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This week, Dr. Friday breaks down the Trump account election (Form 4547) and what it means for parents, grandparents, and employers. She also revisits tips and overtime reporting, the new car loan interest deduction, and the recordkeeping needed for basis and mileage. The show closes with guidance on selecting ethical preparers and staying ahead of 2025 filing changes.
Summary Points
- Form 4547 election for the Trump account can apply to children 17 and under; contributions are optional and may come from parents, grandparents, or employers.
- Tips and overtime totals must come from employers (box 14 or a statement); do not guess amounts when filing.
- New car loan interest deduction requires a new vehicle, lien-secured loan, VIN/FIN, US final assembly, and purchase after 12/31/2024; income phaseouts apply.
- Cost basis matters; without records the IRS can treat basis as zero.
- Mileage and expense deductions require logs and generally apply only to self-employed/1099 income, not W-2 wages.
- Red flags: preparers who will not sign the return or charge a percentage of the refund.
Episode FAQ
Q: What is the Trump account and how do I elect it?
A: It is a child savings account elected on Form 4547 with the 2025 return; participation is optional and contributions are not required every year.
Q: What do I need for the car loan interest deduction?
A: A qualified new vehicle, lien-secured loan, VIN/FIN, US assembly, and proof of interest paid for that year.
Q: Can I deduct mileage if I am a W-2 employee?
A: No. Mileage deductions require business use and logs and generally apply to self-employed or 1099 work.
Transcript
Hey, I’m Dr. Friday, and the doctor is in the house. We are here on this cold Saturday. Good day to be inside, not have to worry about being outside. May mean that many of you aren’t really listening today because you’re not in your cars going all over the place like you usually are.
But today we’re going to talk a little bit about a call. I had a phone call earlier this week from another tax person. that I worked really well with. And Donna, she she also does taxes.
But anyways, we were talking about the Trump account and the election on the 4547. and who should be filing it. And I’ll be honest, when that first came out, I was thinking it was only for parents that had had a child in the year of 2025.
And then it was going to be for those three years. Not not taking a bigger picture or looking at a bigger picture. And so I want to talk a little bit about how this is really going to affect anyone that has a child 18 and under but I should let’s just say seventeen under because in the year which they turn eighteen it becomes um an adult as far as for this account. So if you have 13, 14 year olds and maybe you’re thinking, I would love to have some sort of account, not a 529 plan, because that sometimes limits Und where uh the school or what they can do.
They cannot have IRAs because they’re not working yet. So this Trump account is really A a great thing uh because for a lot of my parents who are looking for find out or even grandparents or employers that are looking to put up to twenty five hundred dollars bonus into their uh employees children’s accounts, this all works.
You cannot be an employee. The employee can’t do it. The employer could do it or grandparents or you as the parent can put it in there But anyways, up to $5,000 a year. If the child was born in 2025, 26, 27, 28, they’re going to add another $1,000. to this. But I mean this is huge because think about in 18, well in some cases 18 years, there’s also a couple other organizations Dill is gifting a supercharge additional funds to the account.
They’re putting $250 for the first 25 million children. And also another company was doing it as well. But there’s a couple others. So if you have a child, but they’re basically saying that if you contribute that $5,000 for the full 18 years or 17 years.
Uh plus that 1,000. When that child hits 18, they would have $377,000. If they continue to let it grow and work, they would have um an additional um two million dollars by the time they’re 65.
If you just put zero contribution just let that one thousand dollars grow over their next um 10 years from when it happens, that would be like $17,000. I’m not a financial planner.
I’m not telling you I’m I’m not gonna really take calls on how that’s all crunching or working because that’s not my expertise. Expertise. But to me, it is going to be taxable when the children take the money out, unless they use some of it for first-time home buyers, because there’s a exclusion you only have to pay tax ordinary tax i should say on that you don’t have the penalty involved there is some college credits you can get out um uh that you wouldn’t have to pay the penalty on um but ordinary income tax. So this is going to be uh interesting because it is not tax Deferred, yet when the kids take the money out, it is taxed.
So in theory, there would be some double taxation in my mind, unless I’m not fully understanding how this works It looks like the employer, if they put in the $2,500, that is deferred. But the money that we’re putting in as parents or grandparents or or something like that.
