Welcome another episode of the Dr. Friday Radio Show! In this episode, Dr. Friday takes on the latest tax updates, answers callers questions, and talks over the following topics:
Tax Extension Deadline Oct. 15 To File Your Tax ReturnOperating Businesses Tax Extention Deadline September 15, 2021Do I Have To Claim Child Tax Credit?Current Capital Gains RatesIs the $300 Charitable Deduction for 2021?If You Did Not Receive A Stimulus Check, Claim It On Your 2021 Tax ReturnDo You Have An IRS Issue That You Need Help With?Do You Need Help With Tax Representation?Apply For Forgiveness For PPP LoanTips On How To Lower Your Taxes
and much more!
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 at 615-737-9986. So here’s your host, financial counselor, and tax consultant, Dr. Friday.
Dr. Friday 0:30
Hey, I'm Dr. Friday and the doctor is in the house on this really, really stormy Saturday. I don't know if any of you, I know a lot of my clients actually have pets. And as you guys all know, I have Great Danes, and my biggest, Zar, my largest one is six and he does not like thunderstorms. So he is all buried in his blankets and underneath his head. It's hilarious. But he is definitely not the one for the thunder. So every once in a while, it rumbles through, he is looking at me like, "What is going on Mama?" So just feel for you guys, if you've got pets because obviously there's not much they can do, they can only look at us and say "Keep me safe." And so we try.
Dr. Friday 1:11
So if you've got questions, you can call 615-737-9986. And Lavidious, if you can get that other screen, so I can see my callers, that would be great. Um, you can also join the calls and move forward on that one. If you've got some questions, this will be the easiest way to do it. But you can also email firstname.lastname@example.org.
Dr. Friday 1:39
This week has been even though I know lately, there have been quite a few different people, as of 7/15 or July 15, individuals have been getting the child credit. I've received a ton of calls from the individuals that either should be getting it that aren't or individuals that don't want to get it but they're not able to get online and actually turn it off. One reason is they actually have to both the husband and wife to do it. Or they can't even get access online for that. So there isn't at this moment, there is not a telephone number that allows you to do it. This is what I will tell you and what's been coming down, you know, down the line from the IRS.
Dr. Friday 2:24
If you are not entitled to the child tax credit, you can either return it to the IRS. And I would make sure you keep very good records on how you do that so that the IRS doesn't try to turn around and make you pay it on your tax return. Because whoever is receiving it, when it comes time to actually do your taxes, you are going to be claiming that on your tax return. So if you do not have a child and you're getting it because, in 2020, you did have a child that qualified you. Or if keep in mind, this is an advance on the child tax credit. It is not like a person, you either need to give the money to the correct person and/or you need to have that conversation because I know what's going to happen.
Dr. Friday 3:14
Come tax season I'm going to have the head of household parents that did not receive it, and they're going to claim it on their tax return. And then the individual that shouldn't have received it's going to owe money and they're going to go "Oh, I didn't know I was going to owe this." Well, obviously you won't be a listener to the Dr. Friday show. So if you are receiving money for a child that you will not be claimed in 2021 on a tax return, you will be having to pay back this money. So be very careful to do that. Whichever way you need to do that.
Dr. Friday 3:48
I don't see the stream. That's the problem. This is a blonde thing. Oh, well. There you go. Okay, you had to be there. Okay. I will open that. Sorry, guys, this is what happens when you have someone working remotely that is not always the best with computers. If you guys have been my clients for very long, you know, that's sometimes happens to me. So we have that situation going in and making sure we have that going on. So that being said, if you want to join the show, you can at 615-737-9986 is the number here in the studio. If you've got questions, or if you'd like to move forward on that question or other questions.
Dr. Friday 4:35
I mean, obviously, we have 2021 quarterlies that we've already made the first to the third deadline will be coming in very soon. That's going to be September 15. And so that would be the next estimate that we'll be looking at. So don't forget to start doing those. All right, we've got Terrance in Colombia. Hello, Terrance.
Good afternoon. I appreciate listening to you and your great advice. I am interested in a 529, I think it's called, savings account for my only grandchild. Now, I know you're not a financial advisor. But I would like to comment on any problems or other things that some of your clients may have had with those or any of the best pluses about it. So any comments you have about it, I would appreciate it.
Dr. Friday 5:35
No problem. And thank you for calling. The biggest thing I have on my own personal site for a 529 plan is that if the child does not go to college, you can roll a two, but as you said, if you only have one child, then that money will have to be refunded back to you. And then there can be some taxes.
