The Dr. Friday Radio Show

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00:01

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 Doctor Friday show. If you have a question, 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. Dr. Friday and the doctor is in the house. We are here today to take calls talking about taxes, talking about maybe making some planning. You know, taxes are great, but normally we’re doing taxes after everything’s already happened. So if you’re really thinking about taxes, you’re probably thinking about 2026. You need to put some plans into play to say, how am I going to pay less in taxes? Can I pay less? Is it better to pay more today and pay less later? If I sell this, if I inherit this, if I convert this, will any or all of these be good or bad things? Again, I don’t really have the perfect answer for you because I don’t know what you’re going to buy, sell, or trade. But if those are things that you’re thinking about, then those are the kinds of things you do need.

01:18

to make sure that you’re accounting for. I’ve had more than one person come in and they have sold their primary home or they’ve sold a piece of real estate Or even inherited property. And they’re like, well, I I shouldn’t owe any taxes, but you know, just because you people tell you you don’t owe taxes doesn’t always mean you don’t owe taxes. So, I mean, you can sell your primary home, but if you sell it for $800,000, you purchased it for $200,000 and you’re a single individual. There is a one-time exclusion of 250,000. Well, 200 plus 250 does not equal 800,000 So you would end up with a capital gain situation. And for any of you are sitting there thinking, but wait, as long as I spend the money within the next two years or put the money back into another piece of real estate, I don’t have to pay the taxes. That tax law died a long time ago. That was something that was actually back in the early 2000s that has not been in existence for a long time. Tax law now is if you sell your primary home You can take your original cost basis and that would include the land and some people built their own homes. And then any major improvements that would have increased the value of the home.

02:36

For example, an extension, or if you’re on piece of property and you built some barns or um or you gutted the kitchen so you purchased the house back in the 80s and and then you redid the kitchen um now that would be a better upgrade so therefore the house would be worth more money so Those are the kinds of things. So also for all of you that are listening, you might want to think about if you’re actually living in a house that you own or purchasing along with the bank for most of us. You might want to document those things, right? Because I have people that’s lived in their homes for 20, 30 years. And let’s be on it. You’re not going to remember everything you’ve ever done to increase the value of your property. You fenced in the properties, you put in a swimming pool, you You know, you you did different things. You took a gravel driveway and now it’s an asphalt driveway. When you purchased it was gravel, now it’s asphalt. That increases the value of the home. So these are the kinds of things you need to document as well. Now, as long as you’re living and that’s what you’re doing as far as selling your property, that’s fine. Now, if you pass away and you leave that real estate. to um whoever your beneficiaries are, they’re going to get what’s called a step up in basis. But one of the things I’ve noticed lately is A number of clients, they inherit the property.

03:56

And keep in mind, it’s what the value of the property was at the time of inheritance, is what your value is. Not after you’ve put $50,000 into that home and increased the value by another $150,000. Because when mom was living in the house, for example, um, she was older, she wasn’t able to maintain the property the way it should be. A lot of things went bad or got old or even, you know, had holes in the floor and bad doors and all those things. And you said, hey, you know what, if we go through and we put a little money in this house, we could get a lot more money out. Great idea. But keep in mind, the value of the home was not the value after you improved it after the passing of that individual. The value that you get of the home was before that happened. So this is one of the big things the IRS has really come down on is a lot of times people are taking comps, but the problem is the IRS is finding that many of the homes when people have lived in them for 30 years have not been maintained like the other comps you’re pulling. So it’s very important to really start getting into appraisal so that the appraisal that comes in you can justify your basis, not just a comp.

05:14

Now, if there’s somebody that you know that can do a uh appraisal based on, you know, the roof is 30 years old, the house is fifty years old, uh, you know, all these different things that come into play because a lot of times people will say, well, I matched it up to another three-bedroom, five bath that’s sold right around the time of the passing And it’s roughly the same square footage. But was it built at the same time? Was it actually had the same kind of maintenance? Because again, as people get older, it is something that, you know, that the house can get away from them So, um, if you are an individual that is uh going to inherit or have inherited um a property It’s a great idea, don’t get me wrong, fix it up and then sell it and put the money, you know, double your investment, which many times can be done with some really decent improvements But um otherwise sell the property before you fix it up and then you don’t have to worry about capital gains. That’s your two options. But uh don’t fix it up and think that Al after you fix it up, now you get 100% tax write-off Because the tax law is coming back and saying, nope, we found out a lot of people are trying to do this. And so they are, you know watching and looking.

06:26

And again, when we file our taxes, it’s not like we want to sit there and say, what can we get away with? We want to file taxes that we can put to bed And that, especially if it’s a an estate tax return, because as a beneficiary or the executor especially, you have legal obligations to make sure the information is to the best of your ability correct But either way, you want to make sure that all of that information is being put together and that it’s being documented and that you’re able to submit that along with everything else to the beneficiaries so that they know how much money they’re going to end up being taxed because everyone always thinks all inheritance is zero, which a good chunk is, which is really nice. If you think about the step up and basis you get, that is about one of the best tax laws that’s on the books right now. Um versus, you know, like an IRA that you inherit and then you only have 10 years to basically empty it. Um, and that’s that’s not an easy thing to do. There are some games people will play, part of it going into charity, charitable remaining trust, different things like that where you can um donate a big chunk of it, but it doesn’t mean that you’re going to put all that money in your pocket and pay no tax. All right, so if you want to join the show you can six one five seven three seven nine nine eight six six one five 737-9986.

07:50

I will tell you guys, this is my last live show. There’ll be no more uh Dr. Friday shows on 99. 7 unless I’m a guest on somebody’s show Um, the this is gonna be we’re gonna be moving fully to the internet, trying to, you know, keep the subjects going, have it a little bit more um ability to zoom in on just the topics that we want to talk about, taking your guys’ phone calls and then being able to really target those conversations. um and not worry about the time or the uh the the rules that we have per se but mainly um I’ve loved doing my radio show for the last I don’t know I was trying to figure out how long I think it’s been at least 15 years maybe more And um it’s been a pleasure having all of you guys listen. Many of you guys are my clients, so I’ll still be seeing and talking to you guys all the time. And if you have questions, you’ll be able to go right to the internet And we’ll be able to do them just as we’ve always done here on the radio and give you the one-on-one that you need. But just so you know, it’s going to be at drfriday.com. That is where you’ll want to sign up. We’ll be getting some sign-ups so that way we can notify you when we do have live blogs going and and just different things like that. So hopefully you guys will continue to follow me.

09:09

I know it’s been easier on the radio, but You know, um, with the current technology and everything, it’s just gonna be time for us to try something new, you know. You gotta every once in a while you can’t get stuck in a rut and just have it go that direction. And I have really enjoyed doing the radio. It’s it’s taught me a lot and you guys have taught me a lot. So I really hope that we’ll be able to continue this into um the next phase that we’re all going to go through, which is going to be the internet. So we’ll see how that works. But you can always go to drfriday.com. Just remember that and you can follow us and we’ll be able to get you linked into all of the different ways of trying to help you um do things or you know I want I love answering your questions and I I’ve always enjoyed the ability to help help you guys hopefully before mistakes are made to give you the ability to think or ask questions or do something like that. So whatever you have there. All right, let’s hit Trish before we have to hit our break, if you don’t mind. Hey Trisha, what’s going on Um yeah, I have a question. Um if I inherit, like I we’re getting ready to do the real flash trust for my parents and um they have a home, my brother has a home and apartment and I have one as well Um, but they’re all in my mom and dad’s name.

10:24

Um scary, I know. But I’ve been paying on my nose for thirty seven years They to turn it over into my name, I don’t know it am I gonna have to pay capital gains tax on that when I they turn it over into my name? Like well I’m I mean I’m not sure. Yeah. Exactly. Okay, so basically, I mean you’ve had um a le uh a land purchase from you to your parents, and I d I doubt that they’re reporting that as income and that you’re purchasing it. You know, I mean I don’t know. Maybe they have. Um if it’s been been reported that way, then it’s no different than me purchasing my house. Your parents are just your mortgage company And um so they just need to uh quick claim the title to you and they can keep a lien, but maybe I mean you’re at the point where you’ve pretty much paid off uh the property probably. So at this point They will quickly and you should have nothing because you’ve paid the full price or whatever agreed upon price you’ve paid now maybe worth a lot more today than it was when you purchased it from your parents back, I think you said 30 years ago. Um So whatever that time period. So basically whatever you paid for it, they need to quick claim it to you for. So that way then, yes, when you sell it, if you ever sell it, whatever the plan is.

11:41

Um, you know, you’ll be able to um sell it just like all orestos. There would be the two hundred fifty thousand or five hundred if you’re married uh exclusion and then you can sell. But are they all tied? I I mean do you have your own plat? Like are each of you guys on your own property? As far as yeah, can you two of the houses are on yeah, two of the houses are on one property and the other was mine is on a separate piece across the street. But my my fear is I mean I inherit the homes because I’m gonna inherit two of ’em Am I gonna have to pay capital gains of like 37%? Like a million dollars? No, because uh when you inherit them, you’re gonna get the value of what they’re worth now, not what they were worth The house that you’ve been purchasing, that’s different because that’s been a deal between you and your parents. But the ones that are just inheritance, inheritance gets to step up in basis. So you will have nothing as far as capital gains unless you sell them for more than they were worth at the time of death. Okay. I don’t plan on selling them, so I won’t have to take capital gains on them if I keep it. No. Exactly. No, you will not. Thank you. No problem. That’s a I’m glad I can give you a little relief. I literally can’t.

12:55

All right. Thank you. Thank you. All right, we’re gonna take a quick break.

12:59

We’ll be right back with the Doctor Friday show.

13:07

Alrighty, we’re back with the Dr. Friday show. Sorry about that. I couldn’t tell when it comes in. Um if you want to join the show, you can. 615-737-9986-615 737-9986 number here in the studio. We’re talking about my favorite subject, which is taxes. It’s gonna affect every single one of us. It even affects us as you can see Even when we’re not here, the people we leave behind are going to end up with some tax issues depending on how you set up your estate. And sometimes you really have very little option unless you want to pay the taxes before you pass away, there is uh always going to most likely be a part of our our inheritance that will end up partly taxable But if it’s handled right and handled with a um a good set of yeah I I’m a huge uh believer in a trust. For most people, a trust is just easier. And to be quite honest, it also allows you, even when you’re not here, when you’re no longer uh on earth, allows us to be able to um Still steer the ship, I guess you would say. Still make sure that what you wanted done even after you’ve passed away because the problem I always have with a will, plain and simple, it’s gonna go through court Court is made up of judges and and other people.

14:22

And sometimes people know how to play the system. And so if I’m not there to represent myself. A someone has to be paid to do that, which is kind of crazy, um, because I already told people what I want, but if somebody wants to contest or question what I want, then you’re in a situation where you’re like, okay, now I’ve got another problem, right? Now I’ve got to deal with this issue. Whatever it is, it still needs to be dealt with, which means you have to hire an attorney to speak on the behalf of the person that has passed away. So that being said, the next thing you really want to do is make sure that you have everything in order. And that’s easier said than done because as we start getting older, things are changing. Right? I mean when you’re in your 30s, 40s, and 50s, basically your main concentration is your spouse or your children or your parents, whatever. just taking care of those immediate. But then as you get older, you’re going to start thinking about what can I, what do I need to have? What kind of documents do I need to have signed? to make sure that there is someone there that’s going to be able to answer the questions when needed, right? Because if I’m incapacitated, who’s going to tell the doctor I do or do not want certain things Because I don’t want them, you know, but that there’s no way of them knowing.

15:36

Um, so you have to have power of attorney for somebody else to be able to do that. It’s that simple You need the ability to give someone the authority, someone you know that will say, I do not want to be resuscitated. I do, I don’t want to be kept on a life preserv a life machine or I do um all these different questions are going to be asked because the job of the doctor let’s just be honest their job is to do what you want but also to the best of their abilities But they don’t know what you want. So they’re going to go and do a hundred things that maybe you didn’t want done, or they’re going to, I hate to say this, look at your insurance and say, oh We can’t use this particular procedure because they’re not insured with this kind of company. Those kind of things. And then also, who’s going to take care of you as you get older? You’re going to be able to keep home care Are you going to need to move to a facility? If you move to a facility, are you going to need to sell your home so you have enough money to pay for the facility? These are all kinds of decisions and sometimes hate to say it, but sometimes the client is no longer there mentally to be able to make some of these decisions. So you as an individual in this world um need to think about this and I would say think about it when you’re younger not I know I say as you get older yes it’s normally we hope that none of these things are needed until you’re 80 years old or 90 years old.

17:00

And at that point you may need some more assistance, but we none know when the big guy upstairs are gonna decide to do these things. So I suggest at least having your first draft done as soon as possible. I don’t do this. It’s not something I’m marketing you to do. I’m suggesting it because I’ve seen so many different people come into my office. And they had to probate things, but they weren’t able to find any kind of well, so you can’t probate easily. Now now the courts and the state of Tennessee is gonna tell you what’s gonna happen, even though you might have known what your parents or your mother or whatever. But, you know, or I mean I’ve had so many cases also that’s come in because obviously when we do taxes, we do estate tax returns. And, you know, I have one recently where her mom had put her down as the beneficiary and then mom had remarried. And um and Daring, uh, she outlived her her new spouse and the the spouse she had um had had a a daughter as well. And um Mom had talked to her daughter many times, telling her she really wished that everything could just be split evenly between her and her s her half sister or whatever.

18:16

Um not too sure the exact because they weren’t really related, but to her spouse’s daughter as well. And but she never changed the POD or paid on death of her IRAs or anything else So at this point, thy client comes in and says, hey, you know, um everything’s coming to me, but I know what mom wanted. And I know even though the will and the trust all them doesn’t say what mom wants. She knows that mom had had, uh wanted to change everything, just never really got to it. Um, and so we we set up a gift tax return, right? And we we gift we after my client paid taxes on everything. She accumulated the differences and then she honestly split everything in half at that point. I give her a lot of kudos because um, you know, it wasn’t She didn’t have to. She felt she had to. And I agree. I mean, mom told her what she wanted, even if the will and the courts, because Mom only had a will, so it had to go through probate and everything. And she tried to bring it up in probate, but the fact is she said no one wanted to hear. what mom wanted, they only saw the document that basically said everything was left to me, which was really done before she even remarried.

19:36

So these are the kinds of things you don’t want your kids to have to go through. That’s all I’m saying. If you’re young and you happen to be listening to this station, think about who do you want to take care of your children? Because if you don’t leave something in the proper order with the proper documentation, The courts will most likely give them to somebody, but will it be the person that you guys want? And you’re all sit here and say, well, we’re young. Why would we worry about because every day people pass away. Not everybody is old and and done with life. Many times it’s middle, prime, young, you know? I mean, and let’s pray that never happens. But on the other side of that conversation, let’s prepare for the worst and live for the best, right? I mean that’s always uh saying my dad used to say, you know, I mean, prepare for the worst, but then go out there and live the best you can. And that seems like a really good attitude. It worked for him, seems to be working for me. And hopefully it will work for some of you guys that are listening. So if you want to join the show, you can. 737-9986-615-737-9986. This will be our last show on air So if you have questions after this, you can easily just go to drfriday.com.

20:49

That is my website. Has been forever. And you can ask questions through the website. We’re going to have a lot more live blogs and different things going on. We’re just moving more that direction. But you know, we’re still here to answer and help educate all of you guys. You have been awesome. Hopefully you will continue to listen. Um through the internet and we’ll be able to get you uh more and more information. And like I said, if you’ve got questions, you can join the show right now, 615-737-9986, or you can send in an email Friday at drfriday.com again friday at drfriday.com and that way you can always um because you know questions happen all the time something comes up something changes Someone says something and you’re not sure if it really applies to you, and please check those out. Whatever your neighbor is doing, whatever your best friend is doing, I’m not saying isn’t 110% correct But may work for them, but because of either your income bracket, the filing status that you work with, um there’s many different elements that could be even if you both seem like you’re pretty much at the same point in the same place. doesn’t mean it’s going to work for both of you.

22:04

Tax law is not black and white. It’s not like everybody that is this is going to get this much money. I mean, basically you can count on the fact that you’re going to pay taxes, but there could be different taxes. You have AMT tax, and of course, if you’re in the marketplace, you can end up with the extra tax that you didn’t pay because you understated your uh health insurance. That is a huge thing. People are still using the 1095A marketplace. And I don’t know, I’m not an insurance, so I don’t know if there’s better options. I hope there are, because I know I use a health savings account, uh, HSA, and I use Farm Bureau. Awesome, works good And the prices are very nice, but um again, nothing fits everybody, but the marketplace when it’s based on your income, You know, I’ve had people having to pay $20,000 back because they sold some rental real estate, didn’t think about it, and then they realized that the market, they hadn’t told the marketplace because they didn’t think of it as earnings This is a one-time situation. Oh, there is no excuse, no penalty. I mean, no way of getting out of that penalty. The black and white is they paid for insurance on you.

23:18

And at that time, the person was paying like $23 a month. Um, and then they sold this real, you know, sold this real estate and ended up making some good money, kicked them into and they owed it $20,000, which they didn’t count on. When we were estimating their capital gains, we didn’t think about estimating marketplace. It’s a lot like Irma, right? So if you make a lot of extra money and you’re on Medicare, a lot of times people don’t think about estimating the IRMA effect. because uh your Medicare is means tested. So if you make uh a big chunk of extra money, that could affect how much money you’re gonna pay in Medicare for the next year after And it always feels like it’s almost two years because you have to wait through the year you did and then you file and then it doesn’t really catch on till a period later. So it often feels like it’s a little longer than it is. But Making sure you’re making those estimates before you make those decisions. Understand how your taxes are going to affect you is really what we love doing. And it’s really what the whole purpose of tax planning is. Tax planning is trying to figure out what’s the best way to put everything into a Roth IRA, to figure out when you’re gonna sell all your real estate, when you’re going to retire, when you’re gonna start Social Security. Million questions come to mind whenever I think about.

24:34

What am I going to do next? What’s the next step and how can I save money? When should I start doing it? And what’s the best way to go about it All right, we’re gonna take our second break.

24:44

You can certainly join the show. 615-737-9986. We’ll be right back

24:52

Alrighty righty righty we are back here live with the Doctor Friday show. You can join us if you have a question concerning taxes or maybe you’re dealing with Some sort of a state situation and you’re not sure which way to go, or maybe you just have a story you want to share. 615-737-9986-615. 737-9986, taking your questions, talking about my favorite subject, which is taxes, which you know what I’ve always found pretty amazing that a lot of you guys actually enjoy it as much as I do Let’s be honest, we’re a little bit weird because who wants to talk about taxes every Saturday? Um, but all my listeners do, and you guys have always been pretty cool. And I like uh talking about taxes mainly because it affects every single one of us, even if you don’t think about it. You know, when you go to the grocery store, you pay tax, sales tax, or You go to dinner and you pay sales tax or liquor tax. And you go to the petro station and you pay gas tax. Um, lots of taxes in our world. Um, some of them get to be tax deductible. If you own a farm and you go out and buy farm diesel, you can ride off the gasoline. If you use your vehicle 100% for business or you’re riding miles because you are using it partly but you’re able to do miles all of these different ways help reduce your taxes now keep in mind if you’re a regular employee because this one gets asked a lot if you’re on a W-2 And you use your own vehicle, it is not going to be any kind of major tax advantage.

26:24

One of the problems we also have is like my truckers. So my truckers used to be able to take a per diem because they spend the night in their truck. But unfortunately When they change the tax law, that fell off the books, cause most of the my truckers are many of them. If they’re not um self-owned, they’re W-2s and those individuals end up with a different situation. So a lot of people have lost some of those tax advantages, but hopefully we’ll be able to find some different ones. Looks like we have Milton. Is this my Milton on the phone? This is your Milton and this one talking to my girl Dr. Friday You got it. We’ve been together a long time, Millie. A long time. I sit here. I’m I’m moaning right now because I’m saying, oh no, you’re not leaving. No, no, no. That’s all right. We’ll just have to get you listening to me on the ra on the computer instead of on the radio. Well you know I will. You know I will. Hey, I got I got two hypotheticals for you and uh one that we’ve been talking about. Let’s let’s go with the first one I’m gonna give you a hypothetical. I won the lottery, I got five hundred thousand dollars, they took out taxes, so now with what’s left over When I at the end of the year, do I have to add that to my income where I’m paying more taxes on it? So what you actually report is the five hundred thousand plus the estimate because we what you didn’t really pay taxes but you made an estimated payment so that estimate would go against it and hopefully it’s enough but I did have a situation where the person was 120 000 short

27:57

of what the IRS did not take when they did the original estimate. Oh good. So you could end up owing more money. So don’t go spinning it all, as that particular client did. um and uh have to go back and take a mortgage on your house. So yes, if you win the lottery, they will take an estimate, but don’t assume that that estimate is going to cover everything. It’s a lot like if you have a 401k or an IRA and they take out a uh 20% because you told them take out so much for taxes, it may or may not always cover all of it. That’s what I that was my next question. How do they know what to take out as it relates to the estimate? It’s the same way as with your four oh one case or your IRAs. You tell them I um want twenty percent, I want twenty-five percent You know, if you’re smart and you made five hundred thousand, I’d probably go with the highest tax bracket, thirty-seven percent, just to be on the safe side, and then you can get the refund back Okay, next question. As you know, because it’s been all over television, Saint Jude is raffing out that uh you pay a hundred dollars, you can move into a nine hundred thousand dollar home, I think that’s located in Franklin Those whoever wins that whoever wins that, what kind of taxes are they having to pay and do they have to report it on their income r uh uh re uh in terms of whoever wins that Well, I’ve always wondered about that, Melton.

29:16

That’s a great question. So I don’t know. I mean if it’s a normal lottery, the answer is they got it for a hundred dollars. So they have uh eight hundred and ninety-nine eight hundred and ninety thousand dollars whatever they have to pay tax on um and many times you hear people when they win a car they have to sell the car to pay the taxes right so that is a possibility but i’ve also heard someone say that it’s gifted from Saint Jude to the person. Now if it’s gifted, that means Saint Jude paid the taxes. And the You know, uh because a lot of the people that built that home did it under a charitable deduction from their companies, because I have dealt with some of the people that help with those projects. And so their corporations are taking their labor and cost directly against charitable contributions. So um I I actually think they’ll end up paying tax on it. I mean it’d be great to win it, but then you it could really mean that you have to go get a mortgage to actually do something with it. Yes, because every you know, it’s been they’ve been doing it for year and it’s it’s a good cause. I I love what they’re doing and I love what they’re doing. I give it every year. Yep. Yeah. Never wanted. see that they’re helping the children out but I’ve often wondered whoever wins that and I’ve I’ve seen over the years different people win it and I often wonder what kind of taxes are they having to pay on it or, you know, at the end of the year or whatever.

30:35

And it’s just I was always curious about it and I sound like you have been too. So I guess you know, that’s just one of those things. But it but it makes sense I’m sure Uncle Sam’s gonna get their share out of it, but I think like what you said with a lot of people doing this as a private donation St. Jude may be the one to go ahead and pay the taxes because I think they’re probably gonna get about maybe two million dollars out of this from what it sounds like Oh yeah. That’s what it sounds like. I mean that’s a wonderful and I mean and like I said, the people building the house are all donating to this. So St. Jude gets all two million dollars. the castle constructions and all them that that participate in the the decorating the building of it, they all take on the cost as part of their charitable deduction. So it’s a it’s a fabulous way. Uh I’ve always wondered if anyone has actually moved in or if they’ve all ended up selling them. I’ve never looked into it, but it would be an interesting, yeah. Good question. Okay. Hey, well thanks so much. And like I said, it’s been a great fifteen years, but you know, I’m not saying goodbye. We’re just saying so long for now. All right, until you beautiful wife I said hi. I definitely will. Take good care and have a good day. All right. We’ll talk to you later. Bye. Okay. Bye bye. All right, guys, and that’s uh yeah, one of my best friends.

31:49

Okay, so um we are on the Doctor Friday show, and that was two awesome questions. Um I’ve had the same kind of wondering, especially if you win something that I mean, I’ve had clients win the lottery and in those cases they file W9s um or W4 forms, I think I think it’s a W9 actually. I think our client had to fill out. And it just told them how much to withhold taxes on, anyways. And in the case of the one that didn’t He had not come to me until after the fact I would have told him that 15% tax on 250 grand or whatever it was was definitely not going to get in the ballpark So you definitely need in those cases, even before you go pick up the money, in my personal opinion, get your attorney and your uh accountant on the phone, tell them that you’ve won, and then find out what you should be doing before you go and pick up the money because once you pick up the money that’s when they’re going to want you to fill in documents. You’re going to need to know what to do. Is it better to move that into some sort of trust or outside your basic information because you also could have a lot of people probably calling you saying, oh, we can help you spend that money, we can help you invest, because it’s kind of public knowledge. Not something I’d want So if uh if you’re lucky enough to win, that’s awesome.

33:06

I think that’s always. And I and anyone that um does participate in the uh the charities that are around. I mean that’s that’s always that’s the win is the help the charities. But I mean some some of these places um have come up with some pretty unique ways of raising money and you have to admit me so j Saint Jude has done a very good job of doing that and I have had some of my builders and designers that have participated in those homes. So Beautiful way to help and also raise money for a great cause. So if you have questions, you can call us 615-737 9986-615-737-9986 taking your calls. Obviously talking about my favorite subject, but I do understand 6-8 or June 8th was when we had to file. Last Monday was when if you did not already file an extension, that was when we had the federal disaster extension expire And um I’ve had some really unique um situations because my tax software does not take into account that Tennessee ended up with an extension.

34:19

So some people that actually owed money, it calculated a penalty. The IRS is now sending letters back to them saying you have a refund. And they’re all sitting there going, wait, I owed money. How can I have a refund? And that was because I did not override and make sure that the penalty had gone away. So now all these people are getting small checks back and the the irritation part is is that the IRS is saying you need to update your bank account because we don’t have your banking and therefore we can’t give you a check back um or direct deposit back. And it’s kind of funny because they had the banking account when we paid it electronically through the same website for the withdrawal of the funds. But um I understand the IRS is working very hard to try to get uh uh the fraud out of the system and I can only imagine what they have to deal with. Since we’ve all heard stories on the smaller level, if you were the US government, I can only imagine how many people are trying to break in. So uh they are doing a lot of identity proving I’ve had some clients, it seems like every single year they have to call the government to prove their identity. And they’re not like some really big, you know, crazy things. This is just a normal situation.

35:32

Um, I have one client that has they were told, well, you should get an IPIN and she has had IPIN for a number of years. So it was funny that the government told her that she should get an IPIN because she has had one Um, and yet, you know, they’re they’re always trying to prove or improve their system. So I guess we just have to be patient when it comes to dealing with that because we really do want them to have hopefully the right people doing the right things and not messing up or taking our identities and doing crazy things. All right, we’re going to get ready to take our last break here.

36:03

This is the Doctor Friday Show. If you have a question, you can go to the email friday at drfriday.com Because I know calling a radio station can be a little intimidating. Not everybody’s comfortable calling radio shows. Um, but if you want to join, you can 615 737-9986. And if you’d never heard me before, um, you can also check us out on the web at drfriday.com. That’s our website, drfriday.com. We’re gonna take this break and we’ll be back

36:31

In a few minutes with the Dr. Friday show talking about taxes as an enrolled agent. That’s all I do. So we’ll be right back.

36:39

Alrighty, we are back here live in studio. Last few bits of the show. If you want to join, you can, 615-737-9986. From any of you that may have been listening to me for the last 15 plus years My name is Dr. Friday Burke. I’m an enrolled agent licensed by the Internal Revenue Service to do taxes and representation. Been doing it here in town for about 33 years. in the Brentwood area. I’ve been able to meet and talk to a lot of you, which has been awesome. And I will be continuing to do that. Don’t think that the practice is going anywhere. It is not It’s just that we’re going to try to take our radio onto the internet, new, um, do a couple new and unique things after a while. You gotta freshen things up a little bit. and be able to really target a lot more of the new uh ways of communicating within everybody. Now everyone texts and emails and you know Half the time I have my employees in here and I’m like, have you called the client? And they’re like, oh no, I text them. Well, you know, sometimes people just like you to pick up the phone and call them. I that’s my opinion. Now maybe that’s not everybody’s opinion But I do like to pick up the phone sometimes. It’s a lot easier and you can resolve things so much faster than going back and forth in text. But that’s not the way a lot of the the future um communications are gonna go.

37:58

And so being able to really just uh c hone in on the topics um there’s so many new things going on a lot of changes that’s going to be coming down we all know that taxes we’ve seen the market there’s going to be new tax laws there’s going to be some changes again Um, I’ve had a number of clients that were uh back in 2020, 2021, 22, they were in business. The businesses have now closed due to a lot of hardships that’s been happening And then we’re having to deal with EIDL loans that uh or SBA loans that were given back then that have not been paid off. So there’s a lot of learning curves, always something new and I don’t want to say exciting because not to everybody is it exciting, but for to me, I’m always able to continue to keep learning. And that’s what I’ve always loved about doing accounting and taxes. If you’re a small business owner and you’re needing to have someone that’s going to help you, you know, strategize. What is it that you really need to be doing? What’s the important parts of the accounting not only to be set up to basically do the basic accounting, but also the taxes and what’s the important things to be tracking. I still have a number of clients that uh seem shocked when I ask them for their mileage logs.

39:13

And yes, mileage IQ is one of my number one I suggest to all real estate agents, anyone that’s doing any kind of major traveling. If your business requires. Again, businesses are changing a lot because I have a lot of people that work from home do not have any miles that they have to track. They basically have a home office and in some cases they’re living in very small studios or even one-bedroom homes. So it’s uh again, an office does require to have some sort of walls You know, it can’t be your front room, can’t be your bedroom, can’t be your kids’ room. You know, I mean just because you have a computer and you can sit on the bed with it is not make it an office The tax law is very specific about what is an office space and it needs to be used solely for the purpose of doing office work, not someplace with your dining room table or your inn table or whatever Um so again, um it’s just one of those situations where things are changing and people are not required or having to have the workspace that you know many of us probably still have. I know I do. I enjoy my multiple monitors. It makes my life easier.

40:25

And I couldn’t do that if it was my kitchen table. Now I have seen some pretty cool adapters that can go on laptops. But all I’m saying is is if you want to understand how you can save taxes, establish a better system for you to be able to track those expenses. And yeah, part of it is you need to be tracking the expenses, not only just saying, hey, I went and done this, but where’s the receipt? If you went to Facebook to buy your office computer or your office Uh furniture, you need to have a receipt for that. You need to have proof that you physically paid for it. The IRS would love to probably take everybody’s word, but it’s not going to happen. Never has, never will You need documentation showing that you either went to a garage sale, that you went to, you know, marketplace, whatever it is, and you purchased it. You need uh, you know, taken a picture of the ad Take a picture of the receipt that you took out for the ATM if that’s when you had to go take and give them cash. Um, because again, most of the time people are paying with cash. They’re not paying with uh credit cards or anything that you can easily track. A credit card statement still is not a receipt. Um many times the IRS has come down saying, you know, you taking your monthly um credit card statement and highlighting this was office supplies, this was, and even though it says Walmart, it may say office supplies.

41:50

this was, you know, uh supplies for the business, whatever, but the receipt is what they want to see. Because the receipt’s gonna show that you didn’t go and buy a paper towel for your house or or food uh even though you put on the receipt office supplies, the IRS wants to be able to verify that. And when you’re doing your accounting, you want to be able to just have those. Nowadays you can take a screenshot of it You can save it. You can start a folder for each year or every month, whatever, and put that together so you’re able to really track being audit-proof. is one of the biggest things we’re going to really start honing down on. The IRS has come out that they’re going to be doing more audits. There’s also You know, the fresh start program for people that cannot pay the IRS and being able to make sure that you understand how that works. I have had more than one person that has put their own um fresh start together or 433 OICA and um you know it doesn’t go through and they don’t understand why because You know, I mean again, uh, one gentleman I was talking to, well, you know, he’s planning to inherit, so he wanted to settle with the IRS before he received the inheritance. is if the IRS isn’t going to know that there’s an I mean one of the questions on the questionnaire is are you going to be inheriting or are you a beneficiary on a state?

43:15

Um, you know, I had a gentleman that settled with the IRS and won the lottery like three months later. Guess what? They came back and said um you know you can afford to pay so they made him pay um things are not always as simple as just saying I can’t afford to pay You have money in your house. That’s the biggest thing. People are like, I don’t want to have to take another mortgage out. I I don’t want to have to take the money out of my house. The IRS has very few people that they’ve allowed to keep their homes without having to do anything. And normally it has to do with age or disabilities, and they’re not able to pay pay them back But you need to understand what the IRS expectation is. They have a very specific type of law. And if you understand what the game is, then you might be able to understand how to make yourself somewhat audit-proof Doesn’t mean you couldn’t be audited, just means that when you go in there, you’re going to be able to give them everything they want, and therefore they’ll have nothing to do but take your paperwork and say, okay, thank you Thank you for showing up. I’ve had that once or twice. Um, I will say most of the time when I get involved in audits, it’s already somebody that’s already started the audit sometimes. Um the they didn’t understand what kind of paperwork they needed to be keeping.

44:32

Therefore, when the IRS is audio asking for mileage logs or documentation showing proof of purchases They didn’t have all of them because again, they didn’t really understand what they were. So it, you know, comes down to really understanding what the IRS is expecting. Then you can go around and do what you need on the rest of it, right? Because if you know what the expectation is, you can often deal with what has to be done on other elements. But if you don’t have that expectation, if you don’t understand what the uh total expectation is, then you’re not going to be able to do anything more with it. I mean If you’re tracking everything the right way, then you can sleep easily at night. You know that it’s going to go versus I had someone say, well, how does the IRS know this? Or how does the IRS know that Well, to be honest, you got to work with the idea, what can you justify? What is going to make you sleep better at night? What is the true tax law? That’s the question Alright, guys, this is the last about minute and a half of the show. Again, this will be the last Dr. Friday show for uh Um for now. I don’t expect to come back on, but I do have a lot of friends on the radio, so hopefully I’ll be invited to be on some of their shows. You can always catch us at drfriday.

45:47

com. We’re gonna be starting some pretty cool um and interesting topics that we’ll be having in there. If you have questions, please still feel free to go to friday at drfriday.com or call me at 615 367-0819. That’s my direct number. 615-367-0819 is the phone number. You can always reach us or you can email Friday at drfriday.com again Friday at drfriday.com the website is drfriday.com it’s what we enjoy doing is helping you guys figure out what’s the the best way? How could I keep more money in my pocket? How can I set up a business and then have it running properly? Not kind of getting love letters from Tennessee Department of Revenue or the IRS because things weren’t filed properly There are ways you can just set it up. It is not that complicated once you understand what the expectations are. So again, I am Dr. Friday, an enrolled agent, licensed by the Internal Revenue Service to do taxes and representation. I’m here in town and have been for the last 33 years. If you need help with taxes, accounting, IRS issues, state of Tennessee issues. It’s what we’ve been dealing with for all these years, and we’d be more than glad to talk to you and help you do whatever it is to keep your business running safely.

47:08

Cop ya later.

Summary Points

Episode FAQ

Transcript

00:00

She’ll 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. 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. Um, and it’s gonna be a an interesting show, I think. For one thing, Monday is our big deadline for anyone that may have been in the 23 counties, which is almost everything around us, Davidson, Rutherford, Murray, um, you know. um Hickman, all of them um are under this major disaster um deadline that extended first to May 22nd then on April 15th, they extend it to June 8th. So all of us need to make sure that they’re filed and paid and dealt with. Um, at least, you know, even if you haven’t filed your taxes, if you’ve made the payment so that your taxes are paid in full or as close as you can estimate, because sometimes I’ve got a number of clients that are still waiting for K1s So it’s not like we can complete all returns, but we have the ability to complete as many as we can or make payments by by Monday so that we keep all of our penalties down.

01:23

We don’t mind not paying the government, but if we have to pay them, we don’t want to pay them with penalties and interest. So I had an interesting situation this week. Um pretty much I find it interesting Interesting, everyone else may or may not. Um, I found that we had a situation where a tax player had it paid um that they they came back, the IRS came back and said, you haven’t filed your 2022 tax return. And we’re sitting there going, okay, um, we show we filed it. We, you know, made all the payments, everything was done. We even sent in the payment with the last, with the filing. And so we’re waiting to find out. But then we um During that same time, the taxpayers had some issues in the past. So not knowing that, we just tried to put a waiver in first-time abatement. It’s an easy waiver and it makes things easy. And then we got on the phone with the IRS and the lady turns around and says, Well, you’re not going to qualify for first-time abatement because you’ve already had abatements in the past. Now we’re talking $46,000 abatement we’re working on here. So this isn’t, you know, a petty cash situation. Um, and and it’s basically coming failure to file the tax return. And so we’re we’re working on that and we have documentation and we’re showing.

02:39

But it’s uh it’s gonna be interesting. And then in the last week or two, I’ve seen Several well probably about four people that have received a notice on 2014 or 2024, 2023, 2022, and says they have not filed those tax returns. returns yet they know they filed them. They even have proof because a lot of them are e-filed. Um but the government’s saying hey EFU filed, you’ve got to resend a copy of that tax return and you need to sign it So you can submit it. But what you have to make sure is is that A, that you show payment in full. This couple did pay everything in full by the uh due date. Question is um The the biggest question that we have to find out is was there an extension file? Because then they were filing late and there was no extension. Always file your extension is what I’m trying to say. So if you have not completed your taxes yet. and you have a situation where you may not be able to file them by Monday, make sure you have filed an extension. And to do that, you have to certify one in. You cannot e-file an extension at this point. The IRS basically looks at extension due date as April 15th. But because of the federal disaster we’re under, you will qualify.

03:58

for an extension, but you have to document it, right? So you need to make sure you send in a certified copy along with on the IRS website they have the federal disaster extension. So you can actually put in the federal disaster or FEMA number that you can use for for your extension. But it’s very important because if you have not filed and you You know, may not be able to. And I know sometimes people listening, you don’t file because you don’t have the money. And it’s not necessarily the best plan, but I get it. Sometimes, you know, you’re just thinking, what can I do to survive? And sometimes surviving is I’m not going to uh file. But Your best bet is always file an extension if you’re one of those individuals. So that gives you until October. And then take that time and try your best to file the paperwork, even if you cannot afford to pay it because then you don’t get hit with failure to file, right? Failure to file just means you didn’t do the documentation. Now if you didn’t file an extension and you filed it in October, that’s failure to file because there was no extension on file. These are the kinds of things you have to make sure. And no matter if you have a tax person or not, you need to make sure that those extensions have been filed.

05:14

We do a lot of tax returns in our office and we do our very best to make sure everybody that we had the year before have been extended and we do it pretty early for probably some tax offices may not do what we do Because of the fact that I’m always afraid I’m a small office. And if something happens to me during the months that taxes are needing to be done, Then my clients could be out for a period of time, or you know, I’m not able to get them done as fast or whatever. And that’s very important to me that they’re covered at least If they have an extension on filed, they’re not going to get hit failure to file. They could still get hit with failure to not make proper estimate takes me. They could still get hit with uh not making proper payments. But the failure to file would not happen because the extension was on in play, right? Unless you wait till after the due date. And then, well, there is no extension after October 15th, unless you’re under a federal disaster extension. It’s that simple. So you just need to make sure that right now, if it’s the weekend, and so if you have not filed um your taxes and you don’t know if an extension’s been filed and you can’t reach your tax person on the weekend and You don’t want to wait till Monday.

06:30

Pull up a 4868 right on the IRS website. Pull up the extension um information, put it right at the very top. 4868 is about the easiest form in the world to prepare. It’s got your name, your social security number, your address. Um, and then it’s got like how much money do you think you paid in, how much money do you think you owe? Um, but you know, if those numbers are zeros, that’s still accepted by the IRS. If you don’t know those numbers, you don’t have to fill them in So bottom line, file that form, go to the post office, use priority mail, or go to FedEx or go to wherever you want to go. Make sure you have tracking. That’s all I’m going to say on that subject Because tracking is so very important, especially in these kind of scenarios, because the government um pretty much assumes that we’re all guilty, that we’re we’re doing our best to And it’s probably because it’s no different than if you probably have a policeman that’s a friend of yours or anything and they see the world a little different. My sister’s uh daughter married a police officer. And uh he’s an awesome guy. Love him. But he always sees the world as something.

07:42

Um, you know, he sees the negative where it’s not always that negative. So um and that’s because he sees the worst of the worst. I mean the things he could tell you. Um are that way. And that’s the way the IRS. They um most people that are calling or dealing. And I’m probably one of the few people in the world that’s like, we need more people to work for the IRS. And I know people are right this second driving your car or you’re in your house and you’re like, oh my God, this lady is a lunatic. Why in the world would we want more IRS? Because we need resolution officers, people. A lot of my cases could be resolved simply if we actually had a qualified resolution individual that could actually take the phone call and do something It’s hard to get a hold of a revenue officer. It’s hard to get a hold because they’re handling 30, 40, 50 cases. I mean, their table load is amazing. I mean And they immediately pretty much, if they don’t hear from somebody, if they don’t have something, that can go immediately back to the queue and they can get it off their desk. And in trying to call or resolve, the only way um if you cannot do it over the phone with a collection, because that’s usually who you end up with, is collections. And so, and their job, keep in mind, their job for the collection division of the IRS, basically all of the IRS, their job is to collect money.

09:06

Right? They’re a collection agency, a massively huge, huge um collection agency. But that agency is going to have situations where people amended tax returns. People had, I had one, it was kind of a crazy situation, but actually it’s happened twice. Um, and we have one both times, but it’s it should be such a simple fix They sold a house and somehow the closing agent as well as their own uh the buyer’s agent both sent 1099s on the sale. So they got two 1099 S’s Same house, same address, same date of closing, yet the IRS got two of them. So what do they do? They’ve changed the tax return saying you have not reported all your sales uh you missed your your sale of your home and that you um now owe hundreds of thousands of dollars. Um the clients freaking out because they’re like I only sold one home. Why would they think I sold it twice But again, most of the time you’re receiving information from the IRS is from a computer. A computer is generating the responses. I’m not sure how AI it is, but it’s definitely a machine that basically says, okay, there’s a collection issue.

10:23

We’re doing matching. If this match doesn’t happen, we’re changing the tax return, sending out the letter that says, oh, we’ve changed this tax return you need to respond by blah blah blah um and so in this situation it took us a year and a half to finally get through the tax advocate office, may I point out, that this was such a simple fix. And if they had had basic normal resolution people that could easily look in See the two 1099s, see the date of closing, see the business, uh the address of the closing, and then look at the forms that we uploaded, which was the sales documents This would have been a two-minute fix a year and a half later, besides seeing love letters from the IRS that keep saying that they owe more and more money. And you know, people kind of freak out over that. So it is one of those things you just You need to stay on top of, but it would be nice if Uncle Sam could put a few dollars and do not tell me we’re gonna go AI, people I’m not opposed to AI. I find it has its uses, but when I have a problem, I have an issue. With a business, it doesn’t make a difference if it’s just customer service.