As far as I know, that is not deferred, but yet it would become this is being treated like an IRA. So there’s still some moving parts. I have a question on one of it would be is if I’m putting after tax dollars in, is there a way to track that so that
We’re not paying tax on that original contribution at least, not so much the growth, because the growth would be taxed possibly or not, but uh these are not Roths, these are traditional So this is a wonderful thing because normally we can’t start doing anything for kids until they actually get the first job. And if you haven’t gotten your first job yet, and normally seven or eight-year-olds or four-year-olds
Do not have jobs. Um, so this would be a way of adding money up until they really do get their job, and then Starting an actual Roth or an IRA, whatever you you find to be the best thing for them.
And then when they’re working, contributing with that. This will stay in the child’s name. The parents don’t have the ability to spend this money. It is in the children’s name. This is supposed to be a way of helping that generation.
So think about 15, 20 years from now All those kids that might have been fortunate enough to have, instead of buying 15 Xboxes over their lifetime and other things, putting the money into this where they’ll act actually get a really good start, maybe even have money to use to pay for their own college or to start their own businesses. This would be a serious start for that generation um that maybe right now they wouldn’t have that kind of start because normally, let’s be honest, the the parents wouldn’t be sitting on those funds, especially if there’s multiple children. The form of 4547 has to be filed with your 2025 tax return.
You have to elect to have that done. So whoever’s doing your taxes, if you know this needs to be part of that conversation, we need to have the conversation. Are you going to be doing this?
Do you want to have this account set up? I don’t necessarily unless somebody that’s listening and you can call in 615-737-9986. 615-737-9986. If you have a little bit more knowledge, if
If you’ve read something that might not be a pro, I’m not seeing anything because I mean there’s no mandate. You don’t have to contribute to this. You don’t have to do it every year
But again, if you happen to have an employer that might want to help with that instead of bonusing the money some other way that might be taxed, this would be not taxed. Maybe you have grandparents that are putting money into something or want to put money in or they’ve started a savings account for the children.
Maybe this would be a great way for for them to help. It doesn’t always have to be um the parents, but you know, I mean obviously it’s designed to help this next generation get a leg up.
So it’s called the Trump account. You do have to elect to be in it. Not every child is going to fit in it and not everyone’s Going to qualify, I guess, for it. Um, there I’m sure there’s limitations like everything else in life, but this is something you need to be bringing up with your tax person to make sure that they understand, you understand. what you have and where it’s coming and all that so that you make sure you have the right information going through Uh so that way, sorry guys, you hear the the dogs in the back there, but um but uh anyways um It’s a it’s a snow day. I couldn’t put them outside.
So um we just need to make sure that if you are filing your own taxes or you have your own tax situation that you have the ability to take and put that all um in the in the knowledge of what you have or who you have and all of that. So just make sure that we have that going forward and that you don’t forget if this is something you’re interested in in having this conversation with um your tax person because it’s kind of important all right so now let’s talk about um a couple of the other things that are getting ready we’re gonna get ready to file your 20
2025 taxes. We some people call it the 2026 tax season. Either way, you want to make sure direct deposit Is going to be basically something you probably want to look into. You’re going to want to make sure that you have reviewed some of the new tax laws, right?
Because we have a number of new tax laws that may affect you. I’ve talked to a couple. people this week in fact and some of them were all talking about um the uh the interest on new cars like oh I brought a new car
You know, and that’s perfect, you know. I mean, but does it apply to the situation? Are you able to do something with it? I don’t know because you have to have the FIN number, there’s information you have to understand, but you want to make
Make sure you have that information when you go in and get your taxes done because that kind of information is going to be key when it comes time to making sure that you’re not leaving Anything on the table. Another huge tax question.
We covered this last Saturday, but I want to again make sure you understand that nothing on your W-2s are going to change when it comes to overtime or tips. Nothing. You’re going to have the same withholdings.
You’ll be reporting the same information. Everything is going to be going through The secret is when you file your 2025 taxes, you will be asked, how many hours of overtime did you have?
What was just the overtime? Not the rate, but just the overtime. Um, and then also tips. How much did you receive and tips? And then based on your income and everything, you will get potentially some money back or applied to the balance due.
So Really important to make sure you’re watching out for all of this kind of situation because let’s just be honest, it isn’t something that we’re usually asked. A lot of employers were not set up, even though because this passed part way through 20 2025, a lot of them were thinking, oh, I didn’t have to really get ready for this until 26, but no, they backdated it to 2025.