Dr. Friday 5:57
The beautiful side of a 529 plan is they can use it from K-12. It doesn't have to just be used for college, I believe it's like $10,000 a year per student they can use. So if the child is in maybe wanting to take some extra courses or do other things, that's the direction that you might want to think. I mean, there are some wonderful tax advantages to that. So they take it out tax-free, no matter how the growth is, but you do not get a tax to defer when you put it in, so you're going to put it in with after-tax dollars, and then it will grow kind of like a Roth concept, it will grow.
Dr. Friday 6:32
And as long as they use it for education, it will come out tax-free. So it really is usually worth that kind of situation. You can make up to five-year gifting into the 529. So if you just want to go ahead and throw in, I think it's like $100,000 or something up to that, as a grandparent, you can throw that in, just let it grow. Again, it's almost like gifting the money to the child. It's not going to be tax-deductible for you, Terrance. But I do think it's a great way to put the money aside.
Dr. Friday 7:04
I'm also a big fan of IRAs, educational IRAs, there are some of those out there. They don't necessarily allow as much and I don't believe they can use the K to 12. But the nice side about that is if a child decides they're going to go to trade school or get married and not go to college or you know, kids are going to be kids, then the money can be used for some other things or just save for retirement. So that's a little bit of the difference for the 529.
Dr. Friday 7:30
And also I believe 529 has to be used in the state that they're put up with. Don't hold me to that. For some reason. I was thinking that one of my clients had that kind of situation, but it is a belief in a state-by-state situation. So you're not always sure. It's maybe transmitted between different states. But again, I would double-check some of that information, Terrance, before I made that final plan.
Outstanding. Thank you so much.
Dr. Friday 7:57
No problem. Thank you for the question. I truly appreciate it. Alright guys, let's head out to Jake in Nashville. Hey, Jake.
Hey, how's it going? You kind of answered my question earlier, talking about a tax credit. But back in June, I actually took the steps to go on irs.gov and opt-out of a tax credit. And in July, I received no payment when some of my other my friends had received them. And then I have two kids, by the way, and then came this month, and they deposit $300 into it.
Dr. Friday 8:32
Oh, great. So one of your children over the age of five is now still getting the credit. They would be getting 300 each if you had two.
I thought it was like 250 for one under. It doesn't really matter. I was kind of curious that it actually showed up in the bank account.
Dr. Friday 8:52
You are correct. It's $300 for those under the age of five and $250 for those over the age of five. I believe you're 100% correct. Yes. But either way, I mean, do you have a young one? Do you have a little tight?
Yeah, I have a five-year-old and an eight-year-old.
Dr. Friday 9:10
Okay, so yeah, and that's the problem, Jake. I mean, what you're bringing up and this is the kind of calls. I mean, my advice is since you were able to opt in the first time. Are you a single parent? Are you guys married?
Well, we're married and we're gonna we're probably gonna make more than what they're allotted for. That's why I opted out of the program because I didn't want to pay it back.
Dr. Friday 9:31
Yes. And you're gonna have to both go back in because husband and wife each have to go into opt-out. So if you know, you have to do it again because somehow they missed one of your children.
Alright, I guess that's what I have to do. I appreciate the time. Thank you.
Dr. Friday 9:49
No problem. Thank you and thanks for bringing up the call. Appreciate it. All right, let's go to Jolene, Jolene, Jolene. Hello, Jolene. Are you there? Franklin, got a letter $2400
My name is Julie.
Dr. Friday 10:07
So sorry, Julie. I'm sorry. There you go. What can I do for you?
That's okay. Yeah, we got a letter from the IRS saying that they had sent us a refund check for $2400. It had not been cashed, so they canceled the check. And I needed to call them to get it re-issued. And I have tried to call every day and cannot get a hold of anyone to talk to them about this.
Dr. Friday 10:36
Yes. And the other side of that, so the 2400 would have most likely been, well, I'm not too sure. 1414 is 2800. This would have been possibly your very first stimulus. Is it just two of you, Julia, or is it more than–how many people are in your household?
There are two of us.
Dr. Friday 10:56
Okay, Do you have children?
Dr. Friday 11:01
Okay. The reason I was asking– I was just trying to come up. So the first stimulus was 1200 and 1200. So, you guys never received the very first stimulus according to this. Does that sound correct?
Yeah, that sounds correct.