11:37

I want to return a product, whatever. And I have to go through 20 minutes of some computer named Al um that is trying to help me resolve my issue, it’s just very frustrating. Maybe it’s my age, maybe it’s just the way I speak, because apparently it sometimes it doesn’t understand me. But it is very frustrating when you’re doing that. I had an auditor that to get to the auditor, it was a 26-minute AI meeting, I guess you would say, where I had to keep going through this this uh AI answering service to get to this person. I had their extension. All I needed to do was tell them one or two things. Meanwhile, I finally hung up to be quite honest. And I decided to go directly to the emails, right? Which is probably what most people would have done. But sometimes it’s just easier to talk. You know, I love to talk. All right, we’re going to take our first break.

12:31

You guys can’t join the show. We are live today, 615-737-9986. 615-737-9986. We’ll be right back.

12:43

Alrighty, we are back here live in studio with the Doctor Friday show. And I guess I need to go ahead and start saying that I am Going to after 17 years, uh Dr. Dr. Friday show is going to move to the internet. Yes, um, we just had a lot of people people that want to be able to do more that direction. So we only have a one or two shows left and then we’ll be going 100% through you guys will see a YouTube stations and we’re going to do a few more things like uh bring it more directly to you guys, but this radio show has been absolutely awesome. And uh I always hope that all you guys that are listening will just go to the drfriday.com and um follow us there. Just put your name out there, sign up so you can find out how you can uh keep giving me uh this kind of information as well as keep the education, but there’ll be a lot more documentation where you can search and find out more topics As you guys know, I love doing the radio and gosh knows I never like to stop talking. So can’t see that happening anytime soon. But if you want to join the show today, you can 615-737-9986-615-737-9986. We’ll take your calls talking about taxes.

14:01

So I did have um a gentleman come in this last week that had um I don’t know if it’s interesting, it’s probably more normal than most. His uh mother passed away, which unfortunately we all uh are gonna have a time clock on us, right? So his mom passed away. She had a will, but the will was older and he he had been taking care of his mom and she had wanted him to make sure everything was um split evenly between his sister and um and him. Basically it’s just the two of them. But you know the the at the time the will was written, the daughter and the mother were having issues um and uh she never updated the will. So in theory, he is the only beneficiary of everything that mom left. And there wasn’t It wasn’t a multi-trillion or billion dollar or even millions of dollars. It was a nice estate. And he was trying to figure out what he could do because the PODs, the paid on death and everything is going to go to him because that’s what the will says. And so he’s trying to figure out how can he make mom’s wishes that he knows what mom wants. But still the courts and and everything are saying that he’s the only beneficiary, can’t do anything.

15:22

And that’s the beautiful thing of what we call gifting. So what he’s going to do is make sure everything has been cashed out or rolled over. And then he is going to take 50% of the estate and gift it to his sister. Now, I know there’s a lot of people out there that have family issues that I’ll be honest I can’t totally relate to because I have very fortunate to have um At least six of the seven siblings. There’s seven siblings older than me, but six of them are my absolute best friends. So I can relate to this gentleman. You know, we’ve all had our years of fighting. We’ve all had our years of being um ounts, I guess you would say, with the family. But as you grow older and as you grow maybe mature a little bit It’s nice. So you’re able to move on and you know forgive. Now we all take big family vacations, which I looked forward to. And Their children now are getting ready to have children. So that’s another change in life that we all deal with. Um but in this gentleman’s case, I think it’s It’s admirable, to be honest, because I’ve had in the 33 years, 33 plus years I’ve been doing um taxes and accounting here in the Brentwood Nashville area.

16:38

Um it is um I’ve had a number of people that if they were the only beneficiary no matter what Um, especially when you know we’re talking, you know, probably about six, seven hundred thousand dollars that would be going to the sister, it’s a a very healthy amount to give. And, you know, if I guess, you know, sometimes you just have to look at your life. You have to look at what what’s the big picture, in my opinion. This guy had the perfect attitude. He he he and his sister really don’t get along. That’s the funny part. It wasn’t something, you know, I mean, it’s not like they’re best buddies and he’s just doing this because he knew No, mom wanted him to do it. Him and his sister haven’t spoken to, I I don’t know if I said this or not, but haven’t spoken to each other for about four years So whenever um whatever forgiveness that was given by mom, not necessarily by this guy. And and he doesn’t care to necessarily open that, but he wants to make sure what mom wanted is being done. And I’m just saying, you know, sometimes people get so hooked into the mighty dollar. And I’m not saying all of us work hard. We need enough.

17:49

But sometimes Sometimes you see some really cool people, and that’s why I love my job, to be honest, um that have given people, individuals on the street. I’ve had people, you know, give tens of thousands of dollars to help individuals that they’ve seen that have gone through hard times, that are going through different types of situations. And like this gentleman, you know, when his mom passed, knowing what she wanted, gifting his sister after IRS gets paid Um, so it doesn’t cost him anything, but dividing the estate at that point is I think a huge, huge thing to do. Um, and I think personally, you know, you do good things, good things will come to you Um, but may not, I mean everyone knows you have to do what you have to do, but um when you’re dealing with taxes in this situation, he had several taxable accounts. So the thing you don’t want to do is split the account before you’ve paid your taxes. He’s the liable person. He has to pay the tax He then can gift it to her, but her her share will not be taxed. Gifting means the person giving the gift has to pay the tax. The person receiving the gift does not pay any taxes. So in this case, he’ll pay all the taxes, then whatever is left, he’ll do his split based on that information.

19:09

And that’s all I was gonna say is that a lot of times people gift things. I had a person win the lottery last year. Million dollars. He was so excited. And unfortunately, he wasn’t one of my usual clients. He had heard me on the radio. And um, so he went to a I think HR block or something And um and he’s like, oh my god, I owe $175,000. And when you win the lottery at that dollar amount, they will take some money out Withholdings based on whatever you tell them. I don’t know what he told him, but they were short. And meanwhile, this was a very happy grandpa that decided to give away all but about a hundred thousand dollars. He gave it to his grandchildren, his children. This was his way of just, again, a wonderful gift. But in this case, he gave before he paid Uncle Sam. Now, this is not a good thing, people. You do not, because he can’t, he, he could, I mean, obviously he could have gone back to his family and said, hey, what can I do? But what we ended up doing, this is the the sad side to this. So this gentleman went out, brought a lottery ticket, won a million dollars.

20:24

Um, I think they withheld like 150, still owed like 175. Maybe it wasn’t quite that bad, because he also earned a decent living. Um, and so he had to get a second on his house. Yes, he actually went and got a mortgage to pay the IRS and then he was going to continue to pay that off versus Going back to his kids and his grandchildren and saying, hey, um, I shouldn’t have you know paid all that to you. Can you each give me 10% back or whatever it was that he needed? So, lesson in that one is do not give away anything if Uncle Sam is in any way tied to it until you have filed, physically filed your taxes. People will say, hey, they took out the money from my IRAs or whatever. But you know, when you combine that with other income, sometimes you owe more money And you know, sometimes your Irma can get messed up. All kinds of things can change in these scenarios. And if you don’t do it the right direction, you’re in trouble. It’s just that big, you know, and this gentleman was fortunate enough He still worked. He still had a good job. He was able to go get a mortgage. Um, I think it was a line of credit. But either way, he went and got a second on his house, paid the IRS.

21:39

Now he’s gotta pay off his house again. But it’s a gift that he didn’t want to taint, I guess you would say. So my you know advice is if you happen to win the lottery, before you even pick up the check Talk to your tax person. If you don’t have one, find one because this is going to create a taxable situation. And many of you that play the lottery, some are on older, younger, but if you’re over the age of 65, that winning can mess up your Irma. And that’s what happened also with this gentleman. He was over the age of 65 on on Medicare. Um, and he, you know, winning a million dollars kind of messes up your um your Irma. So, and that’s your Medicare, what you pay for Medicare. So again, so if you want to join the show today, guys, you can 615-737-9986. 615-737-9986. It’s an absolute beautiful day. So I know a lot of you guys are out. doing things and I believe there’s a big thing going on downtown. So the big country people and everyone’s in town. So many of you guys are either working and or attending and enjoying that I know I was out dealing with my bees, pulled a good 20 pounds worth of honey.

22:56

So very excited about that. So always love my honey pulls. But If you have a question, you maybe you’re starting a small business, maybe you have a small farm and you’re not too sure. I had a lady come in, she did not know that by all keeping all of her goats and her chickens, and she actually sold goat milk and eggs. that she could actually be showing that as a farm. There are certain things you need to be doing. There are certain criteria you need to follow up on. Treat a business like a business is probably the motto. But, you know, she was probably missing out on some serious tax deductions considering that she had to build chicken coops and she had to bush hog and buy the tractor and the the brush hog and everything. So all of those things come into play and those are tax deductions when it comes to maintaining a working font. So if you’ve got questions on that, or you have questions on just, hey, you know what, I’m going to start a business. Everyone keeps telling me, should I be a sub-es corporation? Should I be an LLC? Should I just be a sole proprietorship? How do I know what’s best for me? Well, there are answers to that and you can ask on the show if you want. Six one five seven three seven nine nine eight six. We’re gonna take a quick break.

24:05

When we get back, we’ll get to some more questions. You can also email Friday at drfriday.com. We’ll be right back.

24:12

Alrighty, we’re back here live in studio If you want to join the show, you can 615-737-9986. 615-737-9986. And we have Dave on the phone. And let’s see if I can help Dave. Hey, Dave. Hello, how are you? I am good, sir. How about yourself? Great, great. Just have a quick question for you. I have a house that I bought. I owe about a hundred and twenty thousand on it and I have uh probably double that in savings in the bank and I’m just wondering if there’s any advantage to paying it off, which I could do. And what’s your interest rate possibly uh four Four percent. Yeah. I mean my answer would be if you put that in any kind the money you have that’s just cash into a CD, you should be able to make four percent still. even now. Right. Um, and that means you’re basically operating off free money. It’s not costing you anything to have that low You know, and if you can make four and a half, well then you’re actually making money on someone else’s money. You know what I mean? So unless you’re only making two or three percent, which does happen sometimes. But if as long as you’re making four to four and a half, then you’re basically not costing you anything to have that mortgage.

25:31

Okay, okay. And is there any advantage though to keeping it as a ta uh do I use it as a as a tax deduction? Not really, because it’s probably not high enough when you’re talking about four percent on a hundred and twenty thousand. That’s probably gonna be six six yeah, I mean that’s the good news. Um So it’s probably not really saving you any tax dollars, to be honest. You’re probably not itemizing unless you have big property taxes or or nice size charitable contributions. Right. I don’t the taxes are exactly. Well that’s what we kinda like, even if you’re in Franklin, I mean, they’re not cheap, but they’re Not enough to get if you’re single and if you’re married, gosh forbid, because now you got more than thirty-two thousand dollars, but single at least is sixteen and a half or thereabouts. Right, right, right. Okay. Well that’s that was curious because I I don’t know, you know, my wife thinks that well if we pay it off at least we own it and all we gotta pay is the insurance You know, but so I think it’s a good thing. And depending as we um get closer and closer to the the date of retirement, if that even exists for some people, hopefully it never happens for me. But Um but you know, that’s the way we all deliver like so you’re probably at that point where it’s like, you know what?

26:48

We don’t I mean we don’t have to worry if we just go pay it. Right. I mean I’m saying it’s more peace of mind. It’s not necessarily mathematically the the biggest or you know the strongest thing to do, but there’s nothing wrong with doing I mean seriously. There’s nothing that be bad and you know in some ways you can’t write off the interest, but you have to pay tax on the interest. So maybe costing you that way Um, if I, you know, I’m just trying to look at the cup half full. I do like your wife’s theory there. So, you know, maybe just no the cash flows out. Yes, you don’t have as much in the bank today, but you don’t have to worry about paying tax on that interest And you still you’re not taking you guys down to where you’re not going to have enough money to live. You know, it sounds like you have plenty of of savings. You’ve done a good job. So maybe just paying it off will give her peace of mind And that’s a big thing. You know, there’s some value to that for you, I’m pretty sure. Um my side of it is that that takes away uh ready cash that’s tied up in equity then and that means we don’t really have access to it anymore, you know? Well, that’s always what most of us you know, a lot of us on this side our thinking, but the fact is if you still have a hundred grand in savings and your cost of living is and you still get your social security or whatever your pensions, all that’s still coming in.

28:10

You know, what’s the odds of you needing more money in the bank because if you’re going to reduce now you don’t even have the mortgage payment anymore? You know I’m saying it’s probably not I mean it’s more the security blanket that all of us like to have. I mean when I was a kid I always thought if I had three or four grand in the bank I would have been So awesome, you know, it’s just enough to take the the stress, and then as you get older, you’re like 30 or 40, and then next is 300 or 400. Um, so you know, it you know, it just changes as we get older and realize that, you know, for one, now that you’re retired, you’re less likely to ever take another mortgage. I mean that’s just the truth. Unless you guys have to do that, you can’t do that. Yeah, that’s not in the car. But can I ask you one more question then? Sure. Um really quick. What would I what would be the best place to park the rest of our money? It’s sitting in the bank. I sold off some property stuff and have the money sitting there. Um but what would what would be the best place to put it because I’m only making nothing having it sitting in the bank account, you know. Yeah, you need to um Yeah, you you need to probably talk to and you may have one, but you need to take an it needs to be invested in the market in deferred bonds. It needs to be in, you know, uh mutual fund. I mean it needs to be some, not where you can lose it.

29:24

I know at this point we don’t want to go backwards ever. Maybe a small portion could be put into the market just to help keep up with inflation But you know, there are bonds, there are annuities. Not uh not everyone likes the word, but there are some good annuities out there that you don’t have to stay into for 20 years. But I would definitely say insurance products and bonds will keep it safe because that you’ll never lose the principal. But you may not have direct access to all of it today. If it goes into an annuity, sometimes you only have once a year, you can take it out. But Again, it sounds like a lot of the money you have in savings. I mean, you you probably are living off of your normal income Other than if there was like a catastrophe. You know what I mean? And we now know that’s why you have it. But I mean it just doesn’t sound like you have a major issue with the rest of it So it sounds like to me you pretty much need to put that money somewhere where it could keep growing. God forbid something happens to you. Um, that you’re able to um go on and do something new, you know, with Um with with you know, so your wife would have easy access, be able to continue the life she lives, because once one of you passed away, sometimes The Social Security gets cut in half, basically the only one person.

30:38

And then depending on if were the pensions or IRAs or whatever, sometimes that also reduces. So You know, they may need more money because the lifestyle doesn’t change just because there’s one person in that house costs the same, you know? Yeah, and my my fear is I I’m seventy now, I’m only gonna make it ’til about seventy five, but you know, five years from now. My wife’s family, they live the the women live till their late eighties and she’s gonna need the money, you know, at some point to live on. Sure. And that means she may end up in a nursing home and so she may need to have some sort of monthly allowance because depending if there’s children, I mean there’s all kinds of things that It could be, but having that plan and also I will suggest, depending on your situation, make sure you have a goodwill or trust. I you know I’m not an expert expert, but I’m not sure if you’re not taken care of. Yeah. Oh good, good. Because, you know, again, my family’s like yours. We haven’t had in three generations any of us make it to eighty. Um, but you know, my brothers have married girls that they’re Their moms are now ninety-five and still going strong. You know, I mean so it is one of those things. I just want to I just want to plan ahead, you know. I like it. I I’m glad you’re thinking about it. I know, I know.

31:50

People get people look at me, but it’s like it’s for you, it’s not for me. I’m you know I’m trying anyway. But thank you. No problem with that now. Thanks for listening. Okay. Appreciate you. Thanks All right, let’s hit Will before the break, if we can. Hey Will, what’s happening? Hey, uh, Dr. Friday, I appreciate you taking my call. Hey, uh, I’m going to talk about the extension, file an extension it You said you you need to mail something? ‘Cause I’ve done it online before. Yep But if you haven’t filed it by no, um so let me clarify. If you filed it back in before April 15th and you filed your normal extension, you’re fine. You don’t need to do anything. But some people did not file by April 15th that are listening. And I don’t want them to get hit with failure to file. And if they haven’t, because of the federal disaster extension we’re under They can still file an extension up until Monday. Those people. You may have already done one. No, I have not filed and I was gonna file the extension. This afternoon, tell you true. Okay.

33:00

Yeah, not I need to mail it. Right. My system will not I mean like my e filing system says because the fact that we’re out that my tax software doesn’t take in account that there’s a federal disaster in Tennessee. So it just looks at the normal clock. So I think you’ll run in. Now I haven’t tried anything on the IRS website. I’ll be honest. I’m just using my own tax software, but my tax software says we have to mail it with uh the top has to say federal disaster um you know Tennessee blah blah blah so that way it will qualify and what county are you in Will Um well for Okay, you were under it. So yeah, you’re good. As long as you get it sent out by Monday, you will be good until October fifteenth. Yeah, uh I had uh file uh two years ago. My uh CPA uh got overwhelmed and didn’t do mine So he told me to finally got a hold of him and he said go online and file it. So that’s what I did. I re uh found another CPA last year and that didn’t work out. So this year Um need to find another one so I’m uh going to file extension and get that done later this summer. So Well, give me a holler, but I’m a little far away.

34:17

But yeah, so clarify and and if for some reason I’m gonna try the IRS website just to see if you can file on that one. without having um, you know, because we’re outside of the thing. But again, my software tells me I have to send the extension. Um You know, via mail. Okay. Yeah. Okay. Oh, I appreciate them. So thank you very much. No problem. Thanks for listening. All right, guys, we have a few more minutes before we go into the last break. So if you have a question, you can certainly join. I always appreciate phone calls, 615-737. 9986-615-737-9986 taking your calls talking about my favorite. subject, which is taxes. But it’s amazing how taxes feeds into so many different things within our life because taxes is basically money. And if we can save money, what we can do with it, or if it’s going to cost us money Um, I deal with a lot of financial planners. One of my my best friends, Hank Parrot, is uh is a financial guy with Estate and Financial Strategies. He’s the owner. We’ve known each other for goodness 30 plus years. Um, and so he often brings in his clients and we do what we call scenarios, right? So what if I convert?

35:32

What if I retire today? What if I wait a year and I retire? What if I go to part-time So you need to make sure, whoever’s dealing with your money, however you’re dealing with your money, that you have somebody that’s giving you that tool because we find it to be so helpful in making those major life decisions. What’s going to happen, how it’s going to happen. Because you know what? We never know what the the final day is, but we want to be prepared. All right, we’re gonna take our last break.

35:59

This is the Dr. Friday show. We’ll be right back.

36:09

Alrighty, we are back here live in studio for the last bit of the show and I was trying to just see if you could file. Unfortunately you have to file um when you’re doing this, you know, um Filing an extension online. You guys have no idea what I’m doing because I’m on the radio and there’s no picture. So trying to file something online, trying to see if they will let you do it. It doesn’t look like it. I’m trying 1040.com, which is a free filing system that they have out here, and I’m just trying to see if they will allow me to File this form for free without an issue and you know make things work for us, but I don’t know. I don’t think it’s gonna happen. Anyway, so If you guys are not uh if you’ve already filed your taxes, no big deal. If you haven’t filed your taxes, then obviously you need to make sure you have filed the extension or just make sure your tax person has. It is not a big deal. If you have to file an extension, I’ll be honest. I file extensions just about every year. Very rarely have I ever been able to get to my taxes, and I don’t even do my own taxes, um, before um you know, before October.

37:27

It just isn’t something I do. It doesn’t happen too often. But some people are very Particular, wanting to make sure that um, you know, that you, you know, they get everything done and they’re making in the right place. And Everything’s going the way you want. So, you know, just making sure all that’s there. So if you have questions, you need to understand your tax situation because you know, on the radio we try to talk about what we can do, what we’re gonna do, how we’re gonna do it. Um that’s interesting. You guys again, it’d be nice when there’s a camera in here when I’m talking because sometimes you guys could see some of the things I’m seeing when I’m looking them up. But I’m on 1040.com and it’s asking me about a state tax return. Does anyone know the answer to that? If you don’t, you probably haven’t lived in Tennessee very long. We do not have a state income tax any longer. We used to have the Hall’s income tax Um, wasn’t really income based. It was more investment based, but we called it the income tax. But we no longer have. And they are saying, well, you know what? There’s a fee for that. So they’re already hitting me with fees and all it was trying to do was a negative extension. So that way I can try to figure out what’s going on and where we’re going for the next situation. But If you have questions, you need to be able to get answers.

38:42

That’s what we’re hoping to do, hoping to guide, hoping to at least get you thinking about taxes, right? Because no matter your age, Really, no matter your age. So you’re a 13 or 14 year old, but you are a gun-ho. You have already been on the internet playing games And actually making money. I’ve got some gamers that I could tell you I don’t understand a thing they do. I’m almost 60 and that the age doesn’t necessarily mean anything, but I’m still into Pac-Man. Okay, so then what they do and how they play and then how they actually make videos of how they play and then how they get followers, all of that is fascinating to me Um, and of course, you know, if they get you know tens of thousands of followers, they’re actually making money. And then the parents are like, well, it’s okay for them to be gaming, even though let’s be honest. I don’t care if you’re a 14-year-old and you’re making $1,000 a week gaming, that might sound good, but in all reality, What are you doing besides gaming? I mean, you know, I mean, you need a life. I’m sorry. You need to be able to have an actual life. You need to go to school. You need to learn about other things other than playing a game. Because in reality, every person, I mean, no matter what, if you were um in my day, a lot of us wanted to be rock and roll stars or we wanted to do different things. And I’m a tax person.

40:03

I even went all the way through college, have a PhD in economics. I’m your tax person, right? We all make choices, we all think there’s different things, but without the education You can’t do anything else. So I just want to make sure, you know, I have um a young man that at 18 he had to be emancipated because he actually signed a contract for several million dollars to play golf. He had the opportunity to go to a very nice college and play golf, but the parents felt that that wasn’t going to be his strong suit. I don’t, it’s not my child. I have no idea what the answer is, and I don’t ever want to be someone’s uh, I mean, I’m I’m never going to be someone’s parents. Uh so there you go. And I just want to make sure that we have, you know, what we need. So um, but parenting is hard, I get it. And now with all of this new technology where you’re an influencer or you’re a gamer or you know you you are um there’s several young people out there most of the ones i follow um great cooks But they have some unique approaches to cooking. Um, I am not creative. I mean, obviously I’m a tax person. There’s not a lot of room for creativity. It’s more about knowing what you need to do and how you’re supposed to do it than the other way. So um You know, just making sure that you know what you’re doing and how you’re going to do it.

41:23

And then, you know, you can you can make things work. It’s it’s not that hard. But that being said, you need to Make sure you’re doing everything you can to save taxes. So if you have a child that’s gaming, you know, um, and if they have had to spend money to do things then they need to do that if they’re having to pay for uh video time or cameras or you know even a percentage of the house used for um you know, for their business. Now, if it’s in their bedroom and they’re playing games, that is not a home office, people. I can’t tell you how many times people tell me I live in a one-bedroom apartment. And and half of the apartment is for business. And you’re sitting there going, well, how can half the apartment? I mean, said so, do you have a, you know, like a temporary wall you’ve put up and you’ve kind of set up a whole office such You know, well no, I just set up in the front room, front room, on the sofa with the edge table and the big screen TV IRS is probably hearing this and saying that is not a home office. And they are right. That is not a home office. And a lot of these people nowadays, a lot of you guys can do work from home Now, if you’re a W-2 employee, let’s keep in mind a W-2 employee cannot deduct a home office, even if you work from home And I know I get this question almost every week from somebody, so I might as well go ahead and give it to you.

42:47

The reason for that is the IRS says you’re not putting wear and tear on your call. So you are going to have to or you should get the use of your home. So you can’t can’t pay for commuting, right? When you go to work, no one gives you extra gas money because you’re actually showing up at work, you know, driving. And that’s the same way if you have a home office, same exact thing. So just making sure that you have that information and that you’re doing it the right way Um, so we can try to go through there. If we have someone on, let’s go ahead and grab him really quick. Just put him on the line because we only have about two minutes. Sterling, let’s see if I can get Sterling in Spring Hill. He’s in my town. Hey Sterling Yes, I’m uh I’m seventy-nine years old, single, just divorced the first of January. I have a total I work for the IRS for two years, by the way I have um basically an income of a pension from Ford credit for eleven thousand dollars $26,000 in Social Security benefits. I have a 401k that I’ve built up but I don’t use, which is $20,000. I I I tap it every once in a while.

44:03

I won’t own the house completely clear. Uh-huh. I have um my question is very simple Uh unfortunately I when I got my divorce, my wife didn’t want to get a divorce last year and I ended up having to file marriage files separately, which was horrible Yeah. But what I wanted to know is what are the if in terms of my income, what would I be able to do? I’m married, fouling single, no dependence Right. That’s basically my income I just gave you in the last minute. So half of your social security is a good one. You could do that. It would not be tax free. I would suggest spreading it over two years. Right. Right. But it’s actually. And also do they still have the six thousand dollar deduction for singles? Yes, sir. About twenty-three What’s twenty three plus six? Twenty twenty-nine. How much income do I have in the high Total income do I have taxable.

45:16

You said you had twenty six thousand, eighty-five percent of that’s roughly twenty-three, twenty-three, four. Not eighty-five percent. I’m a single Over sixty-five and seventy-nine years old. It should be fifty percent. So security, social security, you would have fifty percent. Did he make it? No, the maximum is eighty-five I thought it was fifty percent under the new Trump plan. No, sir. If it’s eighty five percent, what is what is my adjustable gross income? Right. So I think you basically be very close if you but if you’re adding the additional twenty thousand you’re gonna end up with some taxable income Um but what would what would my taxable income be if I drew it on an income of fifty or seventy thousand? I would be paying twenty percent on it. I pay no it it would only be a good thing. I paid when I was at work I’ve I’ve already done that. It’s a 401k, so I’ve got basically w it’s based on whatever my taxable income is now, is that correct Yeah, your tax rate would be twelve percent if you took it out. But I’m saying if you spread it between two years you probably could get it almost for nothing. But I would have to look. But we’re winding down the show. I’m sorry.

46:26

We’re gonna be four seconds and I have to be off So um if you want, call the office. The phone number is 615-367-0819. And this is the Dr. Friday Show. Call you later.

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Announcer

00:01

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 Doctor 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.

Dr. Friday

00:29

G’day, I’m Dr. Friday and the doctor is in the house and it has been a wild ride since uh the first of the year, I guess you would say, since you consider They initially extended because of the ice storm into May 22nd. Then on April 15th, they extended us out to June 8th Who knows what’s gonna happen in the next week? It makes my life exciting and and fun, but uh always difficult to stay on top of it. So For all of you that are wanting to make sure that you have made your April 15th payment on time, which means paying it by June 8th. then you should make sure that you have at least the payment made. I mean, if you filed an extension, most of us do, a lot of us will go out until October 15th. But keep in mind an extension only extends the paperwork. Sometimes we’re waiting for K1s. We need to make sure everything is right. We’re not wanting to rush through and complete a tax return just to get it done.

Dr. Friday

01:25

But, you know, with that being said, you don’t want to turn around and then end up with um owing a dollar amount and paying it back in October, because if you pay it in October. Then you will have interest and penalties that you have to pay. Just that simple. So making sure that you have everything correct and you want to make sure that you’ve done what you need to do. Then, you know, at least get an estimate paid out there so that way you’re not in a situation where you don’t want to um uh end up with you know i owe ten thousand dollars and now it’s october and now you owe twelve thousand dollars or more depending on the penalties and if you made proper quarterlies and yes for anyone that’s listening There is a rule that says you need to make estimated tax payments if you actually owe more than $500 the year before. Now, that does not mean that everybody has to make them. You can make them through increasing your W-2 withholding.

Dr. Friday

02:27

You can make it through if you’re older and you may be receiving um RMDs require minimum distributions. You can have them take out the extra payments. So that way you’re not having to make your estimated tax payment. And talking about estimated tax payments, your first estimate would be normally due April 15th. That would be now due 6. 8 or June 8th. Because of the federal disaster extension. So you had have one due on the 8th and the next one due on the 15th of June um to make them filed on time. Many people are getting, at least several of my clients have gotten letters saying that the IRS is um needing them to update their banking information because they have a refund and in many cases these individuals did not have refunds and they do now because Um, at least in in my situation, several of them had uh we had estimated penalties that um got waived because of the federal disaster in 2025. um and in 24.

Dr. Friday

03:29

So some of them have them on one of the other. So again, paying your taxes on time could end up giving you a small refund, especially if you had estimated the tax software to charge a penalty or if you did not make proper estimated again estimates are mandated if you do not pay them properly you will end up with a situation where you have to pay a penalty, even though you paid it all by the April 15th deadline.

Dr. Friday

03:55

I can’t really tell you after 30 plus years how many times I’ve had someone say, why are they charging me a penalty when I’ve already paid them all of the money why you know and sometimes it’s three four five eight thousand dollars because they paid it by april fifteenth but they did not make proper estimates Now, if this was a one-time sale that happened because you sold some real estate or something and you weren’t required to make estimates because of the situation Um, and you did pay it by April 15th, there may be a waiver, but in most cases they’re self-employed and they’re just paying all of the taxes at one time. All right, if you want to join the show, you can. 615-737-9986. It looks like we have David on the line, which is awesome. Hey, David, how can I help you?

Caller 1

04:39

Uh yes, Dr. Friday. I just had a question about uh taxes, inheritance taxes on a revocable trust in Tennessee.

Dr. Friday

04:48

Uh-huh.

Caller 1

04:49

Is is there an inheritance tax on uh uh funds or cash on a revocable trust?

Dr. Friday

04:59

Well, yes. I mean if it’s over, I believe it’s twelve million dollars or fifteen million, I’d have to look up the exact number. If the estate is over, uh Tennessee follows the federal tax law. So it would have to be higher than that to actually do something. But um if they haven’t, I mean if it’s just a normal estate where you inherited, then the only tax you would have to probably look after would be if it’s an IRA or an annuity. There may be taxable dollars involved in um in those funds and you’d have to pay tax on them.

Caller 1

05:34

Okay. Would would that be just the tax on the income generated uh on that fund since the deceased Passed?

Dr. Friday

05:45

Uh yes. Well in an IRA it would be tax on the entire thing because obviously it would be no different than if it was your own personal traditional IRA. On annuities, usually it’s only on growth, but I have had some people actually put the money in an IRA. I mean in an annuity from an IRA. So the same thing. It could be 100% taxable. It could just be taxable on growth, it really depends on the investment. If it’s stocks, there’s a step up in basis. So those would not be taxable Mainly I find the taxable falls into IRAs, 401ks, or annuities is where most of the taxable dollars without step ups.

Caller 1

06:24

Okay. And and what is the difference between a tax rate on these amounts of thirty seven percent or just your normal tax rate, I think, on income for your bracket? What what do you think?

Dr. Friday

06:40

37 is the highest tax bracket anyone pays. Okay, so that’s your highest bracket, um, ordinary income. If you if they file it through an irrevocable trust, which becomes revocable, I mean, um, it’s irrevocable that becomes irrevocable when they die. then then you you you can pay the tax through the trust, but the trust starts at twenty-four percent and works its way up to thirty-seven a lot faster than if you give a K1 from the estate and you file it on your own personal tax return. It really depends it’s that is up to the executor So um I’ve had more than one that says, no, I just want to pay the taxes because I don’t know if anyone will pay them and it’ll be just more headache, you know. Um, but normally it’s cheaper for all the beneficiaries if the taxes roll to the tax Players not through the estate.

Caller 1

07:31

Gotcha. Gotcha. Okay. Very good. Uh good. I think you’ve answered my questions there.

Dr. Friday

07:37

Thank you for calling. I really appreciate it

Caller 1

07:39

Thank you very much. Thanks.

Dr. Friday

07:42

Bye. All right. We have Sean and Bellevue. Let’s see if Sean has something I can help him with. Hey babe, how can I help ya?

Caller 2

07:48

Hey doctor, thanks for taking my call. Sure. So uh in at the end of twenty twenty two, uh went to California to move my handicapped mom out here to to live with me for me to take care of uh take care of her. And she really didn’t have much, but she had a house and we sold the house. And after paying the loan off and and all the fees and so on, she profited about two hundred and sixty thousand dollars Before we left California I talked to her tax person and I said, Hey, you know, do I need to file taxes on this? You know, w what what should I do? And she said, Well, you know, her only income is Social Security at the time she said yes you you should file taxes. She said but the good news is is that you didn’t make enough profit off the house that she doesn’t owe any taxes on that And that’s just how I left it. I haven’t done anything.

Caller 2

08:37

So now we’re getting letters from California saying that she needs to do her taxes because I guess California wants their piece of the

Dr. Friday

08:48

Well, the good news is you should file California only because it’s likely that you won’t owe anything, but all they know about is a home sale. So they’re assuming that there is a profit. They’re assuming that there is money there for them to have. If you file the tax return because of the exclusion um that’s on the table, then you are she mom ‘s not most likely. I mean, you said if she if she physically had a $260,000 profit She may be looking at 10,000, which on the federal side would be zero tax. I can’t guarantee on California it would be or would not be because of the exclusion. Um, you would think that would be poverty um at that point if she only had social security and ten thousand dollars. So um, you know, it would not be, but I would say filing it, you may find that it’s just a matter of putting it to bed, you know, just get it done so that way you don’t have to worry about it.

Dr. Friday

09:38

Likeli this miss mom doesn’t owe anything, but they’ll keep irritating. And they may even assess. California’s funky because Sometimes if you don’t respond to the letters and they do the assessment, you can’t fight the assessment, even if it’s completely bonkus. Um Yeah, so go ahead and and either if she had an old tax person or call her office or whatever, just you know, get the return done because like I said, it may just be be a matter of getting the proper documents to them to show that this was her primary, that you know she only made this much money. And you know Just because she put 260 in her pocket doesn’t mean she earned 260,000, you know, because she had to pay something back in the day for that house. And maybe it was very little. Um, and then she had to um Then she has the 250,000, but you need to know how much she originally paid and then what she sold it for and all the cost that she may have had going into the house.

Dr. Friday

10:27

You might need some of that detail before you call the tax person.

Caller 2

10:31

Okay, yeah, taking that into into consideration is it’s was probably a wash.

Dr. Friday

10:36

It sounds like it’s pretty much a wash. But you know, yeah, exactly. If that’s the case then you know, even though she had money in her pocket doesn’t mean it was actual profit. So yeah, either way you look at it, just get the information, get it filed, and that would probably just take them off her back. And now she lives Here, it sounds like, or outside of California, uh so yeah, you don’t have to worry about it.

Caller 2

10:59

So I don’t know if she’s gonna be around all that much longer, but so can can you do this? ‘Cause I asked my H and R block person when I did mine a few months back and and they said they couldn’t But if you can do it,

Dr. Friday

11:10

you can call my office. Yeah, we do them all the time. Sure.

Caller 2

11:13

All right. I’ll I’ll give you a call after uh Tuesday, I guess. And we’ll just finish this up. All right. Hey, thank you.

Dr. Friday

11:19

Thanks, Sean. Bye. All right. We’re going to take uh a first break here in just a second. Again, um, that’s what we do. It’s obviously taxes for people that may not know what I do. I’m an enrolled agent licensed by the IRS. I have never worked for the IRS, but I am licensed by the IRS for the last 30 years to do taxes and representation. Um, we do all states And we do all tax returns pretty much. If you have a question or you’re getting a love letter, we’ll do our best to explain it to you or help you resolve it Uh that is what we do. And if you need help doing that, we are in the Brentwood area for those that may not want to drive across uh the state because I have people that are hilarious. They will drive all over the place just to get to my office, which is a huge compliment But uh just letting people know and if you want to, you can give our office a call on on Monday or Tuesday.

Dr. Friday

12:10

I know Monday’s a holiday, so Tuesday, and we will be more than glad to schedule an appointment. Or you can call us on the radio today at 615-737 -9986-615-737. 9986 will be right back with the Doctor Friday Show. Alrighty, we are back here live in studio and uh you can join the show at 615 737 9986 for all those that may have thought that uh again this year’s deadline has just floated along obviously I’m hoping they get back to just allowing April 15th. It’s something we’ve all done for most of our life. It’s a good date to have. Um and then obviously last year it went all the way out to November. This year it went to May 22nd. And then on April 15th, they went at to June 8th. So right now the deadline is June 8th for filing your 2025 without late filing fees for the payment. Again, many of us have already filed extensions as we have in past So the paperwork is extended, but the money is what we’re looking for to make sure.

Dr. Friday

13:23

All right, looks like we have Kay on the line. And if she’s already, I will be more than glad. Hey, Kay. Hello, Dr. Fr. Frighty, thanks for taking my call.

Caller 3

13:32

Um my question is uh during the ice storm this year, um I had some damage on uh um uh a building uh on my property. And uh I filed uh so I wasn’t sure if I had a a tax liability on it because when I filed um a claim on it uh Um the insurance adjuster came out and gave me uh uh I thought a very generous estimate on it. And um And went ahead and they just deposited that money to my bank. And then it was up for me up to me to get uh, you know, the the property. Which I did And it turns out that my repairs were a lot less than what the money was that they gave me. So I d you know, I don’t know what to do. Should I Should I

Dr. Friday

14:19

Are you feeling guilt, Kay? Um well the answer is insurance money is not taxable income. Uh the insurance company valued that barn or building as whatever it was. And if you were able to improve, and I’ve had people not even do the improvement, but you did. improve the property to back to what it was prior to the storm, then that’s fine. The income is just um a repayment of all the years that you filed uh or paid insurance in which you could not deduct that cost, right? The insurance every year we pay. So that’s kind of the way it is. There is not any um it doesn’t normally happen that way. So that was actually a nice story because most of the time I hear the opposite. where they come out, they give a bid, and then getting the job done, it costs them a lot more money, right, than what the insurance company uh had given them. So it’s kind of nice to hear that Um that there is the other side of that story. But

Caller 3

15:18

and I w I was I thought uh you know, I didn’t know if there was some sort of form I had to file with IRS about it or I get something from the insurance company, but I don’t have to do anything.

Dr. Friday

15:28

There’s nothing. No. I mean, uh, I mean if if you were ever audited, you’d be able to, you would have gotten something, most likely a form or something saying that they had done a settlement um, you know, when you filed your claim or whatever, there would have been something that you could keep with your tax documents, but it’s not something that’s going to uh most likely ever come up, but that would be the only thing you would need and just justify that the income came from insurance.

Caller 3

15:53

Well that’s good. I had used some of the money, the extra money, to really help do some tree work here to maybe prevent another claim at some point. But you know.

Dr. Friday

16:03

Yeah, and unfortunately that’s not something the insurance company normally pays for. You know, I mean if you have trees and stuff. So good investment.

Caller 3

16:12

Anyway, well okay, so that sort of relieves me. I wasn’t sure if I should spend this extra money or or do whatever. But anyway.

Dr. Friday

16:19

You’re good to go, whatever way you want.

Caller 3

16:21

Okay, wonderful. Well, thanks so much. Thanks.

Dr. Friday

16:23

No problem.

Caller 3

16:24

Bye-bye.

Dr. Friday

16:25

All right. Bye. Um, so if you want to join the show, again, 615-737 -9986. 615-737 -9986 taking your calls. And we talk about anything to do with taxes pretty much. Um, you know, we’re already what five months into 2026. So for all of you that may have either worked up all your numbers for 25 and or have already completed your 25, um congratulations. I can honestly say I haven’t uh had mine completed yet But um but my numbers are all worked up. So working on 26 is essential, right? Because if you’re really trying to work the best numbers you can Sometimes waiting till the end of the year or normally the first of the following year, it’s very hard to really get all the tax advantages. Sure, you can still, and right now for anyone that wants to put money into an IRA Um that date extended to June 8th. So if you were an individual that you know wanted to normally you put it in in April or on or before April 15th, you have that extension.

Dr. Friday

17:36

But Very few tax advantages can be done after the end of the year. Sure, like I said, retirement counts, yes, you can put some money in. But um buying equipment uh it needs to be in service before the end of the year. So if you just went and purchased something and you’re like, well, I um I I want to put it on last year, which wouldn’t happen because you didn’t pay for it. And remember, we do taxes on the cash basis, people. Very few individuals do taxes on any kind of accrual basis. You do it at the time that you’ve paid for it. Not at the time that you’ve assumed the debt. Now businesses can be different. Some could be on actual tax services, and some of them could actually be on, you know, on accrual, accrual or cash. But most, most small businesses, most businesses do not want to pay tax on money they haven’t received, but they also, you can’t write off debt that you haven’t had a personal responsibility for.

Dr. Friday

18:39

So if you just told somebody I’m gonna pay you, but there’s nothing out there, no documentation holding you to pay something, but you know, you’re putting it on as if you paid it. that would be a problem, right? Um so you need to make sure that whatever you’re doing um is basically paid for at that time. Now, sometimes depending on how credit cards are put together, some credit cards have personal guarantees, and therefore if you don’t pay that bill, it becomes a problem, right? Uh I I am a person that likes to pay my credit card off every month. That’s a nice thing to have, right? So pretty much you’re always and at the end of the year I try to pay it by December 31st, don’t it? Because that way all my debts are paid and therefore anything that’s come up. I can do to make it rework. Um, but doesn’t mean it’s going to always be um, you know, perfect.

Dr. Friday

19:31

But when you’re doing your taxes, you need to make sure that you are um doing exactly that, that you are tracking the information that you’re following. And if you’re waiting to the very last minute, sometimes that can be very difficult because sometimes people forget what happened in January or February or whatever and you know making sure that things are working or not working and all of that. So Just making sure that you have all the proper details and information and that you’ve had time to review that and even your tax person because sometimes we get pulled in And we’re trying to do the taxes, which is awesome, but we don’t always know what uh the situation is, right? We don’t know um where every dollar of your money went. We count on you to explain it to us, to give it to us, so we have something to work with.

Dr. Friday

20:25

But I don’t have a good answer on um How you can maximize taxes, but the best way is to make sure you’re tracking every single thing. Give it all to your tax person so that they can come back and say Were these meals business or personal? Were these miles? Were, you know, what what did you and did you not have that you, you know, that was business versus personal? And keep in mind, again, if you’re a W-2 employee, your cost home office, whatever, um, is not a deduction. If you have a W-2 income, you’re even though you’re working from home There is no tax deduction for that. The government has ruled many times that you’re not having to spend money on fuel and going back and forth to work. and putting wear and tear on your car. So that is the exchange that they see that people have. So what money you would normally put out of your pocket because you’d have to drive to work every single day to do the same job, they’re saying nope.

Dr. Friday

21:26

We’re not going to reimburse you for your home because, you know, we we don’t you’re not having to put this so it’s an even situation. I’ve had people argue it doesn’t really make too big a difference because really not much we can do about it. Tax law is what it is. And that way we have the information. Just so you know, I can’t see the stream yard. For some reason it’s going um in and out. Just um I’m not sure if anyone’s on the line or not. But We can come back and circle to that anyhow. So again, if you’re looking to find the best way to save tax dollars, making sure that you’ve got all the documentation, that you’ve done everything that you can do And that you’ve tracked it all on an Excel or that you’re doing it somehow with the way that you want to make sure that everything is going to the best way that you can, that is the best secret you have.