And so having it in 2025 means that employers are really scrambling in some cases. to get that uh information. I know in our office we’ve worked pretty hard, but um you know I mean obviously in some cases people may not have been even reporting it as overtime. I’ve talked to a lot of employers where they just put in the total amount that they want to pay the kid people the the employers or employees I should say.
So you know this person worked you know 40 regular and 15 overtime they add it all together and they just put that on a sub and that’s all they did. Now many of them still tracked it manually.
So this year for 2025 the IRS says hey we’re not gonna really um penalize anybody because it was set up and it was went backwards. But you as an employer are responsible for providing those numbers to the employees.
It doesn’t have to be in box 14. It does need to be on a sheet of paper or something that you can provide to them because if you as an employee are just looking at your overtime on your last pay stub, you are going to be wrong when it comes to the amount you’re putting in there unless. you’re only taking a third of it. Now if you want to do that, you would be okay because a third of whatever that overtime dollar amount is is what you would be credited for. So you need to make sure that you’re looking and doing all of that correctly because if your employer, or maybe you’re not talking to your employer
You have your if you have your final pay stub and you do have overtime or tips, you just need to make sure that your number is going to match what might be being turned in by your employer. And I know many times people are like, well, my employer is not talking to me.
I left on a bad situation. I can’t get my W-2. Um, and if you don’t have your final pay stub, you’re gonna have a very difficult time justifying the number you put on if you don’t have something in box fourteen and your employer has not provided you a number because the information you’re going to have would most likely then be something that you’ve just kind of guessed at. And that’s not one of those categories you want to guess at. So Again, if you want to join the show, you can 615-737-9986-615-737-9986.
We’ll take a break. We’ll get back to some phone calls and some more about coming up tax issues. after this break. We’ll be right back. All right. So for all of my digital currency people, this was in 2024 too, but they are pushing the 1099 which is the disposal of your currency. You need to make sure that you are filing all of that properly. What that means who sent it, who’s getting it, what all that means. So bottom line is when you have it, you have to have when you purchased it, when you sold it, what type of currency when you did the stable coin uh stabling your coins if you converted them into multiple coins because that seems to be the biggest misconception I have when talking to people about digital Digital currency, a lot of times they’ll say, Well, have you sold any of your digital currency? And they’ll say, No, no, I I didn’t sell anything.
I I um I only changed types of coins Well, anyone listening probably understands that that in most cases would mean that you sold your currency. So if you went bitcoin to lithium or lithium to some other, um, that is selling It doesn’t mean you have to sell it back to US dollars.
It just means that you have converted one type of coin for another. And at that point, you need to be reporting gains and or losses. And some of those losses may not be reportable or acceptable depending on the information. information you have and keeping track of the proper digital um what you know I guess the easiest way tracking your your cost basis, when you purchased, how long you’ve owned it, all of that. Because in many cases, it’s it’s not being tracked, you know?
So you have to have the ability to track your current If you don’t, your cost basis is zero. That’s what the IRS has ruled. So if you can’t prove that you purchased this because you purchased it for different types of conversions back
10 years ago and you weren’t tracking it because you thought you were going to be kind of off grid unless you have ability to personally recreate And follow that trail and all those and then making sure you reported the gains as they came through. Because I again I’ve had many people that have been with uh digital currency for 10-15 years but for years they were not reporting it.
So any growth, anything they had, you have to go back to the original purchase. In some cases they won. They were gamers and they they actually won the money through doing different things.
So there was no basis. then the then it became valuable and then going etc etc but unless that was reported and that gain was reported you are not able to then say, well, here’s my basis as of today.
That’d be kind of like getting a step up in basis before you even pass away. Doesn’t work that way. So you want to make sure that you have all of your digital currency. You want to make sure you’re doing the 1090 and following that through. The salt tax deduction, I said, should say salt deduction. We have that on our schedule A. We would basically consider that where we have our our state income tax, um, you know, your property taxes, um, in some cases personality taxes.
We don’t get we don’t have a personality tax in Tennessee from the purpose of tax deductions because we don’t have a state income tax. So all of those. So we have sales tax and property tax.
That’s the two things we actually get to deduct. We cannot deduct our car titles or our car fees, our titling, um, because we don’t have a state tax. Therefore, you’re not paying something that is actually deductible.
