Another episode of the Dr. Friday Radio Show is here! In this podcast, Dr. Friday takes on the latest tax updates, answers callers questions, and talks over the following topics:
What Are The American Rescue Plan Act and the Consolidated Appropriations Act of 2021?Apply For Forgiveness For PPP LoanTips On How To Lower Your TaxesTax Extension Deadline Oct. 15 To File Your Tax ReturnWhen Can I Apply For Forgiveness for Second PPP Loan?The Latest Biden Campaign Tax ChangesDo You Have An IRS Issue That You Need Help With?Do You Need Help With Tax Representation?Can I Make A Deal With the IRS?
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
Good day, I'm Dr. Friday and the doctor is in the house. We are live here on this beautiful Saturday. And if you want to join the show, all you have to do is pick up the phone and call 615-737-9986. We are taking your calls live.
Dr. Friday 0:49
Maybe you're thinking about taxes. You've probably heard me on either here or even on NewsChannel 5 talking about the August 2 date, which is Monday for anyone that lives in most of the surrounding counties, Williamson, Maury, Davidson, all of these counties would have been on a federal extension, which means that if for some reason you did not file an extension back in April, or you did but you owe money, now would be the time to make sure that payment is posted by Monday. So that way, you may find that your penalties and interest will be quite a bit lower than what you would have had if you wait till October at this point. So think about that. So that way you have something to possibly save.
Dr. Friday 1:35
And you probably heard but they did not extend the extension for landlords for, I should say renters, actually. So now landlords will be able to start doing evictions, which I'm sure there are people on both sides, that table but being a landlord and people, you know, having had people live in your home without paying rent or getting very minimal amounts from the government not to offset your own mortgage. So many landlords at this moment have had to put their home mortgages on hold, which means they're not moving forward. And in some cases, the banks have actually caused, you know, because the money's in the landlord's name, not the renter's name, that house could become jeopardized for that. So I think that was a good move.
Dr. Friday 2:21
So if you have renters that are not paying, and I have been extremely blessed, that I would suggest getting out there as soon as possible, because they may change that rule again. But for the next six weeks, since they're not in the office, I would say that you have time to make sure that your renters are actually paying rent.
Dr. Friday 2:41
Alright, so if you've got questions. Again, we have taxes, and we've had quite a few tax laws that have changed in the last year, we had the American Rescue Plan Act and the Consolidated Appropriations Act of 2021. And those are both under Biden, and many of them have temporary situations that will only affect the year 2021.
Dr. Friday 3:07
One of the biggest ones because I know come July, or you know what you guys all received, or many of you that have children, would have received your first installment for the Child Tax Credit or the Dependent Care Credit. And that is just for most people, that is a temporary situation, that is not something that's on the books to continue from year to year. This is a one-time for the year 2021, where you're going to have that kind of situation. But they did make some moves in that.
Dr. Friday 3:39
And they also have done some increases In IRAs, for example, you can go 7,000, if you're over the age of 50 then it's 6,000. If you're under many of the individuals working with these different tax codes, even being able to affect some of the standard deductions obviously increasing. So for the head of household, for example, in 2021, it went to 18 eight. So single individuals obviously increased as well.
Dr. Friday 4:08
So if you've got a question, you can join the show 615-737-9986, and let's hit Sue in Franklin. Hey, Sue, what's happening?
Hey, Dr. Friday, how are you doing?
Dr. Friday 4:19
I am awesome. How about you?
I'm good. I'm calling on behalf of a family member who with another parent shares legally according to a parenting plan 50/50 dependent status with the child. They share 50/50.
So, with this new stimulus that's coming through that, from what I understand over the next few years will total $3600 per dependent. The other parent has already started receiving that automatic deposit for the monthly incremental payments that are coming out. There's no answer at the IRS, it seems like. How does this other parent go about making sure that he or she receives 50% of what's being sent out?
Dr. Friday 5:12
Well, child credits in themselves will only go to one household. A child is only living, theoretically from the IRS, not from the tax courts, because I know many people have a 50/50. But in the case of where's the child spending 50% or 50% plus one day of its time, it may be actually going back and forth, actually, for 50/50.
Dr. Friday 5:36
In those cases, who are claiming that child on the tax return? They both can't. So it's either every other year, or there's, you know, so whose year is 2021? Because that's the one that's going to get additional. That tax law does not extend past 2021 for the extension and the increase.
That's what my next question was. So the key year is 2021. Or was it 2020?
