Selling family property could bring unexpected taxes and higher Medicare premiums.
In this episode of the Dr. Friday Show, financial counselor and tax consultant Dr. Friday , from recent IRS updates to practical advice for taxpayers. She addresses several caller questions and provides valuable insights on various tax situations.
Topics covered:
Transcript:
No, no, no, she’s not a medical doctor, but she can sure 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 737-9986.
So here’s your host, financial counselor and tax consultant, Dr. Friday.
G’day, I’m Dr. Friday and the doctor is in the house.
And we got a couple things we’re going to want to really cover today, which sometimes
in phone lines are open, 615-737-9986, 615-737-9986.
So let’s start with the state of Tennessee, or I should say the Internal Revenue Service,
but the employee retention tax credit.
Many of you guys maybe applied for it.
There is a second chance for programs for people with improper claims.
They have until November 22nd to refile for those claims.
I’m going to put a little caveat out there.
We are in the midst of having several people that have come to my office that did go after
this employee retention and now they’re being audited.
I’m not going to say that you will be audited.
I’m not saying that I wasn’t a part of the original filing, so we’re just dealing with
the issue at this point.
But they will be auditing a large number of people that did get the employee retention
tax credit.
Some people got audited prior to, meaning the IRS found some issue and then they rejected
the claims.
Other people may have gotten the money and now the IRS is coming back and looking at
that information to see if it was properly done.
But if you did or should have received the employee retention tax credit, then you do
have until November 22nd to refile that claim if you were rejected or if you’re in the process
of still dealing with that.
The more important subject today is going to be the beneficial ownership information,
BOI, FinCEN, that’s the Treasury Financial Crime Enforcement Network.
They have passed a ruling, and this has been going on for a while.
When I started really looking into it, I’ll be honest, I didn’t hear a lot about this
until the 1st of 2024.
And that’s partly because that’s when it came into effect.
So basically, they have been working on this since October of 2022.
Actually I think when I read into it, it said in January of ’21, it was designed and set
up for targeting tax fraud, terrorism, money laundering by any U.S. foreign corporation
limited liability company, certain foreign corporations that report in the United States.
The FinCEN’s certainly information about the beneficial owners.
So what they’re looking for and what we must comply with as business owners that have corporations,
partnerships, LLCs, basically any organization that has to file something with the Secretary
of State.
That’s how they’re ruling it.
So mainly corporations and LLCs will be the big one.
So basically all members, owners, shareholders that own more than 25% and/or have a controlling
activity.
So if you only own 10%, but you are the treasurer that writes all the checks, they’re going
to consider you an active member.
Therefore, you are going to need to be, they refer to as a beneficial owner, but bottom
line is you will need to do some reporting on that.
The final ruling exempts certain companies, large operations with 20 or more full-time
employees, more than 5 million in sales.
Those are certain exclusions that do come along, but most of them because of the fact
that those larger companies have already had to do it through other sources.
So if you’ve never reported the owners other than on a tax return, you may want to consider
the fine on this if you don’t do it by, and this is for, let me backtrack.
So if you own a company and it was opened prior to January 1st, 2024, so anytime in
21, 22, like my company back in 1995, any of those companies you have until January
1st, 2025 to comply.
The steps are relatively simple and I won’t say they’re non-intrusive because they basically
require you to upload your driver’s license along with your date of birth or passport
to basically then set up a FinCEN ID.
So maybe you’re like myself where I have multiple companies and I invest in some other companies.
Therefore I would be required to do this multiple times on different entities.
But by setting myself up and getting a FinID or FinCEN ID, then you can put that ID number
in multiple times and then that way every ownership you have in every company that you
may be a part of is a very simple way of setting it up.
So if you are an investor in multiple entities or if you only have one company, you do need
to go in and set yourself up.
You need to set up your company and yourself so that way you don’t have to worry about
this being everything is done online.
Again the reason we’re pushing this because I’ve had probably six or seven conversations
this last week where people are like, “What is this?
We’ve just sent out notices to all of our companies saying, ‘Hey, we’re going to be
filing these things.
This is what we need.’
And again, what is this?”
And I know we’ve talked about it, but I want to make sure everyone understands because
this is going to become a major penalty situation.
It’s my knowledge of this.
There will not be waivers.
I don’t really know.
This is not an IRS situation.