That’s just a fee that you’re paying out there so again very important but it has gone up so we now have 40 000 per return which means if married finally separately you would each get 20 um otherwise 40 it was 10 so This is huge, especially for people that might have state income tax that might be listening. I have people in California, I have people in New York.
Those are the two larger, higher incomes. Um, and in both cases, they were leaving a lot of money. I I’ve told you about my brother, he pays about sixteen thousand a year in just state income tax besides his property taxes.
Um and he was only allowed to get I get 10,000 of it. So he was leaving quite a bit of money on the table. Now we have that. Um the only thing is that there is an adjustable income overall of 500,000.
So if you’re in the higher income brackets, you may have limitations, but we’ve had limitations. on the schedule A anyways. So that’s that’s an important thing for making sure you have the ability to do what you knew when you’re doing it.
We also have, of course, the $6,000 per a person over the age of six. Over the age of 65, 6,000 per person that you’ll be able to have. I believe that’s falling on like line 13. It’s a separate deduction.
Initially we all thought it was going to be added to the standard or itemized deduction. It is a separate line that’s kicking in. for that so we can track that separately so you’ll have that 12,000 and then whatever your standard or itemized deduction might be will still be whatever it is.
You do get that extra 2,000 if you’re single over the age of 65 or 1700 if you’re married each uh to to be able to um get that additional uh credit on your on your itemization or standard deduction. Um well they wouldn’t Anyhow, so if you have questions, you can certainly join us today, 615-737-9986, 615-737.
Taking your calls, talking about all the different things we need to talk about. 2025, the standard deduction. In 2025 is 70 cents per mile, 14 for charity, 21 for military and or mil medical.
That’s actually down a little bit from uh 2020. 23, but 24 is the same. So um, but 70 cents. It’s getting so important to make sure that you are tracking your miles correctly. Every mile is becoming a huge I mean really think about it 70 cents out of every dollar that you spend on your car will be a tax deduction for every mile. Um so You need to make sure you’re using something.
I use mileage IQ, not attached to it. I know online QuickBooks also has a mileage guide that you can use anywhere because this is also more and more money going out means higher the higher audits likely to be on that category Not worried about it if you have a proper log.
If you don’t have a proper log, then you should probably be a little worried because you need to be able to justify the deduction And walking in and saying that I I think I drove about 25,000 miles isn’t going to justify anything to the IRS other than totally disallowing you from that that they will completely disallow. So don’t do that.
Make sure you’re tracking your information, make sure you know what you have going, and then make sure you can go from there and and track what you need to track in doing uh the basic expense for all of those trackings. And remember again, employees, people with W-2s cannot deduct Miles.
We have no place on the tax return to deduct it against a W-2. Even if your W-2 basically says that, you know, you’re driving 15,000 miles a year. It’s built into your wage. It is not a deduction. for you. It is just part of your wage. Therefore you have to do what you have to do, but it’s not going to be something that you’re going to deduct off the off of it and same thing for home offices.
Uh home office is great for anyone that has a 1099 or is self-employed, but anybody that isn’t employee and you’re working from home and you’re like well I’m having to use my electricity and I have to set up an office and I have space that I having to use for my employer, the IRS has basically come down and said, yes, you do, but you’re not having to drive every day to go to work.
Therefore, they’re not considering any type of home office expense. for those employees. So again, all of that should be built into your wage. There is no deduction. So anybody has a W to and that goes for my truckers or any of them you don’t have the per diem you don’t have any of the um uh overnight stays and things you might have been able to to take if you were a 1099 as a W-2, you will be only taking what is there and then itemizing your usual mortgage interest, property taxes. and charitable deductions are the major ones that most people itemize.
So just making sure that we have, you know, that information. information because that is and again you have to have quite a bit of money to actually itemize. So um you know how do I you know inform know, how do I do it or you know, when should I do it? And anytime I have a new client, I always double check it. But most of the time, you know, if you’re a single guy and you got less than
$15,000 in interest, property tax, and charity, you’re probably not going to be itemizing. Um but if you’ve got 25, yeah, you’re gonna be itemizing So, you know, making sure that you understand how that works and what you’re gonna do and when you’re going to do it.
So new car loan interest deduction, which vehicles are you buying and qualifying? So far, the average car price in twenty 2026, they’re saying is averaging about 50 grand, uh, five-year loan, 232.