Dr. Friday

22:19

Seriously, that is the best way to do everything you you need because then you can come back, you can say what’s going on, and I can even see from my side, I can say, wait a second, I can see where this is happening here and this is what I need to do there. And that makes life so much better than you just basically coming in the office and I hate to say it, but sometimes I I promise you, people are just um guessing, estimating. And if you’re ever, I mean, you know, there are times, ah, there we go. I’m back in business. Okay Um, let’s hit. I’m sorry, I was just going off trying to stall because I couldn’t see my screen. Guy in Franklin, let’s hit him real quick, and we’ll take our break. Hey guy. Uh

Caller 4

23:06

hey dog, can you hear me okay?

Dr. Friday

23:08

I can. Perfect, yes.

Caller 4

23:10

Okay. Um thank you for what you do. This is uh this is really really helpful to us here. Um I would fall into the category of what you just talked about, the people to guess. Um and I’m trying to not be that person anymore. So I work for a wholesale dist distributor in construction material Um here in Nashville, Tennessee, my salary, I get paid salary plus commission

Dr. Friday

23:40

Okay.

Caller 4

23:40

So and I’ve noticed on my paychecks that my taxes are fluctuating heavily from my commission paycheck to my regular weekly paycheck

Dr. Friday

23:52

Sure.

Caller 4

23:53

So how should I go to my accounting department and say like how should I be safe? Alife also works um in the school system. I don’t know how her taxes are set up. Like how should I be structuring this so that we’re maximizing the amount of money that we’re that we’re making or paying to the government, whatnot.

Dr. Friday

24:15

Right. Yeah, we don’t like giving loans to the government. So I may I ask, are you getting a healthy refund or are you pretty close to breaking even?

Caller 4

24:23

Uh I think our last refund was kinda was I think it was pretty healthy. I used to own a landscaping business. Okay. Um And our our refunds were very healthy then because of the amount of money that I spent on equipment that we would develop. Right. Uh and that has dropped substantially since I I’ve left that industry and went into sales Um but our our last one was you know it was a couple grand, you know, it was it wasn’t bad. Um but I just want to make sure that we’re maximizable

Dr. Friday

24:49

If you’re yeah, I mean if you’re actually, you know, I mean, because the fact is commissions are going to be taxed ridiculously high, but the fact is you’re jumping tax brackets with those commissions a lot of times or going higher into tax brackets. your regular salary is probably more minimal. Um not saying but you know I mean I mean normally your commission is where the the bigger taxes are coming out. And if you’re balancing out at the end of the year with just a couple thousand dollars, you’re really doing everything you can because there is no back in the day when you had your own landscaping business, you had a lot of tax deduction You were able to write off your your equipment, you were writing off your miles, you were writing off your home office. You had just a ton.

Dr. Friday

25:31

Now that you’re a W-2 employee as a salesperson, you have no tax deductions with the exception of And I, you know, depending on possibly a schedule A, but that means you have a fairly healthy mortgage if you’re actually itemizing or you give a lot of money to charity. Um, so a lot of people don’t itemize is all I’m saying. So at this point, you know, you don’t have the same game you can play guy than you were a few years ago with sound like when you were actually Working possibly, but still had your landscaping. The landscaping business probably on paper did not look like you were making a lot of money You know, I mean, even if you were making some because you were always putting it back into the business or buying a new toy, et cetera, et cetera. In this business, there’s not going to be the only thing you have is retirement that you can actually contribute to or an HSA, something along those lines.

Caller 4

26:25

Okay. Next question would be, so my company is an employee-owned company

Dr. Friday

26:31

Uh-huh

Caller 4

26:32

and in five years I’m fully vested. Um how does that look like taxing like when I’ll get shares of the company out? Like what should I be looking for in that aspect of an eSOM? I’m very new to this business. I started in February. Um and I’m inside sales, so my base salary is actually more than my commission. And then when I move to outside sales, that will flip. Um Sops

Dr. Friday

27:02

are great. If the business is a good business, I’ve got clients that have been buying into their e you know, e-sops when they’re offered stocks or they’re gifted based on bonuses and things, stocks. Um the difference is when that happens, you’re gonna see a difference in your paycheck because usually what happens is they basically buy it through your wages. And so it looks like you’ve gotten this bonus. And so your W-2 could look a little bit wonky because you’re like, I didn’t make that much money. But that’s because the way they sell and buy the ESOP into your paycheck. And then you have to usually sit on it for a period of time before you can sell if you choose to. And then the sale price you have to kind of track it. That would be something if you want to take a meeting or whatever, um, not easy on the radio, but there is some ways you need to track once you get into buying ASOPs. tracking that cost basis that they’re buying at.

Dr. Friday

27:58

So when you sell, you do have potentially capital gains that will happen. Um, but that could be years and years down the road.

Caller 4

28:06

Yeah, but something to definitely look out for and people on the radar. Awesome. Yeah, well I may actually uh I may actually look you up and and probably pursue another conversation further. This is great. I don’t want to take up any more of your time for other people.

Dr. Friday

28:19

All right, thank you. All right, we’re going to take an uh break. And if you want to join the show, you can at 615-737-9986. We’ll be right back Oops, here we go, back live here in studio. You can uh join us 615-737-9986. 615-737 -9986. And this is an awesome show. The phone keeps ringing. Hey, we’ve got Roy in Hendersonville. And if Roy is ready, I will have him jump on. And if he’s not yet, well, then I’ll just keep talking because that’s what I do Um when he’s ready you can join. So anyway, so we were um talking about the one thing I wanted to bring back about the last gentleman I was talking to is the the the tough time it is when you’re um When you’re an employee, and especially going from self-employed to an employee, it sounds like you actually make more in salary, you said, and then the bonuses were actually smaller.

Dr. Friday

29:20

A lot of times in sales it’s the opposite, but either way, um the one thing I will suggest is not to play with those bonus checks. Right, not to play with that stuff because it it usually will work out. Sometimes it feels like, and again, I have some people that when they get their commission on the quarter, sometimes they’re you know Six digits, right? And so they have this huge dollar amount that comes out. And then in that case, sometimes we’ll try to balance out the dollar amount because the tax code looks as if you’re getting that check every single month or every single week, depending on how often you’re paid. And that can be very distorting when you have 60,000 of the hundred coming out and and withholding because the IRS thinks that, you know, you’re getting and making millions.

Dr. Friday

30:06

So it’s just a matter of making sure, but don’t play with your S with your uh itemizing, in my personal opinion, your exemptions, um, unless Unless you know what you’re doing there, because it can usually come back and backfire, and there’s nothing worse than the IRS coming back and saying, oh yeah, you owe this much money, whatever it is. All right. Is Roy ready to join the show? Yeah. Oh, there we go. Hey Roy, what can I do for ya?

Caller 5

30:31

Uh I’m recently retired about three years ago. And uh I haven’t paid taxes in the last three years and uh my on my investments they took out nine thousand dollars For uh to take what is that uh

Dr. Friday

30:48

RM your federal withholding from RMDs or from withhold withdrawals?

Caller 5

30:53

RMDs. Yes Okay, they took out nine thousand dollars. That’s my only income. Do I need to pay any taxes this year?

Dr. Friday

31:01

Well

Caller 5

31:02

the twenty five

Dr. Friday

31:03

So are you saying that your required minimum distribution was $9,000 or that they took out withholdings of $9,000

Caller 5

31:11

No, they sent me a check for $9,000. Okay.

Dr. Friday

31:14

And they didn’t take out any taxes of that, correct? That you know of? Correct.

Caller 5

31:19

No.

Dr. Friday

31:20

So you have Social Security and that $9,000. That is your only income

Caller 5

31:24

Yes.

Dr. Friday

31:26

Okay. Then you are not required to file.

Caller 5

31:29

Okay. Okay. What what uh how much do they have to take it?

Dr. Friday

31:34

The additional tax code comes out to fifty percent of your social security that adds up to $25,000. So unless you’re making $50,000 in Social Security, the $9,000 is not going to trigger it

Caller 5

31:48

Okay. That’s all I need. Thank you very much.

Dr. Friday

31:50

No problem. Thanks for listening. Thanks.

Caller 5

31:53

Bye. Thank you.

Dr. Friday

31:54

All right. Yeah. Bye. All right. So that was a good question. Uh provisional tax code is what people that have hit retirement is looking at, which is always fun about taxes, is that there’s You know, there’s several different tax codes that work within the tax code, right? You have the ordinary income tax and then you have um the provisional tax code and then um you know different capital gains and different ones that fall within the tax code. So it when you hit the age that you hit retirement, that doesn’t always mean that you’re taking RMDs, but I was guessing um require minimum distributions. And he may not be on a requirement, but he may be taking him because he finally hit retirement But Social Security in itself, remember, is not taxable. If you live only on Social Security, you don’t have any requirement to file taxes.

Dr. Friday

32:49

It comes down to the provisional tax code, which basically taking half of your social security and then adding all of your other income if that adds up to twenty-five thousand dollars you may be required to start filing. Um The standard deduction comes in and so sometimes it’s a little higher than that. Especially right now if you’re over the age of 65, you’ve got that additional $6,000. as a deduction on the books for anyone that’s 65 and older. Even if you’re not on Social Security, that’s still on the tax code. So um so that makes the provisional even higher in essence. So if your only um only income in this gentleman’s situation was the 9,000 plus whatever he was earning in Social Security um he will be fine.

Dr. Friday

33:36

Now if he was married and his wife was still working and all these other incomes come about, that would change the scenario again So um, you know, just make sure that you um run those numbers by somebody that you’re expert as long, you know, again. I know that sometimes on the radio I don’t get all of the information. So just keep in mind that this information here is being provided, but I haven’t looked at everything you provide, so I don’t have the ability to necessarily give you a yes or no direct. I always think that I try to lead you guys in the right place and then hopefully from there you will be able to um confirm that information because maybe you have interest or maybe you’ve got capital gains or maybe you’ve received um bonds interest or you know even though you don’t think it’s taxable it does add back into the provisional tax code So, you know, there are things that people forget to say when they’re on the show.

Dr. Friday

34:30

So just making sure that if uh the information is perfect. you’re fine, but uh if you’re unsure, then I mean I’m sure you can contact our office or other offices and we can run the exact numbers and make sure that you are required or not required to file taxes. No one has to I mean I shouldn’t say it. Most of us have to file taxes. But when we don’t have to any longer, it is sweet not to have to file taxes. Maybe that’s the best way to put it I don’t know too many people that actually, even when they’re in full retirement, do not have to file taxes, but I will say it does happen. All right, so If you want, we’re going to be taking our last break for the end of the show. You can reach us in the studio right now, 615. 737 -9986-615 -737 -9986. We’re going to take some calls We’re talking about my favorite subject, which is taxes, which you know is kind of amazing because there’s so many different taxes in the world.

Dr. Friday

35:33

But basically, I’m talking about income tax, tax preparation dealing with you know estates or or businesses. Obviously we do all the different uh 1065s, 1120s, 1120s, along with the typical 1040 and all the forms that go with it, 1041s, 990s. All of that comes together because many times those feed off each other with the exception of the 990, which is for a nonprofit. All right, so if you want to join the show, 615-737 9986. We’re going to take a break. We’ll be right back with the Dr. Friday show. Alrighty, we are back here live in studio. And if you want to join the show, 615-737-9986. And it looks like we have Libby from Nashville. Let’s see if I can get Libby on the phone and help her out. Hey Lib. Hey Doctor Friday, how are you today? I am doing fabulous. How about yourself?

Caller 6

36:33

Doing great. I had a question. My spouse will be retiring in about a year or two and I’ve self managed our retirement funds. And do you assist folks in planning for RMDs and I ha I’m a self-employed realtor and so I’m trying to watch it all and I’m curious am I catching all the things I should be catching

Dr. Friday

37:00

What I can say is I can say yes, totally. What I do is more on the line of helping you prepare for the tax liabilities. on that aspect. I’m not a financial planner, so what you know it sounds like you’ve been managing that perfectly fine. Um I can help you tell you when we need to take out what we can do to possibly defer Talk about QCDs if he’s actually gets the point where you’re six uh seventy-three or seventy and a half or older if you have charities. Um we can do those kind of plannings absolutely I can also suggest people that would help you on the other side if you needed some assistance and knowing, you know, having assistance helping to plan the financial side. as far as planning the 401ks or IRAs or whatever you may have in since you’re self-employed, I’m going to guess that a lot of it’s in uh maybe a SEP or something, but maybe a combo. Who knows? That sounds great. Well, thank you so much. No problem. Thanks, Libby.

Dr. Friday

38:00

All right, we have Mary in Hendersonville. Bye-bye.

Caller 7

38:04

Hey, Mary. Hello. Thanks for taking my call. Sure. Um I had a question. Um we did our taxes with TurboTax, and it gave us the option to either Um, send a check in or the direct deposit. Mm-hmm. Yeah. So we chose to send a check, mail the check. Okay So um we didn’t hear anything back and then finally we got this IRF notice CP53E Maybe you’re familiar with it. They tell us that we needed to do the process with direct deposit and they needed the information on that. So we sent that back hoping that we would get it to the direct deposit, but we did not. So I finally called IRS and I finally was able to get a live person So she put in the system that we wanted a check. And so we did get the refund in the mail. We got a check from IRS So then later on we get this uh LTR12C where they wanted to for us to send in the W-2 form 1099 I’m w not not sure is this a scam or is this um paper audit?

Dr. Friday

39:31

Right. Um one should have nothing to do with the other. It’s just that it’s feeling like they’re kind of No So it is a paper audit. Um not knowing are you self-employed, may I ask Mary? Or are you guys just

Caller 7

39:45

No, we just retired we retired to

Dr. Friday

39:47

security Okay. So your paper audit will be very simple. What may not be matching, you know, they do a match, obviously. So whatever you showed as income plus withholdings, it’s not matching their system. For whatever reason. So whatever was put on the tax return, so you have two things. One, you can certainly, you’re going to have to submit the documents they request. But also you might want to see if you can order your transcripts, yours and your husband. Sounds like you’re married. Um and and just check and make sure that maybe something a stock sale, um something that, you know, wasn’t reported on the tax return may not, you know, or isn’t showing up the same way. uh just to make sure that the tax return the IRS has, that that way you don’t have any surprises, right? Because somewhere I will tell you something’s not matching. It could be that they’re wrong, that you reported something that didn’t show up in their records.

Dr. Friday

40:44

And so they’re trying to follow it up as well. But one way or the other, you and the IRS are not on the exact same page. So if that’s the case, then we need to make sure that we um get on the same page because you can also file an amended return And you can submit it to them under this letter with all the documents and say, hey, we reviewed our taxes and here’s our transcripts and we see this discrepancy. Here’s all the forms we have. And then it just makes it less. But if If you pull those and you don’t see a thing different, then just provide them. Okay, again, you’re going to have a few moving parts. You’re going to have interest and dividends, possibly 1099 Rs. Social Security statements. Um, so it’s not as simple as, oh, here’s a single W-2 and voila, you know. Um, but I would definitely say if if you need help, you can contact us.

Dr. Friday

41:34

It’s not that complicated, and you can upload almost all of those documents right to the IRS website Um and in your case, the only time it really gets complicated is when you’re self-employed. You know, I’m just being honest. That way you have to justify expenses. But these are all documents that you have and they have. So something’s just not quite tying together. And I have had it more than once where the IRS did not have the same form from a 1099R um than we did. But like they never received it, right? And we had a copy of it. And so when we submit it, they then can update their records, but it never made it into their system, even though it was a legitimate form. So it’s it’s just sometimes it’s just more frustrating, but I don’t think it will be very painful. Just more having the tediousness of dealing with it. But yeah. If you have any questions, you can give us a call on Tuesday. I can certainly walk you through.

Dr. Friday

42:26

But it it sounds like you’re pretty straightforward. Just in probably all the documents you’ve already set aside that you normally give to your tax person or you do yourself Those are the exact same documents you’re going to basically be providing to them.

Caller 7

42:39

Oh, okay. Okay, well thank you very much.

Dr. Friday

42:42

No problem. Thanks for listening. I appreciate it. Bye-bye. Bye-bye Okay, guys, we are winding down the show. We’ve got about three minutes left. So let’s talk about a couple deadlines again. Um, June 8th. 2026 is the final day, which is a Monday, to file your 2025s for payments. That’s what I push for most people. It’s not so much that you have to file it. Um Because an extension extends paperwork, most of my clients we extend automatically. Because what if something happened to me Um I always worried, you know, I’m a huge office. I know a lot of people think we probably are, but we’re not. And so I always try to make sure that extensions are filed so that way documentation can be delayed or taken care of until October in most cases or September if it’s a business. But Payments, right? We do not want to pay a dollar more to Uncle Sam than we have to. So to keep those payments down, we need to be paying these by June 8th.

Dr. Friday

43:49

making an estimate, filing the tax returns, whatever the situation might be. We also, just as a heads up, we seem to be getting quite a few letters From clients and from people that are just listeners asking about the IRS requesting identity, right? You have to call them up to prove identity. We seem to have a lot of delays in refunds because of either a bank account wasn’t provided just like Mary said and then you know she had to get a hold of them. Uh the IRS is pushing to remove or to stop mailing checks. And I I mean to be honest with you, I kind of get it. Um mail is slow, it’s expensive, and then the checks have the time or many times they get lost. They don’t get deposited into the right accounts, then people have to go searching for them. Direct deposit is much easier. But sometimes if that account number is wrong, it’s a little harder to get back.

Dr. Friday

44:46

But either way, tracking a bad check or a bad deposit is a whole different conversation. Um but the IRS is basically wanting direct deposits and direct refunds. That is going to be so I have some clients that have pretty much said we never want to give the government our banking. Never. But yet they get a refund every year, right? Or they have to pay the IRS. So I have suggested go to a separate bank or go to your bank, get a bank account that you only use. for the IRS. And keep in mind, the IRS knows about every bank account, every forum, anything that has your Social Security number on it, which you can’t normally open a bank account without one they know about, right? So you’re not necessarily hiding your banking or your IRAs or your investment accounts, your stock portfolios. None of that is being hid because the government already knows about it.

Dr. Friday

45:44

But if you want to have a Pacific bank account that they can only go in and out because they’re not legally available to just go in and out anytime they want They would have to have a court order um to do a levy or a lien. But you know, so I say get a separate account, use something that you never use, a savings account, whatever So that way then you know they’re not going in and out of your regular general checking account, right? It’s pretty simple. All right, so this is the end of the show. So if you’d like to reach us on Tuesday, 615-367. 0819 -615 -367 -0819. You can also email Friday at DRFriday. com. Again, Friday at drfriday. com or just check us out on the web at drfriday. com. Hope you guys have a wonderful Memorial Week in Cop you later

Summary Points

Episode FAQ

Transcript

Announcer

00:01

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 Doctor 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.

Dr. Friday

00:29

G’day, I’m Dr. Friday, and the doctor is in the house. Have we had some busy times lately with the whole Extension on taxes and then a second extension on taxes. So right now it’s June 8th that we have to have everything filed by um in Tennessee. They did all 96 counties. So um We uh obviously are are working on taxes. Not this weekend, thank goodness. So we get a little break. Normally it’s uh been crazy for a while here, but We are moving forward. And then if you’ve got additional questions or you want to join the show, you can at 615 737-9986. It’s actually a really nice Saturday out there. Everyone’s heading some time to uh start working, but we are just about done. with the month of April, which means that we should be seriously considering not only we can’t change a whole bunch that happened in 2025.

Dr. Friday

01:30

Sure, if you are a self-employed person, you can have a self-employed Except that you don’t fund until as long as as October. Um and for some people, if you did not and you wanted to fund your HSA or your IRA for 2025. And even though we are past the April 15th deadline due to the federal extension, we would be able to still contribute the proper amounts into those accounts depending on your age and your income if they applied. So so there is a little bit of a window for some people that may find out that they owe money and they One way to reduce the amount you owe the IRS is putting it into a deferred account. I would always suggest talking to a financial planner, uh, tax people. We’re always looking at instant gratification, meaning if I’m going to save money today by giving it to a retirement plan versus to the IRS, guess what?

Dr. Friday

02:24

I would say it’s usually a good idea, but then I have told people sometimes it’s better to do the Roth because you’re in the 12%, even though you might owe the IRS. You’re only saving eight or nine percent if you put it into your retirement now. Um, if you put it into the Roth, then you know it will grow tax free. And even though right now you may still owe the IRS it will be a better investment. But again, I’m looking at tax situations. You should always double check whatever Unless your tax person happens to be wearing two hats, one as a financial advisor, one as a tax exput, then you should always check. Um just like if your financial, I had a case this year where the financial planner thought they had done the math correct and they had done uh some conversions and um and then of course I did the taxes and they were quite a bit off They um I I don’t know if they just didn’t have the right numbers to start with.

Dr. Friday

03:24

I wasn’t there. So all I can say is the client wasn’t happy. They owed an additional $17,000 um because of Social Security being taxed more, different things came into play. And it may have been that they didn’t know that they were going to have quite the capital gains that came in. A lot of times it’s a lot of little things. I had a another client that we just finished up last Friday, and um he’s like, why? Why do I owe money? I never owe money But they had overall had $60,000 more income because of capital gains, a larger distribution from retirement, which then made more of the Social Security. They were not at the 85% normally. So 85% of their Social Security became tax, a little bit more interest overall, and it all kind of trickled down. And most of the things that had um increase capital gain, social security, they were not having any kind of withholding.

Dr. Friday

04:19

So it was um another case where they owed, it wasn’t horrific, it was like 3,900, but it was a lot when you don’t think about it, right? When you don’t normally owe the IRS. It’s quite a bit when you have to. So if you’re in the process of doing that kind of thing, you do need to make sure you’re tracking everything. Today’s show, I kind of wanted to touch on one of the couple things I’ve ran into this tax season. And maybe part of it is obviously a lot of you guys know I do um I now have a home farm. But also um small business owners. You have to have some reasonable concept. I mean I had a person that came in and They started a business and they um they they went and done a whole bunch of classes and took um took a a lot of courses uh from supposed experts in the field.

Dr. Friday

05:16

I’m talking like up in the forty-five thousand dollars um of doing and um and then you know never generated any income from this business at this point at least. And um and she’s like, well I can write all this off because I was self-employed. And I’m like The tax law isn’t quite that simple. First, you have to be making the attempt to make money. You have to be able to show that you have done this because you’re able to make money. The IRS says, hey, if you’re going out and learning how to make pots and you’ve never made a pot, you’ve never sold a pot, you’ve never done anything, but you’re taking these courses When you do start selling your pottery, that would be part of your startup to learn how to do it. It would not be something you could write off. at the time of taking those courses and not not having anything to sell, any product, any classes, anything that shows that you actually took this um education and created a business that is now at least attempting to make income I mean, maybe you’ve got a full website and you can show that you put out a marketing uh plan and and that, I mean, it doesn’t mean you have to have shown that you made a profit.

Dr. Friday

06:34

But keep in mind, the IRS does also say for uh small businesses or anyone that operates as a Schedule C, um, two out of five years, you need to have been making money So a lot of times the first year or two, we don’t expect to make money. You know what I mean? By the time you get all your startup costs and you learn how to make and get clients Sometimes the first year or two is a dry year or an upside down year, whatever you want to say. Then you go into the third year and and you’re you’re least breaking even. The fourth year you made a profit. And goodness gracious. The fifth year you’re actually paying back the first year’s losses. That’s the way the IRS sees it. If you’ve been at this for four, five, six years, and I’ve had a couple clients come in this year, and they’ve been taking losses I mean, you know, they forever is what they basically have said, but let’s just say for four or five years.

Dr. Friday

07:25

At that point, I’m questioning, is this really a business? Is it a legitimate business? Is this something that’s a hobby? Um Something that uh another one is the a um the short-term rentals. Um if this property is a short-term rental and we put that on Schedule C so we can take the losses Um, if this is actually your vacation home and you are using it more than two weeks in a year. Keep in mind you cannot take all of those losses because it’s personal use. It is not just a business now. You’re using it or giving your family and your grown children and your grandchildren. Everyone has access to this home. That turns around and now you’ve got a situation where if you’re ever audited, they’re going to say, well, was the home available for rent for 365 days? And you may say, well, no, I had this week that we had to go down there for repairs and this, and we had another week where we came down and we we did three more days of repairs.

Dr. Friday

08:26

I’m not saying you can’t work and be down there. I’m just saying the tax law specifically says you have to be repairing something. Doing something, you can’t just be down there enjoying the house with your kids and your grandchildren and calling that a repair weekend or just using it. But you know, so if you do have those kind of homes. You need to figure out the percentage of actual rental days and how much of the mortgage, the HOA, the depreciation, the utilities, all of that that’s a deduction because Every year you’re showing a $35,000 loss. That doesn’t make sense. Nobody can have, and the IRS basically says, who can afford to lose money if it’s a legitimate business every year? I mean, if it’s your hobby, if it’s a place that you’re looking at, like, oh, this is a great vacation place. You know what?

Dr. Friday

09:20

Someone pays most of the stuff. So I don’t mind having $35,000 a year going out because I I use it for personal use. That’s cool. But then you can’t take it as a tax loss because it’s not really a business. So you’ve got to sit down and really look at these businesses that you’ve been using for years to offset Your gains, your personal income, your other lifestyle. And then saying, hey, I I’ve lost 15, 20, 25 It’s going to catch up with you. I’m not I’m not the IRS guys. I’m not telling you this because that’s going to, I don’t know. You may you may be able to do it for 30 years I have people that barely got away with it one year and then they end up audited. So no one knows when or what’s going to happen on that element. But when we do our taxes Hopefully we’re doing our taxes with the idea that we can justify the numbers on that return so that way you can sleep at night.

Dr. Friday

10:16

You put all that together. You scan it all in or you put it someplace safe. And if Uncle Sam comes knocking or the IRS, you have the documentation that you need to justify whatever they’re questioning. You’re not there sweating it saying, oh my God, I’m being audited. No one likes to be audited. It’s never going to be a good. Unless you’re one of my very first clients, I’ll just call him Earl. He he got audited Oh goodness, this had to be twenty plus years ago now. And um and he was when he was done, the IRS owed him like twenty-five dollars. But there was um a couple things that you know, but he had and enjoyed. I think he really enjoyed going through that audit. Um, but most people, most of us are busy. We do not want to be spending time dealing with all that.

Dr. Friday

11:06

So when you finish your taxes, you scan in, and I’ve got some awesome clients. I see, I mean they come in with their whole box And you know who I’m talking about, girl, of all your receipts, all of your folders, everything in there, so that if something were to come back, you have everything organized in one place Um, and many of you that do. But um but you you need to have that. And if you don’t have to have it in paper form, IRS accepts electronic. In fact, nowadays we almost have to upload them into a link To give them the documentation. So having it electronically is almost better than having it uh in paper nowadays. But that is the way you want to live. So if you’re a self-employed person or you’ve got a bunch of um short-term um rentals that you’re using a schedule C because let’s be honest, short-term rentals for people that make more money, you get a better tax deduction.

Dr. Friday

11:58

If you’re making more than about 125 on a schedule E, most of us do not get to claim the losses in the year that happens. We’ll eventually get to claim them when we sell, but it’s not an instant gratification. All right, we’re going to take our first break here. If you guys want to join the show, you can. 615-737-9986-615. 737-9986. We’re talking about taxes. But if you’ve got a question or some sort of love letter you’ve received You can also join the show and share it with us if you’re brave enough. We’ll be right back with the Dr. Friday show. Alrighty, we are back. Here live in studio. You can join the show at 615-737-9986. 615-737-9986. And we’ve got Robin in Murfreesboro, which I appreciate. the phone call, Robin. Thank you. Sure. Happy to happy to be Yes, I’m here.

Caller

12:59

Can you hear me?

Dr. Friday

13:00

Good. Yes, I can hear you now. Yes.

Caller

13:03

Okay, great. Thank you for taking my call. I have a question not exactly about small business, sorry. Um, but this is about taxes and um It’s about I I actually lost my father um last January. He left um an IRA that has there are five daughters and he left those uh to us All of them were marked and we were named as the beneficiaries with the exception of about eighty thousand dollars So that did not have a designated beneficiary listed for that part of the IRA. So the um the company that it was with Right. Decided they they wanted to put that into his trust and they wrote that check to the estate his estate trust. which it is in a uh bank account with an EIN number. Um but my question is how do I disperse that to the beneficiaries properly to pay the taxes um legitimately.

Dr. Friday

14:13

Right. Well it sounds like Robin that they actually cashed out that eighty thousand, wrote you a check to the trust. So theoretically That is now cash, correct? So we have to pay the tax. I should say the five girls, if you’re splitting it evenly, will all have their share that needs to be taxed. You have two options. My First option, it does depend on the tax bracket of the beneficiaries. Okay, just putting it out there. But normally a trust is at a higher tax bracket than individuals. It starts out at 24%. Individuals start out at zero theoretically and work their way up. So the easiest way would do is a 1041 tax return, a trust tax return. And then do K1s where you’re distributing interest. There could be interest being earned on it, maybe not. And then their percentages at the end of the year, they then would file those with their personal tax return and pay their share of that $80,000 because the other ones each rolled into inherited IRAs, they can do whatever they want individually on the distributions of those.

Caller

15:21

Okay. And and we did that on the rest of the IRA. I just know that as the estate trustee, I I didn’t know how to disperse that money. So I can I can take that and actually just give that. And then you said it’s a ten forty one

Dr. Friday

15:38

1041 and then they’re going to be getting a K1. So just make sure they understand at the end of the year that the money they’re receiving today is going to be taxed at their current Tax rates. I d each of them will be different, right? We don’t know. So they need to be setting aside their share. Let’s just say it’s uh well, fifteen thousand dollars. So whatever you know, 10% somebody’s in, they need to set aside, you know, 1500 of the 15,000 and they’ll be responsible for paying that tax themselves.

Caller

16:09

Okay, perfect. And then what would I need to save? Like I don’t want to be liable for that as the estate trustee. I want to make sure that gets done and like for because I’m gonna have to close out that uh estate at some point.

Dr. Friday

16:27

Right. So depending on uh what the I mean an a ten forty one can be done any time Okay, so theoretically you’re they would be filing this with their 2026 since it hasn’t happened, right? So you can distribute And then file the 1041 as final. And then we can provide the K1s so they’ll have them plenty of time. to do their 2026 taxes. So they’re not waiting at the first of the year for it, you know, um, and then then that account can be closed. you could physically send them the check along with their K1s. Um so that way everybody with a cover letter saying here is the check, here is the taxable for. So if they have a tax person, if you were my client I would say, hey, what is the K1 based on last year? Your estimated tax for this year would be this, right?

Dr. Friday

17:18

Based on whatever that dollar amount is. And then that way they have time to say, I’m going to take the 15, I’m going to send in 2500, the rest of it I can invest or pay off something or whatever they want to do with it.

Caller

17:33

That is great news. I really do appreciate your help with that.

Dr. Friday

17:37

Sure, no problem. If you need help with the returns, let me know.

Caller

17:41

Thank you so much.

Dr. Friday

17:42

Had a great day. Appreciate it. All right, that was a good call. We do a lot of estate tax returns. Um, and you know, no matter how well people like to be organized, which sounds like pops are their father. Um, it’s funny they had five girls, my parents had two girls and six boys, so It’s with bigger families, it’s always difficult, but sounds like he was well organized. But something got missed, happens all the time. Um and that that makes it simple for um I say simple, probably wasn’t all that simple, but simpler to deal with some of that than other things. So that being said, um a lot of times you end up with either an estate or a trust um being open uh even through probate for an estate because sometimes people have a house, they need to be able to sell the house.

Dr. Friday

18:30

A home can be titled into a trust, but if it’s not, then it’s likely going to have to go through probate to make it work So it sounds like all in all everything was organized. But you know, you’re you’re helping your children out a lot. We do a lot of these conversations in my office because let’s be honest, none of us are getting in younger And um and I think as we get a bit older, we start thinking about um how some of this can actually work um as far as well if something happened to me today, what would happen? Is everything organized? You know, if you’re young, I mean, I had this conversation a few days ago with with somebody that was in my office and um their their parents were there and they were all like, yeah, they’re they need to get organized.

Dr. Friday

19:12

And I asked them, I said Yeah, you have two children and um I said, Do you have a will? Do you have an estate plan or some sort, you know Do you have something? Because who’s going to take care of the kids? And everyone’s like, Well, no, you know, no, uh you know, but I mean we’re we’re young is what was kind of said. And I’m sitting there thinking, I am quite assured that there’s a large number of young people out there that have not um made it to the age they should have. And that is when you have to start thinking, especially when you have children, right? My opinion. Because If you don’t have a plan, I want my parents to raise them, I want my sister to raise them, I want them to be um, you know, managed this way, the court’s gonna get involved, and then somebody you don’t might not wanted to have your children.

Dr. Friday

19:58

could end up being the one raising them. And that’s serious. So you know you always need to have as soon as something like that happens, you need a plan. That’s all I’m gonna say. Um not an attorney. And again, if you’re gonna do a will or a trust And you know, there is differences and it does depend in my opinion, depends a little bit on how much control you want. A will is great if you only have a few things and you can POD like her father did, paid on death. um a lot of your bank accounts, your retirements. I mean I will we cover some of the, you know, my car and a few things like that, right? That people have. But you do need to consider talk to an attorney. Um I use Russ Cook and Jack McCann. They’re both awesome estate attorneys.

Dr. Friday

20:43

Jack’s also really great at real estate, which everyone knows I get into. So, you know, if you need help with any of that, you can certainly move forward. But you you need to spend the, you know, you You can spend the money now for a trust, or you spend the money when you pass away, your estate spends the money on probate Sooner or later the lawyers are going to get their share. I mean now I’m sure there’s a handful of people out there that said, hey, I have done my own probate, and I’m sure you can if you’re very good at it. I don’t know if I would take on probate Personally speaking, um, but you know, some people are very good at that kind of thing. Um, but most of us are already devastated with the people we’ve lost. We don’t really want to have to take on dealing with the rest of It so if you um have a question and it doesn’t have to be about small business or about estate planning um or tax estates how taxes are handled with estates, different things like that.

Dr. Friday

21:41

You can just call the show now, 615-737 9986-615-737-9986. If you haven’t really known who I am, we are been doing this close to 17 years on the radio. And um And I am Dr. Friday. I’m an enrolled agent licensed by the Internal Revenue Service to do taxes and representation. It’s that simple I do taxes and I represent people because the IRS basically says, hey, there’s a lot of complication when it comes to dealing with taxes And um I just had a case that closed last week in and uh Lewis awesome guy took us I think almost two years to probably make this deal. It kept coming back at us. They kept trying to do this and we kept trying to say that’s not, you know, the way it is. And you gotta really get both sides on the same Story. Um, but I think it was about 400 grand that we settled for about 140, uh, which you know Lewis is very happy with uh because now he can move forward, he can get this paid off He can he’s and don’t get me wrong, this gentleman is selling off his stocks to pay off the IRS, but he’s able to close the door.

Dr. Friday

22:53

He’s able to say, hey, if I sell this I can then pay off the IRS. They’re no longer in my business. He’s been current for a number of years. This is something that happened a number of years ago. And so that’s what we help with. And it’s if anyone thinks that you’re just going to go on, make a deal with the IRS and have it happen. It’s not going to happen. The IRS, you know, does their research. The IRS looks at everything. So if you have money in retirement, you have a lot of equity in your home, you have a collection of some sort or a number of cars All of that is money the IRS says you can afford to pay us. Right? I mean, why not? You purchased this car and didn’t pay me. You put your mortgage every month paid, but you didn’t pay us.

Dr. Friday

23:42

You know, uh you put money into your 401k, but you didn’t pay us. You know, and I’ve had people come in my office and not like to hear what I’m saying. Let me tell you that They’re basically, I’ve worked my whole life to pay down my house. This is ridiculous. And they owe, you know, $150,000 to the IRS and they have almost a fully paid off house. What do you think the IRS is saying? They’re saying take out a second mortgage or refinance and give us our money. And then you can worry about paying off that mortgage because we’ve right now paid your mortgage. And people don’t like to hear those words. They don’t like to hear that that’s the way it works. But I hate to tell you guys, that’s the way it works. If you want to have the truth and figure out the best way to do it, I’m the person for you All right, we’re going to take our second break.

Dr. Friday

24:26

You can join us here live in studio. If you’re getting a bunch of love letters or anything like that, give us a call. We can help you figure out what’s the best way to move forward The phone number here in the studio is 615-737-9986. Again, 615 737-9986. I’m Dr. Friday. This is the Dr. Friday show, and we’re talking about taxes and how they affect you and me. Every day. We’ll be right back with the Doctor Friday show. Alrighty, we are back here live in studio. And it’s actually a really nice day, but I think it’s actually raining again here in Spring Hill. Um, so I mean it’s a good indoor day for you guys to be listening to the Doctor Friday show. Uh you might be sitting around trying to figure out how you’re gonna save more money on taxes Keep in mind tax planning is the only way you’re going to actually do that, right?

Dr. Friday

25:22

So we started talking at the first part of the show about people that may be taking um expenses on an ongoing basis thinking that they’re incurring them legitimately because they think they’re in business, but really legitimately you you might not be in a legitimate business because you’re really not attempting to make a profit. You’re putting in something that you enjoy and then you happen to be able to lose money at that, which also helps you for your taxes. Same thing can be said about different things. I have um a backyard farm, I guess you would call it. It’s a small farm. I don’t I live on fifteen acres, so I certainly don’t compete with any of the people I do big farm things with but there is some advantages to using and producing something if you have land. There’s no question. I mean I have a lot of beehives now and um chickens and you know of course you guys always hear my dogs in the backyard so I’m becoming quite the little bit of a country girl but the the there are some tax advantages I won’t say there isn’t to uh having the ability to produce something that you can then turn around and and sell and then use that money to improve your properties and you know pay for the the f cost of the chickens and the bees.

Dr. Friday

26:38

And I mean, be quite honest with you, especially bees, I love the idea of them because they are um amazing ladies and they um with exception of drones obviously but uh but also just honey and its properties, right? And so, you know, if you’re looking at ways to save taxes and you have things that you can produce that then becomes a product that you can sell and you’re selling those. I have a number of people that do a lot on I’m not too sure if I’m gonna say this right. I call it itsy. It may be Etsy. I’m not too sure what the proper term is Uh but either way, um I’ll have a large number of people that make um have small and they are small businesses that make product and they sell them and you know that makes them a legitimate business is all I’m trying to say.

Dr. Friday

27:28

So if you need or want to talk about how to establish your business, what you’re going to do, we do that a lot. Um, we often talk about, you know, should it be an LLC, should it be a sub-es corporation? And you know what? There was an email in my inbox uh before when I sat down to get ready for the show today. And I thought that might be an interesting conversation because I have a number of people that are wanting to, some are wanting to change from S corporations to LLCs. because of the franchise excise and being able to be under what they call a fonts or a um liability where you are non-obligated. Um, so you don’t have to pay the franchise excise. Now there are legal reasons you may not want to do that, and there may be legal reasons you do.

Dr. Friday

28:16

Again, that is the attorney that needs to answer that question. But if you are a sub-s corporation, you cannot elect to be non-obligated. So I have some that are wanting that. And then I got the opposite. I’ve got a lot of people that keep hearing they should be a sub-s corporation. So why? Why would someone want to be an LLC versus a sub-s corporation? Well I will tell you, the accounting standpoint, this does not cover legalities. So putting that out there because again, guys, I’m not an attorney. I don’t know your business. I don’t know what type of thing, but I can tell you from the standpoint of what the IRS and how LLCs, multi-member, single-member LLCs versus a sub-S corporation, uh, first. If you’re a corporation, you are an individually independent company versus the individual themselves. So Friday And then her sub-s corporation, Dr.

Dr. Friday

29:16

Friday, if it was a sub-S, it’s a C, but um, so that would be two, right? Friday under her social security number. Dr. Friday under an EIN number. For me to run that company, I need to have employees. If I’m working for that company, I need to be an employee. I need to pay all the normal taxes and set everything up. So at the end of the year, if there is said profit, Which I try not to have any because I like to do distributions through payroll, because then you would end up paying less. So if there’s a profit in Dr. Friday, which is supposedly a sub-es corporation. It would distribute through a K1 and I would not have to pay self-employment tax because it’s profit above what I’ve been claiming for my actual true earnings. Okay, so if I need to make $80,000 a year, I’ve got a salary coming out of $80,000 a year.

Dr. Friday

30:15

That covers my lifestyle. That is my cost. And then if I made 100, then I would get 20 out of K1. But keep in mind that that 20 is also going to pay franchise excise tax. So even though you’re not going to pay self-employment tax, Social Security Medicare, you will pay franchise excise. So that’s why, in my personal opinion, I like to run everything through payroll. I like to have my company, if possible, end up with a zero. So I don’t pay any franchise excise because at least if I’m paying into Social Security and Medicare, I’m going to get benefits somewhere later in life That’s the hope. There’s no guarantee, guys. I don’t have a mirror. I don’t know if it’s going to actually um end up, you know, the mirror ball saying, oh, you know what? We’re all going to have Social Security until forever.

Dr. Friday

31:03

And we all know that It’s always hurting as far as funding. So it’s going to be interesting. So with an LLC, be it a single member or or multi-member. All income comes to you on a K1. You have what’s called a partner guaranteed wage. That is what we claim for your ordinary, but normally basically all money coming through is going to be tax, Social Security, and Medicare It’s almost like a sole proprietorship. It’s basically going to come that way. Now, if you are a limited partner, maybe you’re not, you don’t work for it, you just invest it in. You can be a limited and therefore none of your income, it will pass through to you without self-employment tax because you are not actually working. But anyone that runs their own small LLC or a single member which just falls on a Schedule C, which all those, but if you’re a multi-member and you’re working, you’re gonna pay self-employment tax.

Dr. Friday

31:56

So that’s why people like the idea or what they’re being told. is that you can pass money from a sub-s corporation to you without all the self-employment tax, or if you’re an LLC, you’re going to pay that tax. So again, sometimes it’s you pay now, you pay later. So just keep in mind that if someone’s telling you you don’t pay taxes on the money that or you’re not only having to pay ordinary income tax, then they’re not telling you about the state. franchise excise, which can be a minimum of three up to six percent, depending on if it’s based on um profits and or um net worth So you can pay up to 6%. And keep in mind, Social Security and Medicare is only 7. 65%. And if you’re exceeding the the limits of social security, which I think last year was like 175, 185.

Dr. Friday

32:50

I think this year we’re almost up to 200. Um once you make past that you’re not paying Social Security anyways So, you know, I’m just saying, and that’s a an important thing to know because if I my salary maxes out my social security and then any profit above that gets distributed, I might as well do it as a bonus because I’m only paying 1. 45 where if I pay to the state Franchise excise even at 3% is higher than mine. So just make sure whoever is telling you this, whoever’s saying, hey, you know what? It would be better for us to be a sub-s corporation so we can get this passed through and not have to pay so much money in self-employment tax. Anyone that’s listening that is self-employed will tell you that we all hate self-employment. It is no different than all of you that work, quote, a real job and get WTs and you guys pay it just the same way, but your employer pays half and you pay half We get credit if you’re self-employed.