Dr. Friday 11:15
Okay, so the only way I mean, if you can't get ahold of them, you'll need to amend your 2020 tax return and show that you never received it. And then you'll get it as a refund check just like you would normally through the tax system.
Dr. Friday 11:31
I mean, that's another way of doing it. Otherwise, keep calling. But, yeah, we're having the same fun on this site. I think because of so many things. Now we got the child credit, we've got the stimulus still out there. We've got people still looking for refund checks. And it's all the same phone number. So there's no way I mean, you know.
Dr. Friday 11:50
And they haven't hired anyone new. So their phone lines are just way behind. And so normally when I call it says, "We're almost too busy, you need to call back later." I mean, I don't even get into the queue. I'm just being rejected as fast I get in there. And I call it all the time.
Yeah, that's what I'm getting to.
Dr. Friday 12:09
Yeah. Well, all I can say is you can keep calling. I believe they're open from seven to seven. Don't hold me to that. They used to be. And I know I've been on the line. I tried to call at six. And it's still open at that time. So you might want to try outside the normal hours. It's a hint, I'm like getting a lot more success, but share what little wisdom I have on that one. Okay?
Okay, I'll try. Thank you.
Dr. Friday 12:31
Thanks, girl. All right, thanks. Bye, bye. Alright, that was Yeah, and that that one, you may just want to amend your tax return and have it come as a check coming back to you that way because it may be less stressful. Alright, let's take our first break. If you want to join the show, you can call 615-737-9986. We'll be right back with the Dr. Friday show.
Dr. Friday 13:09
We are back here live in studio. And all we need to do is get you on the phone if you want 615-737-9986 taking your calls. Wanting to bring up charitable contributions. There has been in 2020 we filed it and we got an additional $300 cash deduction up to if you made charitable above the standard deduction in 2020. I want to let you know they did extend this for 2021. Married couples filing jointly are allowed to deduct up to $600 for cash contributions that were made during 2021. This is of course an increase from the $300. Regardless of the status. However, the contributions by non-itemizes to new or itemized donation, revise funds and private funds don't qualify for either year.
Dr. Friday 14:08
So just it has to be cash contributions, which basically means if you go to Goodwill, you can't consider that above the line itemizing it has to be money like you gave for tithing to your church, or to some other organization, but it does have to be paid by cash or check. Some form of currency versus itemizing the other way. So just putting that out there that they have extended that to 2021. And now it's going to be 300 for standard individuals and 600 for married couples. So something more.
Dr. Friday 14:43
So last year, a lot of people were kind of taken back because we haven't been itemizing for a couple years and a lot of people are like, "Well, I didn't really track my itemizing because I knew it wasn't going to or my charitable deduction because I knew it wasn't going to itemize." And boom, guess what? Now we surprised you and say we have to do this for you. So if you have some questions on that, we still have enough time for you to make sure you track those receipts for your cash contributions. Especially come the holiday season, a lot of people give money. So I just want to make sure you guys are heads up this year 300, individual 600 married couple, there we go. So we've got that one out there for you.
Dr. Friday 15:24
And if you have questions concerning, you know, 2020. And like I was saying, any of the stimulus money you did not receive, or I shouldn't say that. The first two stimulus checks–that's why I was trying to ask Julie when she had a call because the 1200 and the 600, were the first two for individuals, you may have had a child and had $500 on the first one.
Dr. Friday 15:45
Those should have been, if you didn't receive them, you should have claimed them on your 2020 tax return. 1400 each, which we received in March or therefore after March, if you've never received it, that will fall on the 2021 tax return. And that's what the government is saying. If you did not receive it, you need to be filing it on your tax return. So just make sure that you have that information there for you. And you can do that. You may have to amend the file a 1040x and claim it. But that is the way they're saying to get your stimulus money.
Dr. Friday 16:21
I do have several cases open right now where people are swearing they have never received that money. They don't know where the government is saying it's come. But they're changing tax returns saying that. So we are now making. There are two things. One, you can sign in to the IRS website. Several of my callers and listeners have already told us this. But you can go in there and get copies of your 2020 transcripts. And it will show when they submitted the money. And when they actually mailed it out to you. So that way you can get some more definition on that. Sometimes people have a tough time, getting transcripts.
Dr. Friday 17:01
The other way would be ordering them online from the IRS. But that's the best way of doing it if you can't find the information online, you need to order your transcripts for the year 2020. And it will show when they gave the money to you and how it was applied or what they were sent. And then that way, it may have come back where the government still sitting on it. But when you filed your tax return, and they're saying they changed it, because you did receive that money, that was the danger we ran into.