Um, so what the biggest thing on that is it has to be assembled here in the United States And it has to be on a loan. It can’t be a lease, needs to be a new vehicle, and it needs to um have an you know have to be paying interest.
Most loans would be for interest, but you know, some some have zero percent interest. interest and then you will need to provide that thin uh thin a fin number I believe is f I n number I’m sorry vin number fin number uh for the vehicle so that you have the ability to you know take that off some are as high as 70 seven percent they’re saying so this should give you i believe uh up to like ten or twelve thousand dollars in interest so it is a viable usable number you just need to make sure that it’s something that is going to apply for you. Don’t just go buy a car because they’re going to pay the interest or give you a deduction for the interest. Keep in mind, whenever you hear the word deduction, that is not dollar for dollar, right?
It I mean so if you if you’re in the twenty percent tax deduction and you spend ten thousand dollars in interest, you will get a deduction for two thousand dollars, which means you spent eight thousand dollars that you’re not getting any credit for. So it is not a dollar-for-dollar situation.
So never go into debt just to try to find a tax deduction. Never ever a good plan. Seriously, never a good plan. So if you want to join the show, you can 615-737-9986. 737986 is the number here.
Hopefully you guys are all staying nice and warm. We have a pretty snowy uh day outside, at least here in Spring Hill. It is Um definitely got some snow on the ground. So we’re gonna follow up, but we’re gonna take our second break here.
If you guys want to join the show, or you can also email Friday at drfriday. com Um we can get that on the show as well. We’ll be right back with the Dr. Friday show. Alrighty, we are back here live in studio.
We got Andy on the line. I think he held through the break, which I appreciate. What can I do for you, sweetie? Okay, no problem. That happens. Associated with all the craziness. Well, and if you want to call back, you can.
Otherwise, I will keep it going So I did want to talk a little bit about the I I got an email and someone asked, what exactly can they deduct on the interest from their car? So let me get a little bit more detail first.
You have to purchase the car after December 31st, 2024. So basically as of January 1st of 25. It has to have a lien secured against that loan You cannot have refinanced or done some sort of jerry rigging to get it.
It has to be secured against that car. And it must include a valid identification number, a legitimate lender or dealership, and the interest is paid during that year. You So some cases
Sometimes people will accumulate interest and if they pay it all off, they’ll forgive it. It has to have been paid and applied for that year. In fact, you should have a form. That would show what your balance and how much interest you have.
It has to have been manufactured and mainly used only on public streets, two wheels or more, cars, minivans, SUVs. Does not allow for RVs or campers. The gross weight must be under 14,000 pounds, and it must be new
Used cars are not qualified for this. It must have an original owner. The vehicle is primarily used for personal use. And the income uh and you must still meet the income requirements.
You will get which is $100,000 for a single person, $200,000 for a married couple, up to $10,000 interest. And then it will work its way out. So if you have $105,000, you might only get $5,000 of interest deductible.
So well give a little wiggle room there but that hopefully will make it work again the whole secret is new car you have to have a lender that is actually showing this interest paid And then the ability to go from there. And it must, thank you, Donna, and the fin must start with one, four, or five.
There you go. See this? Well, I couldn’t do the show without Donna. I’ll let you guys know that. She’s a sweetheart. So anyways, one, four, or five, the fin number must have those numbers starting with, right?
Must start with those. So okay, so hopefully that answers the basic questions for most individuals. But if you have more questions, you can certainly um Email us or give us a call Monday and uh make sure that you have already set up your tax appointments.
Let’s just be honest. If you haven’t set up your tax appointments you’re probably going to be in trouble. You really do need to make sure that you have if you you’re in the Mount Juliet area, you might want to just call Donna Blackwell.
I’m just being honest She’s awesome. We’ve known each other, gosh, I don’t even want to say how many years now. Uh Mount Juliet Taxes, awesome. She’s an EA just like me. So that means she’s totally knowledgeable.
In fact, you can see sometimes she’s more knowledgeable than I am in some of these things. Um, so if you um need to to find someone in the mouth, Julie, because you know I am actually in uh in the Brentwood area.
So that’s how we always make uh Donna, send me the number they should contact you directly at, or how do they make appointments at your place? Just so if they’re up in that area, they might as well call you direct.
So I don’t have to refer them up that way Um, so I can move that in. But if you want, so you know, bottom line, talking about EAs, Donna and I are both enrolled agents, licensed by the Internal Revenue Service to do taxes and representation.