Dr. Friday 6:03
Yes, it's 2021. So what will happen is the parent that received the money but the child is not on their tax return. And this is where it's going to get really sticky, because anyone that claims the child in 2020, is how they're getting the information to put in.
That's right, and that person who received it.
Dr. Friday 6:22
Right. And I have a lot of clients that automatically every other year, even year you get it, odd years, I get it. And so when they file their tax return in there is no child that is going to be, it's going to be money you owe to the IRS. It's not like stimulus money. And if they give you money in advance, oh, well, there's really no tax law that says they can't
Dr. Friday 6:43
This is a child credit, which means you have to legitimately have a child, if you don't have a child on the 2021 tax year, you need to go ahead and either give that money to the parent that is going to claim that child and or turn it off by going to irs.gov. And going through the process.
Dr. Friday 7:01
Now I'm going, to be honest with you, I've had probably more phone calls than I like to say, as far as it's not as simple to turn off as people like to think. The government thinks they've made it pretty easy. But getting through the identity theft, and all that situation they have on the website is not that simple.
Dr. Friday 7:20
So my suggestion is if you are one of those people like this gentleman or this couple that have it. They either need to be giving the money to the other person, or they need to be saving it. So they can give it back to the IRS because that couple is you know, the person that's going to claim the child in 2021 is going to claim they never received any of that money. And they're going to get all 3600 or 25, whatever, you know, depending on the age of the children, they're going to get 100% of the credit on that tax return.
And that is your 2021?
Dr. Friday 7:53
Correct. Whoever has the child on the tax return in 2021 is going to get the money at the end of the year. And the person that's receiving it, if they do not have that child, the government is going to come back against them. Again, in stimulus A lot of times people say "Well, I have an 18-year-old, but they gave me the 1400 or they did this or they did that" whatever.
Dr. Friday 8:14
The government really doesn't have any recourse. So if you get paid too much money, or you receive checks that were not necessarily properly done. At this moment, there's nothing on the books that the IRS can do. But child credit is a legitimate tax credit on the thing and they will have collection rights.
So with the money that's being doled out on a monthly basis, now, are you saying that, that's kind of like a pre-payment towards?
Dr. Friday 8:38
That's exactly what it is. It's six months pre-payment for the credit, they're giving people six months or half of the 3600 or the I think it's 2500, If they're over the age of six, I don't have the exact number in front of me. But there are two. I know it's $300 for children under and 250 for children over the age of six.
So if the person who climbs the child in 2020 has been receiving this money, it's really not going to make a difference. They're going to have to settle up with the IRS when they file?
Dr. Friday 9:10
Absolutely and the person that's legitimately allowed to claim that child This is where it's gonna get tricky to a point because there are forms that should be signed. I mean, again, you have tax documents or you have court documents that say you know, "I'm supposed to get the child. We have 50/50." Does the document also say that every other year, you know, even your idea that you have?
Dr. Friday 9:33
Okay, good, because you may need that to prove that you're entitled to it because it's going to be a lot of fun in the next year going with this because you are with my family of clients, this is going to be a somewhat typical situation that we're going to be taking on.
Dr. Friday 9:51
Nobody seems to be having it. So if I find out more information, I will share it on the radio but right now, the IRS is not giving us any kind have ideas on either people that filed for stimulus because they said they never received it, they're getting letters back saying that the IRS is not giving them the stimulus and yet they still never received it. And this kind of situation is where the wrong person is receiving child credit.
Okay, so we may be seeing you in the next nine months. Thank you.
Dr. Friday 10:19
No worries. I'll be there. All right, let's go to Bill. Hey, Bill, what can I do for you, sweetie?
Hey, in January of 2018, we had we were in a disaster, our house was frozen. It was a mess. So we didn't file our 2017 or 2018 taxes. Because the documents were, it's just a mess. But anyway, I filed that 2018 taxes. How long should it take for the IRS to process and give me my refund?
Dr. Friday 10:52
Did you file electronically or by paper?
Well, because it's 2018 you have to file by paper.
Dr. Friday 11:00
No, we can e-file 18, 19, and 20 right now.
Oh, really? I did not know that.
Dr. Friday 11:09
Was the area that you had a federally casual loss, or was it just storm damage on your area? I mean, was it a federal loss? Or was it just something that happened to your house?
My home insurance took care of it. It was a declared disaster. But I didn't get any help from FEMA or anything. I just took care of it on my own with the home insurance.
Dr. Friday 11:30
And you still had some losses because they didn't cover every little thing, obviously. I just wanted to make sure because the tax law changed in 2018, where it had to be a federally declared loss.