Dr. Friday

33:49

We get credit for half and then we pay the the 100%, but we get a credit on one side or a deduction, I should say, on the front side, and then we have to pay the whole thing It hurts. I mean, I mean I have people that basically, you know, make two or three thousand dollars in their business and yet they still have to pay, you know, a couple hundred dollars in self-employment tax. And it it’s never good. But remember that self-employment tax is your Social Security and Medicare. And at some point, you’re going to want it. Well, I don’t know. Again, I’m my heading to 60 almost there. And so anyone that’s close to that, you’re looking at the other side, where if you’re in your 20s, you may say I’d rather invest my own money, but you could put money into a SEP.

Dr. Friday

34:37

And again, you need to talk to a good financial planner, especially young people. I have a number of people I haven’t some of my clients are like totally into whatever you want to do Friday if the Trump accounts whatever. I can honestly tell you I don’t know a whole bunch about the Trump account I do know if you had a baby in 2025, there’s no reason not to have signed up for the free money. What’s going to happen after that? What kind of funding is going to be available? Will you be able to do a $529 and the Trump account? Far as I know, yes. It really depends on how much money the parents and the grandparents and the aunts and the uncles, all of us can help contribute to these kids’ accounts. And anything we do that helps now would be a way of helping these kids even when we’re not here.

Dr. Friday

35:24

I mean, you know, I mean, we’re not gonna live forever, but it’d be a great way of a legacy. But I don’t understand how it’s being invested I am sure there’s experts out there that have done the research or maybe not. I don’t think the Trump accounts even open till after July 4th. Um so I’m not gonna tell you or even really talk a whole bunch about being an advocate or not I’m not a financial person. All I know is that if you had a baby in 2025, they’re going to give you like $1,000, $1,000, $1,000. Let’s not turn it around. If you decide you don’t want to continue, I don’t think you can close the account. I don’t believe Until the child hits 18 is when the money is going to be given to the child, never going to go to the parent, which I kind of like.

Dr. Friday

36:07

Because divorce and all this sometimes messes with monies that’s been put into retirement for the kids or 529 plans, etc. And this way, no matter what happens in divorce, the money goes to the child, not to somebody else. I kind of like that. But I’m sure there’s other ways if you have a good financial person to protect all of them. All right, we’re going to take our last break. If you want to join the show, you can. 615-737 9986-615-737. 9986. I’m Dr. Friday. We’re talking about taxes. Maybe you’ve inherited or gotten some love letters and you’re not sure what the next step is, give us a call. We’ll be right back with the Dr. Friday show. Alrighty, we are back here live in studio for just the last 15 minutes or so. So if you’ve been waiting to call, well, now’s the time to do it, guys, because after that, you’re gonna be on to the next show So if you have questions, if you’ve been receiving love letters and you’re like, oh my gosh, I don’t know how to do it.

Dr. Friday

37:14

And I will tell you, another case that we’re working, and goodness knows, we’ve worked a long time Um she has been trying to set up a payment plan. Now it’s not for you know ten thousand dollars or something. It’s a it’s a good size amount, but She has been calling, she gets through the system, they sell her it’s it’s set up, and then 60 days later nothing comes out. Um, and so we’re having some fun. And if you’re in one of those situations, um what we’re finding and we’re figuring this out as we go, is that we’re gonna probably end up again, you guys hear me talk quite a bit about the tax advocate office I will tell you, I am a fan of the Nashville one. I don’t deal with a lot of other ones. But the Nashville uh tax advocate office, if you’re working in the world of taxes, which I do, um, and sometimes things just don’t make sense.

Dr. Friday

38:04

They really don’t. Sometimes things are just going and they just don’t make sense. And you’re like, why is the IRS doing this to me? And blah, blah, blah. And you’re sitting there going, I can’t figure it out. They are good A lot of times we can go back and forth for a year and we, you know, we have everything documented, but every time we think we’re getting close, something happens. And next thing you know, we’re right back to the same collection letter we started with a year ago. And so if you go to the tax advocate office, you need to be organized. You need to understand what you want them to do for you. And in many cases, you’re just basically outlining, okay, this is what we’ve done. Here’s everything we’ve done. Here’s the amended return. Because it usually goes back to an amended return, at least in my world.

Dr. Friday

38:49

And the amended return never seems to get processed yet. We’ve sent it and we’ve resent it and we’re never getting anything. We get a letter saying, well, we need more time, but we’re never getting anything, right? We’re not getting Clear reason why the ex the the amended return may not be being accepted. There may have been a problem. We did something wrong, but we’re not getting any of that. All we’re getting is we need more time and then boom, it goes back into collections So if you if you’re if you’re frustrated and you’ve got the documentation, my suggestion is to go, because if you get on the phone. You’re going to end up with a different person every single time. And that person isn’t going to really know what they can do because sometimes a lot of them are new. But even if you get lucky and you get someone that really does understand their job is customer service, um then you know that they may be able to get you in the right direction.

Dr. Friday

39:42

But normally what they can do is tell you that they see someone might be working out, but they can’t tell you who it is They can’t give you that person’s direct loan. So you’re kind of back to the same square. Even if it is being worked on, you don’t have any human. And that’s where the tax advocate office of Nashville is They are humans. They are people that you can send something to. They within 30 days usually will call you, give you a status update. Help you get resolution. Um, and not every single time. I mean, sometimes they can’t fix the problem because the problem isn’t something that seems to always Even though as a taxpayer it makes sense to us, we’re not able to give them what they need to solve it. So we usually have to go back to the drawing board start again with a new amended redo it now sometimes if it’s something simple and you can justify it they can help you move past some of that resubmit it to the person that is handling a reconsideration or something But, you know, sometimes you just have to reopen the whole audit, do a reconsideration, redocument the reason.

Dr. Friday

40:46

And it it doesn’t always Um it’s not gonna always go your way. Even if it doesn’t always make perfect sense. Sometimes the time limits went out, sometimes the information that you think is so black and white They’re not seeing it on their side, therefore not so black and white, right? So documentation is the true bread and water of my world and to yours if you’re wanting to have good tax issues You need to be able to document and things happen. You inherit a house 10 years ago, then you brought out a sibling, and then you know, next thing you know, you know, you’re selling this house. The cost basis was nothing because you really didn’t. buy the house and you inherit it, but at the time of inheritance, like the 10 years ago, it was valued at 50 and now you just sold it for 500,000.

Dr. Friday

41:35

Um and getting all of the information together to properly document those kind of situations. And I will tell you, you need, I’ve had a couple cases like recently where I tell people, you guys have been listening, thank goodness, that you need to get an appraisal on the home that you’re inheriting. Um and if you’re going to immediately then sell that house, that makes life easy. You’ve got the original appraisal at the time of death. And then normally whatever it sells for, black and white, normally it’s almost the same amount. But sometimes you can’t sell it You won’t sell it. You’re sentimental. You don’t want to, or it’s a second home, or whatever. You need to have that documentation. And ideally it needs to be an actual appraisal. I know I’ve said in the past sometimes that you can use comps The problem that we’re having with comps and the IRS is coming back on, and it’s legitimate, is that a comp just basically says there was a 2,500 square foot home, just like the one you have here But no one’s went inside that home.

Dr. Friday

42:42

No one knows that the roof is half falled in. No one knows that there the that the house hasn’t been maintained inside. And the home that you’re looking at, the comp you’re looking at has just got a brand new roof on it, and that it the only similarity is is they’re both 2,500 square foot within the same basic area. The IRS is saying, how do we know that that home with this comp is the same? They want someone to sign off and say, we did an appraisal. Someone walk through the house, use that information to come up with an actual dollar amount that can be used to justify the price of the home at the time of death. Um again if you if you’re inheriting a house and basically you’re turning around and putting it right back on the market, you’re not putting a hundred grand or even five or ten grand into it Then the assumption would be it would be what you’re selling for and what you’re buying, uh what do you inherit it would be pretty much the same price as long as it’s not going to a family member Um but uh if you’re ever audited, the IRS is now requesting appraisals, guys.

Dr. Friday

43:49

Appraisals signed off, knowing that someone walked into the home that you’re selling um or that you’re inheriting, I should say. And they have approved that this home is like these comps and they’ve documented what the difference and why it’s this and that uh just as a regular appraisal. And I know it’s it’s not cheap sometimes to do them, but if you want to have a justified number that you’re putting on tax return, especially if there’s three, four, or five of you and you’re each inheriting a portion of it and you’re the executor of the estate. I would say it’s well worth the investment because if something happens and one of them gets audited, they’re going to come back to the executor and say, well, did you do this? Did you provide this? And, you know, and so I personally say it’s worth the $550 or $700, I don’t know what costs, guys.

Dr. Friday

44:41

But just putting that out there because I know I’ve used the words comp and And I do believe there are some circumstances where a comp would be acceptable, uh, but I think in many cases under the new tax laws, I’ve been, or not new maybe, but just looking at the tax laws Um, they’re basically ruling that a a comp is not going to clear. And then if they don’t accept it, keep in mind they could go to zero in one of these cases they were Basically coming back saying, since you couldn’t prove what it was worth, we’re saying it’s zero, and therefore you sold an $850,000 home and have no basis. So you’re preserving that basis by making sure you have the proper documentation. That’s what today’s show is all about. Making sure we are documenting things so that way we can sleep at night and not have to worry about doing some of the other crazy stuff.

Dr. Friday

45:29

All right, so we’re almost at the end of the show. So if you’d like to reach us on Monday, you can 615-367-0819-615-02 367-0819. You can also email Friday at drfriday. com. I think we’re pretty caught up now, guys. Tax season gets crazy, but Friday at drfriday. com or you can also check us on the web, drfriday. com. I am an enrolled agent licensed by the IRS. I have never worked for the IRS. I am licensed by the IRS to do taxes and representation. An enrolled agent is what we are. You probably see a lot of us. out there and that’s who you really want to be dealing with your taxes. Nothing wrong with the CPA, but they’re certified public accountants and they are not licensed by the IRS. They’re licensed by the state Now some of my best friends are CPAs and they know their tax law, but you want to make sure that whoever’s doing taxes understands taxes You don’t really want your plumber doing your taxes.

Dr. Friday

46:32

And the deathly guarantee, you do not want me as a tax person doing your plumbing Um, but if you have questions or you’ve gotten some love letters or maybe you’re just kind of not sure where to start, I’ve had a couple of those come in this last week or so Um and we can tell you. We can help you. We can get you on track. We can help get transcripts so we can tell you what the IRS is starting with and see if there’s income and expenses and all that that we can help you create so that you can move forward and just Put the IRS to bed, right? I mean, at least for the next year, and just keep doing that every year staying current. If you need help, again, the phone number of the office 615 367 0819, or you can email Friday at DR Friday dot com.

Dr. Friday

47:17

Cop you later.

Summary Points

Episode FAQ

Transcript

Announcer

00:01

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 Doctor 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.

Dr. Friday

00:30

G’day, I’m Dr. Friday, and the doctor is in the house on this absolutely gorgeous Saturday and the last one before the April 15th deadline. Let’s clarify for anyone again because I know there’s a lot of misconceptions back on April 3rd. You know how the government likes to keep us on our toes. They passed a um uh impact winter storm extension for everybody that lives in cheatham chester clay davidson decatur dixon harmon harden henderson Hickman, Lawrence, Lewis, Macon, Murray, McNair, Perry, Robertson, Rutherford, Sumpner, Trousdale, Wayne, Williamson, and Wilson. If you’re not sure, you can go right to the IRS website, take a look at the impact storm or the disaster extension for Tennessee, and they will have all of those out there for you because You have until May 22nd, which gives a couple of us a little bit of breathing room.

Dr. Friday

01:35

Not everybody. Some people don’t fall into those counties and therefore. You are still required, people out in uh Knox County and things I do, and they will be filing as of the 15th. So this is the final um weekend before we get to do anything on that. But if you have any questions, you can join the show, 615 367, I’m sorry, 615-737-9986. 615-737-9986. You’d think I’d have that memorized by now. And if you want to have any questions, I know many of you are probably just out there enjoying this weekend, and maybe many of you have already filed your taxes There hasn’t been a huge change. I mean, many people over the age of 65, I will say, a large number of my clients. that do meet that criteria are getting some discount. If you have $150,000 or more in income as a married couple, you’re not getting 100%.

Dr. Friday

02:39

If you have seventy-five thousand dollars or more as a single person, you’re not getting a hundred percent, but it does seem like we’re getting a little bit um in that little bit, especially if you’re in the 150 or or more income, you’re and you’re at the 22%. So if you save a thousand dollars, you’re saving two hundred and twenty dollars. which is more than they normally save. So it does help. But there is still that misconception out there that says that sales, I’m sorry, that Social Security is not taxed. It is taxed, people. It is taxed. It’s going to continue to stay taxed. There really isn’t something that we can do about that. It is going to the best that they did was give some sort of extension to individuals that are um you know older over the age of 65 to be able to get some break. But other than that, not so much a deal that’s going to happen. All right, we got the phone lines. That always makes me excited. Hey Robin Hendersonville, what can I do for you Oops, I lost him.

Dr. Friday

03:42

I scared him away. All right, well Rob, if you want to come back on, you can. That was uh probably me jumping it before They had you ready. But anyway, so um it’s sales tax. We do have um some people are starting to add up their sales tax again and that’s good because we have $40,000 that you get for your salt tax which would include your sales tax state income tax in our case is sales tax And then your property taxes. And remember, some people have multiple properties and they only use them as a basic setup, right? So multiple properties, you can still write off the sales tax on those properties. Now, if you can’t itemize, you won’t get to do that. But if we’re looking for ways of maximizing, sometimes doing the um The deal where you are basically every other year maximizing your sales tax, every other year maximizing your charitable contributions um because you can’t really do much about mortgage interest, but you can on sales tax and things.

Dr. Friday

04:42

So that way you have the ability to really do what you need to do to make it put more money in your pocket. So the only way to do that is sometimes every other year you can pay your property taxes in December instead of waiting till February. Um you can uh buy your larger purchases in that year as well. Maybe you’re thinking about buying a car or a boat or something that would be exceptional on that and we’ll be able to move from there and go into so Keep in mind there is still some ways and charity because if you’re gonna do charity and you maybe always put $5,000 a year, well if you can do it every other year and really maximize your charities in the years that you’re doing your property taxes and everything else, you’ll find that it is actually a really good idea because you may be able to itemize every other year versus not being able to itemize at all if you’re not playing the game. All right, if Rob is ready, we can try to go back to him. Hey Rob, are you there?

Caller

05:41

I’m here. Can you hear me?

Dr. Friday

05:42

I can hear you this time, my love. Thanks for calling back. What can we do for ya?

Caller

05:47

I don’t know if it was last week on your show or if it was a commercial that you did. but it was referring to having to defer taxes on um capital gains through uh that you get through um like a brokerage account. It did I hear that correctly?

Dr. Friday

06:06

I don’t think so. Um and hopefully I did not say that, because it’s possible, Rob, maybe you heard something, but uh I mean there is no way of being really deferring the tax because once it’s through a brokerage account, it’s It’s usually managed or you handle your own account, but once you’ve sold something, you can’t defer it. If that makes sense what I’m saying. Sorry.

Caller

06:30

That’s okay. Answer my question.

Dr. Friday

06:32

I’m glad you called. Thanks, Rob. I appreciate it. The only kind of uh deferrals on I’m trying to think really quick. We can let him go. I’m just trying to think if there you sometimes you can take losses against gains, but that’s not really a deferral. Um but You know, there really isn’t a lot of ways of deferring capital gains that I can think of. But I’ll I will try to go back and listen to my Uh he might have been talking about my one minute moments that are out there and see if we can’t figure out um which one that was during one of the breaks just to see if I can come up with a better answer than no. Never really liked that answer in my life. So I’ll I’ll see Rob if I can come up and if I can I’ll I will uh bring it back on in a during the next break. But um anyway, so we’re talking about anyone that doesn’t live in the counties that are extended, you need to file. Um if you can’t afford to pay, um You you can still file and then make a payment plan.

Dr. Friday

07:33

Sometimes I have people that says, well, I didn’t file a tax return because I didn’t I was afraid to file because I didn’t want to um in a sense have the IRS trying to collect. But you know, the IRS in many cases will actually prepare taxes on behalf of that person, and they’re never going to be as good as what you have Prepared yourself most likely unless you have absolutely no deductions because they’re going to claim you single and zero, even if you’re married with children And they’re going to do the standard deduction, even if you have a mortgage. They’re not going to do anything that they can write off or do, you know, as far as that kind of situation. So just it’s always better. Prepare your own taxes. Make sure that you are thinking about your situation when you’re preparing, you know, if you can’t afford. Also look at why you owe money. I can’t tell you how many times I do this kind of um consulting when we’re doing taxes, right?

Dr. Friday

08:38

So we look at the last year, the last two years sometimes, and they still owe money. Sometimes we’re on the right track, but if we didn’t file the t taxes the year before until June, July, or August, you know, they only had like six months of making the adjustment. We’re closer, but we’re not there, but we don’t need to really adjust after the first year Then sometimes it goes the opposite. For some reason we could go in there and we say, hey, you need to have the you need a change, you need to go single and zero. Even if you’re married, sometimes having to go single and zero is the way it is because you need a higher deduction or just go to box four and say, hey, I need $200 of paycheck coming out because you have income coming from other sources In many cases, you have capital gains, you have interest and dividends, you have a small business, or your wife or spouse has a small business and they’re not making estimated tax payments. So everything’s coming out of your check to balance it out. It is so much easier to pay every paycheck than it is to have a bill that says you owe $6,000, $10,000, $25,000 And even if you’re prepared for it, sometimes you don’t prepare as well.

Dr. Friday

09:44

And then there’s penalties and interest. Yes, having to pay quarterlies is not a choice. It is a requirement Why do you think they love everybody on payroll? Because every time they take a paycheck, the taxes are all paid. They want people that are self-employed doing that exact thing. And maybe you’re not even getting, maybe you don’t have to make quarterlies because of self-employment, but because of other sources of income. Again, capital gains, interest, dividends, rentals. that don’t have any way of having taxes come out. You are responsible based on whatever you owed in 2024. You should have made estimates for 2025. Again, now whatever you owe in 2025, the estimates are based on that for the next year. Now, if you know for a fact that you sold something that was going to actually change those numbers You need to make sure you’re you’re thinking about that. Maybe you don’t have to make the payment until the end, but you need to know that, hey, I’m gonna have a $25,000 bill Because the loan officer you’re thinking about, the IRS, is not a good loan officer.

Dr. Friday

10:47

They have 25% interest. I have a guy that from 2015 he owed $15,000, now owes $28,000. In 2018, he owed like a hundred and twenty-one and now owes two hundred and ten So you can see that is not a good loan officer. There are so many better ways you could spend your money than letting the IRS deal with you on that element. So Adjusting your paycheck, adjusting your quarterlies, adjusting the way you do life. Because no matter what, the IRS looks at it, if you’re making your mortgage payment and you’re not paying them, guess what? They really do own that house. If you’re investing in something else and not paying them, that investment theoretically they can come after. So you want to make sure you’re doing all those things after you have paid them Not before. And I know a lot of people like, well, I have to have a roof over my head. I have to feed my children. I can’t afford to do it all. But you know, the IRS has uh as rules and i’m not i don’t i’ve never worked for the irs i am not saying this as an employee or something like that i am an advocate for taxpayers As an EA, that’s what I do.

Dr. Friday

11:58

But you also have to be logical. If you’re going to be self-employed, you need to pay your taxes. If you’re going to have investments, you need to pay your Your taxes. It’s not just well, I’ll get to it when I can, because what happens is just like that gentleman 2015 and 2018 now owes almost three hundred and some thousand dollars That started out at like 150 if he had been making those payments. But at the time it wasn’t possible. And now he’s going to end up paying a lot more for a lot less. All right, we’re going to take our first break. When we’ll get back, we’ll talk more about taxes and making sure that we’re paying our fees. We’ll be right back with the Doctor Friday show. Alrighty, we are back here live in studio. We’ve got Tom on the line. Let’s see if I can get Tom on. Hey Tom Hey, Dr.

Caller

12:50

Friday. Good day.

Dr. Friday

12:52

Good day. What can I do for you, sweetie?

Caller

12:55

I just turned in my taxes, mailed them out on Thursday. And uh I realized when I was putting my records away for uh for storage that I had forgotten to attach my W two to my return You you don’t have to touch them any longer.

Dr. Friday

13:12

The IRS has them electronically. Now I know back in the beginning you were fine, but I think you’ll be okay. I could You know, we don’t attach them any longer, but we do file everything electronically versus by mail. But I would think they’d be pretty good because almost always they’re in there.

Caller

13:29

Okay. That’s what I thought, because all the papers seem to say now this information is being furnished to the IRS. And so that was the part that made me forget to attach it Yeah, I can remember actually don’t staple, only use paper clips um and making sure that they were always attached and you know making that situation but um yeah i think i think you’ll be all fine if not you’ll get a sweet little love letter saying can you please justify normally when i see it it’s more justifying the withholding that we reported than anything else but Um yeah, I I really don’t think you’ll have a problem.

Dr. Friday

14:05

Good job. You got him in time. That’s the important part. You got ’em in time.

Caller

14:10

Thanks. Thanks very much. Have a great day.

Dr. Friday

14:12

You too, buddy. Bye. Um and you know I would say in most cases nowadays most people do not um mail any longer Tom just to say we are mostly electronically filing in fact The IRS will not mail a refund check back to you now. They want a bank account. They will call you, make you sign up online for ID. me Um I’m sure there are some exceptions if you have uh certain um disabilities or something, but So far, all my clients haven’t met that exception. And uh I’ll be honest, several of my clients were not happy about having to provide a bank account to get it. And my understanding is next year they will not, they’re not wanting to accept checks For payment, they want them made electronically. We’ll see. We’ll see how that feeds out and what we have going on in there. All right. So uh Rob had called about deferrals, and I’m not sure I couldn’t find the exact one, but I might have been talking. Um, about one of two things.

Dr. Friday

15:13

I’m thinking a 1031 exchange, which Rob, you probably already know about, and that’s not usually done with stock and uh and an installment sale, but all of those To be quite honest, they are more deferrals on like real estate. Um, if you sell something and you want to do a like kind, or if you again sell something and you tote the note You can defer some of the cat uh capital gains based on that, but actual stock sales, I could not and don’t see anything that would help us defer on stock. Most again, most of the people I deal with when it comes to 1031s at least are usually people that are selling dirt, you know, real estate of some sort um that turns into a like kind situation. Uh but hopefully I know that wasn’t a lot of help, but that’s the best I had on the short notice that we got going. So um again, if you haven’t filed your taxes, we are under in this Little area we’re in, Davidson, Rutherford, Sumpner, Murray County.

Dr. Friday

16:17

Um we are in um an ext of a federal extension for disaster until May 20 2022 of 2026. So about another 30 days out. Um, I have in most cases filed extensions for my people, anyways. If we have not filed the return. Um, we would have already tried to file extensions because there’s always that fear. I mean, especially after COVID and, you know, uh people get sick, right? Um, we’re not the biggest office in the world, even though it may seem like sometimes, but You know, um, if we lose one or two people due to something, you know, just even for a week of being out of the office or something, we could delay uh other people’s taxes and we would hate for that to be on our shoulders. So very important to be able to just make sure that we’re doing our best to to make it work for everybody and and and all that. So if you are in a point where you’re not sure you haven’t done something, if you’re my client and you haven’t heard or you’d like to hear back as far as has an ex extension being filed, you know, please give us a call or email or text and we will respond as fast as possible and let you know that we have taken care of that and we are Working through the weekend and all next week.

Dr. Friday

17:30

So we’re not stopping just because we have this uh disaster extension. We will get everybody out that would like to be out. Some of us have to file extensions because we’re waiting for K1s or other things to make it work for everybody else. But that being said, right now we are just working on making sure everything is complete um and we’re moving forward on um on that situation um so we’re sending that rather than the other so if you need some help With filing your taxes, we would be able to help you with an extension. We would not be able to take on any new clients for this tax season, not till after the uh May 22nd deadline. But we could help you with getting an extension filed so that way you are not late. Now my understanding is and you know take this as, but I think you need to file your extension If you’re not going to make it by May 22nd, you need to file it by April 15th. So now you’re under the other extension instead of the natural disaster one.

Dr. Friday

18:29

There may be exceptions to that, but I think it’s a lot easier just to file an extension now, put it out till October. If you file your taxes tomorrow, who cares? It is still an extension. It doesn’t hurt anybody, and things move on very, very nicely. So if you want to join the show, you can. Sorry, 615-737-9986-615 737-9986, talking about taxes, talking about all the wonderful things that we like to do as far as what we need to pay taxes, when we need to pay taxes, how we need to pay taxes. They are all part of this. And if you’ve got a unique tax question or maybe you’re just working still on your taxes Or maybe you’ve even filed your taxes and you’re not too sure what the next step is if you have a balance due. Keep in mind you cannot set up a payment plan until you have filed your taxes. The IRS has no idea how much money you owe, so they are not going to be able to help you until that tax return is actually filed.

Dr. Friday

19:35

Once it’s filed, then we’re in good shape. We can move on. The IRS will then. take care of getting everything they need from you know from the information and then move it from there to do how or what you want uh handled. So if you have um uh back taxes like multiple years uh you know come come May June July that’s a great time to get caught up on taxes from Most accounting offices, I’m sure some county offices are different, but in our office we can you know put a lot of time and effort in. And then obviously if there’s an offer and compromise or something that has to be done to try to make that work for you as well. Hey, this is all you need to do. I mean, seriously, it’s not that difficult. You can, you know, get your taxes in order, do what you need to do And then you from there you basically turn around and you start being the person you really want to do. You know what I mean? As far as if if you don’t You can’t you can’t change the past.

Dr. Friday

20:33

Maybe this is the easiest way to put it. You can’t change the past when it comes to whatever happened in your taxes, whatever happened, why you didn’t You only can move forward, right? I mean that just makes sense. So if we’re moving forward, we can only look at 2026 Let’s make that the year that you start making quarterly payments, that you start making or you have enough money come out of your uh W-2s or You know, basically there’s only two major ways, but maybe uh out of uh 1099 Rs, whatever source of income you have, 2026 is the year you you get caught up Because you want to basically start first with paying it forward. You want to make sure that 2026 is the year you don’t owe any taxes or that you can afford to pay whatever is left when you file it. Then we can deal with whatever has happened in the past. Because if you don’t stop the the system of always paying backwards, because I have people every year they pay like 2023, even though it’s 2025, and they finally pay this You need to get a year without all the penalties.

Dr. Friday

21:35

You need to get straight. So you’re now living off of what it really is that you’re earning. Then we can go and say, okay, here’s what the IRS, you’re making your payments, you’re on track, you’re doing everything right. And the IRS says you can afford a partial payment plan, or you can afford a full payment plan. But whatever that comes down to It’s only based on what is left after you’re doing what you’re supposed to be doing for the year you’re living in. And that’s so very, very important. Because to be quite honest with you, if you don’t do that, you’re going to always be paying ketchup, paying a ton of penalties, and those penalties are enough to really, really knock you out. I mean, let me be honest with you. Those penalties can be huge, massively huge. Um, and you do not want to um be paying them if you don’t have to. And you know, it There’s sometimes you can, if there has been a situation, you may be able to get some assistance with it.

Dr. Friday

22:37

But otherwise, yeah, not really. To be honest, sometimes they basically say, sorry, you know, we’ve given you the opportunity. You have not done what you need to do. And so you need to now just Go and, you know, start making payments, make it work, because this is all we have. And you’re like, wait a second, I can’t afford this. How am I supposed to do this? You know, and the only way you can make your taxes and your life and and hopefully thrive is to basically get a handle on, and sometimes you know what? It is really For some individuals, it’s getting out of being self-employed. And that’s a hard thing. They is giving up on the entrepreneurship side because they really cannot um handle all of it. It’s not e it’s not for everyone. I mean no job is for everybody. Don’t ask me to fix your car, that’s for sure You know, I mean, I I wouldn’t know the difference between anything and that motor where, you know, obviously I hopefully know what to do with the taxes, right?

Dr. Friday

23:38

So not everybody is made to be entrepreneurs Some people thrive in it, some people don’t, and sometimes you you don’t know when to give up, and that can drag down an entire financial tree. It really can. I’ve seen it happen so many times You know, you get so invested in the business that you don’t look from the outside and realize you’re kind of drowning. And that is a hard thing to come to, but once you think about it, once you’re actually able to look at it and do what you need, you’d be amazed at how that decision can lift and move you forward and then you go back into the the profession that you used to love and maybe working for somebody else. doing something else and maybe later you you go back into it but you have a whole different train of thought. All right we’re all take a quick break. The show uh the phone number here is 615 737-9986-615-737-9986. We’ll be right back.

Dr. Friday

24:35

We’re back! All right. If you want to join the show, you can. 615-737-9986. 615-737 9986 taking your calls, talking about my favorite subject, taxes. You may have a couple different issues going on, trying to figure out what it is that you really need um or wants to have going on. So if you need help with anything, you can certainly give us a call here at the studio, 615-367 0819 615 367 08 I’m sorry that is my direct office number goodness gracious 615-737-9986. I did not mean to confuse everybody 615-737-9986 is the number here in the studio. Today we’re just kind of talking about what um Oh, we’re going to start talking about what we could be doing to prepare for 2026. 2025 for most people is over.

Dr. Friday

25:32

The only people that can actually still do something would be people with CEPS. you can still contribute money to them. And it is my understanding, you need to check this with a financial advisor. I am not one, but we’re When you’re under a federal uh disaster extension, it is my understanding you also have an extension for your HSA and your IRA contributions that would normally be due April the 15th You do need to confirm that guys. That’s what I’m being told, but I do not do that for a living. So I want to make sure all of you guys have that covered and double check. So if some people sometimes did not or have not done anything in their thing, then you want to make sure that you are able to make it work, right? I mean that’s just the way you want to do it. You want to make it work, you want to put the money where you need to put it, you want to do everything you can uh and and move forward with it. So if you have questions or you need assistance with Trying to figure out that kind of stuff.

Dr. Friday

26:30

We do work straight with uh several great financial advisors, probably Hank Parrot being the number one that I have been working for 30 plus years with. Also Um, what I have found kind of interesting when we do people’s taxes, of course we talk about ways to save tax dollars, what can we do? And again Not a financial planner. We talk more about in tax dollars, right? So one of the biggest things, if you are 70 and a half or older, a qualified charitable deduction is wonderful. And it always surprises me. how many people do not have not actually done just that they don’t do and their financial person isn’t really talking to them about how that could save them quite a bit in tax dollars. I had a couple that came in just last week um and we were doing their taxes and they were both uh in their 70s and I said hey you guys haven’t really started doing your qualified charitable deductions yet and they’re like what is that and then I’m like wow I mean they have a uh financial person you know there’s there’s no reason they wouldn’t know this Um, and I started explaining to them, you know, hey, you can start giving money directly out of your IRA to your charity.

Dr. Friday

27:44

They pay the money directly to the charity, and therefore we can write it off Directly off of the 1099R. We do not have to itemize, right? So this is great. We don’t have to itemize. We got this covered. And then they’re like, oh, well, how much does it really make a difference? And this person, they give about $9,000 a year to their church. And at their income bracket, we were going to save almost $1,300 which meant that they could even give more if they wanted to. So I thought that was really kind of cool. And it really was no change. All right, let’s hit Lisa who’s been good enough to give us a call. Lisa, what can I do for you, sweetie Hey, while I was preparing for my twenty twenty-five return, I discovered a 1099 a dividend from 2024 that I did not include in my twenty twenty-four return.

Caller

28:38

Um, it resulted from my husband passing away and me transferring his account over in my name. And I just I just didn’t get it included. It was only sixteen dollars. And my accountant that did my taxes said not to worry about it, that they would not come after me over that $16. But I just wanted to confirm that with you Yeah, I agree with your accountant.

Dr. Friday

29:05

For $16, probably even for almost, you know, $30, I wouldn’t have made the change. And to be quite honest Um, unless you sign unless they were sent in very late, you know, they would have already sent you a sweet little love letter saying we’ve changed your return. But for sixteen dollars, it wouldn’t have changed the tax bracket or anything. So um likely not to have. So yes, I agree with whoever prepared your taxes, they are correct. I would not do anything. Worst scenario is they send a love letter saying you owe them $4, which is ridiculous. They should shouldn’t do it for under five, but I’m just saying, and any penalties could be waived because of the situation. But I do not expect that to to actually even happen.

Caller

29:45

Okay, good. Well that’s so that’s what he said, but I wanted to confirm with you, so I appreciate it.

Dr. Friday

29:51

No problem. Thanks for the call, please. All right.

Caller

29:53

Bye.

Dr. Friday

29:54

Bye. All right, that was a good question. And sometimes, you know, she brings up a good point because I can’t tell you how many times we’re going through people’s tax documents and because of the timing documents come in Sometimes they come in late, right? So most of my people are very good about they start an envelope or a folder and they just start putting all the documents that come on through the year into this folder so that way they’re ready for taxis and when it comes. Um, and then something comes in late. Maybe it comes in in May, June, July instead of before April 15th. And so they put it into the next year because they don’t, you know, we don’t look at every little thing expertise. Um and so when I get ready to prepare their taxes, we’re looking at the dates, just making sure, and then we realize, oh wait, this was an amended form that actually affected us back in 20 2025, um, or you know, something like that. And you’re like, hmm, what do I need to do about that?

Dr. Friday

30:54

You know? Um, and sometimes we need to do nothing. Sometimes the IRS has already done the job for us You know, we have to figure out what’s next on that situation so we can move forward. But, you know, don’t don’t stress yourself. Easiest way to put it, my opinion, don’t stress yourself over it. The IRS is pretty good. And if you don’t catch it yourself, it could just as easily be something where you’re like Okay, you know I missed it. That’s fine. Life moves on. And the IRS sent you a love letter and says they’ve corrected your tax return, not something we want. to have happen. But, you know, we were able to get everything done and move forward and, you know, have it corrected one way or the other. And sometimes, you know, you file a corrected tax return and the IRS doesn’t correct it because they haven’t apparently received it, even though we have e-file confirmation that they have I know it’s frustrating sometimes and especially when you have to deal with the IRS, I would love to tell you that it has gotten better. sometimes feels like it.

Dr. Friday

32:01

Sometimes you get really, really lucky and you get people on the phone that are just awesome and you’re able to do something. And then sometimes you kind of bounce back and you’re like, okay, we’re back to the same thing. I’ve been talking to this person for how long? And what am I, you know, getting on this? And yeah, it doesn’t really work as well as I like it to, but um Yeah, it’s it’s just one of those deals where you really do want to make sure that you have everything correct as best of your ability. That’s what it exactly says in tax law to the best of your ability. And sometimes things come up where you’re not able to really um do that. And so if you’re if you’re having those problems, maybe you’re having to deal with some of this stuff, then you can give us a call. We’ll certainly help you. We are um I am an enrolled agent licensed by the Internal Revenue Service to do taxes and representation, which just basically means I’m able to help you get Maybe work your way through some of the red tape, deal directly with the IRS if it’s necessary, and be able to finish up or mark everything else that we have to move forward.

Dr. Friday

33:09

So if you have questions or you need something to help you with that we’d be more than glad to help you. We are working on um potentially working on some uh self videos and things that might help some of my clients work their way better uh through the system but It, you know, every case is so different, to be quite honest with you. That’s one of the problems I have, is that every case is so different and needing to address each of those issues with that is not as simple as you might think. So being able to move forward, do what you want to do, um, and you know, take care of all those, then we are in perfect shape, right? But sometimes um you feel like you’re you’re not moving forward with your tax situation. Sometimes you feel like okay you talk to one person, they say okay, um and move on to that and And you know, the next person says, oh, but they you haven’t paid this, you haven’t done this, but yet you have proof that you paid it. But now sometimes uh it it may come down to where the uh IRS has applied it to the wrong place.

Dr. Friday

34:16

I had that happen very recently where the client went in and they paid it under a 1040 health care instead of the 1040 uh when they went on the IRS website. They didn’t realize there was a difference. And one of the choices says do you have a 1040, 1040 health? And they end up, which is people that it was really designed back when we had to have health care And there was a penalty if we didn’t. And so it was a way of paying your penalty right there on the IRS website. And now that penalty has gone away. But People still owe for some of those years. So it’s a place where you can do it. So he had paid it under that, not knowing that he was making this error. And it took us, oh my gosh, I think it took a year and a half to get them to just move it. You would think there’s an overpayment. They could apply that overpayment, but they had it sitting under this health care in which he did not owe any money. and his personal, which he did owe money, and you think they could have, but the system that the IRS uses does not do that. We have a a number of times when something accidentally gets paid on a 941 for a quarter prior, a quarter after And boom, now you’ve got a quarter with too much and a quarter with too little.

Dr. Friday

35:27

Why not merge those together so you balance out? Doesn’t happen. They’ll issue you a refund for one month, and then if you cash that check, then of course you end up with penalties and things that you can’t adjust. So it is just one of those things where you really do want to make sure that you have whatever it is that you that you’re trying to pay and making sure it’s been paid properly. So um, but if you need help with, you know, with doing that or just finding out what is the next step? What should I be doing? What should I be following up with um and and moving on with all that. So if you need help with some of that, that’s what we’re here for. I do know it’s been a little crazy because tax season every year, guys, is crazy. But hey You can give us a call on Monday and we’ll try to help you out. We’re going to take our last break for the show. If you need uh to join the show, 615-737-9986. We’ll be right back. Alrighty, we are back.

Dr. Friday

36:25

And it looks like Lisa has thought of something else to help entertain us and I appreciate your calls because you know, sometimes only talking to myself. All right, Lise, let’s see what you have for me.

Caller

36:35

Okay, part two. Um my husband, like I said earlier, passed away in twenty four Right. When we when I did my return or you know, had someone prepare it for twenty-four, they filed on there that he had was deceased and it would be the final return for him Okay. He had a credit card in his name only. And There was a little bit of a balance on it. Um and I settled with them and paid uh an amount to them for transactions that were uh happened after his death that they said I was responsible for. And then um they sent me and that was it, and that was in twenty twenty four is when I settled it. And I never got anything else from them Well in twenty twenty five this year I get a ten ninety-nine C for them for the difference. It was like fifteen hundred dollars, but it was only, you know, it was in my husband’s name Well my accountant also said this year not to worry about that because it was under his social security number and that I did not need to include it in my return I like your accountant.

Dr. Friday

37:50

I need to meet this person. That person is correct. Because it is uh you’re not responsible for your deceased husband’s tax issue. You know what I’m saying? Um, so you you don’t even really have the authority to file his taxes. I mean, obviously you’re married, you have the But you know what I’m saying, you don’t have the need to. So in answer to that question, I agree again. Um it it seems odd, but But the fact is you do not have the the need to worry about what would have happened if it was only under that person’s name, then you don’t have to file anything on that person. Okay. You know, especially because it’s a non-secured asset. If it was secured like to the home or something, that’s a different situation.

Caller

38:37

Yeah, because he had one that I did get a ten eighty nine C for in twenty four on another credit card, and since I our return at that time was still married filing jointly, I did include that And you probably did out better, but theoretically you would not have had to file for his, but um assuming you’ve always filed Mary Finley jointly, so why not?

Dr. Friday

39:00

Um you know To to make that one.

Caller

39:02

And then this year I did qualifying surviving spouse is what I did this year because I have a son that I take care of that’s disabled that still lives at home. So Yes.

Dr. Friday

39:12

I’m sorry about that. Yep, you’re spot on, girl.

Caller

39:15

Good deal. Thank you so much.

Dr. Friday

39:17

No problem. Thank you. All right. If you want to join the show, you can. 615-737-9986. We only have a couple more minutes. 615-737-9986 taking your calls, talking about my favorite subject, taxes. Um, you know, and it’s just it’s favorite subject for most people. Let’s be honest. How can you not love taxes? So um, oh, looks like we only have a few minutes left. If Marsha is ready, go ahead and hit her on. If okay, hey Marsha.

Caller

39:47

Hey. My question is my brother passed away and left me uh twenty two thousand dollars he sent it had it sent to me from a C V he had with several people’s names on it. Well I need to include that in my taxes this year.

Dr. Friday

40:01

Um, if it was a CD, assuming it wasn’t held in an IRA, then the answer is no, because it’s not going to be taxable. If it was held, the only thing that could have been would be some interest that may have been paid included in there that might have been based on when the CD was sitting, you know what I mean? But if if he has an estate, sound like there’s more than one person?

Caller

40:23

Right it well it was a terrible payroll.

Dr. Friday

40:26

Okay. So most likely the estate would have pulled it out, paid the tax on the interest, but um the the capital, the main part of it, assuming it was just money he had in the bank, you will not pay tax on.

Caller

40:38

All right, thank you.

Dr. Friday

40:39

Thank you. And you know, these guys are bringing up great questions, you know. It’s always a hard thing to deal with when you’re talking about um Death, I guess. Um, and the biggest problem with most of that is is that when you’re talking about death, you’re also talking about how do you handle some of the things that happen, right? We all know about step up and basis. We all know how that works. We all know that we are able to um you know get a step up and basis, but I have Or want to make sure everybody understands that when I talk about a step up and basis, there are some rules that need to be um dealt with uh because Uh you can’t just make up the number that is used for the step up and basis. You need to make sure that you understand how that is going to come out. I mean, so you need either an appraisal, which is what the IRS requirement requires is an appraisal.

Dr. Friday

41:37

And this is even on the furniture, clothing. If you’re going to give a lot of that away, they want an appraisal to show that the value that you’re you’re reporting on taxes is the actual value because I’ve had two cases now where they went and did the whole goodwill thing. And then turned around and found out that they weren’t going to be able to do the total amount because the IRS came back and said, hey, where’s your appraisal showing that you gave 13 $15,000 worth of clothing and furniture. And they think they have all the details because they’re using the Goodwill app and it doesn’t work. They want a physical appraisal. All right, let’s hit Michael really quick. Hey Mike, what can I do for you? Yes.

Caller

42:18

Uh real quick one. How much can a relative give to a relative before they have to pay tax?

Dr. Friday

42:24

Well, there’s really no tax on either, but nineteen thousand before you have to file a gift tax return.

Caller

42:30

Oh excellent. Thank you. Made my day.

Dr. Friday

42:34

No problem. Okay. Thank you, Sweet Hall. All right. Yeah, that’s a good question. Yes. And in normally the only person that pays taxes the person giving the money and if you have a hundred thousand in the bank and you want to give that to your child I’ve had a number of people that help do that with putting down payments on homes you can gift a hundred thousand dollars there is a tax return we have to show it with but the gifting is still available and you’re able to do what you need to do to make it work. So if you have any questions, um, you know, you can um contact our office Monday morning. 615-367-0819. Again, I’m an enrolled agent licensed by the Internal Revenue Service to do taxes and representation. That’s all I’ve been doing for the last 33 years. So if you’ve got questions or you need help, be more than glad to at least lead you in the right direction. I am not a financial advisor. Making sure people understand that because sometimes I’ll get a lot of calls saying, can I do this with my stocks or is this a good portfolio?