Dr. Friday 17:29
What we probably should have done is not applied it to any open balances in a couple of cases, because people are having now to write checks again for the 600 or $1200 that the government said they received. So it's a win/lose situation. We applied it. But then the government came back and said, "Wait, you already received it." And even though the client isn't sure they did, or they're saying, "No we didn't," the government is saying you did. So it's important to be able to see that in your situation and go from there.
Dr. Friday 17:58
So making sure that you have everything correct and in filing that. So that would be away if you've received one of those letters, and the government's changed your tax return bit by 600, or 1200, or they're at 2400 or 12, whatever the number might have been, you need to call and get your transcripts because that will give you the information, then you can go back and look at your bank and see if something was either directly deposited or if it was cashed. And if it wasn't you that cashed it and somehow there was a fraud, then there's a path that we can follow up and figure out. But first, we have to make sure that you are on the right page and what you need to do.
Dr. Friday 18:33
Alright, so that being said, we want to make sure that everyone has their questions. So if you've got a question you can call 615-737-9986 taking your calls, talking about all things taxes. And I realize it doesn't really quite seem like tax season. So you just want to make sure that you have what you need.
Dr. Friday 18:57
I did want to point out the one caller had had said he opted out because their AGI may be getting close to the disallowed amount. So Child Tax Credits just so people because that's a good thing to be looking for. And we'll make sure that people understand that not everyone's going to qualify no matter what. So the child tax credit for 2021 is going to be starting at 200,000, for a single person 400,000, for a married couple, then the phase-out will start happening. So if you're in that ballpark, and you are getting the advanced child tax credit, that's probably not going to happen.
Dr. Friday 19:35
I think for some of the advance it actually that's what they're saying here on the website is that that's what they're going with, but for some reason, I thought it was a little lower for the advanced child tax credits. But we'll keep looking for that one, make sure adoption credit 214 to 254 for married or single.
Dr. Friday 19:54
Interest on student loans for a single couple or single individual 70,000 they'll start going out 140,000 its will start phasing out. Educational credits for a single person American Opportunity is about 80,000 lifetimes about 59,000. It pretty much doubles. So for a married couple 160,000 or 118,000. Again, this is the maximum and then we'll start phasing out so you will not qualify for educational credits. If you're making 180,000 for married couples, it won't be on there.
Dr. Friday 20:24
Educational savings bonds you can finance into if your 82,000 for single 123,000 for a married couple. Retirement plans for like IRAs active participation plans. If your AGI is about $75,000 or less for a single person, and only $125,000 or less for a married couple for full contribution into those Roth IRAs are higher than that.
Dr. Friday 20:49
So if you've got a question or you have something you want to talk about, all you have to do is call 615-737-9986. My boy Milton is on the phone. Hi, Milton.
Hey, Dr. Friday.
Dr. Friday 21:02
Hey, I finally got the charitable contribution right this time.
How are you doing Dr. Friday?
Dr. Friday 21:10
I am doing awesome. When I started reading that one, I was like I was gonna say, "Hey, a heads up to Milton. Cause that's the one that brought me up last time."
Dr. Friday 21:17
Hey, it's good to talk with you. I hope you've had a good summer.
I have. I've had an awesome summer. Hopefully, you and your beautiful wife have too.
We have. Thank you. Hey, I want to ask you about the $600 couple that I just talked about making a contribution. Let me ask you a somewhat of a hypothetical, but it's reality. A close friend of mine just passed in his family did not want any flowers or anything like that. No plants. And they said you can make a contribution to the Nashville rescue mission, the food bank, and something else said. And we wrote out a $100 check for them. Now at the end of the year, even though that's going to charity, and they went in the name of the person who is diseased, even though we wrote a check for the $100, can that be used as the $600 at the end of this year?
Dr. Friday 22:09
Absolutely. I mean, check, cash, all those. It's just basically can't be items. And in that case, you gave it in the name of that person, but you guys basically paid it. So theoretically, that would be 100 towards the 600 we're looking at. Yes, sir.
Okay, very good. I just, I didn't know I kept saying, you know, you don't want that occasion was used in that person's name, but it still was a check written. So I wanted to be clear on that, that we wouldn't violate.
Dr. Friday 22:35
You're perfect on that one. Yeah, he can't use it, Melton.