Dr. Friday 11:41
It used to be you know, if we had a fire and our insurance thing covered, we could claim, you know, casualty loss. But now it's only for federally disaster areas. Answer to your question, if you filed it by paper, it's going to take them at least right now, and I don't know when you filed it. But it usually takes at least 90 to 180 days for, In my opinion, for a paper tax return to get posted and a letter at least to come to you and say they're working on it processing or whatever.
If you filed electronically, how long will it take?
Dr. Friday 12:13
Well, if you file electronically, then within at least 21 days, you would have confirmation that and you could track it, you know, I mean, with the IRS, you would have a document. You probably mailed it with tracking. And it may say that they received it at the Memphis, Cincinnati wherever you mailed it to. But the problem is it's sitting on someone's desk right now because they're already behind from the COVID period anyways.
Right, right, right.
Dr. Friday 12:35
So you're like, behind all the paper returns in 2019 and 2020.
I haven't filed the 18 yet. I did the 17. And I was preparing to do the 18. But if I brought it to you and you electronically filed it, so then it would speed up the process significantly?
Dr. Friday 12:52
It would speed up the process. Correct. I mean, you know, and you may be able to if you did it by paper, but either way, yes, we could help you out with that without a problem. But that would be my suggestion. Again, in 2017 we couldn't have filed it would have had to be done by paper. But 18, 19, and 20 can still be filed.
Yeah, I'm due a hefty return refund. I made like, Is there a limit on how much you can donate to a church?
Dr. Friday 13:21
Can't be more than 50, or let's just say 50% of your actual income, and then it will roll over to the next year.
Okay, I may let you file the 18 for me then.
Dr. Friday 13:32
Okay. Well, we'll take a look at them. My name will be on them. So I'll make sure that they're at least right.
Thank you so much.
Dr. Friday 13:38
No worries, mate. Thanks. Bye.
God bless you and have a great week.
Dr. Friday 13:42
You too. Let's hit Scott real quick.
Hello, there. Hey, hey, quick question for you. So the child tax credit that we're getting in advance, two calls ago, is what you all were talking about. So basically, there's interest in that if you want to look at it that way because that's going to be that much less than. So if we would normally get $2,000 back, then we're going to get probably 1800, it's going to, it's going to take some away from that correct?
Dr. Friday 14:13
Well, last year, we only had 2000 per child in the year 2020. They increased it. So if you have a six-year child five years or younger, they're going to give you 3600. So they increase it by 16 $100. So it's not gonna be a total Wipeout in children over through the age of 17, which used to be only through the age of 16. They're going to give you 3000. So you're going to get an additional 1000 on that one. So theoretically, you will get a little bit it's not quite as simple as that because they did increase the numbers as well.
Yeah, so it's not exactly like the $1400 stimulus and then gas goes up by 60%. So the stimulus is for gas money, isn't it? [laughter]
Dr. Friday 14:55
That is true. Yes, sir.
Okay, I didn't know about the increase but thank you very much.
Dr. Friday 15:01
Thank you. All right, we're gonna take a quick break, we come back, we can hit more of your phone call 615-737-9986. We'll be right back with the Dr. Friday show.
Dr. Friday 15:23
We are here live in the studio. And the number, if you want to join us, is 615-737-9986. And just to reiterate, for all of you that may, hopefully, I haven't confused, but there was an increase in the child tax credit that was part of the American Rescue Plan Act, that was put in effect in 2021. And what it did is, as of July 2021, they started giving out payments. If you have a child that is under the age of six.
Dr. Friday 15:59
And here I had a text come in earlier today, because one of my clients said, "I didn't get as much as I was supposed to" because if the child is five right now, but will change to the age of six by December 31, 2021, you will only be receiving the $250. If the child is five right now, and they already had their birthday, then they will be receiving the $300. So any child that is by December 31, under the age of six will get $300 for all children from six to 17, and that is through the age of 17, we'll be getting $250.
Dr. Friday 16:38
They've also made this fully refundable for people in the lower income tax brackets. So just, you know, I think with most of my clients, and if you're listening, and you are receiving the gentleman that was Scott, that called, I think part of what he was what I was taking from that, at least was Be willing, be aware that you're getting money in advance. Yes, they increased it.
Dr. Friday 17:02
So you have young children under the age of six, you're going to be getting an extra $1600, almost doubling what we were receiving in the year 2020. But you're getting in advance. So if you've used up when you get your taxes done, and you don't normally get a large refund, because the tax credits pay for you, you may not have as much available when the time comes.