Dr. Friday

43:35

Not my thing, guys. I’m always asking the same question of my financial guy who is Hank Parrot. That’s who I would send you to as well. Um, you know, however what you need for that. So um, but if you have tax issues, maybe you have a friend or someone that needs some assistance and you just need to have that initial consultation we can help you with that we can give you an idea a lot of times I have to get power of attorney so I can find out what the IRS is showing what they want to be doing so we can make sure that we have all the right answers to do what we need to do. Also many people seem to forget that they actually have the IRS PIN system. That’s the six digits that the IRS will provide to you. Normally an identity theft situation happened. If you are filing your tax And you’re not providing it, I can tell you right now I have about 12 people that have not yet been able to file their taxes because they don’t have their personal PIN number. And without that, the IRS is going to consider it a fraudulent return because that’s the whole purpose, which is great.

Dr. Friday

44:41

I have other people right on top of it. Give me their PIN numbers. It’s a great thing to do. But um You know, also I’m an advocate for the ID. me accounts. That’s the one where you can go online, look at your IRS transcripts, look at your payments being made, look to find your W-2s, um, missing 1099s. If you Sometimes we move, we relocate, we don’t tell the employer. So you’re looking to file your taxes, you can go in there and pull up the transcripts that will give you the details of those transactions. It’s a lot easier to manage your IRS account. It’s really no different than managing your bank accounts or anything else, but it is a little tricky to set up, especially for some of my clients that have senior parents And the parent needs to have it set up so that they can update bank accounts or update account information and they no longer have driver’s license. They no longer have passports.

Dr. Friday

45:38

They don’t have the ability to have an email. You don’t realize how hard it is to function in this world when you don’t have access to those things. So my suggestion is Set it up sooner versus later. It’s like when someone passes away, never turn off an email, never turn off their cell phone. You need that information to be able to handle the estate so much easier All right, so again, if you need to reach my office Monday morning, 615-367-0819. If you’re in the zone around Williamson County, that’s Davidson, Murray. Um Sumpner, Henderson, all of those remember we have until 522 26. And then if you want to check me out on the web You can just go to drfriday. com, dr-fr-i-da-y. com, or you can email drfriday, which is at friday at drfriday. com.

Dr. Friday

46:33

The email again is Friday at drfriday. com. Hopefully you guys are having a wonderful uh Saturday afternoon. It’s beautiful here. The girls and boys My children uh kept pretty quiet, so I hope you guys enjoy the Saturday, as we say in Australia, cop you later

A: Dr. Friday says the relief applies based on the return address for taxpayers in the covered Tennessee disaster counties, with certain filing and payment deadlines moved to May 22, 2026.

A: As discussed on the show, Social Security by itself is generally not taxed; filing becomes an issue when enough other income pushes provisional income over the threshold she described.

A: Because the appraisal helps support basis or value if the IRS later questions the number used on the return.

Announcer

00:01

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 Doctor 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.

Dr. Friday

00:30

All right, Dr. Friday is here. We’re live in studio. We’ve got some great news for at least many of us that are in Williamson, Davidson, Robertson, Wilson, um counties, Murray counties. The IRS has at the last minute again yesterday on 4-3, they passed an extension due to the ice storm till May 22nd. So um it does say that it is anyone anyone in those addresses that will be in those areas and we can cover all of the counties here.

Dr. Friday

01:02

It’s gonna be Cheatham, Chester, Clay, Davidson, Decatur, Dixon, Hardy. Hardman, sorry, Harden, Henderson, Hickman, uh Hendersonville, Lawson, Lewis, Macon, Murray, McNair, Perry, Robertson, Robert, uh, Rutherford, Sumpner Charlesdale, Wayne, Rob uh Williamson and Wilson. And I know that’s a lot to take in. And you can go to the IRS website, irs.gov, look it up under impacted by winter storm in Tennessee, ice storm uh that will affect us in January.

Dr. Friday

01:37

So I will uh go right to the phones. We got Adam in Antioch and see if we can get a question in here. Hey Adam.

Caller

01:45

Oh that was quick, thank you. Let me give you a lot of things. Uh my total income thirty-one thousand four hundred. Well I have to file a federal income tax.

Dr. Friday

02:02

Are you on social security?

Caller

02:05

Yes ma’am.

Dr. Friday

02:06

Um how much of that is social security that you just gave me? How much a month do you get from that?

Caller

02:12

The total is twenty-nine four

Dr. Friday

02:14

Okay. So out of the thirty-one four, twenty-nine four is Social Security?

Caller

02:20

That’s correct.

Dr. Friday

02:21

Then you do not need to file.

Caller

02:24

Oh good newsweek.

Dr. Friday

02:26

Wow, well thank you for that.

Caller

02:29

Thank you, ma’am.

Dr. Friday

02:31

Thanks, sweetheart. Uh It’s always nice not to have to file. Most of us will never have, but sometimes we get lucky enough here or there to have a at least a year or something that may come into that situation. So um There is some waivers back to the IRS’s um natural disaster that they’ve they’ve put here in uh federal disaster, I should say, for the state of Tennessee You can go again to www. tn.

Dr. Friday

03:02

gov. You can look up the disaster, and that way you can make sure you’re in the right county. It is going to be based on the address that you file your tax return on. The IRS is going to be using that as a forum of who and who does not qualify. I did have someone contact me um this week because they were filing and I guess a penalty was coming up when she put in her estimated taxes for last year because she waited until 11. 3 Um and what you want to do is you want to put in um I have had only a couple of them because most of the people I have uh

Dr. Friday

03:40

Made it, but my system, anyways, all you want to do is let them know that you were covered by the natural disaster. And you can actually look up a disaster code on the IRS website for the disaster that you’re you’re covered under. And then that way you can include that. So that way your address should automatically correct 2025 if there is said penalty and also now Another one for um I should say 2024, which made it all the way in, and then some of the 2025 estimated payments and things that were extended until 11.

Dr. Friday

04:12

3, those will all be covered under your address. So as long as your address, well, the first one, the first disaster covered all, what, 93 counties or something. This one is only covering probably about 15 or 20. This the ones that were hard pit by the ice storm, which Most of my clients, Rutherford, Williamson, Davidson, Murray, those are the big, big ones, Mini and Wilson and Hendersonville, but they’re all listed there. So again, we have uh an ice storm extension

Dr. Friday

04:43

And I can’t tell you guys how many people had asked, do you think the IRS is going to give us an extension? And I kept saying, I have no idea. And then uh and then they did it yesterday. So um extension is on the books, which gives some people a little bit extra breathing room. If uh if you’ve already filed, if you’ve already scheduled your payment, like I have for some of my clients, there’s no way of going backwards. I will let you know that. Had someone email me this morning saying, hey, I um if you haven’t filed my taxes, don’t file them. But I had filed them because they’re due, guys, in less than 10 days almost.

Dr. Friday

05:16

So So for all of you that want to procrastinate, wait. Now many of us would file, I would suggest If you if this is all to do with the payment, that’s fine, but filing an extension if you plan to go past this window. If if for some reason I had a number of people listening to this right now. I’m sure there’s people that had eight, nine, even one client was 11 days without power or internet. um situation. So there was some that were very badly hit.

Dr. Friday

05:48

Some of us only had hours of of something or or nothing at all. But um they’re t they’re including us in the entire um county. So All that are affected on that, you have an extension deadline applies to individuals, income tax, and payments normally due on or before January 22nd. of uh twenty sixth that will extend and as long as the payment had been made before February sixth. So some of this It’s funny, they just put this out yesterday, but their deadlines or their deposits are still saying that some of them needed to have done

Dr. Friday

06:22

quarterlies and things. They’re going to give you a small waiver from January 22nd to February 6th. But if you still haven’t made those payments, there will be some penalties and interest involved. But I will try to keep this out there for everyone to know. A lot of my clients, I’m going to probably try to send out a mass email just so they can make sure that if it applies to them and they have a situation, um, it may be something that they can use to get, you know, hey, if you normally would have filed an extension and couldn’t pay and that’s a

Dr. Friday

06:53

that you know remember guys an extension never ever extends the money that you can’t pay a lot of times people file extensions for many reasons and many reasons is because they don’t have all their tax forms They have K-1s usually that are delayed, so they don’t have the ability to file their own taxes. But payment is due on four equal payments and or with your extension on April 15th. Now this will extend those people to May 22nd, but um you know you’re not going to have until October 15th to make your payment without penalties and interest

Dr. Friday

07:30

Just saying. It’s big news, but I just want to make sure everyone’s on the same page. All right. So if you want to join the show, you can. 615-737-9986-615. 737-9986 taking your calls, talking about my favorite subject. Um, met a lot of new people this uh this last week. I was uh pleasantly surprised. Uh we we really hadn’t taken on a lot new ones, trying not to, uh, but this last couple days met some really nice people, most of them probably referrals from my own clients, but that’s awesome

Dr. Friday

08:04

because a referral is probably the best compliment anyone can give you. And so um but yeah we have some interesting situations, different type tech situations, things like that. So we’re working very hard to uh meet all of those. That’s why I’m working the weekends and I had had to do last Saturday live uh I I was not able to do a radio show because we were actually seeing clients on a Saturday which never happens in 33 years or thereabouts. So um yeah good good tax season. So if you’ve got questions, maybe you filed your taxes or you’ve got a question if you’ve uh filed and maybe you found that there’s a mistake

Dr. Friday

08:41

Um there are ways of fixing those. If you have received a letter, we’re seeing a lot of people getting letters saying that the IRS is asking them to identify or to prove their identity I’m assuming it’s a big part of where they said that they are working or trying to break down on identity theft. So they are sending out a lot of letters saying um that they don’t have uh they don’t they need you to call or contact them. I ideally you just go in, you set up an ID.

Dr. Friday

09:13

me account You can verify your name and your filing and then they’ll release your refund or whatever. Also, um the IRS is not refunding Um with checks. I’ve gotten probably six people that we’ve uh I have a number of people that just don’t want to give the IRS their bank account. And so if they make quarterlies, a lot of them will just roll over whatever refund they have into the next year, and that’s fine. You don’t have to give the IRS a bank account.

Dr. Friday

09:45

But keep in mind if you’re mailing checks to the IRS, they have your bank account, right? So you’re not really hiding, maybe in plain sight Um, but the IRS is sending out letters to individuals where no bank account was provided and now they’re having to call and again Your best bet if you get one of these letters is to go to ID.me. It’s the same one many of you, if you have Social Security. Even if you’re not on Social Security, you might go in and look at your Social Security. That’s the same account you would have.

Dr. Friday

10:16

But anyways, you would need to log in and update your banking information so that they will then electronically pay you your refund So if you’ve gotten one of these two letters and a lot of times I had one person show up at the office on Friday, she got the letter about uh proving her identity And she’s like, I want to make sure this is not a scam. I want to make sure that I’m not going to be walking into something where this is going to turn into you know, someone’s stealing my identity. And I get that. There’s so many scams out there, and we’re teaching people do not give people your legal name.

Dr. Friday

10:47

Do not give them your social security number. And on these questionnaires, they’re going to ask that information So, you know, again, if you’re not sure, certainly double check. But there is a legitimate letter going around requesting normally after you’ve already filed, making sure that you did not have a fraudulent return go to you. All right, so if you need help, if you need to ask a question, what you want to do is pick up the phone, 615-737-9986-615.

Dr. Friday

11:19

737 9986 taking your calls. Talking about my favorite subject, which is taxes We may get into talking about bees or chickens because all the people that come into my office know that that’s my second favorite subject. But today if you have questions on on uh filing, maybe you still haven’t filed, maybe you got a question about what you need to file how you’re gonna file maybe you don’t have all your tax documents what should you do maybe you’ve inherited something and you’re not sure if you’re supposed to report this on your tax return someone gave you a uh what they called a gift but was it a gift or was it really

Dr. Friday

11:54

taxable income or you gave someone a gift and did you try to write that off your tax return because the gift word doesn’t always mean tax deductible But we’ll talk about those or anything else. Again, 615-737-9986 is the number here in the studio. And we’ll take your calls in just a few minutes. We’re going to take our first break for the afternoon. Hopefully you guys are enjoying this Saturday, and we’re going to be right back with the Dr. Friday show.

Dr. Friday

12:26

Live in studio. If you have a question, you can certainly join the show 615-737-9986-615-737 9986 taking calls, talking about my absolute favorite subject. Taxes. Why is it my favorite subject? Because it’s always changing. Right? I mean just like now yesterday, boom, another change. We now have an extension. What does that mean? How’s that going to be advantage? Uh what advantages and disadvantages are we going to be looking at for my people? And what can we do to make

Dr. Friday

12:57

things work better. So um if you’ve got uh uh a situation where I had someone that their um mother passed away ended up selling a house uh for more than what the appraisal was. And but it was only a few months after mom died. And they’re like, well, we shouldn’t have to pay tax because um It’s uh it’s not taxable, right? Because she only died three months ago and this is what the appraisal was. The problem we’re running into, to be quite honest with you

Dr. Friday

13:28

is that it sold under a unusual situation and to an unusual person and therefore I think it may have been Potentially, um, I’ve had many cases where people have sold homes for more than the appraisals, um, and sometimes it’s because they put put money into it But sometimes um and sometimes the appraisals may not be properly done to account for the way the house was when they had it. Someone underscored it thinking it was going to be a low ball And they didn’t highball it and they end up getting the high higher amount.

Dr. Friday

14:00

And you if you can justify that the amount that you sold it for was the true appraised amount, then you have no problem. But remember, you have to pay capital gains on anything that’s above whatever the original appraisal is that you get on a home. So it’s so important not to just lowball it and you know, go after the exact true amount and what you need to have with it versus sometimes, again, people just have a tendency to to just take the the amount that fits the best, what they think’s gonna fit the best, and then you know, not really understand the whole purpose of why we’re asking for the appraisal in the first place.

Dr. Friday

14:38

Um there is losses on appraisal. I have one where I think it was like I don’t know, petty cash basically, but there was like eight members of the family. And so it wasn’t going to be valuable to, you know, to worry about the loss. Um, especially since everyone had already filed mostly their taxes. But um sometimes it is valuable. I mean if you you basically have a house that comes out appraised and I’ve had a couple that they praised them and they were completely wrong So, but they what when I refer to the word appraisal, I I should say in some of these cases, it’s more like comps, right?

Dr. Friday

15:13

Someone’s going in and saying these are very similar to the house we just sold Let’s use these. If it’s an actual appraisal, then the number will match exactly, right? Because they’re going to take and pull five of like kind. They’re going to disallow it for not having a new AC or or having you know a lot of in inside repairs needed, a new roof, whatever it is, and that’s going to come back and and be evaluated on an actual appraisal. So I haven’t seen enough people, I think, sometimes get appraisals because, well, they’re often more expensive.

Dr. Friday

15:46

And uh they don’t want to put the money into it. But keep in mind tax law does say that if you inherit a home at the time of inheritance, um, you are supposed to get an appraisal So that way you have proof that whatever you’re using as your basis is the correct number. That’s, you know, that’s pretty straightforward. That doesn’t seem like they’re asking. Also, I need to bring up the fact of donations. A lot of people go to goodwill or like-kind organizations. They bring in sofas and chairs and

Dr. Friday

16:19

and you know hundreds of items sometimes of clothes, t-shirts, shock shoes, you name it. IRS has basically come down the line from lawsuits and things or or court cases and If you’re going to be a person that’s giving that kind of item way, you don’t just need to take a picture and then, you know, write it down and say, this is what I did. And, you know, most people, in fact, nobody really has the original receipts. Most of us don’t save the receipts from the clothes that we’ve purchased.

Dr. Friday

16:51

Even though nowadays it may be beneficial if you’re actually going to use sales tax in Tennessee because Obviously, we can now itemize the sales tax in Tennessee again because we’re up to $40,000 in our salt tax. So we now have the ability to go back and I mean, I think a lot of people are surprised. I have people, ordinary people, but when you add up all the sales tax you have in the year from all the things you purchased that had sales tax It uh it can be four, five, six, eight thousand dollars. And that’s not just something specially purchased like they went out and purchased a car and had a couple thousand dollars.

Dr. Friday

17:27

This is just eating out clothes, um, you know, buying or paying for anything and everything that had sales tax attached to it. And I have people that save every single receipt One that was audited a few years back and no problem with that audit, I’ll tell you that, because they were able to justify every single receipt. There was, I don’t know, 5,000 receipts and they were able to give them all those. So it’s always impressive when that happens. Um, but you know, a bottom line is if you don’t have that ability, you need to either get an appraisal.

Dr. Friday

18:02

of everything you’re going to give, and you actually have to pay for that appraisal or, you know, well, if you can get someone to do it for free, that would be great. But an actual appraisal, then if you ever audit it, it will come back at you and you’ll be able to fix you know, argue the point that it have it because that was a a lesson learned on someone that uh we saw that was audited and they were not able to do that. All right, hey, let’s hit Alex in Nashville and see if we can help. Hey Alex

Caller

18:28

Yeah uh y you got can you hear me?

Dr. Friday

18:32

Yes sir.

Caller

18:34

Uh yeah, you was talking about uh your You don’t have to do taxes when you turn a certain age when you you’re with social security?

Dr. Friday

18:42

Well, I was saying that you have if your income is low enough, you don’t have to do taxes. I have people in the nineties that had to file taxes

Caller

18:50

Okay, what’s uh what’s the uh the uh yeah.

Dr. Friday

18:55

So they take the provisional t uh income is they take half of your social security And then uh to come up to 25,000. So if you have 25,000, including half your social security. So if you have $20,000 in Social Security, you would take $10 and you could earn $15. The gentleman had called in had only earned like $3,400 and 29, I’m sorry, 34,000 and 29 of it was was Social Security. So he he was fine. He did not meet the $25,000 situation for provisional tax code.

Caller

19:30

If you’re just solely on Social Security, do you have to follow on that?

Dr. Friday

19:34

No, not at all. If you’re only on Social Security, Social Security itself is not taxed. It only becomes taxable with other income

Caller

19:42

Now one more question here. Uh do you need to re do you need to let ’em know where you’re at every year by sending something in

Dr. Friday

19:49

No. I mean if you’re on social security, keep in mind they know where you’re at, right? Because you receive a benefit every year. Or month.

Caller

19:56

So I mean yeah, so you don’t have to worry about that. I just kind of curious. I thought maybe you need to keep an uh record with them every year. What about if they have a uh a stimulus check or something like that?

Dr. Friday

20:09

Right. Well even even back in twenty twenty and twenty twenty one, people that hadn’t filed because of just social security, they actually received the checks faster. So, you know, people on Social Security sort of have a different attachment to the government than most of us that have W-2s or 1099s. Uh but yeah, you you don’t even have to worry about if you’re only on Social Security, you will receive any stimulus. There was one or two years where they were giving a uh a percentage back. I want to say it was like 17 or 18 where there was like $100.

Dr. Friday

20:40

And in those years you could file if there was some sort of money being given to people to file, but uh we don’t have that on the code right now.

Caller

20:50

All right. Well thanks for attending my call and I appreciate it. Enjoy your show.

Dr. Friday

20:55

Thank you, Alex. I appreciate you. All right. That was a uh It’s a good question because I know um a large number I have I have a client that comes in and every year she’s now 90 she is now 93 years old and um she comes in she does her own accounting or uh her own tax records or whatever and she brings them in every year and she goes, Do I have to file this year? And of course every year she has to file. Um and she’s she just does not think it’s fair. There should be an age limit And I’m not disagreeing.

Dr. Friday

21:26

I think if I made it to 93, especially as mentally sharp that she is and and doing, I think there should be some sort of reward. Um, but uh again, there is absolutely no age tied to taxes. I mean, there are kids that are two and three years old due to the fact that they have investment in the name of a minor child that have to be added back to parents’ tax returns and taxed at higher rates. I mean, there’s there’s ways of taxing everybody. And so um even people on Social Security don’t, you know, I mean you have Irma that comes into play.

Dr. Friday

22:02

It’s not a tax per se, but they do base it on income. So you can be, if you happen to sell something with a large capital gains, even if it’s a one-time event. And I don’t care what Social Security tells you that they have this waiver. Maybe someone listening could call in and say they did get it. I have not yet seen, and I’ve got some tenacious clients, uh, but I’ve not yet seen where somebody has been able to get the Irma dropped because of selling a piece of real estate um like throughout time or whatever.

Dr. Friday

22:35

Now maybe if it’s a part year where they are working and then the next, you know, but they they have a two-year look back on on Irma, which Irma’s for your Medicare, just for people that might not know who I’m talking about. But it is one of those things where you you get penalized. I have every year we do taxes for a number of people that end up getting hit and then they’re just waiting for Irma to come because it’s almost like the the devil in the dock, you know? Next thing they get a little love letter from s uh from Social Security administration saying or in some cases they just get a reduced

Dr. Friday

23:09

amount deposited in their bank because they feel like they’re losing their social security. They’re not, but it still feels like it because they pay your uh Medicare out of your Social Security, therefore your Medicare goes up. And I have people that pay twelve thousand dollars easily a year. in uh in Medicare because of the income penalties. So not too sure why we have a penalty, but you know again, all I can tell you is what the tax law is. I cannot tell you why We have an income limitation on how much people can make just because, I mean, it’s not like they use more medical than somebody else.

Dr. Friday

23:46

You know, medical is used when people need it, not based on income and and that’s just crazy. Okay, so we’re gonna um come back after this break and we’ll get to some of your phone calls 615 737-9986-615-737-9986. This is the Dr. Friday Show. I’m an enrolled agent licensed by the internal revenue service to do taxes and representation. We’ll be right back.

Dr. Friday

24:20

All righty we are back here live in studio. If you want to join the show you can 15737-9986. For some of you that just joined the show, two things. One, I am Dr. Friday. I’m an enrolled agent, licensed by the Internal Revenue Service to do taxes and representation. I have never worked for the IRS. I have taken their exams, I have passed their courses, and I am an enrolled agent, which means that basically all I do guys is taxes. as what I enjoy doing, that is what I do. The second part of the good news is for anyone that’s living in the nearby counties, and that would be for me, the closest is Williamson, Rutherford, Murray, Wilson.

Dr. Friday

25:02

All of you that are in those basic areas. We have an extension now till May 22nd, 2026 for filing this tax year. They say we do not have to have an extension Because there’s no penalty and that you need to make sure you make your payments and all the original things that were due. on or due before February 2nd and April 30th. This deadline uh it applies to both those dates. So anything that was due by the end of April you have until May 22nd.

Dr. Friday

25:36

And so that would include filing of your tax returns could be something. But now I want to also point out the state of Tennessee may give May give you an extension one-on-one individually that were they they want someone truly affected. The IRS kind of just lumps everybody in a county. They use your home address They they trigger those and then the system basically just gives all of them the same thing. In Tennessee, if you have franchise XOS or you have anything else that you need to go with on that, uh sales tax, uh business license.

Dr. Friday

26:12

All of them are due before the end of the month. Many of them I think were, I think your annual report was due April 1st, franchise excise April 15th. So all of that needs to be done on time. So either an extension would need to be filed and done so you have it finished or you would need to make sure that you have at least paid the money and filed the extension. Because I mean Tennessee, they’re really more about making a payment than anything else, as far as I can see.

Dr. Friday

26:45

I mean If they have your money, they’re less likely to charge penalties, but they will charge for failure to file. No matter what, they will do it. So uh just making sure that you have All of your ducks in a row, everything is done correctly, and then you’re able to move forward and and do that. But again, making sure that everything is set up the way you need it to. And you know, my girl’s here. She’s uh wanting to go outside and play So um let’s see, what else? We are actually still working, obviously, on all of our taxes, even though we received this information yesterday.

Dr. Friday

27:16

Many of my clients are still wanting to be filed on or before April 15th. So we will have all of those that we can get done will be completed and then people have the ability to make better decisions with that information and you can, you know, file or or do. Many, many of my clients, to be quite honest, are not able. to file their final tax returns because they need to actually have um the um the the K1s or something from another organization before they can before they can send it.

Dr. Friday

27:50

So they need to make sure that’s all done and we are good to go. But we will um if you do have Maybe you filed your taxes already. Keep in mind, 2026 is on us. We’re almost through the, well, theoretically, we are through the first quarter of 2026. So if that’s the case and we are now moving on past that, then we need to figure out what can we be doing this year that might be able to make things better for all of us, right? So maybe better bookkeeping, maybe tracking your expenses a little better. Sometimes people um have to wait to that last minute.

Dr. Friday

28:24

To be able to do something, and that’s never a good thing. Last minute entries often make people think about, well, what can I do if it’s last minute? Should I be doing this? Should I be doing that Um, but you know, you don’t you don’t want to wait to the last minute and then have your, you know, ideally the tax person, because I’m making phone calls saying, hey, did you do this? Do you have that receipt? You know, you sold a piece of property, was there any cost basis? Did you have closing cost fees? You know, um getting all that together, we actually have now implemented where we’re using um Smart Vault.

Dr. Friday

28:57

I know a lot of CPA firms have probably been doing it a lot longer than me. But, you know, no one ever said that I was uh fastest on these kind of situations, but I will eventually get there. And so If you need help and you need an extension or something, you can call our office. And you can also go to irs.gov And you can file an extension right there on the website. They do have some free extension filings just for individuals that may need that extra time sometimes because things are going, you know

Dr. Friday

29:29

crazy in your life and you’re not able at least if you file the extension, you’ve eliminated the failure to file penalty, which is even worse than failure to pay, to be quite honest. Failure to file is is uh I believe six percent um per per time and failure to pay is 0. 6. So big difference. So if you have the ability to make sure you have everything done And you can do your taxes right then, that’s awesome. But if you don’t have that ability, if you’re not able to do some of the things that you, you know, the numbers are not right where you

Dr. Friday

30:03

want them to be, then guess what? File that extension. Maybe this is the first time in years that you haven’t file. I mean, you you know, I have people right now that haven’t filed for six, seven, eight years. Sometimes only one or two. But Make this the year you filed the extension, so then you can turn around and get caught up. Getting caught up, I mean, it’s just gonna take a huge weight off your shoulders It also is going to make it a lot easier for you to be able to um uh get a house

Dr. Friday

30:35

Help your kid go through FASFA. If you have children, they can’t get their loans because mom and dad haven’t filed taxes or maybe you know whatever. So you need to be able to Do what you need to do as an adult, which part of that is, and then also when you’re doing this, after you’ve done that year, and let’s say you do owe money Make the adjustment. Make an adjustment so that you have the money coming out. So you eventually stop the bleeding. I know some people say, well, I can’t live off of this.

Dr. Friday

31:08

Well Sooner or later, if you’re short every year on taxes and you’re not able to pay it, yet you’re making your mortgage payment and your car payment, and in some cases sending your kid to private school and all these different things The IRS is going to say you’re making choices that is not the choice that we would make for you, right? I mean the bottom line is if you’re paying your home, then they’re saying that home is ours Because you’re making a choice. You’re saying, hey, I have to have someplace to live, so I’m going to pay my mortgage, but I’m not going to pay the IRS.

Dr. Friday

31:39

They’ve come right out and basically said, we’ll take your home if you don’t pay us And it used to be that you somewhat protected under bankruptcy and things like that, but it isn’t um it’s not like a completely guarantee that the IRS will not touch your home Okay? So play it smart. Get on track. Figure out what you need to do to make everything work, but don’t just assume that you’re going to you know never have to pay Because that’s kind of crazy. I mean, to be quite honest with you, I mean, you need to make life changes.

Dr. Friday

32:13

You need to figure out how to do it. Sometimes life happens. Divorce is a big reason people end up with tax issues. I’ll be honest Divorce does not make for a good person to, you know, you’re you’re trying to re-establish yourself, trying to get back on your seat, and then you’ve got to split all this income and all your equity and sometimes half your retirement. All of that happens. Totally agree. Happens, happens, happens. But if it does happen and you need to make a deal, then you, you know, you need to get current because the IRS can’t do anything until you have all of your tax filings done.

Dr. Friday

32:48

They need to know how much money do you owe them. And then once that’s done, there are tools out there. There is ways. But I mean again, I know people listen and a lot of times even on this radio show, you’ll hear or this radio station, you’ll hear people say, for ten cents on the dollar, we settled You shouldn’t have to pay all of your taxes. We will help you. Um, you know, there’s rules. And again, one of the biggest things that when people come in my office, they have, you know, $500,000 worth of equity in a house.

Dr. Friday

33:20

But they don’t want to have a mortgage because they’ve worked their whole life to pay off this house, but yet they owe the IRS $100,000. So, you know doesn’t doesn’t really make sense. You need to go get a second or a first or reconsolidate and get the IRS off your back so they don’t take that house. And then finish paying off the IRS, finish paying off your house by making extra payments or whatever you need to do, because the IRS is going to most likely have some issue with not being paid

Dr. Friday

33:51

And they do have collection companies out there. They’re out there, people, and all of that. So you just have to figure out. What’s going to be the best way to have all of this working for you? That’s all I want. I don’t want you to be afraid of the IRS. I mean it’s a collection company. That’s what the RRS is. It’s not anything more or less. It’s a collection company But that being said, you know, even if it’s a collection company, it’s still they need to be able to figure out how or what they’re going to do with some of this information, and they will

Dr. Friday

34:24

make sure that they have the best way to collect. So communication is the second thing. Make sure you have all your ducks in a row and then communication. Let’s make sure that they understand your financial situation. Maybe you can do a partial payment plan for a year or two. Maybe you can reestablish or even get a loan. But all of these are questions or options that are out there. They’re not For everyone. I mean, I have settled IRS cases for as low as $25. Um, and they owed like $110 or something like that.

Dr. Friday

34:58

Even uh even with the state of New York, which wasn’t easy, but I think they took 50, even 25 more. But this was somebody that really had very little. Age helped us. So it wasn’t something like they were just underemployed. They weren’t going to be able to ever make the kind of money they did back in the day that this tax issue happened. So um, you know, those do come into play, but just If sooner you get yourself on the right track, the better. Make 2025 filing that situation.

Dr. Friday

35:29

You’ve got a window here to be able to Get your documents together and move forward. All right, we’re going to take our last part of the show. Um, and the last break of this show, I should say, and we will um take any calls, 615 737-9986. You can also email Friday at drfriday.com. Again, I am Dr. Friday, an enrolled agent, licensed by the Internal Revenue Service. do taxes and representation. Hopefully you guys are enjoying the Saturday. It looks like it’s a beautiful day outside, but we’re going to be right back with our last break from the Dr.

Dr. Friday

36:03

Friday show. All right, this is the Dr. Friday show, and this is the last part of the show. So if you’ve been listening, you have a question, you’re like, oh my gosh, I don’t really want to call the radio, you can also email Friday at drfriday.com. Totally get it Probably never did that before in my life, but you never know when you might want to do it. So 615-737-9986 is the number here in studio.

Dr. Friday

36:37

Want to go over this one more time. Obviously, for anyone that is not within these counties, you need to file by 415. If you’re in the counties of Cheatham, Chester, Clay, Davidson, Decatur, Dixon, Hardaman, Hardin, Henderson, Hickman, Lawrence, Lewis, Macon, Murray, McNary, Perry, Robertson, Rutherford, Sumpner

Dr. Friday

37:08

Trousdale, Wayne, Williamson, and Wilson. They all qualified for the Federal Disaster Relief. They are qualified until May 22 of 26. So again, these are important dates for many of you because if you maybe were a little bit procrastinating or being a little worried about getting all the right information in. Take a deep breath. It’s gonna be okay.

Dr. Friday

37:39

We’re gonna get it done and we’re gonna be good. But I did have, again, I know a number of you listening right now actually did have some serious um Tax issues, right? I mean, just saying you guys, not tax issues. Um, you were f that didn’t have power for 10, 11 days. Number of my clients had 11 days. Some had six, seven, a couple only two or three. Some ended up going to hotels. Some ended up not, but um, you know, any way you look at it, it is definitely one of those situations where you want to be able to

Dr. Friday

38:14

Relax, make sure your paperwork’s together. Um, hopefully all of you were no one was hurt. I didn’t have any clients that I remember or know of. I did have a client this last week um that uh ended up uh Um having a heart attack in the parking lot at my office and was very worried, but I have good news that he is recuperating. Um apparently one of his stints failed that he just had in and uh all is good, but You know, we don’t uh really want to mess with any of that.

Dr. Friday

38:46

Thank you very much. It’s a bit scary when it comes to that kind of thing. So, you know, our prayers are with him. But If you are a person that has had the the weather or maybe maybe you just live in one of these counties. I happen to live in one of these counties. We’re in Murray. So we don’t have to really worry I’ll be honest, I file an extension on myself. Anyways, I am not going to rush to the finish line as long as I have paid my estimated taxes properly.

Dr. Friday

39:18

Um, I will pay zero penalty and I will be able to do what I need to do when I need to do it. I mean, why not? Why do I want to worry or or stress over doing something when it’s not necessary Let’s just be honest. So if you are a person that is that way, then you’re good. If not, well, then you know You’re going to be late and that will be fine. But for any of you that may have just said, you know, I’m not going to make it. There’s no way. I don’t have enough time to put the documents together. And they also are saying if you need to get your transcripts

Dr. Friday

39:50

Because some of you may have had some serious computer damage or something like that. They are allowing people to be able to get those for free. I guess there usually is a fee fine. a fee that people will have to pay, but filing and paying these taxes um after the original due may have until uh the affected people and it will have until May 22nd to file and pay the taxes that was originally due by April 15th. So again, um this is uh for individuals, payroll taxes, anything that would have fallen between some of these due dates.

Dr. Friday

40:24

You do have some extension I’m not a person that likes to play with payroll taxes. I will say that. So if you, I mean if you have payroll going on. I I will always pay my payroll taxes the moment I do payroll because it’s just so much easier. That is the one um situation you do not want to have. payroll taxes can get pretty um expensive they will charge you 25 percent penalty without even doing anything else and then interest and then failure to pay failure to file failure to

Dr. Friday

40:57

basically do anything and you know it’s it’s kinda sad. But um you know so don’t mess with your payroll taxes. Just make sure that they are done the way you need them and then get them done. Because the fiduciary responsibility on payroll taxes, it’s not your money. If you’re not paying your own tax bill, that’s one thing. If you’re not paying someone’s payroll tax bill And I get it, guys. I’ve been in self I’ve I’ve been self-employed for 30 plus years. There have been rough years and having to come up and do things with that situation. But

Dr. Friday

41:28

It’s time, it’s a good thing. You need to make sure you have all of your ducks in a row. If you haven’t done or if you have payroll issues and you need some assistance. with dealing with the IRS because they will be much more aggressive with that. In fact they usually only give you like twenty four months versus like five or six years for the personal side, 24 months if you’re dealing with payroll issues. We can help you with that. But again, you need to make sure that you’re ready to make a deal with the IRS because Um yeah, we’ve we’ve had to do those for years and it’s uh it’s a painful process and the penalties can be quite

Dr. Friday

42:04

extensive. They’re not very big on giving a whole lot of um waiver on most of those. If you can show that you were basically out of business you can do a little better than if you’re in business but um you know we can we we’ve been doing this long enough where we can give you some help and guidance And then you also want to talk to an attorney because I’ve had a number of people asking me, should they be now a sub-s corporation versus an LLC? And I’m gonna be quite honest with you.

Dr. Friday

42:37

I have um a problem because we just talking about payroll taxes, right? So everyone’s being pushed because on a sub-S corporation, the pass-through income, you don’t pay personal, you don’t pay uh self-employment tax. I get it. I understand. But I also understand that if you’re looking at all this and you’re saying that you’re going to now turn on payroll, in which you now have to pay the other 7. 65%. up to, and I believe the IRS sent something out $75,000 or $80,000 for an average business owner.

Dr. Friday

43:09

And it is supposed to be based on what you would pay someone else to do your job. So if you’re higher in an executive and you know you’re a specialist and you um if you were working in the workplace, you’re making $200,000, then you need to be paying yourself $200,000 and then anything above that would be considered. dividends or pass through. So that’s the biggest thing. I’ve seen people that try to pay themselves $20,000, pass through $100,000 so they don’t have to pay any taxes. I hear it, but it doesn’t make a lot of sense to me because it seems like to me that we are um avoiding and then at the end of the

Dr. Friday

43:45

Time when you hit 67 or whatever time you’re gonna start taking social security, you’re gonna find out, guess what? You cannot uh get any social security because you didn’t pay any in I mean, I’m just saying, you know, I mean, you paid in on $20,000, you’re going to get $2,000 or $3,000. So you avoided it throughout time. I have a sibling. He makes good money, but he paid himself always a minimal, minimal amount, and he found out that his Social Security is uh pretty much nothing um because of it.

Dr. Friday

44:19

And that’s I mean again, everyone has their own choice. And in his case it wasn’t going to be a major issue because he still had plenty of money. But Um, you know, his Medicare is high and I don’t know if that has any bearing or if that’s just because his Irma is high, but um he was pretty shocked that he hadn’t uh paid in enough to really qualify for anything or very little. um social security. So sometimes you think what sounds good now, oh we’re not paying it. But if you’re taking that money and then reinvesting it into a 401k or something, but keep in mind 401ks SEPS

Dr. Friday

44:53

Uh IRAs all of that is based on your earning, not on what you’re passing through um as uh distribution, right? So if your W-2 is $20, $20,000 You can maybe put the 8,000 in, but you’re not gonna be putting much into a SEP or 401k, especially if you’re distributing really your income is 120. Now you’d be able to put some serious money aside All right. Well, this show is winding down. We’re at the last minute. So if you want to uh give our office a call, you can Monday morning.

Dr. Friday

45:25

Six one five three six seven zero eight one nine six one five three six seven zero eight 19 or you can check us out on the web, drfriday.com. Pretty easy. If you’ve never heard of me, you’re not too sure what I do. Everything’s there on the web You can also send an email through there making sure that everything is clean. And the email is friday at drfriday.com also. Uh again, I’m an enrolled agent licensed by the Internal Revenue Service to be doing taxes and representation.

Dr. Friday

46:00

I’ve been doing taxes for 30 plus years here in the Nashville area. My office is in Brentwood. And so if you have questions, you need help. At this moment, up until April 15th, we have no more openings, but we would be able to maybe take a meeting after that to if nothing else guide you in the right direction, help you to get in the um get to the right person to help you get to the right place. So again, if you need help, 615-367-0819 or Friday at drfriday.com or just go to drfriday.com on the web. As we say in Australia, cop you later.

A: The new $6,000 per-person deduction for taxpayers 65 and older is not available to those who file married filing separately. Because the IRS can’t verify both spouses’ income on separate returns, the deduction is disallowed entirely for that filing status.

A: Most likely not, or very little. Inherited property receives a “stepped-up” basis equal to its fair market value on the date of death. So unless the artwork appreciated significantly after he passed, any gain above that stepped-up value would be small — and the gain period would be short-term or long-term depending on how long the estate held it before selling.

A: Possibly. Before signing anything, consult a financial planner — it may be possible to do a custodial (trustee-to-trustee) transfer to an IRA or another deferred account and then take withdrawals over time. A lump sum taken all at once will push you into a higher tax bracket and make up to 85% of your Social Security taxable, so it’s worth exploring every option first.

Announcer

00:01

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 Doctor Friday show. 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.

Dr. Friday

00:29

G’day, I’m Dr. Friday, and the doctor is in the house. We are here live, so if you have some questions concerning maybe you’re working on your taxes. I do want to put a shout out for anyone that is a multi-member LLC or a sub-s corporation. Do remember that Monday is your tax day. So you should have filed an extension, just to make sure that everything is filed properly or file the return, whichever works for you. Either way, you need to make sure you’ve got it all filed so you don’t get hit with penalties. That’s the one thing we don’t like is penalties.

Dr. Friday

01:00

So if you’ve got questions and you want to join the show, you can do that. 615-737-9986. I am going to say that we are working hard on a lot of taxes ourselves. Finding that tax documents, people are having some problems getting all their documents together. We’ve already had a change, I believe it was with Charles Schwab, where a second set of documents have been sent out after the first.

Dr. Friday

01:30

As well as we have the issue with all the tips and mainly tips, I have to say, overtime. The definition of tips, especially on the self-employed Uber drivers — individuals that are reporting the information based on what they have. The biggest question is, if you’re reporting tips and you are an Uber driver or somebody that is getting tips through a 1099, make sure that those tips are reflected in the income side because a lot of people are just using what Uber is providing. But we all know that if some of the tips are cash that did not run through the Uber 1099, therefore you may be overstating the tips based on the income. So if you’re going to report all of your tips, you need to make sure that you’re also deducting those from the right amount.

Dr. Friday

02:31

And remember, tips for a self-employed individual — you do still have to pay the self-employment tax. They just give you a deduction against ordinary income tax. So the savings is good. A lot of times there’s still a misconception a little bit on: is Social Security taxable? Because everyone’s like, no tax on tips, no tax on overtime, no tax on Social Security. Well, there is tax on tips for a lot of people. You won’t get as much depending on your income. There is definitely tax on overtime for a lot of individuals, depending on your overall income.

Dr. Friday

03:11

And then same thing with Social Security. Social Security in itself is tax-free, unless you have other earnings. If your other earnings exceed the $75,000 or $150,000 threshold, you start losing that $6,000 or $12,000 if married — the deduction that they are giving you to help pay for your Social Security. But Social Security still has to be reported on your tax return. That was one of the bigger misconceptions — sometimes people didn’t bring in their statements because they were under the impression that they no longer had to report Social Security as part of their income.

Dr. Friday

03:50

So again, it’s confusing. Taxes are always confusing, which is partly the fun and partly the other side of it. We do our best to try to make sure that we’re giving everybody all the answers they need. But if you’re working on your taxes, maybe you’ve gotten something with inheritance, or you’re selling a piece of property that maybe at one point was inheritance and then you had to sell it or whatever — then that’s something you need to consider: what the basis is.

Dr. Friday

04:21

Sometimes that can be a bit confusing. I’m going to suggest for a lot of people that if you have a piece of property that is going to be left to children or the next generation, look at a trust. I’m not an attorney — put that caveat out there — but there are a lot of good features of a trust. Part of it is there are ways of making sure that the basis is preserved and different things like that, especially for a husband and wife. I heard recently, and again this is what I heard, but an attorney said that if a home goes into a trust, and especially an A-B trust, that preserves the step-up for the wife.

Dr. Friday

05:03

So there are different questions and different ways of doing some of this and making sure that the documentation is the easiest for those that are left behind is really the question. I got into a bit of a conversation with one of my clients — a young couple — and we were talking about how they had just had their first child and I’m like, have you set up a will? And they’re like, well, no, it’s on our list but we haven’t got there yet. And I’m like, well, you know, hopefully you’ll live to a nice old age. But we all know that things happen every day. And do you have things set up for what happens to that child if you’re not there to raise it?

Dr. Friday

05:44

And of course that made them start thinking. These are the kinds of questions no one likes to answer or ask. But if you are a young person — because a lot of times people listening are people that are maybe closer to my age, in their late 50s or older, but some are younger — the average age listening to the station is probably around 40. Many of you have already had children or are at that point. Young people need to put some thought to not so much that you have an estate — you haven’t built all your wealth yet — but what will happen to your children, to the things you do have?

Dr. Friday

06:22

Even though it doesn’t seem like it, I know most people think estate planning is really for people that have an estate. But think a little outside of that box. Think about estate planning especially when it comes to your children — maybe having life insurance to help them to the next level and learning more about how all that’s going to work, because that’s really the more important thing in my personal opinion. More important — estates can be settled in court. Not the ideal situation, but they can be. But if we had to make a choice, I think we’d rather settle an estate in court than decide who we want to have our child raised by if we can’t raise them ourselves.