Hey, take care and have a good rest of the day.
Dr. Friday 22:42
Thanks. Appreciate it. All right. All right, we're gonna take our second break here. And when we come back, we'll take more of your phone calls, you can reach us here in the studio at 615-737-9986. And we'll be right back.
Dr. Friday 23:09
All right, we are back here live in the studio. So if you want to join the show, you can 615-737-9986 taking your calls. And we're gonna head right up to Scott. Hey, Scott, what's happening?
Not much enjoying an online for a minute. But my question is, I take care of my dad, and I claimed him on my taxes. And I did get the credit on the first one. But I got a letter yesterday saying that he is eligible for the second stimulus. But he doesn't file taxes. Is he eligible? And does he need to file for that year to get it?
Dr. Friday 23:57
Well, normally, for anyone, I'm assuming he's on Social Security? Does that sound right? Would he be on Social Security?
Yes, ma'am. He is on Social.
Dr. Friday 24:06
Okay. He should have gotten it into his bank account with his Social. The same account he gets the other 600 should have been put in there. Now, I'm not gonna say that happened. Okay, because we all know that that "should've, would've, could've" would have been great in life. But he should have received it as part. So you might want to check his bank. It would have come in in late December or the first of January, it was a pretty short window where they actually did these deposits on that one. So you could check. Just see he may already know it didn't. But sometimes, you know. If not he needs to file a tax return. Did you claim him in the year 2020?
Yes, ma'am. I've claimed them for the past three or four years.
Dr. Friday 24:51
Well, then he won't qualify for the 600. 1400 a month would have received because they eliminated the age and 1200 you would have gotten 500 for him because he was your dependent, I think. Or you got 1200? Because the year before he was not, I'm not sure if he will qualify for the 1200 or not, now that I'm thinking about it. But he won't qualify if you claimed him as a dependent.
Okay, that's my question. Thank you so much. I enjoy your show.
Dr. Friday 25:19
Thanks, Scott. I appreciate you. Thank you. Yeah, that was the confusion with the stimulus. I think they finally got smart by the third one, because we had kids that were 17 and 18, filing their own tax returns. And then we had parents that normally would claim all of these different things happening. And when it comes down to it, it's really just, you know, they got smart. When it came down to it, they basically said, "Hey, you know what? We're going to give everybody in the household $1400." And basically, no matter their age, because one way or the other, the people are going to find a way of getting that money. So that will make it smarter than trying to do 500 for kids 17 and under 1200 for adults, the next one was 600. But I think it basically comes down to that they basically woke up and said, "Hey, this is a really good time to make sure we don't have anything out there that's really happening or doing anything crazy."
Dr. Friday 26:15
So if you want to join the show, you can 615-737-9986 just taking your calls doing things we want. Sorry, I was also looking I had the news on here. I was looking at photos from the flooding that's going on in Middle Tennessee and I live out in the Murray County area, it's not really come out so much here, but they are some really big ones in Hickman County, Franklin's getting some serious flooding. I think the wisdom that we've all learned from the flood of 2010 was if the water is running across the road, seriously, think twice, or maybe don't even go into that water would be my advice. Because we've seen people where they're, you know, the roads are getting flash floods, Dickson county is being flooded that. So just be really, really careful.
Dr. Friday 27:08
If there's any kind of moving water don't go across that water, because that's where people are getting trapped. And there's a lot of branches and debris out there. And you don't want to get hurt just trying to get across the road. So, be smart. Make sure you're paying attention if they've got the roads, even if they're not blocked off. You know, they're trying to get out there. It looks like trying to take care of all that. And all this is coming in from I think it's Henry, the weather front that's coming through. So just be careful.
Dr. Friday 27:35
But, again, I'm watching pictures of people trying to go through roads, and then they're getting their engines are stalling and they're, they're getting trapped in the middle of a road with raging water, not a good plan. Again, right this second, I'm sure it's going to change at any moment. So just be really, really careful. Raging waters, streams and everything have overflowed. So staying home probably a good plan right now, they've probably got enough activity going on outside there to keep them busy. So if you don't have to go out, I would probably suggest stay at home and listen to me.
Dr. Friday 28:13
Alright, let's talk to Robert in Brentwood.
I got a question. How are you doing?
Dr. Friday 28:21
My son is 21. He got a stimulus check. And what we had done is we he accidentally filed and he didn't file as a dependent. But he needed to be even though he's in college and the person benefits that we get. So we wanted to find out, what do we do with the stimulus checks that he got?