Dr. Friday 17:26
So for many of my clients, especially the people that are self-employed entrepreneurs, let's be honest, most of the time, we are writing checks, no matter what, at the end of every year, especially if we are doing better and better each year, take this as this money, set it aside in your tax account in that way cuz you were prepared for it anyways. We weren't taking that money on a normal basis to take care of household bills. If you're having a hard time, this will be a very helpful situation. And I'm sure that will, they'll make things better for you.
Dr. Friday 17:55
I mean, I have people with two and three kids. So they're getting you to know, $800 to $1,000 a month from the government in additional child tax credit. So that would be surely helpful. Alright, so then we're also earlier when I first started the show we were talking about for 2021. The standard deduction will be as follows $25,100 for married filing jointly $12,550 for single filers and 18 for the head of household. The reason we need to know that is if we ever want to itemize, and it's getting harder and harder, especially for married couples, because you got to have more than $25,100.
Dr. Friday 18:34
And I have a lot of clients that are extremely great givers to charity and things like that. So they may be able to itemize, but not every single time also there was a charitable deduction in the year 2020 for an additional $300. As of right now, that has not been extended into the 2021 tax year. So just keep that in case you have something you're working on. And of course, we try to try to run through some of the things that I get asked about divorce the Tax Act again.
Dr. Friday 18:45
So if your divorce was executed after December 31, 2018. So bottom line, anyone that got divorced after the year of our starting in the year of 2019 moving forward, alimony was no longer taxable. So it kind of changed the game on how we divide properties and how much money is being paid out since sometimes the higher-income individual will have to deal with the taxes.
Dr. Friday 19:34
So I had someone call me and they were divorced back in 2016. And she's like I heard people were paying tax on alimony. And I'm like, yeah, but you're a few years early on that one. So it can't you know, you can't divorce someone twice. You can't change the rules. So it was something that you know, obviously, you are not a part of that situation. Another thing you want to definitely look at a little bit is right now. We have a lot of people selling real estate, I mean, I've got people that are moving back in with family members, because their houses are worth so much money, and they're wanting to sell them while they have the equity in them.
Dr. Friday 20:12
And so I want to share the good news. The good news is if this is your primary home, you've lived in it two out of the last five years, and you haven't taken the exclusion in the last two years, then you will have the exclusion for a single person 250,000 and a married couple of 500,000 above what you paid for a home. So if you sell your primary home right now, and let's say you paid 300,000 for it, but right now you're going to get 700,000 that $400,000 is tax-free money, and you do not have to reinvest it into another piece of real estate.
Dr. Friday 20:54
There was a law many, many years ago, where you had to reinvest within 24 months to keep the money being tax-free. That is not the book. So just for those if you're selling rental homes, though, this is a different situation. So if you're selling a rental home, and you are making it again, it is going to be taxable. Okay, so and you also have to recapture ordinary income tax depreciation. So you'll have the long term in many cases unless the rental is on a for a few months.
Dr. Friday 21:29
In most cases, you'll have long-term capital gains for the difference between what you paid for the house and what you sold it for. And then you'll have ordinary income tax on the amount of the home, you depreciate it over the years it was a rental, you need to make sure unless you're going to do what's called a 1031 exchange. And this is only like, only available for an investment property, you cannot do a 1031 exchange on your primary home.
Dr. Friday 21:58
But you can if you have rental real estate and you decide you want to sell it, you can go and buy like property which would mean rental or investment property for investment property. So in theory, you could buy an apartment complex, you can buy a farm, you can buy several different things, as long as it stays as an investment property and does not turn into your primary home.
Dr. Friday 22:21
You can defer the taxes. And right now with a large number of capital gains coming around, it's something you might want to consider. Because I think with the fact that there's going to be quite a number of people going through either evictions or either way, either losing their home to the bank or having to move out because the landlord has been carrying them for a while, those properties may then become available. And I think interest rates are also going to go up.
Dr. Friday 22:49
So these are things we have to consider. And I had I actually had a real estate person that he's an awesome guy, he does a lot of real estates. And he brought up a good point cuz I'm always like, well, we really don't want to sell now are bottom lines you want to sell now, but not by now. And he's always buying no matter what. And the one thing he brought up, which I hadn't really taken to account.
Dr. Friday 22:49
So for all of you or any of you that are in that situation that you want to buy or sell, is the fact that interest rates are so low, right? So when I purchased my home back in, you know, 20 years ago, whatever, I think I was paying 7% interest. And now of course we're paying three, three, and a half percent interest.