Dr. Friday

07:10

So just putting that out there — I know it’s a little dark — but it made me think that maybe we don’t talk enough about some of that. Estate planning is essential for every single person. And you may sit there and say I don’t have an estate. Most people have something. I had a gentleman that lost his son not that long ago, and he didn’t have a will or anything, and he didn’t have a wife or anything like that. So it came down to him having to settle. But he had a 401k and he had a bank account. He had to settle the debts, and since there wasn’t a will, it had to go to probate. It was just a lot of work at a time when, to be quite honest, Dad did not have a lot of willpower to do it. He just lost one of the most important people in his life, and it was very difficult to then go deal with all of the other things that sometimes life throws at us.

Dr. Friday

08:09

Yeah, he did an excellent job, but still it would have been simpler had there been something we could do to make that work. So anyhow, if you have questions, I would definitely say this is something for an attorney — something that you want to make sure is being dealt with by someone that really understands the difference in your case of an estate, a will, a trust, or what the next step is. But put it on the agenda. Something we need to look at once we’re done talking taxes.

Dr. Friday

08:41

Because we only have almost 30 days left of tax season. And at that point, you either have an extension filed or you have filed your returns. If you need to have taxes done at this point, my office can help with extensions and then we can help you after the tax season. Otherwise, we’ll do our best to send you to somebody that can help you. If you’re looking for a tax person this late in the season, it’s going to be probably difficult to find a qualified one because most of them have already booked up. But if you do need some help, you can call the show: 615-737-9986. We’ll take your call here live in studio.

Dr. Friday

09:52

We’ll try to help you, guide you in the right direction — at least tell you what we think you need to do, and then you can see what would be best for you when and if that was something that needed to move to the next level. But you can join the show. It is live: 615-737-9986. I’m receiving quite a few emails on different individuals, mostly businesses. So I’ll answer this first one. This is a business owner. They have an LLC, but it’s a single member LLC. They were wanting to know if they need to file an extension by tomorrow. And the answer is no.

Dr. Friday

10:29

If you are a single member LLC, the Internal Revenue Service considers you a sole proprietorship. Proprietorships are due April 15th — or usually this year it will be April 15th. So you don’t have to worry about filing that extension yet. You do need to make sure that when you file your personal tax return that even if it is a zero LLC — maybe you started it but didn’t have any activity — you still need to file a Schedule C with the EIN number, the name, any loss or gains or just zeros so that it’s documented. And then remember in Tennessee we have franchise and excise. There are a few companies that would have an exclusion, but that’s often the ones that get the love letters.

Dr. Friday

11:13

This week I’ve had three emails just looking at them today concerning business licenses that are due on April 1st. Apparently the state is sending out notices from TNTAP asking people to file their business license — just a reminder, not so much a bad thing. It’s actually a good thing because for a few years they used to send out postcards, people lost the postcards, and now they don’t have them. So this is a good thing. If you’re getting anything from TNTAP, it’s most likely a reminder to file your business license. And if you’re a brand new company and you haven’t set up your TNTAP, that’s TNTAP.tn.gov. You need to do that because it’s all the communication you’re going to get from the state — for your franchise excise, your liquor tax, your sales tax, your bonds. Pretty much any license or tax that you have, they’re going to communicate through that site, letting you know reminders as well as any balance dues, failure to file, or anything like that. Make sure you have that set up.

Dr. Friday

12:27

All right, we’re going to take a quick break here on the Dr. Friday show. When we get back, we’ll take your call: 615-737-9986. We’ll be right back.

Dr. Friday

12:41

Alrighty, we are back here live in studio. You can join the show: 615-737-9986. Taking calls, talking about my favorite subject — even though today is an absolutely gorgeous day. Most of you guys are probably outside enjoying it because I was under the impression we were supposed to have cold weather today. But I went out and visited my bees, have flowers coming up. That’s probably gonna be a bad sign because some of them are probably gonna need something put over them because we’re going to get some cold weather here, and it should be interesting to see how that all flies. But hey, we’ll take that one step at a time.

Dr. Friday

13:21

So if you have calls or you want to join the show, you can: 615-737-9986. Taking calls talking about taxes. Obviously that’s the important thing right this second. Because with taxes, you have to deal with all of the penalties, and I often have emails that follow up with, well I filed my estimates — why am I getting penalties? The answer is pretty easy, depending on if you made your estimates on time. That’s the problem with some people because sometimes people won’t make four equal payments. Sometimes they’ll do them sporadically and they won’t do them on time.

Dr. Friday

14:00

Just keep in mind that you do need to file your estimates based on the prior year — how much did you owe? You need to pay at least 100% of what you owed the year before, 110% to completely avoid penalties. And then you need to make them on time and equally. Sometimes people look at their situation and they’re like, I’m not going to make as much money this year, so I’m not going to pay as much in quarterlies. That can be a whole different conversation because if you made your proper estimates, you’ll see — I had a gentleman that owed over $200,000, but he had paid in almost 120% of what he owed the year before. So there was no penalty because the big event didn’t happen until that year when he made a sale. He was able to keep that money for a few months and do what he needed to do.

Dr. Friday

15:01

But again, this is the kind of thing you want to make sure you understand. If you have questions about penalties, you can request a waiver. But to be honest with you, sometimes that is not always an option because penalty waivers — the IRS really only gives you one time, what I always call the get-out-of-jail-free card. They allow you to ask for that and you usually get it, and sometimes you can get them up to every 31 months. But you have to make sure that they meet certain compliance. If you can show that the error was not something that was a mistake by your tax person, a mistake by the IRS, or somebody not giving you the proper documents, you might be able to get it waived for cause. Otherwise, they kind of only give you one form to use to do it that way.

Dr. Friday

15:53

So when you’re looking at why you’re getting hit with an additional penalty — the other question I hear a lot is, people come in and they’re like, well, I paid the IRS. Of course, you paid them late and they’re wanting more money. And you’re like, why are they asking for so much more money? It can be a fourth of what you owed. So if you owed $20,000, they’re still looking for $5,000 because you paid it in October, and you paid what you owed back in April, and they’ve already added penalties and interest and failure to file — possibly failure to pay penalties on top of that. There are all kinds of wonderful penalties that you can deal with.

Dr. Friday

16:39

So when you’re looking at extending your time, especially for 1120-S and 1065s, keep in mind they don’t actually owe taxes, right? These are pass-through companies. The money falls on the individual. So extending them really doesn’t have a financial situation, but for personal tax returns — if we haven’t filed or if you’re waiting because you haven’t received all your documents — the IRS wants you to be making an estimate either with your extension or your four equal estimates.

Dr. Friday

17:20

So I have clients every year that would rather pay the penalty than make the payment. That is totally a choice. It doesn’t have to be that way, but you have a choice. And the IRS says if you want to do that, we’ll be more than glad to be your loan officer, but we’re going to charge you 25% penalty, 12-13% interest, and from there we’ll take it and see what comes next. So you just have to be willing to pay that fine. But if you are behind and you need to make a deal, we do have what’s called offer in compromise.

Dr. Friday

17:54

This was an email that just came in — he’s like, well, I haven’t paid, I haven’t filed for 10 years. Don’t know how much I’m going to owe, but I’m unemployed and I’m not able to make the payments. And there are two sides to that. One, if you’re underemployed, the IRS may look at your history. Maybe not someone that hasn’t filed for 10 years, because they may know how much money he’s made if it’s been turned in. So if he’s self-employed and received a number of 1099s, or he works for one person every year and the 1099 has come in and he just hasn’t filed on it — those are the ones that end up with the highest tax issues. Because throughout the year, an individual with W-2s usually has paid something. Maybe they’ve chosen not to have enough come out of federal withholding, but they have paid the Social Security and Medicare. So they’re a head start on the self-employed individual.

Dr. Friday

18:54

If you don’t have the ability, or you are underemployed, or maybe you’ve had some health issues, you have the ability to make a payment plan, a partial payment plan, or you have the ability to make an offer in compromise. Now, this is what you hear a lot of times on the radio — people talking about how they can make a deal, 10 cents on the dollar. And I will be honest, my best deal ever was settling something for $25. Yes, $25. She owed $70,000. But she was completely unable to pay, and we were able to show both the state of New York and the IRS that she was unable to pay these debts.

Dr. Friday

19:38

Yes, you can do those kind of deals, but you have to have nothing to do it. So most of us have homes, many of us have 401ks, have IRAs, have equity or stocks — and the IRS takes that all into account. For example, the equity in your home is an asset. Therefore, the IRS says, wait a second, if you only owe us $50,000 and you have equity in your home of $200,000, there is no reason we’re going to accept an offer in compromise because you have the ability to pay. In fact, you’ve been making mortgage payments and not paying us. So therefore that equity is ours.

Dr. Friday

20:22

Now, there have been a few court cases for older individuals where the only retirement they have is the equity in their home, and it has been proven, at least in those cases, where they were able to preserve and make the deal. But that is far between. Many other people still have retirement, they have jobs, they have Social Security or disability. I have people right now that have money being taken out of their disability check because they haven’t filed what they should file and they’re not able to make the payment — but now the IRS is seizing or taking partial payments of their retirement. Because you can become non-collectible — there are ways of doing that if the situation applies. But it would still be better if we’re able to do something with the IRS versus allowing them to levy or lien a bank account or a paycheck, because that’s not really the best way to handle it. We want to be a little more in control personally.

Dr. Friday

21:49

All right, let’s see if we can hit Howard before we take our second break. Hey Howard, what can I do for ya?

Caller

21:55

Yes, thank you for taking the call. I’m needing a little clarification on this no tax on Social Security. I’m retired and I have other income. I have a pension and then a small amount of taxable income and then Social Security. My taxes have already been completed and filed by a lady that does my taxes here in Lewisburg. But I keep hearing no tax on Social Security, and when I look at my 1040 — I’m going down to 6A, Social Security benefit which is $30,972, and then I have an amount in 6B that’s carried over into income of $6,762.

Dr. Friday

23:06

That’s okay. Go to page two and see if you see $6,000 sitting in 13B. Do you see $6,000 there? So Social Security — anyone over the age of 65 is getting an additional $6,000 to deduct as a deduction to help pay for tax on Social Security. Okay, so it’s not like Social Security is tax-free, but you should have that deduction. Now the only other reason that might not be there, sir, would be if your AGI on line 11 is over a certain threshold. Are you single or married, sir?

Caller

24:39

I’m married filing separate. I’ve got an amount in 11B of $27,937.

Dr. Friday

24:47

You’re losing the deduction, Howard, because married filing separately does not qualify for the deduction. Since they’re not able to see what each spouse makes, they’re not allowing it at all. So your return is probably correct because of that feature. You’re not getting the benefit of it.

Caller

25:11

Is married filing separately not going to allow for the $6,000?

Dr. Friday

25:17

That’s correct, yes.

Caller

25:19

Years ago I did taxes for a firm for three or four or five years and of course we had classes we went to. And I remember just talking about married filing separately — people in the tax world call it married filing stupid.

Dr. Friday

25:57

Well, I will tell you, I do a number of married filing separately, and there are reasons to do it sometimes. Not always financial reasons, but other reasons — for one, sometimes the spouse is self-employed or they don’t want to know each other’s tax situation. They’re willing to pay that little bit extra to have that separation. Sometimes — I have individuals that have student loans, for example, or if they owe money and the other one doesn’t, if their name’s not on the tax return, they can’t come after the spouse. So there are good reasons to be married filing separately, but unfortunately under this situation, you do lose a tax deduction by doing it.

Caller

26:42

So the $6,000 not coming off of the adjusted gross income — that’s the answer, yes, married filing separately?

Dr. Friday

26:53

You got it, my love. Thanks, good question. I appreciate it, Howard. All right, we’re gonna take a quick break here. When we get back, we can take some more of your phone calls: 615-737-9986. We’ll be right back.

Dr. Friday

27:36

Okay, back to the studio. Sorry, I stepped away. So if you have questions or you need help, you can give us a call: 615-737-9986. So that was Howard on the line — he did a great job explaining the married filing separately situation. That is a caveat I should have explained earlier. But let’s hit Emily. Hey Emily, what can I do for you?

Caller

28:10

I have a question. My husband is not 65 yet, so I’ll be able to do the $6,000 deduction. What does that actually equate to at the end of the day? Like is there an average that people are going to get back? I’m sure it’s a good thing.

Dr. Friday

28:30

So it’s not refundable, but it will reduce your taxes and it’s based on your income bracket. So if you’re in the 10% income bracket, it will save you $600. 20%, $1,200. But it’s basically based on the percentage of your income bracket, Emily. Whatever your combined income is, whatever bracket that puts you into, it would then give you a tax deduction of whatever your tax bracket percentage is against the $6,000. It will reduce your income by $6,000.

Caller

29:17

Oh, it reduces the income. So you could effectively get a small return.

Dr. Friday

29:27

Yeah, you could. We probably make about $70,000 between the two of us in retirement. So that is in the 12% tax bracket. So again, it could give you $600-$700 theoretically as a refund, assuming you paid in some money.

Caller

29:53

Okay. All right then. That’s all I needed. Thank you.

Dr. Friday

29:58

Thanks for calling. Appreciate it. All right, let’s go to John. Hey John, what can I do for ya?

Caller

30:05

Yeah, my question is whether I ought to try to file my taxes on my own. I’m 67 years old and I’ve got two 1099s, my pension and my Social Security. I haven’t sold any stocks, I have no other income, and I have no debt.

Dr. Friday

30:25

Can I ask if the 1099 from your pension — you know, is it $20,000? Give me a ballpark, John. I’m not asking you to give me the exact dollar amount, but I’m curious if you have to file.

Caller

30:39

Well, I’m looking at it right now. It’s $53,000.

Dr. Friday

30:47

Okay, so yeah, you make plenty. All right, so you could do it easily. It’s not a complicated return if you’re comfortable on computers. The IRS will not take paper returns any longer. There is also the AARP — they have a lot of free services. You’re not complicated, you’re not looking at having to have someone that has a ton of experience to do it. And AARP — if you go to their website — they usually have different places that they’re holding free tax events. Either option is certainly viable.

Caller

31:26

Okay. Yeah, between the pension and the Social Security it’s around $90,000.

Dr. Friday

31:31

Yeah, Social Security will be taxed at 85% for you, and then all $53,000 in pension — and then you will qualify for that $6,000 deduction. So that will help. If you get a tax software or anything, that will automatically work for you as soon as you put your date of birth in. But if you prefer someone to help you, then I would definitely say try to go to one of the simpler services. Thanks, John. Appreciate ya.

Dr. Friday

32:14

All right. Let’s go to Kaylin. Hey Kaylin, how can I help you?

Caller

32:19

I’m doing good. How are you? I am awesome. My husband and I own four long-term rental homes and one short-term. We just file normally, married filing jointly, like personal. We haven’t yet ventured to make it like a business. But we are contemplating a trust this year. Is that smarter for taxes or what?

Dr. Friday

32:51

That’s a wonderful question. So the trust isn’t really going to do a whole bunch for the aspect of taxes. It’s basically going to only protect you if something were to happen to one or both of you. So not a bad idea. But you probably also want to look into the potential of setting up either a single member LLC or a multi-member LLC, depending on how the houses are titled and all that. I would definitely suggest looking at that as one of your options because there’s an extra liability protection. We all know I also have a lot of rentals and we carry insurance for it, but there’s always that extra fear that if something were to happen, they could do something to our personal assets. So having a separate LLC holding these properties — or at least having them as management companies protecting those assets — it’s never a bad idea.

Dr. Friday

33:56

And then of course the LLC would theoretically — if you set up a trust — the LLC would then be the beneficiary after both of you have passed, to leave it to the next generation. And that way you still have full control if you want to sell a property, whatever. I do like the idea of an LLC for your rental properties.

Caller

34:21

Awesome. That was the question I had — if we do the LLC prior to the trust, are the taxes going to be a little bit harder on us?

Dr. Friday

34:33

Most likely the trust will be a revocable trust, which basically means that it doesn’t come into play until you die. So it’s really just a shield like a little umbrella over you, but it’s never really going to get in your way. It does make things easier when you’re not here to help out. All right, well, thank you so much. Thank you very much.

Dr. Friday

34:57

All right, let’s see if we can hit Scott really quick before this break. Hey Scott.

Caller

35:02

Hi, hello. I’m doing well, thanks. Beautiful day out today. My question is, my father-in-law passed away a couple months ago and we sold — he had a lot of expensive artwork and we managed to sell it, we’re gonna get maybe $70,000 for it. What’s the law in reference to paying taxes on that?

Dr. Friday

35:25

So the good news is most of those things would have had a step-up in value. At the time of his passing, whatever the value of that artwork was, we would not have to worry about gains on that. So you should be in good shape as far as that goes. But if you’ve held it for a few years — I don’t know when he passed — then we would have the appreciated value that you would need to add in. So whatever it was worth at dad’s death would be your basis, and then whatever you have after that would be gains if there is a difference.

Caller

36:04

Okay, I appreciate that, ma’am.

Dr. Friday

36:06

No problem. Thank you. All right, we’re going to take a quick break here. When we get back, we’ll hit Joe and Ray. 615-737-9986. We’ll take a little bit of an early break so we can get back to the phone lines. This is the Doctor Friday show.

Dr. Friday

36:41

Alrighty, we are back here with the last bit of the show and we’re going to go right to the phones. We have Ray that’s been holding the longest. Hey Ray, what can I do for ya?

Caller

36:50

Yeah, thanks for taking my call and I enjoy your show. You mentioned one time before — if you’re on Social Security, both my wife and I are on Social Security, and you sell your home, you could take the home sale and buy another home, but you don’t have to pay taxes on that.

Dr. Friday

37:13

Actually, it would be that you get an additional deduction. So whatever you paid for the home plus $500,000 — you do not have to reinvest the money, to be quite honest with you. So it really comes down to: you can sell the home and get an additional $500,000 plus whatever you have as an original basis. Hopefully that will cover the house no matter what, and therefore you don’t have to pay any taxes. You don’t have to buy anything, Ray. You could put it in the bank and rent for the rest of your life and you’ll never have to pay any taxes.

Caller

37:55

Okay, so you don’t have to do any tax forms at all showing that, or just the tax form — the answer is yes?

Dr. Friday

38:04

There is a form that I usually file that shows that the sale was your primary home to get that exclusion, but there’s nothing on the form that says you have to reinvest the money.

Caller

38:16

Yeah, but you have to fill out a form though. I mean, you can’t just skip it.

Dr. Friday

38:19

Yes, there is a form for home sales. It’s going to ask you about your basis and it’s going to have that $500,000 exclusion. It’s all on that form. Yes, you would do a 1040-SR or 1040 depending on your age.

Caller

38:54

Yeah, one more question — if you sell your home like that and you’ve got a part-time job, just working part time, would you have to start using that Social Security as part of your income?

Dr. Friday

39:12

So Social Security will be taxable to you if you have to file, if you have other income — just like that gentleman Howard or John that called. So yeah, you may have to pay tax on your Social Security, but if you’re over the age of 65, you’ll each qualify for the $6,000 deduction that’s on the tax code.

Caller

39:38

But if you’re working part-time it automatically puts you back to that other bracket where it’d be a good thing, right?

Dr. Friday

39:50

Would be yes. If you’re only making two or three thousand, no. Okay, I appreciate your help on that. All right, and thank you. Thank you very much.

Dr. Friday

39:58

Let’s see if we can get Joe from Gallatin. He was nice enough to hold. Hey Joe.

Caller

40:05

Hey Dr. Friday, how you doing? Thank you for taking my call. I appreciate it. I’m required to take a one-time lump sum distribution of a pension — a deferred pension plan. I have to take it now that I’m over 65. Can’t get out of it, can’t do installments. So is there any way to avoid all the taxes at one time?

Dr. Friday

40:41

Joe, I understand the one-time distribution. It seems to me that I have an awful lot of people that are able to transfer that to another deferred plan through like Fidelity or something, and then take payments out of it instead of having to take the one-time lump sum. The company may request it because they don’t want to have it after a certain period, but they should be able to do a custodial transfer to another account that would still preserve that fund, and then you could take it out in smaller increments.

Caller

41:34

I looked at charitable gifting and so forth like that, but they said no, no, you can’t do that. You’ve got to take it out. Period.

Dr. Friday

41:41

Do you have any required minimum distributions or anything that you have to take, Joe? Or is this your main retirement?

Caller

41:54

This would be my main retirement.

Dr. Friday

41:57

I was trying to see if you had to take RMDs — you could have deferred some of that through charity. But honestly, I would before I did anything, contact like Hank Parrot or whoever you might have that does financial planning. They may know something that you and I don’t know, Joe, because I would hate to have to take a one-time lump sum if you didn’t have to pay all the taxes at once. Because it’s going to make your Social Security fully taxed or at least 85%. It’s going to put you in a higher tax bracket, no question.

Caller

42:27

Sure, sure. And who’s this Hank Parrot?

Dr. Friday

42:30

Hank Parrot — he’s an estate and financial planner. He’s been around forever. I’m going to give you his cell phone number because that’s the only number I have memorized for him. Are you ready? It’s 615-202-9009. Give him a call before you sign anything, and I bet he might have a better suggestion. All right. Thank you very much. No problem. Thanks, Joe. Appreciate you listening.

Dr. Friday

43:10

All right. Those were great questions, guys. I was a little worried the sunshine was going to make it too much fun for all of you to make calls to me. So we’re winding down the show here, we only have a few more minutes. Let’s go through and talk a little bit about making sure that when you get ready to file your taxes — because we’re still in the 2025 tax season and 2026 we’re filing, but tax year is 2025 — we do want to make sure that everyone has all your documents.

Dr. Friday

43:47

You need to make sure you have everything organized or taken care of so that way when you get ready to do your taxes, it is simpler. Life needs to be as simple as possible. And many times, maybe you changed your information — let’s say you had Fidelity and then you went to Vanguard or vice versa. Make sure you look at both of those statements because sometimes, depending on when you did these changes, you might have had dividends, interest, stock, capital gains, whatever that you need to report from both companies. Because a lot of times people will come in and then we find out that there was something missing and then we have to amend. Amendments take forever right now.

Dr. Friday

44:38

We still have a handful of people and I will tell you, the IRS is doing a lot of identity checking. So if you’ve received a letter that says you need to call the IRS to verify the information because a tax return had been filed in your name, it’s probably true. Because we’ve got a number of my clients having to do that. It’s not a big deal — they’re doing a great job. Now, if you do have an ID.me account where you might use it to get onto your Social Security account, there are some ways you can get in and look at your tax records. That is an important thing.

Dr. Friday

45:24

Also, the IRS will not mail back a check this year. We had a couple people that really did not want to put their banking information in. So we filed them just to see, and sure enough, they got a letter back saying we received your return but we could not give you your funds because there was no banking information attached to your tax return. So if you have a refund, you will need to make sure that you’re putting your routing number and account number. Now, if you’re a person that doesn’t really want the IRS to have your main accounts, you can open a separate account and do this. But you need to do something with it because otherwise Uncle Sam’s going to keep your money — that is the new rule. And my understanding is by next year, they’re not going to want to receive any checks.

Dr. Friday

46:18

We try to make at least 95% of our taxes that have balances due pay electronically. But there are times when that’s not always possible. As far as I know, in 2026 they’re going to penalize unless you have cause to use a check. So again, we’re trying to go electronic here, people — that’s the only way it’s going to work. So if you’ve got a refund and you didn’t put the account number in there, you may want to follow up because they’re probably holding your refund. You can go to irs.gov/refund and look at the status — have they received the return, are they processing, is there a hold. At least it gives you some detail.

Dr. Friday

47:05

All right, so if you need to reach me, my office is open Monday at 615-367-0819. You can also email [email protected]. I will tell you we’re running a little behind on both messages and emails. I’m doing my best to catch up this weekend. But if you want to email [email protected] or call 615-367-0819, cop ya later.

A: Not automatically. Age alone does not remove capital gains, though primary-home exclusions and lower-income capital-gain rates may help.

A: No. It is a deduction that can reduce taxable income, not a dollar-for-dollar refundable payment.

A: The gain can be taxed as capital gains, and prior depreciation may be recaptured at ordinary tax rates.

Announcer

00:00

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-WW-FC. That’s 737-9986. So here’s your host, financial counselor and tax consultant, Dr. Friday.

Dr. Friday

00:29

It’s an absolutely gorgeous Saturday out there. My girl is outside making sure that no one sneaks up on the property. Apparently, you’ll hear in the background. If you want to join the show, you can at 615. 737-9986, 615-737-9986 is the number here in the studio. We talk about taxes. I am an enrolled agent licensed by the Internal Revenue Service to do taxes and representation. We have seen that a lot of the one big beautiful bill has helped out a lot of my tax people. Everyone will have their own. opinions on that, I suppose. Most people, if you’re in the the middle to low income, you will see benefits of the no tax on tips the uh tax uh extra tax or the refund on overtime as well as if you’re 65 and older getting that six thousand dollars And, you know, I mean again, some people will get more benefits. A lot of people still confused on how much of the overtime they’re able to take. Again, this is just the portion that is overtime. So if you make $10 an hour and overtime is $15, you’re only taking that $5 of overtime is the portion of overtime you’re able to deduct, but it’s still a good uh portion and it does work very well if you’re not sure uh how much you do need to either take a look at your final paycheck stub and or you need to contact your employer so they can make sure that whatever information you’re putting On your tax return is correct. I would not suggest I have um seeing a couple interesting things on the internet And I’m gonna be quite honest with you, I do not suggest guessing. I do not just say, oh, put whatever number you want, the IRS won’t know. You know Keep in mind the IRS has basically three years to go back and audit. They will be getting this information from employers. And if they do find it, guess what? You are responsible for all the information and even the information that a a tax preparer, let’s use that term instead of an enrolled agent because we don’t, but someone just throwing numbers on a return. So be careful. That will possibly or most likely come back and bite you. Okay. Looks like we’ve got Wayne in Jolton Um, this is Dr. Friday Show. Can I get you online?

Caller

02:46

I’m here.

Dr. Friday

02:48

Hello, sweetie.

Caller

02:50

Hello. Thank you for taking my call.

Dr. Friday

02:52

Sure.

Caller

02:53

I have a Sumner County property, maybe a capital gains question. My brother sold some property for $80,000. And will we have to pay capital gains on that?

Dr. Friday

03:10

Well is your does your brother pass away after he sold the property?

Caller

03:14

No, no, he’s he’s still very much alive. Okay, okay.

Dr. Friday

03:17

I didn’t mean to kill him off that fast. Um anyways, um it just depends on what his original basis is then so if he purchased the property for 80 and he sold it for 80 there’d be zero but if he purchased it for 40 000 let’s say held it for a number of years and now he got 80 000 he would pay tax on the difference or on 40 000 like that example Okay, this was inherited and given to the Okay, so does he when he inherited there would have been a basis or there should have been a basis established. So at the time of that person that passed away, within 30 days of their passing, when you to know what was that property worth if you don’t have any way of going back to appraisal you can usually look at property taxes that’s not always the best number but it is at least a viable number

Caller

04:04

So the property So would they have would he have paid taxes on that at the time he inherited it?

Dr. Friday

04:09

He wouldn’t have to. No. What he would have gotten is let’s say let’s just say um he passed the whoever died passed away a year ago. The property at the time of that passing was Worth $80,000. A year later, your brother sells it for $80,000. It would be zero tax. So what was the property? He needs to find out at the time of the property with whoever he received it from passed away. What was the value at that time? Oh okay. And then the difference between that and what he sold it for will be capital gains, if there is a difference.

Caller

04:39

And that’ll be paid to the IRS, right?

Dr. Friday

04:41

Yes, sir. And that will report on a schedule D on his personal return.

Caller

04:46

I’ve heard you plenty of times. Thank you for talking to me.

Dr. Friday

04:48

Hey, no problem. Thank you for calling. Okay, that was a good question. And um Go ahead, hang up. Um and I will say that is something that is sometimes confusing on when we inherit. And uh I I can’t put out enough. The best thing to do if if for some reason um it’s It’s a bad situation, but if some reason you have now inherited some property, or maybe you inherited it years ago, the best thing you could do is to get either a real estate agent, an appraisal company But you need to know what that basis is because otherwise the IRS is going to say your basis is zero. You didn’t purchase it, so you have no purchase documents. You inherited. What was the value of the property at the time? Time of inheritance. That’s what we need to know. Then it’s you know, many times I mean I have people claim losses because they’re not able to sell it for what it was worth with the time. Most of the time and tonight to see though we’re fortunate that our property doesn’t usually go down. It has a nice steady uphill um grade, at least at this point. But either way, you need to know and then if this property was not in the state of Tennessee, let’s say you sold you inherited a house in in Alabama, Kentucky, um they have state income tax. So you would also have to file a tax return there if there was a capital gains. So again in Tennessee, we do not, and just because you live in Tennessee, if you sell something in another state, there is normally a capital gains tax or a tax due at the time. of the sale. Inheritance-wise, most of the time we don’t pay anything, but at that time you will pay something and it will be time to have to do what you need to do, which is file taxes on it. So hopefully again, if you’re sitting on something You know, now before you decide to put it on the market would be a good time. So you’re not having to run around and try to figure it out after you’ve already sold it. And real estate agent um agents are really good. I have a number of them are friends, and especially if they’ve just sold the property, they can usually pull comps for when the person had passed away. So if you’ve just recently sold that property, you might be able to go back to the real estate agent, have them pull comps in that area. at the same time that the person passed away. So now you have something in writing that would say this is what it would have sold for back at the time that person would have sold at before they died. And then this is what you sold it for. You’ve got documentation to justify the numbers on your Tax return. All right. So let’s continue forward, making sure that we have everything we need to move forward on our life and trying to get to all of my emails. have been a busy day. But anyway, so if you um you’re working on your taxes, we are totally working on our taxes here. I will tell you uh at this point our calendar calendar is full to be honest, which is a blessing to have. Not always great when you’re always wanting to meet and help new people. If you’re a returning client, we usually have a space for you, but new clients, we won’t be able to do anything but file an extension and then help you out. But um either way, um if we can’t help you, we can try to refer somebody if we know of someone that um that’s available that hasn’t already has their calendar full. But if you have a tax question, maybe you’re doing your own taxes or maybe like the gentleman that just called, maybe someone you know has asked you a question and you’re like, I don’t really know how to handle this. Maybe I can help out. If nothing else, I can send you in the right direction. So you can find out what would be the best way. Because what you don’t want is the IRS changing your tax return. It does happen often actually. So you want to make sure that if there is a change, we got a letter from one of my clients. We amended a tax return. return in 2025 and the IRS sent back saying we need more documentation on that amendment, so give us more papers to justify why you’re changing the return this happens quite often and a lot of times people are like well i filed the tax return and they haven’t adjusted my things you need to make sure you’re not ignoring irs letters or if you’ve gotten a letter and you’re not sure how to respond so you don’t respond sometimes that can be a problem as well so just make sure that you’re dealing with your issues and moving forward with whatever you need need to move forward with. If you um do have a tax question, you can join us here, 615-737-9986-615-737 9986 taking your calls. As uh people that may not have heard this show before, my name is Dr. Friday. Friday being my first name not my last name um and i have a phd in economics there’s the doctor part but i do taxes i’m an enrolled agent that’s the important part of all of this because as an enrolled agent i can represent you in front of the Internal Revenue Service. I can help you file your taxes if you’ve received love letters, maybe you haven’t filed taxes in a number of years. Whatever might come with that, that’s where you you’re going to be able to help you make sure you can stay in compliance. Because remember, the IRS is a collection agency, a very powerful collection agency. But that is what their job is. So they basically are going to go out and try to collect what you owe them, be that through the the taking of your payroll, cleaning out your bank accounts, seizing properties. They have the authority to do all of that, but not just Today I’m going to seize your property. There has to be notification, communication. So keeping that communication open is the way you’re not going to have as much happen. But also staying in compliance Maybe you made a mistake back in 2015 or 2016, but you’ve always filed your taxes. You’re less likely to have as much really angry situation unless you basically have the ability to pay, but you’re not paying. And that’s sometimes an interpretation. Don’t get me wrong. I know that. I’ve gone through people’s paperwork and they’re like, I can’t afford to pay anything to the IRS, but yet They could because the IRSA doesn’t look at you paying off your credit cards every month being a way of taking care of credit card company isn’t something the IRS considers something you have to pay in full. Your child being in a private school. I had one that had three kids in private school owed the IRS, but the private school, the IRS doesn’t that’s a that’s a something, a luxury that you can put your child into. If you’re using IRS dollars to keep your child in private school, the IRS is going to look very badly on that Um, you know, if you have money stored in equity in your home, but yet you don’t want to take it out and you have the ability to do that, some people don’t. But these are the kinds of things you need to answer questions of you always hear these places say oh we can sell it for 10 cents on the dollar really not everyone can do that in fact a large number of my clients have to make make an actual deal. And we did one 320,000. We just closed. It was 116,000. He was very happy. We were able to resolve the issue, get it taken off. And that way he’s able to go back and move forward and rebuild his finances without the IRS being on his back. But it wasn’t going to be ten cents on the dollar. He had too much um invested in other ways. So you have to figure out what’s going to work, but you also have to deal with the IRS. You can’t just ignore them. They will find a way of being recognized in your life. All right, we’re going to take our first break. If you want to join the show afterwards, you can. 615-737-9986 615-737-9986. We’ll be right back with the Doctor Friday show. Alrighty, we are back here live in studio. You can join us if you want at 6 Six one five seven three seven nine nine eight six six one five seven three seven nine nine eight six taking names and uh taking numbers I don’t know what I’m taking. I’m obviously a little confused. Um, but if you want to join the show, you can. If you ask tax questions or if you’ve got something that you’ve been looking at, you’re trying to figure out which way you need to do it. Um, and deal with the situation. I had an email that came through during the break and it was from Kate and she was asking, she says she has three properties that she inherited and And she’s not had them yet transferred actually into her name because probate hasn’t happened. She wanted to know if she could claim the property taxes on them. And as for anyone that’s listening, if you have multiple properties You can’t always take the interest because if it’s not your primary home or secondary, you cannot take the interest. But property tax on any properties that you have can be added under the salt tax. So your home primary one plus any others And she’s just asking, can she deduct those since they’re not in her name? If she has proof that they are actually her properties just waiting for probate. and that they will be in her name and she paid from her own pocket, not from uh an estate bank account or something, I think there would be enough room to justify that those inherited properties would be able to be deducted from her her pocket because she paid them out of her pocket. Preferably you do not put any tax or property on your tax return that you do not own or or you’re not buying. I mean sometimes the bank helps own all those things as well but that’s that would be the the tricky part of that cost conversation. Either way, if you have a question, um again, 615-737-9986. Okay, so I was working on some taxes recently And I noticed something when I review. This is a first-time client to me. And so I want to make sure when you guys go and have your taxes prepared. It it’d be like me going to an auto shop and saying the car is not working, and then when I get there the car is working. I would not understand, to be quite honest, I wouldn’t know what they did to really make the call work. They might tell me, but I wouldn’t know. So that’s sometimes how taxes are for some people, right? So you go in, you hand them the the documents, the tax returns done, and you just assume That’s what you just paid for that this person knows their taxes. But I can say to you, take a quick look. Ask questions as Like, hey, did you get my rental property? Did you get my social security? And that they should be able to just say, yes, it’s on this line here. You can see the schedule. You know, did you deduct uh my property taxes? And then they’ll say, no, you know, you didn’t qualify, or yes, here it is on the Schedule A. Feel free if if you’re feeling that you can’t ask those questions, you’re at the wrong place. These are taxes that you’re signing off on saying they are done to the best of your ability or the best of the ability you you hired someone to do. Um and what I have found is that several of these uh people doing taxes um aren’t putting things on the right lines. I mean, I have one where this person had been going to this person for three years. They have a rental property and somehow the it the income from that rental property without reporting total income and all the expenses, just the net effect was ending up under other income Um, that means the depreciation wasn’t coming through. That means there just was no paper trail, you know. I mean, just said other income. It didn’t even say rental as other income, it just unidentified other income. You know, uh same thing when I had one company where they they did a lot of personal loans and they had actual mortgages, right? And they weren’t reporting this as interest On their tax return, even though they were providing the information to the preparer that they were dealing. So I just want to make sure when you go into these, I know that you’re going to say, hey, I’m paying this. person to do their job. And yes, you are. But keep in mind that the IRS is also looking at you as the final person. Your name’s on that, your social security number, you are the final person So and and mistakes might be made. I mean between any person. I’m not, you know, no one’s perfect. But you need to at least ask. Hey, did you pick up this? Did you didn’t really ask me, but I had this And they may turn around and just say, you know, that didn’t really apply this year. That’s not part of the current tax code. You can’t deduct this. Who cares? Those are questions. Questions should be answered. You should feel comfortable with the person that you’re dealing with to ask those questions, to review that information. That’s all I’m saying. If you’re not if you’re going in someplace or you know you know you’re dropping off your tax forms, again, nothing wrong, but how long does it take to have a basic conversation and say, hey, can you confirm these information is all on here Because I want to make sure when I’m signing that this information is there for me to sign off on, you know? Um, so you have to make sure you’re the person that is asking those questions and that you’re doing it. I have another one that just came in and she wanted to know if she could write off the miles to going to her doctor. And she had heard that there’s medical miles. And the answer is yes. There are what’s called medical miles. There’s also, if you work for a charity, there are charitable miles. But keep in mind you also have to deal with the fact that you have to itemize to take either of those so right now that’s a little hard to do it’s what almost 16 000 for a single person 31 for um person underage, a married couple underage 65, I think, and like 34 if you’re over 65. So it’s that’s a lot of debt. Single people probably have the easiest because if you have a decent sized mortgage, you might be able to itemize um some of the charitable miles Medical miles, you have to have more than 7. 5% of your income. So $7,500 if you make $100,000. Anything above that would be a tax deduction. So again, it really comes down to income and how hard or easy it will be for you to be able to meet those criteria when you’re doing it. But Always turn that information in because you never know if it’s something that’s going to happen. All right, let’s hit Steve. See what I can do with Steve. Hey Steve, what’s happening?

Caller

18:49

Yes ma’am, thank you for taking my call. I wanna ask the question about the big beautiful bill and the addition to the standard deduction

Dr. Friday

18:59

Yes sir.

Caller

19:00

Uh over sixty-five, right?

Dr. Friday

19:02

Yes, sir.

Caller

19:04

But it only adds to your standard deductions, correct?

Dr. Friday

19:08

No So if you itemize or take a standard deduction, you still qualify if your income limit is within it for the six thousand dollars per person and this is only for as Steve was saying for people that are age 65 and older this doesn’t have anything to do with itemization It’s actually two lines below that.

Caller

19:31

You’re not gonna I guess I’m trying to ask, you’re not gonna wind up with that money, right

Dr. Friday

19:36

You’re not gonna I mean it’s a deduction, so you’re not gonna get a refund of six thousand dollars. It will reduce your income by six thousand dollars.

Caller

19:44

Yes, ma’am, that’s exactly what I thought. I just want to make sure about that.

Dr. Friday

19:49

I like that, yes. I had two people call this week at the office and that’s the first thing. I don’t I don’t need to file, but I want to file so I can get the six thousand dollars. So there’s obviously a lot of misconception. So thank you, Steve, for calling

Caller

20:02

There is must dis uh uh must yeah. Yeah.