This is something being done by the Treasury of Finance and basically Crime Division that
is handling this.
So you as a business owner have a responsibility.
If you own a corporation, an LLC or a version of where you have to be listed with the Secretary
of State in your state, then you need to go on and you can just Google BOI or F-I-N-C-E-N,
BOI whatever business beneficial owners information.
You can type any of those things in.
It’s going to come up.
It’s the Treasury website.
It’s not a hard one.
Like I said, it’s going to basically walk you through the process.
If you don’t take the time and do it immediately, then you are going to run into penalties.
Also, if you have any changes in your entity, let’s say that somebody sells out and then
you buy, you know, buy someone else comes in as a new partner, you sell your shares
or whatever.
Anytime that has, you only have 30 days to update this report.
Again, this is something that none of us in the last almost 30 years of doing all this,
I had no idea this existed.
Like I said, January of this year is when it kind of came to my knowledge.
And that was only because they were sending out these things saying, if you don’t do this
by January 1st, you’re going to end up with a $500 a day penalty.
And then if you opened a company now, currently those companies only have, I think it’s 60
or 90 days to do the reporting.
So if you open a company in January, you only had until April, you are not in compliance
if you haven’t done it.
I know a lot of attorney firms, even though that they’re doing the corporate setups, I
know many of them are not doing this.
There was a big conversation I had with someone recently about it and they basically said,
yeah, they, I mean, it’s not part of their process, even though it should be, if you’re
opening a company, this should now be part of the company’s process of making sure everything
is in compliance.
So again, you are going to want to make sure that everything is in, because if you make
a mistake, if you don’t know what you’re doing, or, you know, and if you’re not a US citizen,
it will accept passports.
It’s not something that you have to have.
They prefer driver’s license and the driver’s license has to be current.
It can’t be an expired driver’s license.
And then of course, you know, other alternatives is a passport if you don’t have a driver’s
license.
They did make this, this is a true enactment of Congress.
So we don’t have a lot of options.
Again, the final reporting ruling began January 1st, 2024.
Companies created a register before January 1st, 2024 will have until January 1st, 2025
for this initial reporting while reporting companies created or registered after January
1st, 2020, oh, we’ll have 30 days to do this.
So if you opened your company January, you only had until February 28th or whatever,
30 days from the date you open it to create your registration.
If you have not reported this, you need to do it ASAP.
You need to make sure that you are in compliance.
This is nothing to do with your tax returns or your state filing.
This is an additional filing done by FinCEN or the Treasury Financial Crime Enforcement
Network.
Very important guys.
I can’t say how many times I just wanted to make sure we covered that.
If you’ve got questions, if you run a company or you have a small business or I’m assuming
larger, bigger companies and like the ones on the stock market, I know do not have to
comply.
They’re already registered basically, but most of, none of my companies basically are
on the, are in the market like that.
They’re all small business owners and we all just basically run it through our normal system.
So if you have questions on that, you can certainly call the show 615-737-9986, 615-737-9986.
And if someone is actually, I will not say I’m an expert on this.
I have become more and more knowledgeable about it, but if I’m missing something, if
there’s something important that we need to make sure the listeners know, please feel
free to call in.
Again, I want to make sure that this is being in compliance because we were down to a few
months before this is going to start really hitting a lot of my clients besides the fact
that I really need to go back and make sure if you start a company in 2024, if you haven’t
done it, you need to do it ASAP.
Again, if you’ve got questions or you just want to join the show, 615-737-9986, 615-737-9986.
For some of you who have never heard me before, my name is Dr. Friday.
I am an enrolled agent licensed by the Internal Revenue Service to do taxes and representation.
So if you’ve got love letters, if you haven’t filed taxes in a number of years, or if you’re
just like, I don’t know where to start.
I don’t even know if I have IRS issues or if I don’t, where do I do?
Do I need to go back and file all 20 years I haven’t filed or is there something else
I can do?
I can answer those questions.
I can help you get it all resolved.
It may turn out like some of my clients that walk out the door and they’re like, yeah,
I left some money on the table, but I’m all caught up and now I’ve got my refunds for
the last three years, which is huge.
And you could be that way, or it could be that you have to make a payment plan.
Nothing’s going to be impossible or an offer in compromise.
And maybe that your tax bill is too big and you have to resolve it that way.
We can help you handle all of that.
