm-3pm right here on Super Talk 997 WTN now some contact information for you if you want to get a hold of Dr. Friday.
John Haggard 44:34
First, let me give you the email address. It’s going to be friday@friday.com. And of course you can go to the website drfriday.com. Get a lot of information there. And you can reach her at 615-367-0819. That’s 615-367-0819.
John Haggard 44:53
Do you ever wonder what the term Thanksgiving really means? Well, Thanksgiving is really thanks giving. Thanks for the giving of eternal life in Heaven. The Jesus Christ offers all who believe in Him and who accept Him as their Lord and Savior.
John Haggard 45:11
Did you know that every time Jesus broke bread scripture says He gave thanks. He was teaching us that our daily provision comes from God not from money, power, fame, or other earthly possessions, you know, things that we want and all that. Everything we are, and everything we have, comes from him. 1 Thessalonians 5:18 in the Bible says, Give thanks in all circumstances, for this is God’s will for you in Christ Jesus.
John Haggard 45:36
Note that scripture says give thanks in, and not give thanks for. There are many circumstances in our life that we don’t want to give thanks for happening. So now you know the true meaning of Thanksgiving. If you’d like a guaranteed reservation in heaven, just pray this prayer, “Jesus, I invite you into my heart. I proclaim you my Lord and Savior. Forgive me of my sins.” If you just prayed that prayer, and that’s what you really meant in your heart. Welcome to the family.
John Haggard 46:07
And for anyone who needs prayer right now, here’s a website that you can go to. It’s called treasuretop.com That’s treasuretop.com. God willing, we’ll see you next week John Haggard saying until then for the Dr. Friday program on Super Talk 997 WTN.