Dr. Friday 28:41
Nothing. There's really not a whole bunch to do. I mean, you can send it back to the government. And that's what they're going to tell you mail it back to the government. But you know, and for purposes of me, I need to say you need to mail it back to the government. But there are no collections or anything on those funds.
Okay, so they'll never really come after it. I guess if they did, they'd be a penalty. But so that's really up to us, okay. I wasn't sure. And he got two of them. And did file a 1040X, you know, to make him a dependent.
Dr. Friday 29:18
Right, you need to amend it. And that's what I try to explain to a lot of parents is college credit was still higher than the stimulus money. The difference is the stimulus money was going into the children's pockets, not children at 20, but the kid's pockets, and the parents were still counting on the educational credit to pay their tax bills or to get back their money. So you couldn't have both is the problem.
Dr. Friday 29:38
So it was usually smarter still to do the educational credits. But it's a crazy time period where you need to do their thing. So that's all I'm saying. It's a little crazy that way, but we'll make it work. But yeah, so we've done a lot of amended returns. So at least you figured it out, Robert, good job.
Yeah, and we did because once we made him a dependent, we got a $500 and some odd amount check from the government once he became a dependent that was tied to that. So it was kind of interesting. It's like, okay.
Dr. Friday 30:12
It shouldn't have though because he was over 17. That's where the confusion is. So the first two were tied to the age of the kids, right? That's why at age 17 and 18 year olds or whatever, kids that were still truly dependent. Now, the third one was not tied to the age, everybody got 1400 that lived in the household. But the first one and the second ones were both tied to ages. So that's the government's just messed up. They don't I don't know, what's the I mean.
Dr. Friday 30:37
Again, I always try to make it not an excuse. But the IRS was never designed to be issuing stimulus checks out to individuals. They're a collection company. So it really was never set up to do the opposite. They're doing a great job considering that fact. But it's not perfect.
Okay. All right. Good to know. I appreciate you answering my question.
Dr. Friday 30:58
Thanks. All right. Bye. Bye. All right. So if you have questions, you can certainly call us we're going to be taking one more quick break here. And at that, there'll be the end of the show. So if you've been holding your breath, first, take a breath, because that's a long time beholding it. And then if you've got a question, you can certainly reach us here in the studio at 615-737-9986. We are taking your calls going to be talking about taxes.
Dr. Friday 31:24
Or if you've got questions about something either a love letter you have received in the mail, or someone a friend of yours has, hasn't received any of the stimulus money, most likely, because they haven't really filed all their taxes. Or if you filed a bunch of taxes in 2020, you may find out the government never really processed them. And you may need to refile those, but we'll talk about some of those things. And also, what you need to be doing to get yourself in compliance and we'll stay on top of any of the tax changes that might be coming down.
Dr. Friday 31:54
There are some new bills out there. And some of them are a little bit concerning what's going to happen to the future of step-up in basis and capital gains. As more of those bills come up and actually start producing documents that we can read and truly understand what they're talking about, we'll try to share some of them. Right now, none of them are actually up for a vote yet. But there have been several bills submitted, talking about how they want to change the step-up in basis.
Dr. Friday 32:23
And for those of you that may not understand what I mean, just saying the step in basis is when someone passes away, and we inherit something, that something we get is something that we're able to go and do. You know, as far as, like you inherit your mom's house, so we get a step-up in basis. Instead of what she may have paid for it, we're going to get the value at the time that she passed away.
Dr. Friday 32:44
Those are huge because a lot of times those are the only things that a lot of clients get is, you know, something like that and having to pay tax or even trying to figure out what the basis was when someone else purchased or done something like that, that's going to be the crazy thing when it comes to that situation. So you know, we just want to make sure that we have that situation. And also they're talking about increasing capital gains rates, up to the 30s. And right now the highest tax bracket is about 24% for capital gains, but we're going to do that.
Dr. Friday 33:16
Alright, so why don't we instead of Jack holding, and I've only got about another minute before the break, let's hit Jack really quick. And we'll get him on if you want. Hey, Jack, what's happening?
Yes, I have a couple oil stocks that I had for the long term. And I'm wanting to sell them sell for a loss. And where can I use that loss? If I had a profit on some other individual stocks? Can you take that and use that? Can you use it against the capital gains on some other stocks and so forth?