All that means is that we basically um do taxes. That’s all we do. I mean, I’ve been doing it for 30 plus years. I think Donna’s right there behind me. She’s a little younger, but still basically in that same ballpark
And we basically don’t do, you know, we don’t do bookkeeping. We don’t do auditing. Now we have bookkeeping in my office. My brother does. But we make our our income by doing taxes.
That’s what we’ve studied, that’s what we understand, that’s what we’re constantly trying to figure out. Donna was the one that brought up the whole thing on the Trump um Trump credits for kids the Trump accounts.
Um I was still thinking this was only for people that had kids from, you know, 25 through 28. I never even put it out there until she brought it up that, you know, this is awesome for parents that have children.
They’re basically 17 and under and you’re looking for another way to put money aside for your children I doubt that, Donna. 615, if you guys are in Mount Juliet, or maybe you’re looking for someone in the Mount Juliet area.
Enrolled agent, totally important, okay, because if you are not, um, you’re just going to HNR block or one of the others, no disking them because Both Donna and I know people that basically have work for them. But if you’re looking for someone that’s there 24, well, I should say at least 365 days a year, when we do our taxes, we actually stand behind our taxes not give you a phone number to call afterwards. So if you’re in that area and you’re looking for someone, 615-773-2736, that’s Donna’s number 615-773-2736. I don’t know, she may be like me.
Our calendars are getting booked full, but um, you know, if you want to call, see if there’s an opening she’ll be a little closer to you in that area versus coming all the way down to Brentwood. And I will be honest, unless you are um a returning client at this point, we’re pretty much at our max So the advantages of being around for 30 years is that we seem to keep our clients coming back.
The disadvantage is that I’m always fortunate enough to find new people and making sure you guys get qualified help. And that’s something that I really want. Donna does taxes like I do.
She’s always doing her best and So as an enrolled agent, us girls have to stick together. But also seriously, if you are right now, a lot of you are just getting your documents together and make sure you have everything together right make sure hey did you get any of these new tax things where if you have a new baby do you have a social security number for example
Um, do you uh new car? Do you have all the information that’s required? If you have um tips over time This isn’t something that as a tax person, we’re going to magically be able to come up with those numbers.
Those have to come from the employers, which means a letter, the employer great thing would be is if they have it in box 14 But since this was such a change, employers are going to be waived. But we do need a letter from your employer or something that says this is the actual overtime and this is the actual tips that we’re reporting.
It’s so important because if we don’t have that, we can’t just guess it. We have no idea. It does no info on a W4 or W2 for that information. W-2 information is just going to have box one, three, and five, how much earn, box two, four, and six, how much taxes come out.
That’s it really. So box 14 is what we’re looking for, or we’re looking for something that gives us that additional detail. Sometimes if you’ve only worked and you got your final pay stub, you know, we could probably take a third of the overtime and assume that that was pretty much close number, but I would not be overly confident with that. I would much rather have the employer giving us those numbers because they’re going to potentially have to get that back from uh the government, you know, is going to eventually ask for that information.
So we want to make sure we’re matching. The last thing you want is your tax return changed because the IRS says, well, we can’t comply with this because we don’t, you know, we don’t have that same, it’s not matching our information Then we’re in trouble.
We can’t do anything with that if that happens. So all we need to do is just make sure you’ve got all of your information together. If you’re not sure, when you call either of our offices, we have a checkoff list. of what basically is going to be, you know, what you need, how you’re going to make things happen, all of that. And we can run through some of the things you might need to bring in If you’re you can’t really bring too much information to my office, at least, I’ll be honest.
I’d rather you have too much and me say no, that doesn’t apply than coming and then having to make a second appointment And then that’s gonna in many cases cost you more money because we had to do two appointments. Not a good thing.
So make sure you’re organized, make sure everything’s going through, and then you’re in good shape to have that going through and where you’re at. So 6153 7379986 is the number here in the studio.
615-737-9986 is the number here in the studio. Um if you are wanting to um sometimes I have people that call a lot of times and they’re wanting to find out, hey, I do my own taxes, but I really like someone to check them I’m gonna be honest.
Um, we don’t do that very much anymore. We basically end up redoing the taxes and then you can compare and see if it’s the same. But if you’ve done your own taxes and just the reason you want to have someone else do your taxes is because you think you owe too much money.