Dr. Friday 23:28
So he's like, well, if you consider that you can buy a three, you know, what you paid 300,020 years ago, you could buy for 400,000 and still pay less money on that scenario because of the compound interest. So that was an interesting situation, I thought, but let's go ahead, Joe, real quick before the break. Hey, Joe.
Yes. 1031 exchange. I've got a piece of property that I bought over 10 years ago. And I just never got the money together to get in shape to rent and I've just been paying the taxes and so forth on it.
And so now I figured it's probably worth about four or $500,000. And I'll maybe make three or $400,000. And I'd like to buy some property out of the country and have a house on it to rent. Why can't I build a house on that piece of property and live on it? Or can I?
Dr. Friday 24:22
Well, you can't live on anything that's an investment property. Okay? So theoretically, I mean, that's just the rule 1031.
How long does it have to remainder investment property before you can do something with it?
Dr. Friday 24:34
That's a great question. And I'm not an attorney. But I think I heard someone say that whenever you turn it into your primary at that time, you have to turn around and pay the taxes because it's moved out of the investment arena and became part of your primary which then would fall under the other exclusion right?
Dr. Friday 24:51
So you could do that. Or you may split the property and have a rental on part of it and only have to deal with part of it for the 1031 exclusion.
Yeah because I can still be renting the house on a piece of property also.
Dr. Friday 25:06
Yes, exactly. So not all of it, maybe would have to be recaptured or, you know, taken out of 1031. And maybe that you could have a rental on it, and a big piece and then build yourself a piece, you know, and have a primary on it, as well. It's a possibility is all I'm saying.
Sounds like I need to get some kind of public some kind of publication on that to really.
Dr. Friday 25:30
If you call my office on Monday, I'd be more than glad to give you an attorney that is awesome at it as well. But that's their expertise. All I know is I can avoid taxes. So that's what I like about it in most circumstances. All right.
Okay. I appreciate your time.
Dr. Friday 25:44
Thanks. All right, let's take our second break here. When we get back, we can hit more of your phone calls at 615-737-9986. And we'll be right back with the Dr. Friday show.
Dr. Friday 26:10
Friday here. We are back here live in the studio. So if you want to join us easy to do I have to do is pick up the phone. 615-737-9986 is the number here in the studio. And you can reach in join us on the radio if you choose to. That would be the easy way to get the free consulting or quick questions you might have. As far as asking or getting what you need to do. As far as those questions. All that being said, we are taking your calls.
Dr. Friday 26:39
I do want to put a holler out to individuals that did have the PPP, I had a couple of people early last week or actually late last week, Friday, that called because their banks were notifying them that they were going to have to start making payments. Remember, a PPP loan is supposed to be forgiven, assuming that you did what you're supposed to do with the money. So if you haven't done that, please jump aboard. Make that happen, because you really do need to do that so that you have the ability to make sure that you have free money because no one has to pay back money that you weren't planning on paying back in the first place to make it happen.
Dr. Friday 27:16
So anyway, if you want to join the show, you can at 615-737-9986. Let's go to Ann in Springfield. Hello, Ann. What can I do for you?
Yes. I sent you an email, but I never heard anything back. I have a friend who is asking me about the Advanced Child Tax credit. Now I've read it. And the best to my explanation for her is that the events child tax credit, what they're receiving from the Recovery Act, is what they didn't get in 2020. And they could neither take it now. Or they can take it later. Am I correct?
Dr. Friday 28:11
No, you're not correct. The tax credit was put into the Tax Act that Biden fight signed into account in 2021, and is a temporary extension of the tax credit by allowing families to claim credit regardless of their money income levels, It increased the tax credit from 2000 to 3600. For children under the age of six 2000 to 3000 children over the age of six, it is eligible balance payments are being made starting in July has nothing to do with the year 2020. As far as a child tax credit.
Okay. All right, then, is there some new law, I guess, for a better rocket charge that says they get anything extra from 2020?
Dr. Friday 29:05
Well, I mean, the only thing in 2020, they would have gone would have been the stimulus monies. And this is not stimulus, but they would have received stimulus back in, you know, early 20. And then in December or January of 2021 was the second, And then were was a third.
Dr. Friday 29:21
But there is no other money for children and not under the tax law. There may be something outside of the tax law, but there's nothing for the year 2020 as far as child tax credits.
Okay, I couldn't find anything. And I kept trying to think about it. And I thought, well, maybe the Recovery Act was recovering 2020 but I didn't want to explain it to her until I talk to you because you're my go-to.