Dr. Friday

20:11

Hey thanks for calling. And uh it yeah. And to reiterate really quickly what Steve and I were talking about for people that might be listening is um simply you can hang up on Steve uh is that the one big beautiful bill one way for them to help people over sixty five pay tax on social security now some people at sixty five are not taking social Social Security yet. But the theory is, is that the majority will be on or soon to take Social Security is to be able to give them a deduction of $6,000. So if you’re in the 20% tax bracket, that could save you. about twelve hundred dollars in taxes. But this is only if you owe taxes. I had two people this last week week they called they’re very confused because they wanted to go ahead and file taxes even though they haven’t had to file for years because all they had was social security And so Social Security itself is not taxable, therefore they have a zero tax return, but they wanted to get the refund of that money. That money is not refundable. Zero percentage of it is refundable. It’s only good for individuals that actually have to pay taxes. And it would help reduce your tax bill. And it does work. I have a number of people that if their income, especially in retirement, are often the Really close, you know, 75,000 this year that’s 76. Maybe they made a little bit more in interest. So their tax bill is fairly consistent, and we’re seeing a thousand dollars, a two thousand dollar drop because of being well in the one with there’s two thousand there’s two of them so it was a twelve thousand dollar deduction but still that was helping did it cover all the tax that was on social security Security? No. But was it a nice, wonderful surprise? Absolutely. It is a wonderful thing. And most of my clients are just happy that they don’t have to pay as much as they usually do. So, you know, anytime you can save a few dollars, it is a win-win situation. But it’s not everybody’s not going to get it. If you’re a single person and you make $85,000, you’re not going to qualify for all six you might get $4,500, whatever. It’s going to means test out is what I call it. So $75,000 or less as a single person, you will get all $6,000. 150,000 or less, you will get 12 if you’re married, 12,000. And but if you make any more than that, they will slowly zero itself out. So just, you know, put that out there. But again, it is not a refundable, it is not going to be putting more money in your pocket. It is all going to be a way of reducing taxes. Period. Reducing taxes. Okay. Hopefully that helps. Uh, because it’s very frustrating when you think you’re not getting enough money, or if you think, oh my gosh, I’m gonna file because I want to get some more money, and then you find out it’s not refundable, then you get a bit upset So if you’ve got questions, you can join the show. We’re going to take our second break here, but he can at 615-737-9986 We’re taking your calls, talking about taxes, talking about IRS issues. Maybe you haven’t filed for a period of time. Maybe you’re looking at something on your tax return and you’re sitting there going oh my gosh why do I owe so much money usually I’ve had those calls and people are like you need to do my taxes because I did them myself and I owe all this money and I want you to file them keep in mind I’m not doing anything different than you would be doing unless you’re not sure how to do your taxes. If you’re not answering the questions properly, you’re not putting the forms in properly. Sure. Sometimes my number might be higher than what you have. Sometimes it’s lower. I had a nice one this other day. She was just doing an estimator that they have on the IRS website. and the said that she was going to owe like $8,000 and she only owed $800. So um it was a wonderful thing. But that was an estimator and probably didn’t have all the information that I did when I prepared the actual test tax return, but it made her happy anyways. All right, we’re gonna take a quick break. We’ll be right back with the Dr. Friday show. Alrighty, we are back here live in studio. I’m Dr. Friday, an enrolled agent licensed by the Internal Revenue Service to do taxes and representation. So if you have a question concerning taxation had someone that wanted to know his wife was uh working as a travel agent and wanted to know if he uh if if the trips they were taking would be able to be qualified as a tax deduction. And that’s an interesting question actually because I have a couple people that are part of a um travel club, I would like to refer to it. And the idea is you get people to help sell products and people to use it for their vacations and they do things on the side. Um but it’s not really any of them they don’t do as a full-time job. First, if you’re truly a travel agent, you need to be making sure that this is a full-time position, not just something you do on the side because you get some good discounts and you like to travel. And then I think you would have to be able to really document how many trips you have sold on those kinds of trips so that you can show that your experience of having this travel has made the trips a viable tax deduction. So let’s say you’re uh take a cruise on the Royal Caribbean and you you’re doing different ports of call, but you’ve never booked one of them of those you’ve never actually sold this package to somebody else um and you know and you’ve taken two or three or four different but yet you’ve never even booked booked a cruise or booked only one or two cruises yet you spent more in travel than you have in actually bookings. The IRS is not going to look at that as a necessary um tool. Now if you’re selling, you know, 50, 60, I don’t know what they call them, rooms on a cruise, every cruise, and you take a accrues. I’m assuming that would be necessary because you’re now selling something that you have a better uh knowledge on and that’s creating sales. Therefore it’s a necessary um part of your job. So again, it really does come down to um how much what how how necessary of that trip would be what did you walk away with what can that turn into dollars because the irs is not like your vacation has nothing to do with doing this kind of situation. It all has to do with how and what you’re going to generate in sales and how was that tied to whatever you did I know I had a client also walk in the office this the other day and said, well, you know, why can’t we, they have like four rental properties. Why can’t we buy ourselves a Mercedes and use that as a car for the rentals? Um and they they manage them themselves. So theoretically there is a management But how is the Mercedes a necessary expense to managing rental properties? It’s a lot like a guy that owns a hotel that goes buys a beautiful BMW um and they write the BMW off. How is how is that necessary to the hotel business? Now, if that person had to have a vehicle, and then keep in mind there are luxury deductions, so theoretically the IRS is saying A car maybe necessary because he owns five hotels and he has to drive it between them all. It’s a necessary expense. But is it a necessary expense to go and buy $175,000 Mercedes or whatever. There is rules. I know people will turn around all the time and they’ll say to me, Well, I brought over a six thousand pound car and I should be able to take a section 179, which right now, again, we were not at 100. But thank goodness for the one big beautiful bill, we’re back at 100%. So I want to take that $175,000 vehicle off as a necessary vehicle for my business. And again, what is your business? Why would you? I mean, it has been approved in court. Um, a couple of the real estate people have been able to prove because they have sold multi-million million dollar homes, their their relationship to that kind of um sale is vital for them to prove their success and people like to see that therefore they’ll use them that has been proven but it’s also been proven that somebody that owns as I used it earlier a hotel or a handful of rental properties. I don’t care if you own a hundred rental properties and you’re managing all of them, it would still be what’s the necessity of having a high-end vehicle? Especially if all of those rentals are in normal, ordinary neighborhoods. It’s not like you’re in the million-dollar club and you have to go in and out of um very nice subdivisions with multi-million dollars and your vehicle would be um something that might not uh sell something or be a part of but keep in mind What you drive, the IRS basically says it’s four tires, right? They don’t care that you have it. So you need to prove the necessity, especially if you’re not just using miles Miles you can justify, right? Because hey, if I have four rentals and I need to go to my rentals, I can go from my home. to the first rental and then f and I don’t have to show that as commuting in a rental situation because I drove out there specifically for a reason to go to that one and then if I had to go to Home Depot go back to that repair something and then come home. That is a legitimate tax deduction. I did something. Maybe I collected rent. Maybe I need to look at something to get a repair person out there. Those are, that’s my job as a manager of my own rental properties. That is allowed. And saving the receipt, making sure you document that receipt because the problem is Home Depot lowells. Um, if you order something online to replace something They need to know that that was for said rental, not for your personal home. And that’s not easy to prove unless you can show this is what the process was and and how you how you had to replace the light bulbs or the air filters or whatever it was. And and you know it’s it’s up to us as the taxpayer to document what we’re doing so we can do that. And while we’re on that subject and rentals, let’s also not forget that our lawn person our heating and air conditioning guys, our repair people, anything from roofing, unless they’re a corporation, which most businesses nowadays are LLCs, we need to 1099 them because rental properties are businesses. If someone does it at your own house, your own personal lawn guy. It’s not a business. Theoretically we’re not, I’m sure the IRS would love it, but theoretically we’re not responsible for 1099 them. But if we have a property that we’re renting out, that now makes it a business, that now makes it something that you have to 1099 those people. There are penalties up to $500 for each penal 1099 you do not issue. There is stuff that you need to to deal with is all I’m saying. So don’t just think that this is all easy. I know some of my people sometimes um I think get a little relaxed with it. And um You know, as long as the IRS isn’t looking, that sounds great. But if the IRS is looking, not so great, because then they disallow it. Now you’ve got profits that you didn’t have before, and that never makes anybody happy Let’s just be honest. It never does. It doesn’t make any of us happy. So if you want to join the show, you can. It’s 615-737-9986-615-737 9986 just saw an email about doing a 1031 exchange. I am an avid believer in 1031 exchanges as long as the profits on those justify the purpose. So meaning that if you have a property that you have $10,000 in because you’ve owned it for 40 years and now it’s worth um a hundred thousand dollars and that ninety thousand because of your income could be taxed at twenty-three percent, that might be a good time to consider what they call a ten thirty-one like kind exchange. Sometimes it’s It’s you know whatever the dollar, but if it’s only like a ten or fifteen thousand dollar difference, I’m not an avid believer, why not pay now and then not have to worry about it? But most people look at ten thirty-one exchanges, you’re talking at hundreds of thousands or even millions of dollars. And keep in mind, whatever you sell that property for, you now have to buy property for And so um it, you know, it is what it is. So you have to turn around and and make sure you do that. So if you have um you know, sold something for a million dollars and even though you may have had a mortgage for six hundred thousand on it, you still have to go buy another property for a million dollars to get it um out of you know to to qualify for a 1031 exchange it’s not based on your profit it’s based on the gross sale and you can always deal with someone on that question all right let’s hit Danny in Nashville see if I can help him out Hey Danny, thanks for calling.

Caller

33:15

Hi Doctor How are you? Thank you so much. Um the reason I w I have a capital gains question, I heard the first caller call about capital gains

Dr. Friday

33:24

Mm-hmm.

Caller

33:24

And uh we have a similar situation with my mother and father in law. They are elderly. Uh they bought a piece of property uh for Uh well I can give you the numbers for twenty thousand and they sold it for fifty thousand. Uh is but uh with them being seniors, does that matter? Uh do they get some kind of special consideration because of that

Dr. Friday

33:46

No, the only only kind of consideration anyone gets and age has no bearing would be if it was their primary home. But otherwise.

Caller

33:55

It was not their primary home. Yeah.

Dr. Friday

33:57

Yeah. Then they’re looking now again, there is a zero percent capital gains rate for long-term, I mean short term is ordinary income, but if it’s been held for over a year, and if their income is a married couple including the capital gains of in this scenario, let’s say thirty thousand dollars is all under a hundred thousand, they may still pay zero tax.

Caller

34:18

Okay.

Dr. Friday

34:18

Yeah, well so I don’t know their situation, but I’m just saying sometimes we get lucky on that element. But other than that, uh Um yeah, they’ll they’ll have to pay capital gains on the difference.

Caller

34:28

Yeah, well I don’t think they’ll even come close to that.

Dr. Friday

34:30

So that may be their saving grace. Exactly. I I’ve had it happen more than once, my friend. It’s always a nice little gift that keeps on giving.

Caller

34:38

Yeah, well I I certainly appreciate it. I listen to you often and I have met you a couple of times when you’ve helped me out with a couple of things. So I appreciate it. Thank you so much.

Dr. Friday

34:46

Thanks for calling Danny. I appreciate it very much. All right. You can uh Thanks, Danny. All right. If you want to join the show, we’re getting ready to take our last break, but you can join the show at 615-737-9986-615-737-9986. taking your call, talking about taxes, talking about maybe like this situation where you know somebody else that has maybe a tax question and not everyone’s um brave enough to call a radio show. So it takes a little bit of guts to do it. So if you have a question for someone else or a question you might think other people might be thinking about and you want to have An answer to it, feel free to give us a call again at 615-737-9986-615 737-9986. Again, I’m Dr. Friday. This is an I am an enrolled agent licensed by the Internal Revenue Service to do taxes. and representation. So if you’ve got questions dealing with that or maybe you just know someone that hasn’t filed taxes in a while and you need some help, we’ll be more than glad to help you out or leave lead you in the right direction to help you make sure that whatever you’re doing now, you can make sure it’s not going to cause problem later because the last thing you really want is Uncle Sam. to be a person that is going to be on your back all the time. All right, we’ll be right back with the Dr. Friday show. We are back here in studio. Let’s uh looks like we got a few people. Let’s go to Sue and Smyrna first.

Caller

36:13

Hello. Hi. I’m a senior citizen and um because of the Fairness Act I got a lump sum last year. Mm-hmm. And uh I had to pay eight hundred dollars taxes on it. But so I went in and I uh put down that I’d take out seven percent you know, for next year taxes or whatever. Are they gonna is has President Trump done the no tax on social security or should I just keep that seven percent or should I raise it

Dr. Friday

36:46

Well, I mean, at least keep the seven. The no tax on Social Security is is basically his way of the six thousand dollar that he gave you because you’re over the age of sixty-five, that’s how he’s helping with the tax You’re under sixty-five, then uh you won’t get it yet.

Caller

37:03

Yeah, I’m over sixty-five. Okay. Yeah, I got it this this year and that did help, but Yep

Dr. Friday

37:09

Sorry. Yep, but good question.

Caller

37:11

Oh yeah, I was thinking it wouldn’t tax it at all.

Dr. Friday

37:15

But we were all hoping, but that is not gonna probably pass uh to be quite honest. Just not gonna happen too many people of over sixty-five that help pay the tax bill.

Caller

37:26

Okay. Do you think seven percent will be good?

Dr. Friday

37:29

If that I mean if you again it really does depend on how much, but you sound like you were pretty close this year, so it sounds like the seven percent should be pretty close, but um you know it’s too hard to say on the radio unfortunately.

Caller

37:41

Right, right. Well yeah well I’ll just keep that I if I have to pay I have to pay. But yeah thank you for your help. I appreciate it.

Dr. Friday

37:48

Thank you Uh-huh. Let’s do Susan and Dixon. Goodbye. Susan? Uh how are you? I’m good

Caller

37:56

Quick question for you. Um I wasn’t I was wondering if someone’s lived in their primary residence for say twenty to thirty years and then they sell it, are there any tax benefit credits for I mean are Anything that saves you other than paying is a big difference?

Dr. Friday

38:10

Right. So the only advantage, I mean, anyone that lives in it five years or more has the two out of five year sale and it’s two hundred and fifty thousand per person, so A single person would get 250,000 exclusion and a married couple would get 500. Um that exclusion plus whatever you paid for it. So So let’s say you paid 200, you get 250, you could sell it for 450,000 and pay zero tax. Okay, good. Yeah, okay. Good. Thank you. Thanks very much. Uh-huh. How about Bob in Columbia?

Caller

38:45

Hi Dr. Freddie. My question is very quick. Uh Sure. Is that considered income to me as the homeowner?

Dr. Friday

38:56

No, thank goodness Yes. But no, that’s just all between family.

Caller

39:01

Okay. All right. That’s all an easy one.

Dr. Friday

39:03

That is an easy one. Thanks, Bob.

Caller

39:05

Yeah. Thank you.

Dr. Friday

39:06

All right. And that actually th that is a a good question. I have had that more than once. Because even when you have a rental and a lot of times people will let their children rent, there’s certain things like we can’t take losses on those kind of rent. rentals. It’s a little different when it’s family, family works together, achieves whatever they’re going to go after and do what they need to do. But other than that, you don’t have to worry. That’s just, you know You can give a gift to each person of eighteen thousand dollars or nineteen, I think it is now, uh, per a year. So all of that kind of washes out those kind of situations. It’s not a tax deduction for the child either. So um you know, that works out for for anyone. But those were great questions. I did want to say um if if you are a person sounds like um Uh Sue initially she was asking about um the tax on her social security. She’s actually thinking, because a lot of people do not take the choice to have taxes withheld on Social Security. But that can be a problem because I have people now that are getting, you know, $50, $50,000 a year in Social Security, up to 85% of that can be taxed. You’ve got $40,000 that doesn’t have any withholding. That’s going to eat up your entire pretty much 12% tax bracket if you’re single. So it is an important thing to think a little bit more about if you’re getting Social Security on top of a pension, on top of your RMD or your IR, um your IRA distributions, um, or maybe you still have a job and you you’re receiving your your social security, you know, you need to make sure you are thinking about the taxes that happen on social security because so often, you know, this the $6,000 per person um helps. It does save a few dollars, but it’s not going to pay your social security. Bill, most likely. At least we we did some uh calculating in our office this last week and did it with and without the six thousand and and how much the tax was on the Social Security based on their income brackets and it’s it’s not going to help that much but it does help it’s better than nothing so it’s better to put that 500 1000 1200 whatever it might have been that saved you versus what you would have had last year rolling into the this year. So um take the win for what it is, and most of us do, but it’s uh I I have not yet seen anything from Donald Trump other than what happened on the one big beautiful bill. He still talks about not wanting to pay tax on Social Security. I just not seeing anything that’s going through the Senate or the House that shows that that’s actually going to be be um a viable um concept but we can hope don’t think we should pay tax twice on anything and social security is definitely being double taxed when you are retired. So if you have a question or you need to have um you know some some sort of situation and uh you can always email us at friday at drfriday. com. I will tell you this time of the year Um our staff is doing their best to communicate, try to get back with you, try to update you on what you have. Um they will try to uh at least send you in the right direction if it’s a question that we can help you with but um this is our busiest season so a lot of times that’s also when you’re thinking about what’s going on in your taxes while I try to push throughout the year to be thinking about these things we do a lot of times in in um our tax meetings that we also prep for 2026. What what do we think is gonna happen? I might retire, I might sell a house, what would happen to my Irma if I sell a house? How long do I have to pay the higher uh Medicare tax? Cause a lot of people Um let’s say you you own a rental property and you sell it and you make a couple hundred thousand or you know whatever and now you’ve got the taxes, but you also will have if you’re receiving Medicare, you also have IRMA that’s going to be a problem. And how can you, if you can, avoid that kind of situation? And You know, to be quite honest, it’s not an easy thing to avoid. Yes, you can do 1031s, but then you really haven’t sold your real estate. You’ve really just changed one type of real estate for another um and that doesn’t make an easy transition so there are there are some reads and different things out there that is a possibility for you to be able to sell and do something with but um i’m not a financial planner let me put that out there i do taxes only taxes so if you’re looking for financial um advice financial planning advice you need to make Make sure you call someone that is an expert in that division. I am not that person. I am a tax person. So I can tell you what is going to be the best um option through the eyes of someone that’s looking to save taxes. But keep in mind, my my vision is usually one to five years. I’m not looking at retirement for you. I don’t know what you have coming down the line unless you’ve shared it. And then we might say, well, you know, hey, it’s a good time. Be honest with you, we have a number of people that are now over the age of 65 and we have that extra twelve hundred or twelve thousand dollar deduction And so we’re doing some small IRA conversions at zero or 12%, keeping them in that lower rate to make things happen. All right, we’ll see if we can get John on and off. Hey, John, what can I do for you?

Caller

44:23

Uh yes ma’am, I bought uh bought a property years uh years ago. It was a trailer in five acres.

Dr. Friday

44:28

Mm-hmm.

Caller

44:29

Lived in it, paid it off, sold it. So I rented it, decided to sell it and I just sold it th last year The bank said something by a gift equity tax because I’ve kinda sold it cheap ’cause it’s kinda rough shape. I made twenty five thousand off of it actually. Do I have to pay taxes?

Dr. Friday

44:47

Well I guess uh how long how long did you rent it?

Caller

44:54

Okay. Yeah.

Dr. Friday

44:55

So yes, so the difference between what you paid for it Um and what you sold it for, that would be taxed at capital gains. And then also since you had it as a rental property, you probably depreciated that trailer or you legally should have depreciated that trailer for those five years And so then you have to recapture depreciation, which is taxed at ordinary rates. Reason I don’t like depreciation. But we don’t have an option. That’s tax law. So just put it out there, but you would have both of those.

Caller

45:25

Well see the bank, of course the county appraised it for one fifteen. And that’s the reason that their gift equity tax was their down payment

Dr. Friday

45:34

Right. But you purchased it for how much?

Caller

45:36

Yeah.

Dr. Friday

45:37

Oh fifty. Okay. So the difference between the fifty and the one fifteen theoretically would be your capital gains Plus wouldn’t wouldn’t be much of a recapture. Now you may have done improvements on the trailer or something while you live there, so that’d be something you’ll have to look at. Unfortunately, we’re hitting the end of the clock here, John, but you might want to see if you did any major improvements that would have helped value the land for reason it’s sold for more. If you didn’t, then yeah, you’re just looking at some decent capital gains Sorry. Okay. Thank you, sir. All right. We’re at the end of the show here. If you want to join us or have a question or whatever, you can email Friday at Drfriday. com. Again, that’s Friday at drfriday. com. You can call us on Monday morning at 615 367-0819-615-367-0819. Hope you have an awesome Saturday. Love the show. Cop you later.

A: File an extension before the due date to avoid unnecessary penalties while you gather complete records.

A: The episode explains that employee wages are generally still taxable even when an organization receives grant funding.

A: Side income is typically reported on Schedule C, with income and eligible expenses documented carefully.

00:01

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 Doctor 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.

00:30

G’day, I’m Dr. Friday, and the doctor is in the house. We are talking today about my favorite subject, which of course is taxes, and it is tax season. It is the time that we’re all looking at our tax forms I know many of you are still waiting for your 1099 consolidated from places like Schwab or Edward Jones. We have many clients that are also on that same page, don’t sweat it, they will come out, all will be good.

00:57

Um but if you are a corporation or an LLC, a sub-s corporation I should say, or an LLC, remember your due date is around the corner, March 15th. And so we just want to make sure that you are not um, you know, waiting too long or if you if you’re waiting for something else to come in and you’re at the mercy of either another company that may be owned and you have to wait wait for their K1 to come into yours. Don’t forget to file your extension.

01:24

Better be safe than sorry. So if you’ve got questions though, you can join the show. 615-737-9986-615-737-9986. Taking your calls, talking about life. favorite subject and then we need to talk a little bit about a couple of the things I see happening in my firm and then if there’s other people that are uh tax experts that are listening, feel free to chime in.

01:52

But I’m seeing a large number of people that don’t have all of their overtime information. Many of them are requiring to have to go back and look at pay stubs. It’s kind of an interesting challenge for tax people like myself because I have found out at least if people work for like GM in some of them They don’t follow the federal overtime standards.

02:18

For example, if you work more than 30 hours in some cases, they get overtime. If they work more than 10 hours It’s overtime. They have the union that has negotiated their overtime schedule. And it isn’t exactly what the Fed. So therefore, it could look like they have more overtime hours than what we have um or what we’re actually allowed to show.

02:40

And then sometimes they have double time and and weekend times. So um you know, as a tax person, we have to go with what we can to the best of our ability uh understand. But it would be very helpful If the companies, now some like Kroger’s and them, even though the WTs don’t have on, they have sent separate letters with the amount for each each employee.

03:02

So that makes it so much easier, right? So again, if you’re just taking a number and you cannot take the total number off of a pay stub because again, that’s your overtime, including your prime rate So it would only be like a third of that or time and a half of uh of the number that you need to use. The IRS is going to get this information from the employer It’s going to happen. It may not be as fast as we’re providing taxes, but it is something that we’re being asked to provide.

03:30

And so the IRS is going to end up coming back and correcting your information if If you put it in incorrectly is my understanding. So make sure you understand exactly how that’s going to work. All right, let’s see if we got Val in Spring Hill, my town. Not the warmest Saturday in the world, but hey Val, what can I do for you? Hey Dr. Friday, I have a question.

03:51

I did my taxes recently and saw that twelve thousand dollar additional uh d standard deduction uh added to the standard deduction for those of us over sixty five. Yes. Is that just like a regular added to that? I mean is that worth Regardless of where the income comes from?

04:14

It is. It’s all based on um AGI. So if you had all 12,000, then I’m assuming your AGI was less than 150,000. for a married couple um or right around that number. And then if you make more than that, let’s say you make 200, then you would have seen possibly nine 9,500.

04:32

Well, they would have means tested, right? I call means tested. They would have adjusted it based on income. But everybody or anybody that’s 65 and older that meets the criteria will get that sweet little uh um a senior benefit, I guess you would call it. I think there’s a proper term senior something like that that they’re putting on my tax returns.

04:52

But yes, it it is an automatic And so so the reason I’m asking is because I’m trying to calculate how much to take from my wife’s IRA without us having to pay taxes on it Um we don’t make a lot of extra income, but we don’t need it. Our social security is good for us. Um so I How I did it was I took the table where you figure out your taxable social security based on you know there’s a number you plop in and it tells you how much is going to be taxed.

05:32

Right I mean I found the chart online which which gave me the number. So I took that and I took the amount I want to take out. And then what I think my income is going to be, and it comes out to less than the forty six seven, which was this the deduction that I you know, the whole twelve thousand plus thirty-four seven If I do that, I shouldn’t owe any taxes next year if I do that, right? 100%. That is the game we love playing, especially when people have retired.

06:00

They’ve they’ve Limit like yourself, you’ve limited all your debts so you can live off your social security. Theoretically you can have a decent, you know, but you have money let’s say in an IR uh a traditional IRA or four And theoretically, could you be converting money every year for nothing or pennies on the dollar? Um, and then that way, you know, when your family inherits or whoever inherits So why not money from the government for free?

06:31

That’s what I want to do because I don’t have to do it from my social security. I’m not required for another two years to take money out. first year that she’s required to so I want to take out as much as I can so that when the time comes, you know her R and D is going to be less. So no that’s that’s a smart idea. Seriously. Very smart Martin I I I I’m glad you brought that up to be honest, Val, because I think so often people just look at the idea I don’t have to pay taxes or or I’m paying the minimum or I don’t even need to file, right?

07:04

But then you you’re leaving money on the table if you don’t need to file it and you do have an IRA or a 401k, maybe you should file just to make that tax-free conversion. It’s just saying you know it’s it’s free money so good idea great planning very good thank you bye bye thank you appreciate it all right that was actually really good um what val was saying so if you are someone one and it doesn’t have to be anyone that’s 65 and older. I’ve got people that retire at at 58 and 60 um and they don’t need to take any money out but maybe they have um small pension or something they’re getting or maybe maybe they’re just living off of savings.

07:42

So the idea would be is to take that free money that the IRS is giving you And if you’re 65 and older, like he said, it’s basically forty-six thousand dollars. Now, again, you have to take into account your provisional income or your social security portion that will be taxed because for some of you you have a zero tax on your social security.

08:01

If you do a conversion, it could be a dollar for dollar. So if you convert 20,000, 20,000 of your social security could be taxed so there’s your 40 but that’s twenty thousand dollars that was converted for zero dollars i mean it’s kind of a no-brainer but you do need to just play the game hopefully you’ve got a good tax person or or if you do it yourself just as Val may be doing figuring it out now’s the time to kind of put it into the this year’s tax program and say hey if I do this and I calculate this and it it comes out with zero because sometimes you have interest and dividends and capital gains, a few moving parts that you don’t have absolute, but the tax code’s not planning to change a lot from 2025 to 2026.

08:43

So it’s time for you to play the game and see how much money you can do without paying. Or maybe you’re only paying six or seven percent And you know, if your children, and I know it’s kind of morbid, but all of us are gonna pass away at some point, and the game is to let your children have it for a lot less than what they would have to pay if you pass away. And if you have a healthy IRA, I mean I’ve got people that have several million, but let’s just say you have 500,000 or a million, you know, and you’ve got one or two children, they have to take all that money out in 10 years.

09:15

That’s the new law, right? So you right now have your entire lifetime to do conversions or do whatever, but when they inherit what’s left, and it’s a traditional IRA and or 401k, they now have a 10-year clock to take whatever you have in there. So if they’re at a decent income bracket, you know, they’re going to have to pay 24 Or some 32% tax on their inheritance. And you could have maybe paid 12 or less on some of it.

09:43

Maybe you’ll never get it all converted, but what you can convert will grow tax-free. So therefore they will have some money that is fully tax-free, if nothing else, to help pay for the taxes on the IRA that isn’t. So it’s just a gift that keeps on giving. So keep looking that direction. Again, I’m not a financial.

10:03

So I’m not saying this uh this approach is for everyone. It’s not. I’m sure there are people out there that if you’re gonna be living off of what you have in an IRA or in your retirement that’s in a tax account a taxable account, you know, maybe it’s it just let it ride and you use it every year during your lifetime and it’s not.

10:23

Another game to play and I haven’t I was talking to someone I guess they had heard the radio show or whatever and I gave them this idea and I I’m glad I said it, but I want to repeat myself because it saved them tens of thousands of dollars because the mother um who was very much a person to squirrel a lot of money aside, right? So she had a very healthy bank account. She ended up in a nursing home. Um it’s costing eleven thousand dollars a month and she also had several hundred thousand dollars in a IRA they were um going to take a lot of they were just going to spin down her cash and then go And start taking the money from the IRA.

11:00

And then they heard what I said, and then they checked with their financial planner to make sure this was a good plan for mom. Because again, we don’t want to, I’m I’m giving you good time tax advice. I’m not your financial planner. Sometimes we don’t work hand in hand. But if if it does work, it’s beautiful.

11:16

So anyways, in this case they were going to take a portion of her IRA, which could apply against, because again She had dementia. She was not going to be ever to live on her own again. It was in a um assisted living, full, full living facility. And so they were able to take part of that because that’s medical cost. And then that way they were taking tax dollars and being able to write it off against medical cost, and it was helping to reduce the cost and therefore she really wasn’t paying tax on it either.

11:44

It was going to put more money in everyone’s pockets. Cash is cash and we want to keep as much as we can. um and pay as little amount of taxes as possible, especially when you’ve worked out your whole life to accumulate this and you don’t want to just be giving it away. All right. So if you want to join the show you can 615 737 9986 615 737 9986 is the phone number here i’m an enrolled agent licensed with the internal revenue service to do taxes and revenue I do not work for the IRS.

12:17

I work for you, the people, and helpfully give you the guidance you need to represent You in front of the IRS. We’re gonna take our first break. We’ll be right back with the Dr. Friday show. Alrighty, we are back here live in studio working on on our taxes, trying to figure out what the best way to do things is going to be for all of us.

12:42

And remember some things that are best for one thing might not be very good for another person. And so make sure that you’re getting some good solid tax advice on your particular situation because penalties and interest can be a bit expensive and you don’t want to be paying them If you don’t have to. Let’s talk a little bit about the Trump uh bank accounts.

13:04

Because I can’t say uh yesterday was probably the first day where I had a number of people that were starting to um oh an I shouldn’t say bank account investment for the kids account um I think they’re just calling them the Trump investment account for kids is what I think they’re referring to about. But um it’s basically just the jump start for that generation. It’s really important. I think anyone that has, and keep in mind, you as a grandparent may want to consider um having the form filled out, you can also go right to the IRS.

13:40

I think it’s called Trump account and you can file the 4547. So again, the 4547 is gonna basically want the custodial parent or grandparent to complete this so you can set up an account where you can actually put and if the child was born in the year of 2025 There is some additional benefits for those children. You get up to another $1,000 in summer, if it depending, I know.

14:09

uh Microsoft and and a couple are actually adding to these funds. But if the child was born in 2025 or any child born from 25 to 28 will get an additional thousand. But after that you have um a $5,000 per year contribution. And so a lot of times, I’ll be honest, as an aunt to what, 18 or 16 um nieces and nephews and probably another six or seven great nieces and nephew.

14:37

We, you know, a lot of times we’ll either buy savings bonds, we’ll we’ll spoil them rotten. Maybe one of the better things because this whole pop idea is to give them this investment. Um, and there was usually nothing there. You had a 529 was the probably the closest to something like this, but um it’s an investment account for a child that’s not working, right?

14:57

So once you start working, you can do IRAs. Which is sort of like what this is. But the nice thing about this is, at least in the example I’m going to give you, is I know someone that’s divorced It’s been pretty bad the whole time. And so there’s no communication. And last thing they want from each other is for them to have any benefit from each other.

15:21

But The child is what we’re talking about. So this account is set up. You file a 4547, you put them in there, and then grandma or grandpa or aunts and uncles Um, or the children themselves, if they get money from other ways, can contribute up to $5,000 into this account and it will grow until the age of 18. At that time, this account goes into that child’s name.

15:44

They could use it for education, they can use it to buy their first home, they can buy it for trade, so they can use it for trade school because not everybody is designed to go to college. Um, you know, it’s just really easy. Qualified name, US citizen, social security number. That’s it. And you can set it up.

16:02

Um we were, I was talking to someone yesterday and they have six grandchildren, two in which they are raising. because unfortunately um one of their child children passed away so they’re raising the grandchildren and then they have four others and so they wanted to make sure these were established so grandma and grandpa can contribute money to these accounts And then that way when these kids get older, and maybe grandma and grandpa may not be here, some of them were two and three years old, who knows?

16:28

Then they have these accounts and they can Use them for their education, for their um for their first-time home buyers. You know, this is a way of giving that generation some amazing step-ups that some of us may not have been fortunate enough to have. That’s the purpose in it, right? Is to be able to give this next generation $5,000.

16:48

And if it’s got 10 years, this child will have $50,000 plus the growth in this account. Um and maybe more if they’re if it starts when they’re just born, right? Because you have 18 years and you, you know, and it doesn’t always have to be the same person, right? It can be I put in a thousand My brother puts in a thousand.

17:06

The grandparents from the other side put in a thousand. It’s not like everyone has to, but if you could do that, just a maze imagine what those children could do with that money. All right, we got Jeff from Manchester and see if I can help him. Hey, Jeff. Hey, how are you? I am awesome.

17:22

How about yourself? I’m doing all right today. Um, I have a question. Uh my father is ninety-two years old and just sold his house to move into an assisted living. And the sales price was approximately a million dollars. Okay. And we’re curious as to what we need to do to navigate capital gains taxes.

17:46

Great question. So what you and hopefully dad is still able to help a little bit, but we need to know how much did they buy that property for and then if they’ve owned it for the last forty years, let’s say, because that’s what I had one recently. They had basically built it and lived in there. But they had re they they had done some improvement. Improvements on it over the years, major improvements, adding things, things like that.

18:09

I don’t, I mean, again, at 92, I’m not too sure if Dad has all of that documentation, but to the best of our ability, we’ll need to know when he purchased it. We can use if we have to probably um tax assessments, but ideally if you could find the original form, did he build it or did he buy it? Do you know? Um he bought the piece of property and then he built a house on it in the fifties and then I believe he built an addition on to it in the seventies.

18:41

Okay. So and was he married or is he married? Uh he was married uh but she’s since passed away. Well, was she on the title at the time that they built? Was this his spouse and I mean his spouse he said he was married, but were they both in this house as joint tenants? Do you know?

19:04

‘Cause back in the fifties and forties things were a little wonky for what you know, I mean just how things were put in names. And they divorced and she’s passed away. Uh, he remarried and she is uh passed away. So he’s outlived them both, but Poor guy. Um so the reason I’m asking this is because if they were if they were I mean, unfortunately with divorce, there wouldn’t have been a step up in basis.

19:39

He basically either brought her out of the house or they she agreed uh they made their own arrangements, right? Whatever it didn’t affect the basis of the house If the second wife moved in and she lived there until sh and she became um and they and they jointly held the property and this is where it gets a little, I don’t know, and we may have to get a little deeper in than we can on the radio But um if she became part of the home as far as you know she was on the um title um and then she passed away, there would have been a step up in basis at the time of her passing, and that’s what I’m looking for.

20:12

because obviously if she passed away in the 80s versus the house in the 50s, we might have had a better basis for pat half of the home. But I don’t know if that’s gonna apply or not. I uh a question about that. Uh the house was on approximately an acre and sometime in the nineties, I believe. He bought an adjacent acre and a half or two acres to increase the size of the property.

20:42

Would purchasing and joining the two pieces of land would that cons would that make the step up in basis? Because it’s less than five eight well it won’t get a step up in basis, but it would add to his base Because he went and spent another twenty-five thousand, fifty thousand. I don’t know what whatever it costs for that acre and a half, two acres. Now that would be added to his homestead or his home property.

21:05

So it it it would increase the basis because when you when he sold them assuming it included all let’s just say three acres at the time of the sale Okay. So we need, you know, you’ve got a couple different moving parts. Because basically what you’re gonna have in it you know is whatever we can justify he put into the house plus at this moment $250,000 that he gets as an exclusion.

21:28

The rest of it, whatever that number plus 250,000, anything above that number is going to be capital gains. So it’s important to try to do our best to come up with all the legitimate basis we can. Or step up in basis if the wife passed away and you know she was part of the home. Okay. So my next question uh to that is Uh he lives in South Carolina, so I assume I need to find a CPA located in South Carolina.

21:59

Is the what is the I mean we yeah, I mean we can do we do all states, but I would say it may be beneficial. Um they may know Um as we know here in Tennessee, obviously living here thirty years, if you can find someone, they may know because there’s a state tax in South Carolina as well. So not only capital gains to the Fed, but also capital gains to the state.

22:19

So yes, we need to, we you probably need to have someone that has some um experience in dealing with real estate, if you can. Okay. Uh any suggestions on how to go about finding that person? Do you guys have an estate uh does di since he lives there, does he have any kind of attorney that he’s been dealing with for his trust or will Uh I don’t believe so. Which it’s probably something else that needs to be good put in place, huh?

22:48

Yeah. I’m thinking it a lot of times we work hand in hand Like here I often work with attorneys. So as I say, if you can find an attorney, often they’ll work in hand in hand because he’s gonna need um like well he should have a goodwill, obviously, if nothing else, or a trust, um, but something and And then he needs the power of attorneys for, you know, medical. He may have all those, but it might not hurt to have um an update done at this point since he’s changing ownership of the home, moving into a facility.

23:16

Um might not hurt to just get all of that, you know, make sure. And then, you know, at 92, you know, we hope and pray he has a nice long life, but the fact is he’s towards the end of it at this point.

23:38

everything is nice and organized because I’m sure he would like that. Um and then having that attorney in state because you’re talking to me here, so I’m assuming you’re a Tennessean And not that it’s a far drive, but we do have a state and uh federal situation there that we don’t have to deal with here. I understand. Yes, and I am a Tennessee resident, so Okay But yeah, so if you if you need help, you can always um text my office or call my office and I will give you if nothing else I can give you a few places to start and then they might be able to lead you to someone you feel comfortable with.

24:10

All right. Well thank you so much for your help. Yeah. Thank you. All right, guys, we’re going to take another break here. When we get back, you can join us 615-737-998. We’ll be right back with the Dr. Friday show. Alrighty, we are back here live in studio. And you can join us online or Live here in studio at 615-737-9986.

24:38

We’re gonna hit Nelson in Nashville. Hey Nelson, what can I do for you, sweetheart? Hey Dr. Friday, how you doing? I am doing good. Hopefully you are also. I wanted to know some standard deductions amounts. I just want to know, you know, h what the final status is.

24:55

How much is, you know, for each of each uh threshold uh for uh uh this is for people over sixty five years old. Uh what is the standard industry for a filing marriage So if you’re finally married, um you basically have the standard deduction is 31. 5 and then you get an additional um 1600.

25:17

I’m looking it up really quick. I’m cheating because I don’t have that memorized myself. And then on top of that, um you’re gonna get another 12 because I know it’s 43. 5 So it’s yeah, so it’s 435 is what you get if you’re over the age of 65, I believe. leave that’s what it comes out to here we go married 435 would be the total for both spouses basis 31 plus you get thirty two hundred dollars extra Um, so that makes it 34-7 plus the twelfth.

25:55

So your standard deduction is thirty-four-seven. What about filing single I mean separate in your married? Married filing separately, it uh it’s basically just taking that number in half. They give you sixteen hundred plus your standard deduction of what fifteen So it’s just basically taking that 34-7 and dividing in half. They don’t give you any additional benefit from married filing separately.

26:19

I think it’s about 17350. would be the standard plus if you’re over 65 you’ll get that additional 6,000 if the income now marry finally separately you cannot get the 6000 So that new one that came in, it only allows for married filing jointly, single or head of household. Married filing separately, it’s disallowed. So that’d be something like 19 something or what? Uh 17,350 is what you would get married filing separately.

26:46

Okay, and the last one is a single flower. If you’re just single and you’re filing separately, I mean just single without the other is um twenty-one seven fifty. It’s 21. Okay. Uh did they ever do they still do that uh deduction extra deduction if you’re legally blind? Um if you’re over 65, you don’t get the extra deduction for being legally blind.

27:12

I don’t believe leave but let me just double check that i don’t do a lot of um yeah i wanted it used to be a fifteen hundred dollar used to be um like an extra fifteen hundred dollars um in 2025 legally vacuum total standard okay so a single person over the age of 65 that is legally blind would get an additional two thousand dollars so that would be 19750 This is what happens when you keep your computers. So they do give me another two thousand dollars.

27:41

Yes, sir. You good question. Well, I really appreciate it. And I’ll and all you have to do is add the uh six thousand to that nineteen, right Right, if you’re single, legally single, yes, sir. Oh, okay. All right. Well I appreciate it. No problem. Thank you for asking Appreciate that.

27:59

Okay. All right, thanks. Bye-bye. All right, let’s hit Rebecca in Cottontown. Hey Rebecca. Hello. Thank you for taking my call. Mm-hmm. I have a job that’s funded by block grant funding. And the people that write the check said don’t claim it on my income tax ’cause it’s not taxable Well, I claimed it one year.

28:20

I don’t have to pay federal taxes on it, but I had to pay social security taxes on it Okay, that’s an unusual. So a block grant is basically a federally grant awarded to state or federal government broadly defined as functions, health care, so social services are Community, highly flexible, lacking of automatic funding. I can’t say I’ve ever really heard of a block grant, but what you’re saying is it’s not earned income, therefore they’re not taxing you as far as the ordinary income tax, but it still qualifies as earnings because Social Security and Medicare has to be paid.

28:59

Right. Huh. Reciprocant can tailor the program to look around the And you just work for them though. You’re an employee of this company that has the grant. Well, actually they write the checks, but it’s like I’m an individual and they fund the people that I work for. better light and but again you’re you’re actually work I mean I I’m a little just making sure I don’t want to lead you in the wrong but you’re actually working for a company that has received this grant Um, but you’re you’re not an owner of that company.

29:34

You are actually an employee or are they just giving you money every month? I mean are they 1099 in you? Is there any paper? 1099 at all. Nothing You don’t hit nothing except you check with a stub that says which client you work for. Okay. Well, I’m gonna be quite honest.

29:54

I have never heard and I’m gonna be researching that Because to me, even if um my company receives the grant, and from what I’m reading here, it’s basically designed for love uh smaller regional government bodies to help aid in social services of different types, right? It’s supposed to help with care, social health care, children care, et cetera. But if you’re the employee, so let’s say I have a daycare and I get the grant, my employees are still going to be required to have all the regular Because what if they fire you?

30:26

You should be qualified for unemployment. You know, I mean, I’m assuming this is a ordinary job. So I think they’re I think they’re misleading you. I will be honest with you. Now if somebody’s listening to this and is totally hooked into this, I don’t want to mislead this lady, but I’m I mean I can understand if a grant comes into my companies, I have people that have gotten grants to buy or to recycle something and that is not taxable because the money is used for for a specific purpose, but I’ve never heard of an employee that works for a company that receives a grant not to be treated just as any other employee.

31:01

I know if it’s a nonprofit, if they have less than five employees, they don’t have have to pay unemployments. There’s certain things that work for nonprofit. Are you working for a nonprofit? Yes, ma’am. Okay. It is a it is a legitimate 501c or version of a 501c? Yes, ma’am.

31:16

Okay. I still, I mean, we do a lot of nonprofits and I still think that you are not a uh officer of this nonprofit, you are an employee. I think they’re leading you down the wrong path. But you need to keep if you don’t mind, Rebecca, keep listening. I’m gonna put my number out in just a second, my regular number Um, and we can follow up on that and I can get a little bit more.

31:39

I don’t want to put any more on you because this is just the basic call-in show, but um If if you have to pay Social Security and Medicare, you have to pay ordinary income. That I know. But let me um let me see if I can jump to Pam that’s on the line and and I’m gonna get my phone number out and we can talk more off the air, okay?

31:58

Okay, thank you. Okay, thanks. Let’s hit Pam from Manchester real quick. Hi, Pam. Do you have any I have I have a really s maybe strange question. Uh in 2014 I got a reverse mortgage on my house. Uh I moved in uh 2011 and I just sold it in 2025.

32:20

And I have uh let’s see, mortgage insurance well anyway, I I paid off the the the uh reverse mortgage And I uh I I’m on Social Security, I’m seventy-three years old and I don’t know uh what are my options as far as filing income tax And um I know I I don’t have enough to do the uh capital gains because it’s under two fifty.

32:47

But uh uh I bought the house for seventy three thousand and I sold it for two ten. Okay, yeah. So even if I I mean so yeah, your your your math is correct, Pam. So obviously you sold it for less, but you do need to report that as a f they don’t always know it’s your home that you sold. They may get a ten ninety-nine S and they may not the government should get representation that the home was sold.

33:11

So there is a primary home form that you need to put on your tax return it will not be it’s all gonna be zeros I suggest you doing it you probably don’t have to um no capital gains and you’re living off social security no required filing uh for Social Security if that’s all you have. And you could you could probably wait and see if the government comes back and asks you or they send you one of those love letters says now we’re charging you capital gains because you didn’t report it.

33:40

But I don’t want to put that pressure. It may never happen, to be honest with you. But you’re under the requirements as far as you’ll pay zero capital gains on the house as well as you know, obviously with zero capital gains nothing else is going to be made taxable like your social security or anything. Right. But is any of the interest that I paid on the reverse mortgage uh recoupable?

34:01

Well since you don’t really have any income There’s no reason to worry about itemizing. I mean all you could do is itemize to reduce taxes due. You don’t have any taxes due, therefore the itemizing would be of no use. use. Okay, so just uh just do the standard uh ten forty or whatever and uh make sure that I fill out the sales sale of a house form.

34:24

else it’s going to be all zeros there’s no advantage to having an additional loss because there’s no there’s nothing taxable Right, because my re my retirement unfortunately was from uh Kmart and it’s less than two hundred dollars a year. Oh wow. Okay. Yeah, so again that keeps you and then after this you won’t be filing, at least for a very long time Well, you know, I I do that just to to because uh because we’ve brainwashed you for the last sixty years.

34:59

I’m sorry, what? I said it’s because we’ve taught you for the last fifty years of your life, when you were working and everything, you’ve always filed taxes. Oh yeah. Yeah. But we don’t have to be a little bit more than that. Yeah. It’s up to you. It’s always something you can fill out.

35:16

It’s not a problem with you doing. I’m just saying the the mandate is there that you are not required if you have less than 15,000 as a single person and you’re on Social Security, you’re not going to be filing a tax return. You certainly can. No one stops you, but I’m just saying that the pressure is off. You don’t have to Well uh with the social security I brought in like forty thousand, but I know I only have to pay taxes on half of that.