All you have to do is call my office when you have a moment and we’ll set up a free
consultation to make sure that everything you need to know we can explain to you and
then see if we can help you move forward.
But for today, if you have a question or if you have a friend or just want to bring up
a topic, you can at 615-737-9986.
We’ll be right back with the Dr. Friday Show.
We are back live here in studio.
And if you want to join the show, you can very easily 615-737-9986, 615-737-9986.
Taking your calls, talking about my favorite subjects.
Well, actually mostly my favorite subject, taxes are my favorite subject, which we’re
going to convert to a little bit because we are getting closer and closer to the tax deadline
for those who filed extensions.
That’s right.
So September 15th for again, corporations, that’d be 1120S, 1065s.
Those are due on 9/15, that gives you 30 days enough time to go file your own personal taxes,
which are due on 10/15.
So if you have filed an extension, this is going to be your due dates.
Now I want to reiterate that that did not extend any money you may have had due.
So if you have a corporation and you owed money through the corporation, then that is
something that you should have paid.
Or if you’re a sole individual and you extended your taxes, you extended the paperwork.
You did not extend the money due.
So expect that if you owe money, you’re going to have penalties and interest.
It’s that simple.
Because I know a lot of times when people come in and we’re working on the taxes and
we think, okay, well we got close, but if we ended up with a situation where there was
money due, you are going to owe some penalties and interest.
Now if you’re a first time offender, you probably can get the penalties waived.
Anyone that tells you that interest can be waived is wrong.
The only time interest is waived is when they reduce the penalty and the interest that they
charge them that that would be reduced.
But all in all, interest is not a waivable situation.
So again, making sure that you’re estimating your taxes.
Now I have also people who have come in and say, well, I don’t actually really have to
pay quarterlies, right?
It’s just a choice.
It’s something I can choose to do, but it’s not something that I have to do.
Now why would any of us choose to want to pay quarterlies if we didn’t have to?
I mean, think about that.
I’d rather hold on to my money as long as possible and then just send them a big check
in April saying that the last day of April, if I file an extension, I can just send in
what I think I’m going to owe them one time.
Yeah, that’s not the real world and what you have to do, and there is penalties if you
do not pay quarterlies.
There’s 6% per, basically 5%, 0.5% per a month, 6% a year for not making proper quarterlies.
So some people say that’s enough.
I don’t need, you know, they just pay the penalty and they’re happy with it.
I prefer not to pay a dollar more to the IRS than I have to, penalty interest or anything
else.
So I do pay proper quarterlies.
Quarterlies being paid properly is basically taking whatever happened in 23 and I, whatever
that dollar amount do, since I am self-employed, I would take that money and divide it by four
and send in four equal payments so that I have paid in as much as I owed the year before.
And then if my year is better or worse, I may make adjustments, usually not until the
last one, which is January 15th of the next year.
Because again, I don’t know for sure what my year is going to be unless I’ve almost
got through it.
So usually come October, November, we have a good idea where we’re on target or if we’re
above or less.
That’s also a good time to make determinations.
Are you going to upgrade your computer system, buy a new tax software, do something that’s
going to actually count for a true good tax deduction, or are you just going to pay?
Because again, going and spending money isn’t saving you dollar for dollar as far as I’m
concerned.
If I go spend $10,000 and I’m in the 30% tax bracket, I’m going to save $3,000 in taxes
and I had to spend $10,000 to do that.
So if you’re truly counting your true money, it’d be better to give the government $3,000
and keep the other seven unless you need that.
For example, I can’t do taxes without tax software.
So buying it in the current year versus the beginning of the next year may be a determination.
And since my software is something that is every year updated and new, I write it all
off in one year.
You don’t need to amateurize something that is a one year period.
So you need to figure out in your numbers how you’re going to do it.
But yes, you must pay estimated taxes.
And this isn’t just for the self-employed.
I often bring that up because they’re usually the larger dollar amount.
But this is also for people maybe that are into investing, people that have rentals.
I have many people that have retired, but because they get their money in so many different
ways, they need to make estimates every quarter because otherwise they wouldn’t have enough
paid in.
So, you know, Social Security is basically 85% of that is taxable.
So you could either have taxes come out, but some people say it’s not as easy as you think
to get that set up.
And then of course, you’ve got IRAs and annuities and pensions and all these things that come
along.
And if you’re on the railroad, Social Security versus the regular Social Security, different
types of taxation.
