Mar 5, 2024
Dr. Friday Radio Show – March 2, 2024
In this episode of the Dr. Friday Show, Dr. Friday covers a wide range of tax-related topics, from individual tax situations to business tax considerations. She provides valuable insights and advice for listeners looking to navigate the complex world of taxes.
Topics covered:
* Roth conversions and their tax implications
* Taxation of Social Security benefits
* Tax considerations for surviving spouses and dependents
* Life insurance payouts and potential taxability
* Business losses and the IRS's expectations for profitability
* Importance of filing tax returns for partnerships and S corporations
* GoFundMe accounts and their tax implications
* 1099K reporting for Venmo transactions
* Adjusting W-4 withholdings to avoid tax surprises
Transcript
00:00:00.000 --> 00:00:06.560No, no, no, she's not a medical doctor, but she can sure cure your tax problems or your00:00:06.560 --> 00:00:07.560financial woes.00:00:07.560 --> 00:00:09.800She's the how-to girl.00:00:09.800 --> 00:00:10.800It's the Dr. Friday Show.00:00:10.800 --> 00:00:19.800If you have a question for Dr. Friday, call her now, 737-WWTN.00:00:19.800 --> 00:00:23.760That's 737-9986.00:00:23.760 --> 00:00:26.760So here's your host, financial counselor and tax consultant, Dr. Friday.00:00:26.760 --> 00:00:32.280All righty, I'm Dr. Friday.00:00:32.280 --> 00:00:33.280We are live.00:00:33.280 --> 00:00:44.320You can reach us here at 615-737-9986, 615-737-9986, taking your calls, talking about taxes.00:00:44.320 --> 00:00:47.280Many of you may be working on your taxes this weekend.00:00:47.280 --> 00:00:50.320I know I'm in the process of working on taxes.00:00:50.320 --> 00:00:54.640You may actually be running into some things that you're thinking about for 2024.00:00:54.640 --> 00:00:56.040I mean, things are always changing.00:00:56.040 --> 00:00:58.800A lot of people are thinking about Roth conversions.00:00:58.800 --> 00:01:03.480I am not a financial advisor, so I do not get into that aspect, other than the fact00:01:03.480 --> 00:01:07.200that if you do a conversion, you will end up paying taxes.00:01:07.200 --> 00:01:10.200So you may want to talk to your tax person when you're doing that.00:01:10.200 --> 00:01:15.240We do a lot of planning when we're usually doing tax prep because what you have happening,00:01:15.240 --> 00:01:18.600you know, sometimes people are thinking, "Well, maybe I'll sell a house or I'll do this,"00:01:18.600 --> 00:01:26.000and all those kinds of things not only affect your actual taxes that are due, but your IRMA,00:01:26.000 --> 00:01:28.600if you're in and receiving Medicare.00:01:28.600 --> 00:01:33.680So it's very important to take into account not only what you're going to be paying in00:01:33.680 --> 00:01:38.480actual ordinary or capital gains tax, but make sure that you talk about the IRMA as00:01:38.480 --> 00:01:43.280well because we have found over the years, many times people take into account, you know,00:01:43.280 --> 00:01:44.760how much am I going to pay in capital gains?00:01:44.760 --> 00:01:45.760I already calculated that.00:01:45.760 --> 00:01:49.800And then they get the love letter from Medicare that says, "Hey, we've changed the amount00:01:49.800 --> 00:01:54.500we're taking from you because this situation is happening," right?00:01:54.500 --> 00:01:57.300Whatever it might be, but maybe you sold something, your income went up.00:01:57.300 --> 00:02:00.100Now, I do understand there is a one-time exclusion.00:02:00.100 --> 00:02:04.060I'm not going to claim I'm an expert at it, but I'm sure you could talk to someone over00:02:04.060 --> 00:02:08.120down at Medicare or Social Security that could help you with it.00:02:08.120 --> 00:02:12.640But it's very important that you consider how all that's going to work because when00:02:12.640 --> 00:02:17.380you decide to take large distributions, again, I have a number of clients that are really00:02:17.380 --> 00:02:23.520trying to get more