35:39

And then that makes sense. Right. Uh Social Security is is full tax free unless you earn another fifteen thousand above the social security. But what you’re telling me is you’re pretty much living off your social security with the little retirement you’re getting from when you worked, but it was only like two or three hundred dollars a year.

36:00

Right. Oh, it’s not even that much. Okay, so you are not required because the Social Security only becomes taxable when you You have other earnings of like fifteen thousand. Okay. So then no file no filing unless I really want to and to go ahead and and file the paperwork for that I sold the house.

36:20

You got it. Perfect. Perfect. Well, all right. Thank you so very much. I relinked my mind. Thanks. All right, we’re going to take our last break. We’ll be right back with the Dr. Friday show. Alrighty, we are back here live in studio. Again, you can join the show.

36:40

We got a few more minutes. 615-737 9986-615-737-9986, taking your calls, talking about my favorite subject at least, taxes. Um, I did want to bring back up on the block grant. I was texting with someone because again, I’m not gonna say I’m always an expert on certain nonprofits. I don’t get as much into nonprofits as businesses for profits.

37:06

But it was specifically told to me that if you must pay income tax on any wages you receive from any nonprofit, even if that nonprofit is funded by a block. grant while the nonprofit itself is tax-free, he says, but the employees are still subjected. And that employer that you’re working for, that is the nonprofit, should be providing you a usual form called a W-2.

37:31

Nonprofits are required to file them just as any other organization. The source of the funding does not exempt employees. from paying any kind of personal tax. So not only should you be paying Social Security and Medicare, you should also be paying ordinary income tax on that. But if you are listening, uh, I think it’s Rebecca, you can also call me at 615-367-0819.

37:55

For anyone listening, that’s my direct line, 615-08 367-0819. Um, and you can give me a call on Monday and if you need more information on what you should be doing, but they should be giving you a W-2 and or a 1099, not knowing your connection exactly, but either way, your income should not change from uh for-profit or not for profit. The block grant has no bearing on you as the employee or subcontractor.

38:25

All right, so that all being said, it’s getting down to the final part. So we just want to make sure that it is tax season. It’s time for you to think about preparing your taxes. But not only preparing this year, thinking about next year. This is the time. I mean, I know we often have a large number of people that are um, you know making changes in life, right?

38:48

We have things that we we want to do. Conversions one thing, but maybe you’re thinking about retiring. Maybe you’re thinking about selling your house and downsizing or moving to another state All these decisions are pretty big, and most of them, I hate to tell you, have a tax impact. And so making that impact is important to being able to understand how to um follow through with that to know am I gonna owe money?

39:15

Is it a good idea to owe money? Is it a good idea to do something with it? Or, you know Just so you’re prepared. No one likes to file their taxes and know they owe $83,000 like someone I just finished. All right, so let’s hit the phone line real quick.

39:28

Moose in uh Greensbrier Briar. Excuse me, Greensbrier. Hey Moose Yes ma’am, how do you file like if you’re doing side work, how do you uh how do you file that in other words if I wrote down five thousand dollars in income, am I am I gonna have to provide You know, or is that just gonna red flag a audit? Well no, it won’t I mean a lot of people do side work.

39:53

You’re gonna file that on a schedule C like cat Um, and it’s basically designed for self-employment. You’re gonna tell them, hey, I was doing landscape, I did handyman work, I whatever, I don’t know what you do. Um, and then you’re gonna fill in your income and or expenses um that you might have had to do whatever you’re doing for the side work and then pay taxes on it as you have.

40:16

Um whatever you know, whatever the profit is after your ex legitimate expenses you might have for that five thousand. But no, I mean We do a ton of Schedule C’s for people that do what I might say side work where they work a regular W-2 job, but yet on the weekends or things, they do a side electrical, they do a side, you know, handyman work, whatever.

40:38

Okay, schedule C is in CAT. Yep, you got it, sir. Thank you. Okay, thank you. All right, so again, that’s a great question. Because if you’re filing your taxes, you kind of want to make sure you are reporting all of your income. And I want to clarify one thing because a lot of times people will come in and they give you all their 1099s and they say, here’s all my income.

40:59

And I’m always asking them because the likeliness is that you don’t get all of your income on 1099. Some people are just not going to 1099. You maybe made less than $79 $600. Yes, you are required as the person receiving the money to report that’s uh $500 or $400. They may not be required to 1099 you because anything under $600, we don’t have to Same thing when I’ve had someone just recently, we did all their taxes, and then she came back and said, oh wait, I’ve got another 1099.

41:30

Well, you’re supposed to be giving your tax person every dollar you’ve earned If you get a 1099 or not. And it’s pretty easy because it’s every dollar that either went into your bank or all the cash that you have used throughout the year. You as a business owner, that is your responsibility to track all the income you are making and on the other side track the expenses that go into those just because someone gave you cash doesn’t mean that you’re entitled to not report it Um the IRS is kind of funny that way.

42:01

They, you know, and keep in mind, the IRS is an enforcement agency. They don’t write tax law. They are not The bad guys, in essence, no one likes enforcement, but the fact is their job is to collect so that we can have all the benefits we have here in the United States. You may not like the way they spend the money in Congress and the Senate, but the IRS is not spending the money.

42:24

They’re collecting it, putting it into the general fund. General fund is then spent however they spend it. And yes, I’m with you. It’s not spent very well Um, but I had a a gentleman come in my office and he’s like, I don’t want to pay any taxes. I don’t want to have to do this.

42:38

This taxes are unfair. We shouldn’t Well, I think probably every single person listening would say taxes are always high, taxes are not always fair, it’s not a good thing to always have to pay taxes. Some of us Um, you know, some people I I have as clients pay more in taxes than people make in a year. It’s not something that you have a choice, though.

42:58

You’re a U. S. citizen. Our obligation is to pay our taxes Also, our obligation is to take every legitimate tax deduction we’re entitled to. But you can’t take that if you’re not tracking it So again, you know, if you ever get audited, they’re going to do a means test, meaning your lifestyle, if it’s more than what you’re showing on your tax return.

43:19

In some cases, I see people come in and they say they’ve only made $10 or $12,000. They’re raising a child, but yet they’ve got a car payment that’s $600 a month and a rental, they pay rent of $14 or $15. There’s no way you can be living off that if you don’t have both. Just saying, not possible. All right, we’re gonna hit Alley really quick in Manchester because we only have about three minutes left.

43:41

Yes I sold a place in in McGallan, Texas, and uh I took a cash offer And I only received around one hundred sixty five thousand for that, but it was appraised for way over two hundred plus thousand. But I took it because it was a cash offer and to avoid expenses like property taxes and so on. And now with the IRS they say I’m to pay a capital gains tax.

44:09

And I wanted to ask you, uh I’m age seventy seven. Uh do you think I should pay the capital gains tax? Yeah, well you would it just depends. How much did you buy this property for? Uh I bought it for 130,000 in 2021. Uh-huh. It was at a rental.

44:41

other people that could just rent it to all ages. Okay. But w while you owned it, was it a rental for you? Did you have it on your tax return as a rental Well, yeah, I did rent it out two different times and but but not for long because well, one guy moved out early and the second lady moved out because she didn’t want to pay an increase in rent when all the costs went up.

45:06

Yeah. Well, right now just based on what you said, you paid 130, you sold it for 165. If there was closing cost fees, you can back that out. But you do have about thirty thousand plus recapture of depreciation. So yes, ma’am, age has no bearing on it. You do have, based on what you’ve given me, some capital gains issues.

45:24

Now if you don’t have have very much income and um you know this is all you have theoretically there is a zero percent capital gains rate but I don’t do your taxes so you might want to just but yes ma’am I’m gonna have to take a quick break here because the show’s gonna end. But um But yes, you will need to to talk to someone, but you may have taxes due.

45:43

Sorry. Yeah, I’m gonna get back in touch with you. Thank you. Thank you so much. Good night. Thank you. All right. We’re gonna take uh this the end of the show so I need to make sure you guys have my contact information 615-3670819 that you can call on Monday 6153 367-0819.

46:02

You can also email Friday at drfriday. com, Friday at drfriday. com, or just check us out on the web. You can also send questions through the website drfriday. com again drfriday. com again it’s tax season I know there’s a lot of crazy things going around do not fall for some of the phone calls there is I meant to hit on some of the scams the IRS says is happening.

46:28

If you’re getting rejections on your uh tax returns and things, you may have to call the IRS. But keep in mind that we’re here. So hope you copy later, as we always say and also Joy.

Announcer

00:00

For tax services, planning, business, and IRS negotiation, visit drfriday.com. No, no, no. She’s not a medical doctor, but she can sure cure your tax problems or your financial woes. She’s the house. 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.

Dr. Friday

00:35

So I guess I want to start the show with talking a little bit about um some miscommunication that I see keep coming through emails and um I’m going to assume that it’s out there on the internet as well about who can claim and who cannot claim over time and tips. Now keep in mind there are some rules. It’s not like everybody’s going to get it and everybody. Everyone’s not going to get it. You do not have to itemize, which is one of the misconceptions that is not required. But if you are in a managemental position And you have the um federal sta… uh Department of Labor statistics, sorry, um, and there’s a bunch of rules that have to be applied, then that will be how and if you can get this. So if you’re a manager and you’re paid overtime, but your overtime is based on something other than the typical 40 hours, you may be at risk. If you are um um a manager that basically you’re not really a manager, they just give you that title, but you’re really just work clock in, clock out, you know, you probably will be able to qualify. But you do need to make sure because I know everyone’s just going to click the button saying they qualify. So let’s go ahead and hit the phones. It looks like we have someone on line one. Go ahead and bring them in. Sorry, I can’t read my screen right now. Hey, this is Dr. Friday. Can I help? Yeah, I have an IRA question. Okay, go for it, sweetie.

Caller

02:01

Okay, I had I had two uh last year and I combined them and they were in two different places. Well, it turns out that where I put them in the one place, uh, they didn’t add that amount of money in for my required minimum at the end of the year ’cause they said They only send that notice out in the beginning of the year and I put that money in in March. So in realizing it in January, I did go and take the rest of what I’ve my required out. But I’m wondering if there’s some way I can uh or I have to let the IRS know that I took it out for the prior year in January

Dr. Friday

02:43

So you did not take your RN, let me make sure I’m recapping really quick. You did not take your RMD or your required minimum distribution in the year Let’s just say in 2025, but you took it out in January of twenty-six or maybe different years, but the same concept?

Caller

03:00

Well, I took part of it out in the first year i in in December and the m remainder what w what I w had to take out for that extra money I took in January.

Dr. Friday

03:10

So it was and can I ask how old you are

Caller

03:14

76.

Dr. Friday

03:16

Okay. Uh I wasn’t sure if it was the first year in which you had to take your required minimum distribution. There’s a little wiggle room there. So when you do file, there is an eighty-six zero six that would require you to um document. that you um that there was a a um a miscommunication because I would have thought that your fiduci person would have giving you that information properly. Because your RMD is always based on the prior year balance, right? I mean, just for people that are listening, not so much for yours. So Whatever you have to take in a requirement of a distribution for 2026 would be based on your December 31st balance in your 401k IRA, whatever. And so then that’s what you have the whole year to take it out on Sounds like somewhere they dropped it, but yes, there is a form and how we they they they didn’t add it in.

Caller

04:04

They did not add that amount that I uh they added to the IRA. They didn’t include it in my required minimum

Dr. Friday

04:11

Yeah, so they they did not take the add in and add it back in, but you put it in that same year, in the year in which the prior year, I guess is what I’m saying.

Caller

04:21

I took what I I I took I took part of it out in December, what they already had and the additional that I added in, I I wound up taking it out on January twenty ninth

Dr. Friday

04:33

But when you put the additional in, when did the additional get added in? What what year? Last year or this year? In March of the prior year, correct? In the year that we’re talking about. Okay. Okay. Yeah. Yeah. Sorry, I know we’re going back and forth and poor people. Um you’re you’re so if you put it in March of twenty five, that doesn’t go into play until twenty twenty six RMD So 2024, whatever you had in there as of December 24, December 31st, 2024, is what you have to do for RMDs. Anything that got added in 25 will be part of your 2026 RMDs, which they do as of 1231-2025.

Caller

05:15

Except that I always took it out of the other place and I f and I d it didn’t dawn on me that I that they didn’t add it in. I I it was all I always took two two different Right.

Dr. Friday

05:31

Yeah. And so when the one company which is only responding to their percentage because that’s all they know. And the other company was and you were, I got it. So you were taking care, I mean you were basically managing both of them, but somehow one of them did not get added in Right. Okay. Well there it’s not a huge deal. I would just suggest writing a letter when you file your taxes about the innocent mistake. IRS is not so I have not found them to be extremely aggressive about this. They did reduce the penalty for failure to take it out, but you took it out as soon as you found out that the mistake had been made. It’s not like it’s a year later. Um so um I think you’ll find I file that form that you suggested 860606 and then yes you can also attach uh PDF if your system allows if you’re doing it online or if you’re doing paper filing, attach a letter explaining the situation, how it was just a mistake. As soon as you found out you resolved it and the money has been taken out.

Caller

06:27

Okay, thank you very much.

Dr. Friday

06:28

No problem. Thank you. Thank you. All right. Sorry guys. Like a little bit uh more intense than probably some of you, but that’s the problem with some of these. Um not not so much that, but it just it is When we’re dealing with taxes, everyone’s situation is slightly different. And uh what we were talking about for some of you that maybe just caught part of it was is that this listener has required minimum distribution but she also has two accounts. So each fiduciary responsibility is is independent for each one. So Well, this is one of the reasons that I personally I know some people I’m not a financial planner, so don’t come back at me. But I’m just saying as we get older, sometimes it’s nicer to have everything in one place. So that way these kind of things don’t happen as often. I mean, sounds like she’s done a great job up until now. So this is maybe just more of a simple mistake, but it is for all of us. It’s always harder and harder to track things when they’re in multiple locations. So not a bad idea to basically move them into one place where even you have two different types of accounts, move them in so that you have the ability to um you know, go for it and and see what you have. Um so anyways, if you want to join the show, 615-737-9986-615-737 379986. A lot of confusion on tips and overtime. I have found that for the people that it applies to, they are definitely getting better refunds. Um the confusion really still coming out is who’s really going to qualify, who’s not. Um, you know, a lot of people work overtime, but sometimes their overtime isn’t going to be considered qualified and remember if you’ve got double time triple time that doesn’t add more to you it’s only on um double it’s only on traditional overtime So again, making sure that you have that information in the right place, doing the things the right way, that is what we want to be able to do. And We’ll be able to, you know, move things forward. So if you’re working on your taxes this weekend, which you can be because obviously tax season is fully open. Make sure, because I’ve done a couple taxes this last week and a couple people sent me notices saying, oh wait, we did your taxes, but we just got another 1099 in the mail Or we just got another uh interest statement in the mail. So double check, triple check before you send the taxes because that’s what you don’t want to do is send off taxes and then have to amend them. Amending them can usually lead to more, but you don’t want to not file them correctly. So, you know, I mean obviously you want to amend versus that. And then the IRS will come back and give you some sweet little notification saying that we have changed your tax returns because And and also payments. I have one case where we have a gentleman, first we were dealing with 2024, now they’ve come back on 2023, and we’re still, you know You need to make sure if you owe money, you need to make sure that money has cleared your bank. Even if you’ve given the accountant the approval to auto-draft or anything else You need to be tracking. If you don’t see that money coming out of your bank, you need to stay on top of it. You don’t want the two years later the IRS saying you owe a ton more money because the money never came out. It is your responsibility to make sure that money comes out. All right, let’s hit William and Smyrna. Let’s see what we can do for William. Hey Will, what do you got going?

Caller

10:02

Uh well uh uh I got a question about the R and D’ Uh I take uh some out every year uh for for that. But uh my question is, do you have to designate it on paperwork or some kind of special paper or you just take it out

Dr. Friday

10:20

Um I mean from no I mean for the purpose of an a regular required minimum distribution or RMD you you’re gonna take it out you’re gonna receive a form called a 1099R You’re going to report it as ordinary income, assuming that you’ve, you know, traditional and then pay tax on it. It’s really that simple There’s nothing you have to designate. The only reason in her case we were designating more of it was because she took it out late.

Caller

10:47

Oh okay. So I believe that pretty well answers my question. So as long as I take enough out each year to cover the R and D That’s all I have to do really.

Dr. Friday

10:57

Right. Yeah, that’s it. As long as you’re taking out enough or more than what’s required, then there’s nothing really you have to worry about.

Caller

11:03

That that takes care of my question. I really appreciate you. Thanks a whole lot.

Dr. Friday

11:08

Thanks, William. And for any of those that are receiving RMDs or anything like that, you can hang up on William. Then they um you can also do what’s called a QCD, a qualified charitable deduction. And in that case, what you can do is you can give that money directly to a charity, and then that money is not taxed at all. You do have to put it through the system. There is a process. But it is a way of taking money and instead of taking it from your bank account and giving it to the charity, you take it directly from your required minimum distribution and send it to the charity. And now you don’t have to worry about itemizing. or any of that, you can take it directly off and it gives you a really, really good tax deduction. Now you do have to be 70 and a half and older to qualify for that and you do need to be having it through a traditional IRA 401k. It cannot be an inherited IRA or anything. It has to be your But um if you can meet those criteria, I mean most people or many people take money right from their checking account or cash out of their bank and give it to their church or their their uh charities and this would be a way of having them write the check from the fiduciary side and then you can reduce your taxes and You know, right now it’s hard for people to really itemize unless you’re giving, you know, $15,000, $20,000 because if you don’t have a mortgage, it’s very difficult to meet Itemization. All right, we’re going to take our first break. You can join the show at 615-737986-615 737-9986. We’ll be right back with the Doctor Friday show. Alrighty, we are back here live in studio talking about taxes. It is the season, guys. So the most important thing is making sure you file. If you haven’t filed in a number of years, you need to have a conversation because it’s now’s the time. I mean, there is some really good fresh start programs out there But most importantly, you have to be in compliance. You can hear all those ads you want, they’ll say they’ll settle for 15 cents on the dollar or 10 cents on the dollar, but none of that’s going to apply to someone that hasn’t filed First thing you need to file and then you need to find out what the IRS is actually showing on you. I had a case recently where they had taken someone’s ID, someone had filed a totally fraudulent you know, tax return trying to get two hundred thousand dollars or something worth of refunds um on this person that didn’t have that kind of situation Um but the government was trying to collect forty-five thousand dollars on them, which had nothing to do with their normal taxes. I mean they usually owed maybe fifty 1,500 or less, right? So again, making sure what the IRS has is correct and also filing what is correct for you so that that way then you’re now dealing with your particular tax. If it is a fraudulent situation like this one, there is a form that needs to be filed. You need to notify the IRS. You need to show the proof behind it. In this case it was so easy, but in some cases maybe not. But especially if if you’re self-employed and someone tries to fraudulently file a tax re I mean these returns were absolutely ridiculous. I mean, if you ever look at some of the the fraudulent returns coming through, I am totally surprised the IRS allows any of them to go through the system. system but you know it is what it is um and so you are the responsible person to let the know let the IRS know that you need to correct the file file the actual crop proper tax return Do it through the proper system and then go from there and then either make payments or settle, or then you can hear about the offer and compromise, the fresh start program, et cetera, et cetera. None of that can be done if you’re not filing the taxes and if they’re not correct. I had one that came in and they gave us all their paperwork and then recently I got a notice saying that the IRS has changed their taxes I mean it was completely again, it wasn’t that our return wasn’t uh was a fraud in this case. The taxpayer had not told us about additional incomes that they had come in and then the IRS came back and corrected it So you’re not hiding when you don’t do that. And anytime when I see when someone says, well, um, I just got a couple more 1099s and so I need to correct my taxes, that’s a problem because 1099 should not be gearing. your income. Your income should be totally what you received. It shouldn’t make a difference if two years from now you got additional 1099s. Because those 1099s are only a gear to make sure that that person is claiming the same amount you’ve posted to them, but not shouldn’t be your total income. That’s it’s just that simple. You know, I mean, even if you only have one employer, it’s still you should know how much money that person gave you. That is one of the jobs, one of the positions we have as um self-employed people And then the other side is tracking all of our receipts so we have the best uh deductions we can have. You can’t just wing it. I mean, you know, you can’t just say, well, I think I did this much supplies and oh I’m sure I did at least that much in in advertising. It doesn’t work that way. You have to have the physical receipts, guys. That doesn’t mean that you have a bunch of stuff for Amazon and you call it all supplies IRS is going to want the physical inventory. If you went to Amazon, what did you buy? How they know you didn’t buy school supplies or personal supplies So it is your job to do that and making sure that you have everything you’re supposed to have. And nothing the IRS will basically just turn around And, you know, be honest with you, they’ll turn around and basically disallow all of your expenses. You know, they they have no reason to allow them all. It’s not their job to give them to you. So as an entrepreneur, as a self-employed person. Because we have the higher higher chance of being audit. A gentleman with a or a female with a W-2, you’re not going to have much, right? I mean it’s a W-2. There’s no tax deductions against W-2s. You may have some overtime or tips, again, that’s being reported from your employer. So if you’re going to go in there and put $25,000 and you only made 30 is not going to make any sense and you’ll be audited anyways. I feel very strongly that the tip one, especially because you can report cash tips, but If it’s not reported on your W-2 or through your 1099, at least through the 1099, to be quite honest, we pay all of our ta our taxes. on it. But if you write off all these expenses and then you say, well, this much was tips, and then you turn around and show it, the government’s going to probably audit because it’s going to be, how did you support yourself People have a tendency to reduce things down to very, you know, they don’t want to pay any more money than they have to. And I get that. But there is a reality. You have a car payment or you have a mortgage or you have rent You have food, you have clothes, you have medical, all these things come in play. The IRS has already got a lot of that information on you. So then when you go in and say, Well, I only made $2,000 a month based on your tax return. And most of that came through TIPS. So there you four, I didn’t really have any income. Now the IRS is going to sit back and say, wait a second, this person has always been showing this much money, but now they’re saying almost all that money came through tips. You know, and I get it. Your bartender, your waiter, I can see where some of that, but most people only get 20% tip. They don’t get you know, hundreds and thousands of dollars. Um, you know, in even even if you make a thousand dollars a weekend at your job, your your wages should be offset and that should already be in that number So I would just have to say be careful when you’re looking at all of that information. Be truthful because it is going to most likely be one of the highest audited areas. Tips, especially overtime. I think most people can justify. Keep in mind you’re only using the qualified portion. Do not put 100% of your overtime in that box. It specifically asks you on the tax return. Is this the qualified portion? If you say yes and it’s actually 100%, then you’re gonna see that you’re going to either get your taxes uh audited and they’re going to come back and ask you for the money that they that you’ve taken or they’re going to disallow your tax return because they’ve already figured out that that was a problem in the first place So, you know, again, your choice, but no one likes to be audited. No one likes to have these kind of things happen to us. So Really, really important for you to make sure that you’re putting the right information because most of us like to file our taxes, put them to bed, never have to look at them again. That’s the perfect world. You know, you never know if the IRS is gonna pick your number and it does happen, but I usually find that most of the time, most of the time Something different happened in the year in which they’re pulling. Unless you’re just a self-employed person. They see some consistencies in the way that the expenses are going. Um, you know, they see some consistencies in how the numbers are reported. Most people don’t make the same amount in sales, most people don’t have the same expenses every year in same categories. Um, you know, it just isn’t normal associated with inflation and things. Most of the time we are paying more money and therefore we’re actually billing more money in many of those cases. So if you’ve got questions on that, um make sure you can always call the show 615-737-9986-65 So when preparing your taxes, what’s the first thing? First thing, make sure we have all of our documents in front of us. Right. We have our W-2s. We have our 1099 SAs if you have a health savings account. You have your 1098 T or mortgage or your 1098 T for college if you’re in college. Um all the things, interest, dividends, stock portfolios. If you’re into crypto, your stock portfolio, because crypto is stock, right? So all of those forms have to be in front of you before you even start doing your taxes. And all of those forms are also being copied to the IRS So if you have a Coinbase or you have, you know, e-trade, whatever, all of those are going to go to them. So making sure you have all that, then sit down and start putting the information. If you’re not sure of the answer. I will say I know some of these software programs have assistance. Don’t be shy to ask. You can also ask us, but you know, in most cases, it’s it’s a pretty straightforward answer. You know, you may not like the answer because you might find that the answer is basically one of those deals where you’re like, hmm, you know what? If I say yes to this answer That’s fine. But if I say no, I get more money back. I can’t tell you how many times I’ve heard those words. I went ahead and checked this. I married, but my husband and I filed separately. So I went ahead and chose head of household because if I change married filing separately, I didn’t get the kind of refund I did when I was filing head of household. Well of course not. Head of household means you’re supporting that person that you’re claiming as your dependent solely by yourself. You’re not living in the same house as your husband or wife and then claiming that that person doesn’t really exist that you know that’s blatantly lying but also it’s not that confusing Head of household means that you are the only adult basically in that household supporting those other people you listed as your dependent. If you are married, married filing separately is your only option. And right now, if you file married filing separately and you do have tips and you do have overtime, you will not get those deductions. It doesn’t fly when you’re married finally separately because most of them have means testing and they don’t know how much money your spouse made. So they’re not giving it to you at all. So understanding that if you switch from married filing separately to head of household because you want to get all this money, it’s not going to fly in the big picture Sooner or later, I feel that people are going to be caught. I know there’s some people out there that have probably been doing it forever and has never been caught, but you know, karma’s karma, so we’ll find out because theoretically that is just Wrong. That’s my opinion. Head of household should be for the people that are truly single parents trying to raise kids or grandparents that are trying to raise their grandkids, you know, a single parent and a and children because That’s why we’re trying to level the playing field by giving them head of household. All right, we’re gonna take our second break. If you got a question, you can join the show. 615-737-9986. 615-737-9986. We’ll be right back. Alrighty, we are back here live in studio. If you want to join the show, you can 615-737 9986-615-737-9986. And we have Rob on the line. Let’s see if we can get Rob on the line. Thanks. Hey Rob.

Caller

24:36

How are you? I got a question. Um you were talking about the deductions for being uh married, uh and filing head of household and all that. Yes. I have a problem. My wife is medically disabled. But she cannot get disability from the government because I make too much money.

Dr. Friday

24:55

Right.

Caller

24:56

How can I claim her if it won’t allow me to use her as a dependent or anything Just an exemption, but I still have to pay all her medical bills.

Dr. Friday

25:06

Well, I mean theoretically I mean the only option you have is You claim her as your wife, so you would claim married and she would be your spouse, and then any medical expense would go on Schedule A that you might be able to meet itemizing with your income being higher, it may be very hard to actually get itemizing under the current tax code, but that’s the way it would work.

Caller

25:27

Okay, so I I was just checking to see there’s another way around it.

Dr. Friday

25:31

Yeah, there’s no easier way around it. I mean unfortunately either way, you know, um She doesn’t have any way of deducting it. You could gift it to her, but there’s no income to offset and your income’s too high to offset it. So it’s one of those catch twenty-two’s it doesn’t benefit you either way. Okay. All right. Well thanks so much. Thanks, mate. And there’s the true story of how it happens so often. Um and I have a a number of clients with that kind of situation. So Um it it’s not easy. I have a couple that are, you know, theoretically now, you know, he could file Mary filing separately, but that wouldn’t benefit him because then he’d lose the actual higher deduction as being married um and she would have no advantage to being married violent separately because she has no income to report it sounds like so yeah it it’s not a it’s the the system definitely is not a perfect system. So um, you know, I hate to say this, but theoretically divorce, and then you could do head of household, but, you know, and have of her as a dependent but again it’s not really going to get you any more money you’d be better off almost married because the higher uh earnings would be tax lower as a married couple versus as mayor uh head of household or single so um no win in that conversation okay so um if uh you have question you can join the show Show 615-737-9986. 615-737-9986. Taking your calls, talking about taxes. It is tax season. We are working on all kinds of funding. and exciting things. We do have better depreciation this year. So for all of those that may have um purchased equipment, tractors, all those good things, we should have a better deduction. I will say again, talking about cars. Um, sorry, no one knows I’m talking about cars because I was just reading an email and someone had sent in and they are basically asking, you know, hey, I brought myself a Land Rover and I’m a real estate person and I want to take a 179 on it. How does this work? You have to be really careful when you’re truly, I mean, if you are audited and you’re a real estate agent and all you have is one Land Rover and nothing else to your name and you’re trying to say 100% of vehicle uh is being used for business, I would think the IRS would say, hmm, that’d be very hard because you do have to go the grocery grocery store you do go do personal things therefore the car is being used for personal use um say you do have a full car I mean you have another car that you use for personal and you only drive the Land Rover for the purpose of real estate. They could, I mean, for one, it’s a luxury vehicle, so does it really qualify? And you wouldn’t be able to to do it is over six thousand pounds I know you’re gonna say and it’s a bigger vehicle but you know um after the first year my question really comes to this so you got a hundred thousand dollar vehicle You’ve accelerated depreciation on that. So now the next year, all you’re going to have is interest, possibly penalty. I mean um insurance. and petro, but you’re not putting a lot of miles on this car apparently. And that’s my example from this email. So the first year you got all of this, even if you qualify and you you’re able to accelerate the depreciation in the first year and you can take this huge savings. Now you’ve got another two, three years and then you sell this car. And so let’s say you in three years you sell it and now it’s worth $70,000. Well you’ve taken all the expense for $100,000. So now you’ve got to recapture $70,000 as income. Or you go out and buy another Land Rover and now you’ve only got a savings of maybe $20,000, $30,000. After the first time you’ve done it, you’re you’re basically unless the car becomes worthless and you hold it long enough It’s an endless cycle. So yes, if you are a construction guy and you drive your truck to the ground and you want to use it and solely use for your business, or you have a tractor and you’re or a farmer or you’re a land mover, um, you know, you you build roads, whatever. Those types of equipment, no question, easy to do. But when it’s a personal vehicle, and even though you may be able to do something Something with it in the first parts. After the first time you do that, you’re going to then have to always be buying a more expensive vehicle than what you’re reselling it back for. And a lot of these cars have decent resale values. So Just put it in your mind, yes, you may be able to get an initial instant gratification, which is what we call section 179 or I do. Um, but after three or four years and you want to get rid of it and you’re gonna have to recapture 60-70 grand because that’s what it’s still worth, then you have to go buy another car worth more than that because you’re not going to have any depreciation to offset the gains And now you’re taxed three or four years later for what you could have just been paying the taxes for. So just keep in mind, maybe do it more of a straight line, um miles at 70 cents a mile, guys, um, for real use. Usage of vehicle is is pretty clean and you can use a vehicle that is used personally and for business as long as you’re tracking your miles and miles logs are required. IRS has never stipulated that you can just go in and just make an educated guess. You need to know what, when, where, and how, basically for why did you go there? Who did you meet with what was the purpose of the meeting was it business oriented and you need to know that on everything for every mile you do so i mean in some businesses it’s easy i went stopped at the client dropped off the product moved on and they they do deliveries. Um or you know, I went to visit my my my tax person and then you went back. And those are legitimate business if we talked about business. But you know, I went to the coffee house every day and some people try to write off their coffee every day. Now if you are in the coffee business maybe there’s some legitimate reason there. Otherwise that truly is just the stop and it’s not going to fly if you’re ever audited. And we do try to do taxes Just believe it or not, most people should. We try to do taxes based on the true fact. What is going to be legitimate when and if the government ever asks you to prove yourself right you don’t want to just throw some numbers on a piece of paper and then turn around and have to then try to backtrack and figure out well how did I come up with those 35,000 miles? Um and I’m a nail specialist or something. You know, I mean obviously it was commuting. Unless you’re going from location to location and doing people’s nails, maybe there is a business out there like that. Most of mine aren’t and remember commuting is not a tax deduction for nobody that means for Dr. Friday to go from my home here to the office in Brentwood, that is commuting. My clients are at the office in Brentwood. My clients are not where I’m at. So therefore I don’t get to take the miles from my home to the office and my office back home. Commuting. Always going to be. Once I’m in the office and then I go and and uh go to the bank or I go to see a client or I go meet Hank at his office to meet his clients, those would be legitimate business miles from office to go see client back, that’s fine Keep in mind that is very important because I have a lot of times. I mean, if you have a business with a um brick and mortar situation and you only have one business. and you’re coming from your home to that business, that is not a tax deduction. Now if you’ve got four or five locations, your first location would be the place that the you know the from home to the first location would be commuting from there to other locations could be um business miles and then obviously from wherever you’re going back home would be commuting Because it’s no different than a person that’s going to go to work. They have to go from home to the workplace and back. They are not allowed to ride off those miles. We are not allowed to ride off those miles miles. So again, don’t um when you’re when you’re estimating or you’re guessing, those are often the problems that people are not taking into account their true commuting miles. And it’s really important because if we’re ever audited, I will tell you miles are usually one of the first things they come back at, especially for people in the service business like real estate professionals or um Um or any, I mean, if it’s a business, let’s say that you have a hotel or you have a business like that and somehow you’re showing 15, 20,000 miles, but you only are showing one hotel in your tax return. or something like that. They’re going to question, are you really taking commuting from home to that hotel and back as part of your miles? Even if you’re you know, just an investor. I mean, you have to be able to justify those miles. So it’s really, really important that you’re doing that. All right. So for any of you that are just tuning in, I am Dr. Friday, an enrolled agent licensed by the Internal Revenue Service to do taxes and representation. just basically means I have passed all the tests. I’ve been doing this for 32 years this year. So I’ve been at it for a little while. And um, you know, I I find that I totally enjoy doing taxes. It’s always a change. Everyone’s taxes are different. But if you are in a situation where you don’t know what or how to get forward, maybe you haven’t filed for a number of years, maybe you’ve got a a lot of love letters coming. from the IRS, then we’re the people you might want to give a call. At least give us the option to see if we can help you. If you have a question now, you can join the radio show. It is 615 737-9986. Take your call. You don’t have to give us a real name or anything. 615-737-9986. There really are no I know a lot of times people are afraid I’m gonna sound really stupid on the radio. Well, hey guys, I’ve been doing this for what, 18 years or something. Um, I’m pretty sure I’ve said some pretty silly things. But seriously, there’s only, you know, if you don’t ask a question, you’re never gonna really know the answer. So give us a call, we’ll take our last break. We’ll be right back with the Dr. Friday show. Alrighty, we are back to the show. We’ve got two people that have called so let’s start with Jerry from Nashville and then we’ll go on to Greg. Hey Jerry, what’s happening?

Caller

36:14

How you doing doc?

Dr. Friday

36:16

I’m good.

Caller

36:17

Hey, great. Uh question for you. As an airline pilot, say I live in Nashville but based in Dallas. If I have a dedicated car to drive to the airport Can I deduct those miles and the expense of travel to Dallas to begin my job?

Dr. Friday

36:38

Uh there’s some software, I do a couple of different pilots and so when you go from here but let’s say your your flight is out of Dallas is what you’re saying. So if you’re staying in Nashville and you have to go to Dallas to get onto your first flight There is some allowable transfer in there, but in theory, the IRS is gonna say you driving from here to the Nashville Airport is your commute

Caller

37:02

Oh, but then the expense of per say you purchase a ticket to go to work.

Dr. Friday

37:08

Right. You would be able to go most likely from from Nashville to Dallas to have to catch your flight. They would allow that

Caller

37:15

Oh I see.

Dr. Friday

37:16

Just the drive would not be allowed because you’re going from the airport. Once you’re at the airport, you’re theoretically having to get to Dallas and they would allow that commute Okay. Or they can file the cost. All right.

Caller

37:29

That’s that’s good good information to have. Thank you very much, man.

Dr. Friday

37:32

Thanks, buddy. All right, let’s go to number two, which is Greg. Hey Greg, what’s happening?

Caller

37:38

Oh not much. Enjoying the sunshine and no eyes.

Dr. Friday

37:42

I like that.

Caller

37:44

Quick question, we have a small construction company and we run two trucks. I run one and my helper runs it. Construction trucks, loaded ladder racks and all that. Um now my location I do have a active home office at my house that’s got desks and all that in there Um the shop is beside our property. We’re on Acreage, but I walk to that shop and he pulls up to that shop and we take off. Are we allowed to claim mileage from there to the first stop? I’m a little clear. You would have asked for a year.

Dr. Friday

38:16

Yes, and and you would, Greg. You are a little different because your home office or your shop is your first place of business. That’s where you’re stocking up on all your supplies, you’re you’re taking your phone calls, whatever. Everything is starting there. So that is point one. So from there to your first client would be your starting of the meter. Yes

Caller

38:37

Yes. And they don’t like even so we try to keep a good log. You know that if you’ve done any kind of audits with people. It is so tough like Did he stop at the store to get a soda or what? I I can’t keep up with all that, you know, and the mileage IQ goes so far, I mean it’s gotta be a little grace with some of this. You know, we try real hard to keep up with with everything but it is hard when you some pl times we see thirty clients a day. And that truck is active from day one. It’d be nice to have it where you could just Just do your mileage at the end of the year and never have to keep a truck. We keep a dump.

Dr. Friday

39:08

Yeah, that would be sweet, but you could see how many people would cheat. But in your case, since your employee or your helper has a truck when he leaves the office and goes back home, those miles would be his commuting.

Caller

39:21

Yeah he doesn’t we don’t allow him to take trucks home.

Dr. Friday

39:24

We just construction guys do. Okay Um, so yeah, it sounds like you actually have a little cleaner because a lot of times they do allow them to take them home and that’s when it starts getting more because How do we and then they also have a gas card which makes it even harder because how do we know you filled it up to go home, not for business? So It is a it is a very difficult uh thing, but uh the best thing is if in your case would be always tracking a customer calendar so you could actually show all the trips that would have been there. So I have found most of the time if they’re darn consistent. the auditors are much more open than if there’s a lot of blank holes when people do their schedules.

Caller

40:04

Oh I understand. Yeah, I appreciate that. Yeah it’s it’s tough as a business owner trying

Dr. Friday

40:12

It is and that that’s where mileage IQ and stuff has helped, but I agree with you there’s still a lot of work that has to be done for an employer to make sure that it’s meeting compliance.

Caller

40:22

And and and I have had a friend that just said, Forget it, I’m not gonna claim any mileage because I guess he got audited and he was like, I’m just done, I’m just gonna run. I can’t keep up with you know, I went two point eight miles to the next house. You know.

Dr. Friday

40:34

Yeah. But that’s huge because in your life, I mean, I I’m assuming if you’re seeing twenty, thirty people, even if they’re all fairly close together, you’re talking at seventy cents a mile, you know, I mean that’s a lot of money that you’re leaving off the table. By just saying, hey, you know what? I don’t want to have to deal with the IRS. I get that hole, I don’t want to deal with the IRS. Most of us don’t. But if nothing else Play it on the safe side, you know. Hey, you know what? I’m gonna my my car had sixty thousand miles and I’m gonna be able to easily justify forty-five of it You know, at least take what you can easily justify. If you don’t want to push the bucket, that’s fine, but I think he’s probably leave you a lot of money on the table.

Caller

41:14

Yeah, no, we we do that because uh we keep our vehicles until they’re plumb or out. So yeah, doing the what you were speaking about earlier, people buying these hot dollar vehicles and writing them off. Yeah, it’s great that first year to think about it, but that next year you’re kinda in trouble. And I’ll be honest with you, I don’t want to keep up with oil change and all that to collect that money, I’d rather do the mileage and take the 70 cents instead of keeping all the receipts for fuel. Did they put fuel in the you know lawnmower or what? I I I have no clue what all these guys are doing. You know, but I appreciate your time, ma’am. Have a wonderful weekend.

Dr. Friday

41:42

You too. Thanks, Greg, for listening. Appreciate it. All right, let’s see if we can hit Elizabeth really quick. Hey Liz, what can I do for you?

Caller

41:50

Uh just wanted to tell you uh enjoy your show, listen to it every weekend, and thank you for taking my call. I have two questions The first one is do you have to turn it in on income tax if you give your uh child, grandchild like three, four thousand dollars to buy a vehicle?

Dr. Friday

42:11

No ma’am. That’s not sub has to be turned in and it’s underneath the gifting rules so nothing has to be reported.

Caller

42:18

Okay. The second question is do I have to file I don’t file taxes because I’m on social security and low income Uh, but do I have to file taxes on like twenty-five thousand dollars uh interest on a savings account?

Dr. Friday

42:35

If you actually earn twenty-five thousand dollars that would make you taxable yes I’m sorry two thousand five hundred oh twenty five thousand big difference there yeah twenty five hundred dollars would not make you a taxable situation No.

Caller

42:51

Thank you so much. You have a wonderful day. Appreciate you.

Dr. Friday

42:54

Bye. All right. Well, that was great. I love it when you guys participate. Makes my show go so much faster. We’re going to get down to the nitty-gritty. So if you would like to call our office on Monday Sunday morning you can phone number is six one five three six seven zero eight one nine six one five three six seven zero eight one nine and you can can also email friday at drfriday.com. Remember when you’re working on your taxes or someone else is helping you with your taxes, hopefully you’re using a tax tax person and enrolled agent. Um, but you know, make sure that the information you’re putting together is to the best of your ability. That’s what the tax law says. Um and I get it sometimes Sometimes it’s it’s frustrating and nobody likes to go through audits. Um no matter how good your paperwork is, you just it’s just a lot of time that has to go into it. So keeping track, making sure you’ve got everything saved and put into the proper files so that way if some question comes up on your tax return, then you’re able to turn around and respond to that instead of having to open up a full audit. Because if you don’t respond, what’s going to happen is the IRS is going to disallow everything and then it is going to be a full audit because you’re going to have to justify every expense and you know more and more I see that I will be honest a lot of times I see now we have paper audits and a lot of times they’ll come back and they basically say um here’s what we’re we’re auditing and it’s mostly a schedule C or a schedule E. We’ve disallowed all expenses. Please justify the expenses you took on your tax return. And now you have to send in all of those details. So easiest way to do that is obviously when you’re preparing your tax Make sure you’ve saved those documentations, scanned in the files. Um we do have to have receipts that justify the expenses, give or take, unless it’s $75 or less for meals and entertainment, but otherwise we can’t really take any entertainment only meals. Um so if you’re taking people out for entertainment purposes, remember that isn’t a tax deduction for a business right now. But meals would be a tax deduction so again if you’re interested or need help or just if you if we can lead you to someone else in your area because we’re in the Brentwood area maybe it’s a little too far away you can give us a call 615 367 0819 615 367 0819. You can also email Friday at drfriday.com again Friday at drfriday.com. If you don’t have any idea who I am or if you’re a returning customer and you have not yet got your calendar or got um you put onto my calendar I should say say you can check the website at drfriday.com the calendar is there and or you can call the office and we’ll make sure there’s an opening for you. If you’re a new client, we usually like to try to do an intake. So make sure Make sure that we are a good fit because you know your tax person should be able to handle the kind of taxes that you’re doing. Make sure that you feel comfortable because there’s gonna be a lot of personal information going between you when you’re tax person. And if you don’t have that comfort zone, you’re probably not dealing with the right tax person. So if you need to find a new tax person, even if we’re not that person, we might be able to lead you in the right direction. Again, the phone number in the office 615-367-0819. Or you can email Friday at drfriday.com or check out drfriday.com. Hope you guys have an awesome Saturday. Cop you later