So you really need to understand how all that works so that you can make sure you’re paying
in enough.
Now, I’m not asking you to go and pay in a lot extra.
I’ve got some people that I think way overpay every year, but they’re either so fearful
that they will underpay and the penalty will be ridiculous or they just, they estimate
themselves.
They don’t use the rule, whatever happened in 23, I’m going to pay for 24 and then 24.
If you have a good year, one year, you could only end up way overpaying.
But if every year you have to normally make quarterlies anyways, you can adjust the next
year and roll over that overpayment.
So that way you don’t have to worry about waiting for the money to come back and make
deposits again and things like that.
So it’s really just making sure that you have that information.
Also I want to bring up this last week, we had three cases of individuals getting love
letters from the IRS that says the IRS has changed their 2022 tax returns.
And almost every single one of them was because of stock portfolios.
So they didn’t know, they didn’t realize that they had sold stocks.
They didn’t even remember in one case that they even had a stock portfolio.
And then one of them, they had turned in two, but they didn’t really, they had three accounts
apparently.
So they had missed one of their portfolios.
Very important.
And so the IRS, obviously when they sent the love letter, sent it based on gross sales,
right?
So your sales were, they, even though it may tell them how much the cost of goods are on
these letters, they don’t take into account when they’re calculating the tax due.
That way they basically can terrify you that you owe money.
In most of the cases, there was a very small adjustment.
In one case, they actually got a bigger refund.
So it wasn’t necessarily the world’s worst situation, but make sure when you’re filing
your taxes or even in this case, when I, when they came in, we also went and looked at 2023.
And in one case, one of them had also missed that year as well.
And correcting it now versus waiting for the IRS to send them another love letter.
Because again, we get into that whole penalties and interest where you didn’t intend to do
this.
You, you didn’t mean to make the mistake.
And in some cases, the one person’s like, I didn’t even know I had it.
Actually they did, but you know, things happen, life gets busy and sometimes we forget.
And when that happens, you know, your best bet is to review the information.
I almost always do a worksheet or a minute return to find out how it truly would come
out because then on these love letters, they always say, well, if you agree, sign here.
And if you disagree, sign here.
And in most cases, especially on these, since the basis wasn’t reported, we didn’t agree
with their information.
We didn’t agree that this was correct.
So we were able to resubmit the information, waiting for them to deal with that and to
correct the information and then ask for forgiveness.
If you haven’t had a problem in the past, that’s always the wonderful thing, but you
can only really do that one time.
And then, or at least once every, let’s say 40 months or something like that.
And once every three to four years, you can ask for forgiveness, but they, they really
don’t like to, if, if you keep making the same mistake, obviously at that point, you
get your, or a repeat offender, um, and you’re creating more problems.
So just making sure that you are reporting everything, take a breath, stick back, go
back and look, double check with your financial planners.
Cause in this case, the one she had everything with one financial planner, but the problem
was they emailed everything and she didn’t see the email and it’s just a simple mistake.
And since it was a new account, there was no history of it in her taxes.
So when she was looking at what she’s supposed to have and all that, she didn’t have it because
it wasn’t in there at that time with what they were doing.
So it’s very important that you just take that time, make sure you know what you’re
doing, make sure you’ve got everything you need to, to balance things out and go from
where you’re at.
So if you need help with that, you can 615-367-0819, 615-367-0819 is the number for my office.
If you want to join the show today, 615-737-9986, 615-737-9986 is the number here in the studio.
So if you have a question concerning either working on your taxes, dealing with tax issues
or just trying to figure out what the best way to deal with a particular tax situation,
all you have to do is pick up the phone, call us here in the studio at 615-737-9986.
Let’s see if we can get John on really quick before the break.
Hey John.
Hello, how are you?
I am great.
How are you bud?
I’m doing good.
I’ve got a question about, I’ve got a piece of property that I’ve had for about 30 years.
Half of the property was given to me by a relative and the other half, it was dual ownership
when I got it.
The other half I bought the other relative’s half out for a very small amount of money.
So I’m considering selling that piece of property and just curious what the tax liability may
be on that.
So make sure I reiterate, you inherited it first and then you brought out the other family?
It was actually given to us.
The relative was still alive.
Oh.
All right, so that creates a little bit more.