money into their Roth IRAs, reducing their traditional IRAs while taxes00:02:23.520 --> 00:02:25.320are still low.00:02:25.320 --> 00:02:29.760There is absolutely no guarantee that we know in two years that taxes will go up.00:02:29.760 --> 00:02:33.640But we assume that is what the tax law says at this point.00:02:33.640 --> 00:02:36.240Many of us never expected taxes to go down.00:02:36.240 --> 00:02:38.840So, you know, no one has a magic ball.00:02:38.840 --> 00:02:42.480But if you're actually a person that is working towards that, then, you know, we have these00:02:42.480 --> 00:02:44.800expectations to do that.00:02:44.800 --> 00:02:48.040All right, let's hit Alan in Spring Hill real quick.00:02:48.040 --> 00:02:49.680I think you have multitask there.00:02:49.680 --> 00:02:50.680Thanks, boss.00:02:50.680 --> 00:02:52.240Hey, Alan, what can I do for you?00:02:52.240 --> 00:02:55.000Hey, I have a question.00:02:55.000 --> 00:02:58.040My wife and I are both retired now.00:02:58.040 --> 00:03:08.280And I know that if you keep or you can confirm it, if you keep your income under 32,000,00:03:08.280 --> 00:03:13.000your Social Security won't be taxed if you're filing, you know, married couple.00:03:13.000 --> 00:03:14.000Is that true?00:03:14.000 --> 00:03:15.000Right.00:03:15.000 --> 00:03:19.160Well, the provisional tax code takes half of your Social Security as part of that.00:03:19.160 --> 00:03:24.960So that is true, the 32K, but half of that is Social Security or half of your Social00:03:24.960 --> 00:03:31.560so if you make $20,000 a year, 10 of that 32 would come from your Social Security.00:03:31.560 --> 00:03:36.760Okay, so here's the situation.00:03:36.760 --> 00:03:39.840And I'm not sure I understand what you just said there.00:03:39.840 --> 00:03:42.800Go ahead and give me your numbers maybe or roughly.00:03:42.800 --> 00:03:45.880You don't have to give me exact.00:03:45.880 --> 00:03:53.720So I'm looking at possibly taking some funds from my wife's IRA.00:03:53.720 --> 00:04:00.320Okay, our only income is some interest income that will be about $11,000.00:04:00.320 --> 00:04:05.400Okay, how much do you guys get in Social Security?00:04:05.400 --> 00:04:09.360About 48,000 a year.00:04:09.360 --> 00:04:17.680All right, so theoretically, you're already over the zero percent capital gain.00:04:17.680 --> 00:04:23.720I mean, the zero tax for Social Security because the provisional tax code says, take all of00:04:23.720 --> 00:04:26.160your Social Security divided in half.00:04:26.160 --> 00:04:30.200So that would be 48 divided in half is 24,000, right?00:04:30.200 --> 00:04:34.560And then add all of your other income, in this case, 11,000.00:04:34.560 --> 00:04:40.560So we would be at $35,000 income before you do anything else.00:04:40.560 --> 00:04:46.840So you are most likely going to have at least some, not all, because they can only tax up00:04:46.840 --> 00:04:50.280to 85% of your Social Security.00:04:50.280 --> 00:04:54.080I know it sounds silly, but they can take 85% of it in tax.00:04:54.080 --> 00:04:57.480At this point, you'd probably only be at like 20% or even less.00:04:57.480 --> 00:05:00.440It's progressive a little bit.00:05:00.440 --> 00:05:06.160But you're already going to be over that 32K before you take any other distributions.00:05:06.160 --> 00:05:10.000So, okay, I understand that.00:05:10.000 --> 00:05:18.480So if I take, say, another 12 from the IRA, then I'll be at what, 47?00:05:18.480 --> 00:05:21.760Yeah, well, yeah, you'd be at 47.00:05:21.760 --> 00:05:26.840And then of course, as far as, I mean, not all 24.00:05:26.840 --> 00:05:32.360So probably about, to be honest, probably about 15, 11, and 12, that's seven, eight,00:05:32.360 --> 00:05:33.360about 38.00:05:33.360 --> 00:05:34.360And what is it about?00:05:34.360 --> 00:05:36.320Almost, are you guys over 65 or under?00:05:36.320 --> 00:05:37.960We are over 65.00:05:37.960 --> 00:05:40.240Okay, so you almost have what, 31?00:05:40.240 --> 0…