That that probably isn’t going to save you a lot of money unless you’re unless you’ve never done your taxes. But if nothing’s really changed, I had a gentleman that called this last week and he’s like, well, nothing’s really changed, but now I owe $25,000.
Yet I found out he got married in that last this next year. Last year he was able to claim head of household with his daughter. Now he’s married and he’s doing he’s gonna have to file marry filing separately because his wife um wants the file separately, he couldn’t claim head of household. So right there was a huge change. And after the conversation, yes, we were able to help him, but When people say things don’t change, a lot of times they really have.
Or you’ve ended up changing jobs and you find out that you were claiming married in three for some reason, yet you’re single in zero And you didn’t have enough money come out. And that is often the problem with a lot of us.
So again, want to make sure that you, when you’re this is the perfect time, guys, to look at your tax situation and say, hey. Maybe I need to be claiming single and zero. I don’t care if you’re married with three children, but you’re not having enough tax come out because either your spouse works or you work two jobs and enough money is not coming out of your wages to make it work. then that’s fine. But all you need to do is adjust your withholdings. Now it could be simply just going to your W4 and going into box four and say, you know what, I was short twelve thousand dollars this year
I need an extra $500 for a paycheck every two weeks coming out. So I have that $12,000 coming out of my check. So I don’t have a Huge heart attack when my tax person says I owe money.
Now is the time. Not waiting until April or May, when then you’re three, four months into the year, five months into the year, and then you’re making it or Worse, waiting until October when we finally file the final tax return, and now you’ve got a whole nother year of that same problem.
Even if you’re not filing your taxes, even if you’re saying, hey, you know what, I might not have everything, you need to do a rough workup to make sure that you’re not going to owe $15,000 on October 15th because you extended it. And also that means the next year, most likely, if nothing’s really changing, you need to do the same thing.
Now is the time to make those adjustments. All right, we’re going to take a break and we get back. We’ll do the last part of the show 615-737-9986 is the number here in the studio.
We’ll be right back with the Dr. Friday show. Mike’s hot. Thanks. We’re back here in the studio. And if you have any questions, you can. 615-737-9986 615-737-9986. So for all of you that are sitting here thinking, okay, I gotta get ready.
Tax season’s here. I gotta start planning it. If you’re single and you have $15,000 or more in standard deductions, again, that would be itemizing, which would mean charitable deductions. mortgage interest, property tax, sales tax. Those are the four big things that you would have. If that all exceeds $15,000, you will be itemizing. In a married couple, $30,000. Head of household $22,500.
If you’re over the age of 65, single filers will be $32,000. Married filers would be $33,000. 200 and then obviously not part of the deduction. If you’re 65 and older, for each person on, you will have $6,000 in addition that you’ll be coming in, but it doesn’t affect your standard or itemized deduction.
So it is a separate bonus deduction that’s on the returns. Um we have the loans, tips, and overtime. Again, I just want to make sure you can deduct up to $12,500 of overtime, $25,000.
And tips as long as it matches your W-2, right? It’s important. And if it’s not on your W-2, you need something from your employer. We need to make sure all of this is gonna. to come back um and and pass because you can put any number you want on the tax return and i’m sure there’ll be people out there fraudulently doing tax returns
Or and you know doing something. In fact, there’s a big warning on the IRS website if you look under frauds. Any preparer that basically says, I’m going to take a percentage of whatever I get you back
Or any preparer that’s not willing to put their name on a tax return is not a preparer. I’m just being honest. That’s a fraud. Those people are doing something illegal as far as I’m concerned.
I don’t know if it’s truly. I’m not a police officer, but if you’re paying me to do a tax return, I better well have my name on that tax return. Return to prove that I am the person that put that information on that.
If I’m not willing to put my name on it and it says self-prepare, but yet you went out and had someone else prepare it Then you could have prepared it yourself as far as that’s concerned. You paid somebody that’s not taking any responsibility.
And that is not right Same thing with anybody that’s going to take a percentage of your refund. Well, that’s your refund. A. My fee should be based on my fee. Whatever I charge you shouldn’t be different than the next guy that walks in the door just because this guy has a larger refund or more money due or less money due.
None of that applies in our world A true tax person is just like anybody else. When you go in, there’s a set fee for those services. Those services are going to be billed based on that, not based on how it affects your refund.