So theoretically, if they were gifted to you or given to you, then the basis you had would
have been what they paid for it originally, which is never easy to find out.
At least the portion that you received and then whatever you paid for on the other side,
right?
That one we know what the basis is because you physically wrote a check for it or whatever
you did to pay off that other person.
But you’re going to need to try to find out how much that property was purchased that
back when whoever this person that gave it to you received it.
Either they inherited it or they purchased it.
They inherited it many, many years before that.
Yeah.
So unfortunately, you’re going to have to go back and find out if possible when that
happened.
And I don’t know if this person’s even around, but hopefully you have some maybe connection
because otherwise the IRS would say your basis is zero for what it was given to you.
But I don’t like zero, John.
So I’d do a little more legwork and find out when he or she inherited it.
You might be able to go back and look at property taxes, get something that we can use as a
government or official value of what it was worth at the time of inheritance.
So we have something to at least justify the numbers.
And if I am at zero and the property’s worth 500,000, what would my tax liability be on
that?
Safe bet would take 18%.
18%.
Okay, great.
Thank you very much.
All right, John.
Thanks.
All right, we’re going to take a quick break and we get back, we get some more of your
phone calls at 615-737-9986.
We’ll be right back with the Dr. Friday Show.
All righty, we are back here live in studio.
And if you want to join us, you can very easily pick up the phone 615-737-9986, 615-737-9986,
making your calls at, maybe you’re in the process of, maybe you’ve inherited something
or you’ve got some question about if you’re going to do conversion, how that can affect
not only your taxes, but your IRMA.
And so making sure that when you’re making some of these decisions, even like selling
that land, I don’t know the gentleman that had called in, but if you have a piece of
land and you’re already on Medicare, selling that piece of land will affect your IRMA if
it’s over the, what is it now?
I think it’s like a hundred thousand for a single and 200,000 for married.
Anything above that can affect your IRMA, which makes your Medicare more expensive.
So a lot of times when people are looking at taxes, they look at the federal taxes,
which is of course what I usually talk about.
But we do want to make sure that if you are 65 and older and on Medicare, any decisions
that you’re making concerning selling something, unless it’s your primary home, that will not
have an effect.
But rental properties, land, doing conversions, taking money out of forms of retirement, if
it’s enough, combined with your other income, again, if you have basically, I think a hundred
thousand for a single person, 200,000 for a married couple, anything above that will
affect your IRMA, which means you’re going to pay higher Medicare for the next year.
It almost feels like more than a year, but at least for 12 months.
And then once the new tax year rings around and you refile, they’ll base it on the new
tax return.
And, but you are penalized.
So making sure you understand when you’re making those decisions, because I know I have
a large number of, well, a number of clients, maybe not large, a number of clients that
really do try to work hard on trying to get their, their Roths converted.
So every year they make sure they do conversions and sometimes, you know, you’re saving taxes
to do it on a big spread.
And then sometimes it’s smarter to just bite the bullet and do it one time.
Cause then your IRMA is not effective versus doing your IRMA for multiple years.
Again, it’s not huge, not as much as it would probably cost in taxes and some other cases,
but it’s enough to make sure you have it in your consideration when you’re making these
decisions.
You know, if you are that same gentleman, I’m just using him as an example because he’s
the one that called so far today.
But if that same gentleman wanted to go buy another investment, let’s say he wanted to
go buy some rental real estate or a farm or whatever.
He could do a 1031 exchange, which would then not affect his IRMA.
He could sell that piece of land, reinvest into another piece of land or like kind property,
keeping the investment going and still not have to worry about his taxes.
But he’d have now an investment that may be able to generate more income or whatever.
I mean, again, I don’t know what the situation is, so I’m using that as an example.
But if you have a question on that or other questions, you can certainly join the show
today, 615-737-9986, 615-737-9986, taking your calls.
I got a text over the break and the person just said, “Am I a sole proprietorship?
Do I have to do that BOI?”
And the answer is no.
It’s only entities that are registered with the state.
In Tennessee, to be a sole proprietorship, you do need to obtain a business license with
the county or city, but we don’t register with the state here.
So you are not required to file this report.
It is only entities, that’s what I’m going to refer to, that are required to do that.
Again, 1065s, corporations, either 1120, 1120s, or variations, hybrids of those.
But those are the main three forms that you’d be looking at.