Dr. Friday 33:50
Long? Yeah, long term for the long term, short term for the short term. So any other stocks that you have that are in long term you can sell, and you can write off the loss of the one against the gain of the other and it will wash out and then you can take up to an additional $3,000 if there's still loss available, and then the rest will roll over for 20 years.
Okay, when you say the rollover, otherwise, my tax man will keep on track of what my loss is if I have a condensed loss?
Dr. Friday 34:22
That is correct. So every year, you know, he'll be able to take or she'll be able to take up to $3,000 against and reduce any of the gains you might have had every year against that loss. So you don't have to do it all in one year if you're doing it over the next couple years or whatever. But theoretically, you have a 20 years. I mean, I have some people that have hundreds of 1000s of dollars loss that they'll never be able to reclaim unless they get some serious gains. But in most normal situations, were able to eat it up over you know, five or 10 year period between gains.
Okay, so otherwise if you sold your stock for the year, so forth, you have that one number and call them their proceeds, let's say is that $68,000? And then losses was $62,000. I can act, no, it's 27,000.
Dr. Friday 35:17
So then you'd have a fourth of $6,000 loss carryforward, actually, you only have a 3000. Because you can take an extra three above. So if you had a $68,000 gain and a $72,000 loss, you would have a negative on your tax return of $3,000. And you'd have another 3000 that you can roll to the next year in that scenario.
Okay, but you can't take them both in the same year, the 3000.
Dr. Friday 35:41
Yes. But yeah, the $68,000 gain, you're going to offset In the same year, the $72,000 loss. So that will leave you with a $6,000 loss in that year. But you can only take 3000 of a loss after you take the gain. So you'll have to roll the other three into the next year.
I gotcha. Okay. And it would be if it was short-term, Is that a different formula?
Dr. Friday 36:09
Same formula, but a short term for short term, long term for long term.
Okay. All right. Well, thank you very much.
Dr. Friday 36:17
No problem, sir. Thanks. All right. We're gonna take a quick break. When we get back, we'll get a few more phone calls. And we'll talk about a few other tax things to be looking out for. And you're listening to the Dr. Friday show at 615-737-9986. We'll be right back.
Dr. Friday 36:40
All righty, we are back finals part of the show. So if you've been holding your breath, you need to join us at 615-737-9986. Let's go to JD in Franklin.
Hey, how are you?
Dr. Friday 36:55
Good. I have a this is off the wall question. But I have some property, very rural out in West Tennessee. We're building a Christian camp there. And I have a neighbor that listed the property next door. It's been on the market for a while. And I'm wanting to propose that he donate it to our 501 C 3. And I wonder how he could take a charitable contribution. Would he have to take it all at one time? Could I do, I don't know three years or five years? Could I give him credit for that? How would you do that?
Dr. Friday 37:28
It's a great plan. And what I like about the plan is he gets to donate at the value that the property is so not what he paid for it. But what it's worth. So A, he donates the value, let's say it's worth $200,000 he can take up. How much is it?
It's not worth much. It's let's say it's worth $20,000.
Dr. Friday 37:47
Okay, 20,000. Well, that may go faster. He's got 20 years, a lot like capital gains, he has 20 years to use it up. But he'll be able to use 60% of his income he can use for donations. So even for itemizing, you know what I'm saying? So if he puts it in that first year, he'll be able to use most of that unless he's retired and, you know, doesn't have any itemizing, because 20,000, even if could take 100% when itemizing that year. But it would work for a charitable contribution in his case, and he'll be able to use what he could get for it, not what he paid for it.
Right. Perfect. That's what I was thinking. So I'm gonna maybe propose that to him and see what he thinks. So I think that'd be great.
Dr. Friday 38:33
I mean, it can't hurt to ask, right? I mean, it's a wonderful concept. And it sounds like it would help on the facility that you're trying to build up there for the kids anyways, or for whatever, you know, for the nonprofit. So it's a great contribution and doesn't sound like it should be too much of a hardship on that particular person.
That's right. That's what I was thinking. Thank you very much.
Dr. Friday 38:54
No problem. Thanks, JD. Appreciate it. Alright, so if you've got questions, or you're trying to figure out what's the next step, how do you get moving on doing your taxes? Remember, I'm an enrolled agent, which basically means first and foremost, I have never and have I ever worked for the IRS. I am licensed by the Internal Revenue Service to do representation and taxation, which basically means I can be a shield between you and the IRS, making sure you have the proper representation to do what you need to do.