Dr. Friday 29:46
So the American Recovery Act. No, it's basically helping the economy recover. And they also in that particular one was also the $1400 that everyone got and stimulus obviously.
Dr. Friday 29:47
So each individual has gotten over $3,000 that if you made the income that they allowed, and then they had children, they've gotten additional money for those children. So there's been quite a bit, but no, that has nothing to do with the child tax credit. This is just one year for the year 2021. Right now.
Okay, so it's just extra money for 2021. Okay, I got right.
Dr. Friday 30:21
Thank you, ma'am. Let's get Theresa on line two. Hey, Teresa, what's happening?
Hello, thank you for taking my call. I'm retired and on Social Security. And I need to go back to work a little bit. So I'm wondering what is the maximum that you can make up before you have to pay income tax on it?
Dr. Friday 30:45
So are you on early Social Security? Or are you over? So you're regular Social Security?
Dr. Friday 30:51
Okay. So it basically has the provisional tax law. So they take half of your Social Security, whatever that is? And are you married or single?
Dr. Friday 31:02
Okay. And I'm trying to get a cheat sheet here, I believe it's like 32,000. So half of your Social Security, plus whatever you earn can be right around $32,000 for that dollar amount. And I'm looking to see if I can get you the exact because every year there's a cost of living.
Dr. Friday 31:20
So you know, just whatever you're making, let's say you're making 20,000 in Social Security, you would take 10 of that. And then you'd say, "Well, I can make around $20,000." You know, and in that way, then you'd have that as the additional money you can earn like a W2.
Oh, okay. All righty. I appreciate your help. Thank you.
Dr. Friday 31:41
No problem. Let's go to Frank on line three. Hey, Frank, what's happening?
How are you doing Doc? I talked to you last week about PPP. I was approved for a PPP check that was from my online banking. So they called me from a different number.
But I managed to call the company that I went through. But then when I emailed them, and I didn't get a response. And then I called the small business people who just told me, "Okay, we're looking through it" and so and so about it. I've not gotten a response. So I was wondering if I still have to file for forgiveness on this money because I never promised a person.
Dr. Friday 32:33
Right. Again, outside my expertise, unfortunately, Frank. You've got to get a hold of someone that's handling the PPP. And find out or I mean, normally it's handled by like, you say, Blue, whatever, I think it was right, you got through somewhere called Blue something?
Dr. Friday 32:53
You need to find whoever it is and find someone, you can just keep calling different numbers, Google it, whatever you need to do. Because if they're sitting on it, they're the ones that had, they would be the ones processing the paperwork. SBA would not be the people to go to. Because they didn't actually do the loans. They didn't do the banks.
Okay. All right. Thank you.
Dr. Friday 33:12
Thanks. No problem. That's hit, Terry. Hey, Terry, what's happening, sweetheart?
Yeah, I'm on Social Security. I'm in my 70s. And we have some money with Edward Jones. And I was just wondering, you know, can I take that out? It's all in cash. And I was wondering, could I take it out and put it in a checking account without paying taxes on it now?
Dr. Friday 33:37
Well, if it's all in cash, if it's just sitting in a money market or a holding account there, then you've already paid tax to get it in there, or you've already done that. To answer your question, as far as I know, yes. I mean, it can move from one bank account to another as long as they're not selling something to get it to you.
Right. Okay, then.
Dr. Friday 33:57
Yeah. So then you can move from TD Ameritrade checking to your Bank of America or whatever, I'm just saying, you know, it can be moved from whatever location you want. Yes, sir. As long as it's not also in an IRA, this is in a regular fund, right? I mean, an after-tax fund.
Yeah, if it wasn't an IRA, well, I mean.
Dr. Friday 34:19
Then it'd be a distribution, right? They would, they would basically show that you took it out, and then you put it in your bank account, but you'll need to account for some taxes.
Okay, even if I'm only making like, 20,000 what, 24,000 a year, if that's all my income I have otherwise?
Dr. Friday 34:37
Basically there will always, I mean, as a married couple, you get the first 25,000 couple $100 free. But if you're on Social Security and you have anything else, you're probably eating some of that up. There may be a little wiggle room there. But if you're you know, just being honest, if you take 20 or 30 grand out, you're probably going to get hit with some taxes.
Okay, that's why I was wondering if I should take half of it out now and then half out next year if I would make a difference.