So just making sure that you have that information because I don’t want people to be stressing
but on the other hand, we’re getting to the last quarter almost of the year and if you
haven’t done this, you really do need to just take it into, take you a little while, make
sure you have digital copies of people’s, other partners’ and people’s IDs and then
you’ll have no problem in getting that done.
If you do need some help or you have a conversation, you need to join the show, that would be awesome,
737-9986-615-737-9986, where I’ll take your calls if you want to join in.
And again, you can also email Friday@DRFriday.com.
I do monitor those during the radio show just to see if there’s anything I need to be able
to answer.
I know not everybody enjoys calling a radio show, but I do appreciate it, it makes it
so much easier.
So like Donna in Clarksville, let’s see if I can get her on the line and see if I can
help her.
Hey Donna.
– Hey, how are you?
– I am awesome, thank you for calling.
What can I do for you?
– Well, my sister and I sold a piece of property that we inherited in July.
It was an old family home cabin.
Each of us netted right at $49,000 each, wondering what kind of taxes I’ll have to pay on that.
– So when did you inherit this property, Donna?
– When our mother died in 2000.
– Okay.
So theoretically, whatever the house was worth in 2000, I don’t know what the value is, but
whatever, was there a mortgage and things on the house, Donna?
– No.
Well, we had a HELOC mortgage on it that we paid off.
So that left a net of $100,000.
So we split that difference, yeah.
– Basically what you need to do is the person that sold that real estate for you, they’re
very happy because they got their money.
You might want to ask if they can pull some comps around the time your mom passed away.
Because whatever the house was worth at that point, let’s just say it was worth $100,000
and you sold it for $150,000, just example, not reality.
Then each of you would have $25,000 taxable capital gains, or just that $50,000, because
the $100,000 would be a deduction, split in half, $50,000 by two is $25,000 each.
So you would pay tax on $25,000.
And in most cases, I don’t know, how much would you say without this happening, Donna,
how much is your basic ordinary income that comes in the house?
Just ballpark it.
You don’t have to be specific.
– I’m retired on Social Security and small retirement.
So, 35, 40,000 a year.
– Okay.
So theoretically, you can earn about $58,000 and have zero capital gains.
Okay?
Because part of your Social Security is not going to be taxed.
So you may be, depending on how close the original balance of the mom, what the home
was worth back in 2000, it may have been 50,000.
You may pay tax on 50.
I don’t know.
But whatever that difference is.
So anything above that in your case would be about 15%.
So again, really finding out how much the house was worth in 2000 would be my suggestion.
Then you would split, take the total gross sales, back out all fees that you had to pay.
And then, and not the line of credit, but like the agents or property taxes or insurance,
any of the things that they may have hit you with.
The HELOC, unfortunately, is not a part of your basis.
So again, if it was worth 100,000 and you guys sold it for 150, you would pay tax on
25.
In simple math.
And depending on your income, it could be…
You’re breaking up.
I’m sorry, Donna, that overwhelmed me with my wisdom.
Oh, I’m so sorry.
No, I understood that, except you were breaking up some.
So is the value of the house in 2000, would that depend on the tax appraisal amount?
What we pay taxes on in 2000 for the property?
It’s probably the easiest.
The comps might be better than the property taxes.
So if the real estate person can give you a comp of something similar in that area,
it may be higher than the property taxes.
Okay.
All right.
Well, I think I’ll have to seek one who is very knowledgeable about this when I’m ready
to file.
Hello?
You got it.
No problem, sweetheart.
I appreciate you.
Hopefully, she can hear me.
We’re going to get ready to take a quick…
Thank you, Donna.
I appreciate it.
Thank you so much.
Thank you.
We’re breaking up.
Sorry, I’m breaking up.
Okay.
All right.
Why don’t we take a quick break?
And then when we come back, I will see if…
Hopefully it’s not my internet again, but we’ll take a break a little bit early.
We’re going to be right back with the Dr. Friday Show.
We are back here live in studio.
And if you want to join the show, you can.
We’re almost at the end of the show.
So if you’ve been holding your breath and you’re like, “Oh, I really need to ask something,”
but you didn’t, well, now’s the time to do it.
615-737-9986.
What’s 615-737-9986 is the number here in the studio.
Taking your calls, talking about all things taxes.
Hopefully, Donna was able to understand that the best thing…
I think she walked away with the right idea.