Dr. Friday 39:22
Maybe you're having some issues with the IRS, maybe you haven't filed all your tax returns, maybe due to some of the unpredictable lifestyles we all have had and things that have happened, things have not gone as perfectly as you would have liked. There are plans, there are systems in place that will help you get back on track. The IRS is truly looking for people to get on track and to become back to paying taxes.
Dr. Friday 39:45
The fact is, you can't change the past. Whatever has happened back there, it's impossible to change. What they want to see is change moving to the future. So what we need to be able to do is to change the future. Make sure that everything is going in the right direction. And so that way you can actually do a payment plan, make an offer and compromise, become non-collectible. You need to get everything in place. So that way you don't have to worry about them coming in levying, or seizing or, or locking up, I've actually had them come to a business and put a lock on the door. Or even another one Tennessee Department revenue more renowned for this basically saying, "We'll take what's in the cash register," right?
Dr. Friday 40:24
So you want to make sure you're staying ahead of those kinds of things. It doesn't happen, because the first time they've contacted you, they come and do this. This is because they have tried several times over a period of months, and it's just no response. That's what gets their attention. You need to communicate, you need to make sure and if you can't do it, because, you know, no one's always saying it's easy to be able to communicate with the IRS, gosh knows that not the case. But the people that work for the IRS, yes, we usually can do a pretty decent job.
Dr. Friday 40:53
So you need to be able to talk to them, figure out what you need to do, figure out what it's gonna take to get you into compliance because that, my friend, is the very first thing you want done. You want to make sure that you're in compliance. And that's what you have for each of them and make sure you have the situation you have. So all you need to do is first to make sure you understand what is the IRS looking for? I mean, do you need past taxes? Do you need to get a payment plan? Do you need to have more money coming out of your paycheck because you're claiming married and 10 and you're single and zero, and therefore you owe every single year even though you're on a W2?
Dr. Friday 41:30
Most people should not owe if you're on a W2, it's that simple that the employer is taking out the taxes. The only time people owe is when they're kind of fudging a little bit with their withholdings. So you need to make sure that those numbers are correct. And it's also very difficult for married couples, especially if you're in the middle class. And you have a tendency to, you know, I mean, you're at that breaking point because you're jumping between 22% and 24% tax brackets or worse going from 12 to 22, which is one of the biggest jumps. And so you're both claiming married and zero or married in two because you both have two children well married means there's two of you. So you're both claiming each other plus two children, you're going to end up in trouble sometimes with that kind of math.
Dr. Friday 42:12
So you need to make sure whoever's doing your taxes and or if you're doing your own taxes, you need to start compensating for the fact. And then of course, once children hit the age of 18, you know, they don't necessarily have the same situation. Now, if they go off to college, sometimes you'll still get college credits, and that will help offset the difference between the child credit and then you go into college credits. And nowadays, they have changed the rules from going from 17 to 18, which is huge, because it used to be 16 and under was $1. And then basically kids started college between 18 and 19. So we had two years there were kids were actually in high school, but they were not children anymore, yet they were not in college. And so it makes it very difficult for parents to get all that information correct.
Dr. Friday 42:58
So if you're having troubles, I can certainly help you, you can get my firm a call. Or if you've got friends, please refer them if there's something I might be able to do to help. I will tell you, I'm not one of those people you're going to call up and the first thing they say is, "Well, we're going to charge $5,000. And here you need to start paying me 15 $100 and then $500 a month," before I even know if I can help you or not, it's not the way I work. It's not the way I'd want someone to treat me. So I want to make sure that we're all on the same page.
Dr. Friday 43:23
So initially, the first consultation is always free to make sure that we're all on the same page and that I can help or that you really want to move forward in getting your taxes or your tax situation is taken care of. Because if you don't, then all the help we can give you because won't work because obviously the information has to come from you. So if you have questions, you need help with taxes, you can call us at the office on Monday at 615-367-0819.
Dr. Friday 43:57
Or you can email email@example.com. Or check me out on the web. A lot of times people are like, "Oh, I don't know who this is. I've heard of the first time." Sheck out drfriday.com. It'll tell you a lot about who I am. We've been on the radio here for almost 10 years. So many of you guys are avid listeners and we appreciate that very, very much. So that way, we can make sure that we have what we need and get everything going in the right direction.
Dr. Friday 44:26
But if you need assistance doing taxes, or maybe you've got a friend, the best thing is to send them to the website or send them to my phone number and we'll be more than glad to talk to them and figure out what we need to do. Call you later.