Dr. Friday 35:01
If you want to give me a holler on Monday, your choice, or if you have a tax person, I can throw that information and give you a rough idea of what would be a safe number to take out so we can keep it below, you know, the 10% or 5%, or whatever, and see what you're thinking a little hard to do here, but that'd be something to think about. Okay?
I appreciate it. Thank you.
Dr. Friday 35:21
Thank you. Alright, guys, we're gonna get ready to take our last break of the show. So if you've been sitting there thinking, "Oh, I've got a question, I got a question I want to call." Then you need to do it 615-737-9986, the number here in the studio. And after that, we will be off on Saturday, and you'll have to call me on Monday.
Dr. Friday 35:43
So if you have questions about the tax credit, or maybe some other tax issue that's come along, or maybe you've got a friend or family member that hadn't filed taxes in a number of years. Which now we know they've left 3000, or some dollars on the table because they have never gotten the stimulus. Plus, you know, maybe some other credits and things that have happened. Besides, it's very hard to move forward in life, if you're still always looking over your shoulder with Uncle Sam. There are ways for us to help as an enrolled agent to get you straightened out. So I can talk to you and help you with those. So you can reach us again at 615-737-9986. And we'll be right back after this break.
Dr. Friday 36:29
All right, we are back here live in the studio. And if you want to join the show, you can at 615-737-9986. I want to correct something I had said a bit earlier for the young lady that said she was going to go back to work and she was on retirement at full age, the maximum provisional income, which is half of your Social Security is $25,000. So less than 25,000, you will pay zero tax, but you have to take half of your Social Security added to your income, along with interest and anything else you have in there.
Dr. Friday 37:07
And if it's under $25,000, it will be zero. 25 to 34 would be up to 50%. Anything over 34,000 would be 85%. And this is for single and head of the household individuals. So one, I think I said around 30 ish, it is actually $25,000, which makes it difficult. So again, just a caveat there to make sure I'm leading you in the right direction didn't want you to go out there and get a job. And next thing you know, you are having to pay taxes. So if nothing else, be prepared.
Dr. Friday 37:41
Because one of the hardest things I will tell you, I can't. A lot of people, individuals will do things like you sell a house you sell or you convert an IRA. And normally your income is low enough where you're not really paying much or any tax on your social security benefits. But boom, now you've made 35,00, 40,000, $45,000. And next thing, you know, 50% or 85% of your Social Security has now become tax. So instead of just making 40, you've now made almost 70, because you've got half of the 85% of your Social Security, which puts you in a different tax bracket.
Dr. Friday 38:17
And sometimes it feels like a dollar for dollar that you're paying tax on your social security at the same time you're paying tax on whatever it is that you may have sold for capital gains or something else. So very, very be smart. You know, I mean, when it comes down to it, anytime you're going to do something like sell a piece of real estate, sell-out or convert an IRA.
Dr. Friday 38:39
My suggestion is to call your tax person. I mean, if they're doing their job, they should be able to tell you in advance what's it going to do to your tax return. Because my tax people know. I don't I mean, I'll say I don't even charge my clients cuz I don't want to be that tax person that turns around when I'm doing your taxes and says, "Oh, yeah, and you know what? Because you sold those stocks, or you sold that house, we now owe another $25,000" and you're sitting there going "holy tamale that wasn't what I thought would happen." No, no, we don't want that kind of experience in our office if we can help it at least.
Dr. Friday 39:14
So make sure that you have you know some place or if you do your own taxes and you have access to the tax program, all you want to do is take last year's taxes, add the new scenario and make any basic adjustments and find out how much you would owe in taxes. It gives you at least the basics I mean, we know sometimes they change tax laws on us, different things may happen but all we can do is our best in preparing this information.
Dr. Friday 39:37
So just want to make sure that when you're doing and making these decisions or doing something simple, like me right now. I have a lot of people that are concerned with possibly another tax law that may change and there's a lot of talk about changing the inheritance tax as well as the capital gains rates tax. And if that were to come into effect how that would affect.
Dr. Friday 39:59
So that's why I have quite a few clients that are not doing the 1030 ones right now because they feel that at this moment 1031, the capital gains tax is actually lower now than what it might be 10 years from now when they decide to get out of the real estate business completely, and, or something like that. So it's something you have to think about, you need to have someone you can bounce those ideas because you never know what the best plan is, or how you're going to do it. And you want to make sure you're doing the best that you can for you and the next generation that's going to follow behind you.