She needs to get somebody to give her the comps for the year of 2000, right around the
time when her mom passed away, where they inherited the property.
So that way, whatever that value is, is what they would subtract from what they sold it
for, along with the real estate fees and all the little fees that come out.
And then split that in half with her sister.
So each of them will have that as their remaining taxable amount.
And then determine if it’s enough to…
Hopefully, it’d be great if she could actually be under the dollar amount that’s required
to be able to file for zero capital gains.
Keep in mind, it is a fairly low dollar amount.
It’s like $58,000 for a single person, 116 or 124 married couple.
And it’s not always easy, but it does exist.
So if you…
I had a client that would do a conversion every year when he started, I don’t know,
he hit retirement early, so it’s like 62.
And he had like 10 years.
And every year, he’d do a conversion to the dollar amount that would keep him under the
standard deduction every year.
So he didn’t have much…
He had saved up a lot of cash, so he didn’t really need to have any reportable income.
And he wasn’t on social security yet.
So he would just take that 30 or 20,000 or whatever, and they would convert it every
year and it was zero tax, which you put it in at zero and because you got deferred and
you take it out, it doesn’t happen very often.
And it’s always nice when it does happen.
But it’s one of those situations where if you sit down and you really start looking
at planning your own taxes, that’s one of those things you should do.
Look and see if there’s any kind of little loophole.
Sometimes you can sell something in multiple steps to make it work better.
So maybe you sell off something over two or three years instead of doing it all at one
time.
Again, that’s always one of those situations where I’m not an attorney and I’m certainly
not an investment advisor.
So I don’t know if selling something over a period of time is smart or not based on
the investment.
I’m saying it’s based on taxes.
You really do need to make sure that you are communicating with someone that actually is
handling your portfolio, hopefully.
So that way they’ll be able to take advantage of those.
The other thing I do want to put out there, we are getting close to our third or we’re
in third quarter going into fourth quarter.
And if you are a person that is on required minimum distribution, it’s basically after
the age of 70, even though you’re not required to take RMD, you can start taking a required
minimum distribution and using it for QCD, qualified charitable deductions.
I like to always put that out there because a large number of people that are at that
age still like to take the money out of their bank, give it to the charity that they’ve
chose to do and make that a good thing.
There’s nothing wrong with that.
I will be honest with you.
There is absolutely nothing, but you’re not going to get the tax savings.
So if you give to your church and you usually tie three or $4,000 or more, and you’re not
going to itemize because the standard deduction is too high.
So giving to charity will be a zero effect on your taxes.
But if you use it through the QCD, it will reduce your 1099R by that charity and therefore
a hundred percent tax deductible.
And so it’s, it becomes a wonderful way of giving to charity and at the same time not
costing you any money.
And again, I have many clients that use their RMDs or their IRAs as a way of giving to charity
or portion of to the charity instead of taking it out of their bank.
Cause if you take it out of the bank, you’re not likely unless you are giving, you know,
20 or $30,000 a year, then yes, you’ll, you’ll be able to use that and exceed.
Assuming that your income is high enough, you’ll be able to use that as a standard deduction
or exceed the standard and start itemizing your deduction.
Not most individuals, especially if you’re on a retirement and that you’re not going
to have quite as much to give away and therefore doing something in that system is going to
make it a bit harder.
So I’m just saying, make sure that if you are, if you can find a way of giving money
away, why not give it away at a way that you could save taxes at the same time?
There’s nothing wrong with win-win situations.
So if you have any questions about that, you can certainly call our office.
But the other side of that is talk to your financial advisor.
They should be telling you this anyways, but talk to them because they’re going to know
where your investments are, what’s the best way to do it.
If it’s a good solid investment plan, it’s just something that you can take to your financial
person and have that conversation to make sure that you’re maximizing your taxes is
at the same time.
You’re not paying tax on money that you’re giving away.
It’s very hard to itemize anyways, right?
So it makes it very difficult to make it work.
So we’re going to be winding down on the show again.
If you have a quick question, there’s about five minutes left of the show.
You can call us at 615-737-9986.
615-737-9986.
We’re going to recap a couple of the situations we have.
I’m going to talk about the BOI.
You’re going to probably hear a lot of that over the next few months.
That is again, the beneficial ownership information.
If you are a person that is in business, maybe even have a small LLC, you and your husband
or you and a friend, keep in mind, this applies to you.
You are registered with the state.
Therefore you are required to file this.
So even if the business isn’t making money, it doesn’t nothing to do with income.
This has zero to do with income, everything to do with who owns the company and how many
people and where’s the address and all of that kind of stuff.
You need to make sure.
Also, if for some reason you did not get the employee retention tax credit, there’s a voluntary
disclosure program, a program for improper claims.
I really think this is going to turn into some pretty big audits.
Like I said, we’ve had a number of people come in.
I think that if you got employee retention tax credit and you’re not sure that you did
it properly, you might want to have it reviewed.
One of the reasons we didn’t get into it as a payroll situation, we do have payroll in
our office, but we use it outside payroll service for all of our clients for that reason,
for making sure all of that information is being properly registered and properly reported.
Payroll is probably the number one thing for small business to get in trouble with, to
be honest, because the penalties are higher.
They give you less time to pay off back taxes versus an individual or a corporation.
You’re going to end up with more apt to have more problems because it’s a fiduciary situation.
When you take out money from someone’s paycheck that’s supposed to go to the IRS on behalf
of their social security, Medicare and federal withholdings, and you fail to do that, they’re
more apt to come after you for that than anything else as far as I’m concerned.
If you do have payroll issues, if you haven’t filed or made everything properly done, my
suggestion is definitely get into our office.
The easiest way to do that is to call our office on Monday, 615-367-0819.
We can set up an appointment, get a list of what you need to put together, make sure that
you’re in compliance not only with the IRS, but also with social security administration.
If you haven’t filed your W-2s, there are some big penalties that can come up with that
kind of situation, and they are not waiving a lot of those penalties.
So again, 615-367-0819 is the number here in our office.
You can give us a call on Monday, and we’ll be more than glad to set up a time.
If you’re an existing tax client, hopefully you’ve received our calendar.
We are opened up for making our tax appointments.
If you haven’t received, please feel free to email us, and we will make sure we update
your email address so you can go ahead and book your tax appointment for returning clients.
And if you need help filing this or some other forms, again, our office is available to help
you with the B-A-O-I or just helping to deal with other IRS issues, or maybe something
like when Donna called and she needs help with someone helping her estimate and get
her taxes filed properly.
That’s what we do all the time, so we’ll be more than available to help you with filing
your taxes to make sure you stayed in compliance and that you’re doing everything you can.
So that way, and you might want to work it up just to find out if you need to make any
kind of estimated payment.
You have about 90 days from the date of any kind of transaction like that to at least
make an estimated payment so that you don’t owe a huge tax bill and possibly with some
penalties or interest and things going on.
So if you don’t know who I am, I am Dr. Friday.
I’m an enrolled agent licensed by the Internal Revenue Service to do taxes and representation.
It’s that simple.
It’s pretty much all taking care of making sure people stay in compliance, dealing with
the state or the Fed as far as any kind of situation that comes up for taxes.
And so if you need someone that really understands how that all works, been doing this for a
very long time, so you can feel free to give our office a call.
The easiest way to set up an appointment is to call 615-367-0819.
You can also go to email.
It’s a Friday@drfriday.com.
Friday is my first name for all of you that may not know that.
So it is something that’s a bit different.
That’s why Dr. Friday versus Dr. Buck.
And then you can also check us out on the web at drfriday.com.
Again, if you need any kind of help or you’re just getting ready to maybe relocate here
from out of state, we are licensed in all states so we can help with out of state tax
filings as well.
Anything that’s going to make life a bit easier on you.
And if you need to sit down prior, now’s a good time, especially if you’re going to
be new to our office, to set up a pre-consult to make sure we’re all on the same page and
that we’d be able to help you get your taxes filed on time and stay compliant with the
IRS.
If you need help, 615-367-0819.
Call you later.
In this episode
- A tax filing extension extends the paperwork deadline, but unpaid taxes still generate penalties and interest after the original payment deadline.
- Spending $10,000 on a deductible business expense saves only $3,000 at a 30% tax rate, so prioritize purchases your business needs.
- Review the cost basis before accepting an IRS notice about stock sales, because the proposed tax may reflect gross proceeds.
- For inherited property, establish its value when the owner died and account for selling expenses when calculating the taxable gain.
- Eligible IRA owners can use qualified charitable distributions to reduce taxable retirement income from charitable giving, even without itemizing deductions.