Dr. Friday 40:34
Again, one way to lower your taxes, guys, the simplest way, especially with, I mean, it's always fun to say, I have a client that's hitting the age of taking Social Security. And maybe they don't think about taking it because they're like, "Well, I'm still working full time. Why would I take my Social Security?" Now, this only happens when you have individuals that maybe have stopped maximizing their retirement because they have enough in there with their age, but if you are at that age, that I mean, I just heard another my financial guys that do those things. But the bottom line is they maximize the IRA or the 401k at work, and then they take out their Social Security.
Dr. Friday 41:13
So in essence, your Social Security is being deferred into a retirement account that you will have for later, but you're actually getting the money. So it's not going to have a zero effect on your income. And it's a way for you to take your Social Security. Because one of the biggest concerns that people that walk into my office, in all honesty, is when it comes down to is, "When should I take my Social Security?" And I am not a financial planner, people. I can tell you tax-wise, what would be good, bad, or otherwise. But when it comes to actually do it, that's something you need to talk to a licensed financial person about.
Dr. Friday 41:47
But, you know, my personal opinion is my parents died fairly young. They died before they hit their 80th birthday. And for people that have that kind of situation, you might want to think so security early, leaving the 401k to the kids. That's a thought but not again, the caveat. I am not a financial planner, and you need to consult with your financial person on that because I do taxes.
Dr. Friday 42:08
Let's hit Ron, really quick. Let's go to Ron. Hey, Ron, what's happening?
I filed with the, you know, filed my taxes back in May, middle of May. And I used the RS TurboTax thing, I guess I'm looking for my refund to hit my bank, and it hadn't hit in the last two or three weeks. So the IRS doesn't have any record that they ever received anything. And I don't know how to contact TurboTax to I mean, I can't find a phone number to call and find out what happened to me, you know.
Dr. Friday 42:50
Did you make a copy of the online?
Dr. Friday 42:55
So you have a copy of the return?
Dr. Friday 42:59
So my suggestion to that would be is, Isn't there anything on there that will give you the information as far as what numbers to call if there's any problem?
No. I can't find the telephone number anywhere. And I would rather call and talk to somebody rather than trying to email back and forth and, you know, trying to explain the whole situation.
Dr. Friday 43:28
Right. Well, here's a number you can start with. I believe this is the free filing line for Intuit, which is who owns them. It's 1-800-315-1481. Yep. 1-800-315-1481.
Thank you very much.
Dr. Friday 43:52
No problem, sweetheart. Good luck.
Dr. Friday 43:55
Thanks. All righty. So we are getting down to the end of the line here. So let's just go through the basic information. If you would like to reach me, it's pretty simple to do. All you have to do is pick up the phone call me at 615-367-0819. Again, 615-367-0819. Or you can email email@example.com again at firstname.lastname@example.org.
Dr. Friday 44:25
Better yet, you can also check me out on the web because many of you guys may have absolutely no idea who I am. I go by Dr. Friday. My first name is actually Friday. The last name is Burke. I'm an enrolled agent licensed by the Internal Revenue Service to do taxes and representation which is what I do all the time, guys.
Dr. Friday 44:44
So if you're looking for someone that's going to help you get out of tax problems, and we'll shoot it straight, not everyone applies. I know they have those things on the radio, it says "Oh, everyone can get 10 cents on the dollar." Doesn't always happen, but when it does, it can and otherwise we can make deals that make sense. They'll get you what you want and how you want it done. And the IRS is making deals right now. But you have to be able to first get in compliance.
Dr. Friday 45:09
If you haven't filed taxes, at least for the last six years, sometimes we have to go back further, if the IRS has already filed statutory returns for you, then we will have to correct those and get the right information out there. But once that's done, and we get all that file, we can find out do you qualify, and we're going to tell you before you go and put 1000s and 1000s of dollars into it, we're going to let you know what we think the IRS will or will not accept, because that's the important part of that conversation. You own $200,000 and you can and we say well, we can get down to 50 or $60,000 you're sitting there going, "That's not gonna do me any good. I don't have access to $6,000." So then we have to look at other options, other possibilities. And some of it is you know, the government doesn't take into effect that if you've got your children in private school and things that are not a tax deduction.
Dr. Friday 45:58
So if you want to talk about that, or you need help, the easiest way again is to call 615-367-0819 call me on Monday morning at 615-367-0819, or email me email@example.com. Friday, just like the day of the week at drfriday.com or go to www. drfriday.com. You can email me through the website as well.
Dr. Friday 46:26
I hope you guys are having an awesome Saturday. Enjoy the weather enjoy the way everything is and hopefully when we get back next Saturday. If you've got some questions, give me a call here in the studio. Otherwise, call you later.