And if they’re putting in numbers that are not right, if you go in there and they say, hey, you know what? We can get you $10,000 back this year. And you’re like, oh my God, that’s awesome.
That’s totally great. But Are they doing it correctly? I mean, are they just throwing in $12,000 and $25,000 in tips and $1,200 in overtime and just saying, hey, let’s just take that money and see what happens
Keep in mind the IRS doesn’t have to come back to you for a couple years before they can correct this. And they will catch a lot of this. They’re going to have a huge audit going Because one of the reasons I think they opened up overtime and tips was to be able to see if employers as well as employees were properly being paid and reported.
This is a great way for them. People are all excited about getting some money back. This also opens up a huge reporting issue for employers and employees. So she on tips, employees are responsible to help report that.
It may not be coming out properly. And then then of course on um Overtime, many times people are paid straight time or paid cash under the table for their overtime. That way they they think they’re getting away.
But again When people are throwing numbers in on tax returns, this is going to cause a lot of questions, which means Federal Department of Labor, State Department of Labor will be very busy in the next couple of years I just guarantee, as a as a person that has also bookkeeping in her office, I am predicting in the next two to three years we’ll have large numbers of federal and state unemployment audits or or just employment audits because um because now they have more information this employer said this employee said he had this much in overtime yet you didn’t report that Now is that a fraud from the employee or employer? And they’re going to be finding that out.
So just making sure you’ve got those key changes Um oh I think I misstated uh single followers are 157. Sorry, married followers are 31. 5 and head of household is 23625. I’m sorry, I was using
2024 numbers, 2025 numbers for the standard deduction are up. There you go. And then if the the The they still have the other caps. And then we used to have the salt caps at 10 is now $40,000.
That is huge. I think a lot of my people, um, you we stopped having people um track their sales tax because between property tax and the basic sales tax they were hitting that ten thousand dollars.
Now I will say for people that used to track how much money did you spend on sales tax. It’s well worth having that conversation again now that we’re not locked into that ten thousand dollar mark.
I had many people that would spend, you know, ten, twelve thousand a year in sales tax But when you can only put in five because their property tax was five, it wasn’t worth the tracking as much as it would have been on all of that. IRA contribution 7,500 over the age of 50, 8600.
So those are some of the changes. Earned income credits. Updated tax potential credits and potential taxpayers for qualified children. The child tax credit portion up to 1700 per may be received as a refund, 2200. is the dollar amount that we have. Um so again, and you know, income does apply in that. I had a person that come in and she only had like, I don’t know, four thousand dollars earned income and she had two children and her refund was like, I don’t know.
$400 and she was quite upset because she’s like, well, don’t I get the $1,700 refundable credit? And you don’t get it just because it’s available, you get it because you actually had some earning earnings.
So again, one of those things you want to follow up with. All right. So we’re getting to the end of the show. Here’s what we need to know. Um e If you are a returning tax client to Dr.
Friday Tax and Financial Firm and you have not gone on our calendar, you do need to call our office Monday or Tuesday, depending on how weather is for you guys. It is a little snowy out there today 615-367-0819.
615-367-0819. And again, for anyone that is looking for a great Tax person at Mount Gilliet, you can call her at 615-773-2736 or call my office, be more than glad to get you that information.
Um, and then we have My email, friday at drfriday. com. Friday at drfriday. com. You can also just check us out on the web, drfriday. com. Pretty easy. D-R-F-R-I-D-A-Y. com. And um make sure you just put together a minute envelope.
Start your 2025 year, put everything that comes in. I know you’re getting a ton of stuff in the mail, but just make sure you’re getting everything put away nice and organized, right?
So you don’t have your tax appointment and find out, oh, I forgot. I had two W-2s. I only got one of them. And if your employer is not very community Then you’re going to need to figure out, and I don’t have a good answer right this second.
Maybe uh other people listening might have some ideas of what we’re going to do if an employer doesn’t provide overtime or tips And they don’t have their last paycheck stub that we might have some information on. And the employer’s not talking to them We will have to find out and hopefully we’ll also have some information from the IRS that will be able to give us a little more information on how or what we’re supposed to be doing. to submit. Also don’t forget, if you have a child under the age of 17, really look into the Trump fund. Even if you hate Donald Trump. No one says you have to like the man to like the service
This is something that you could start that may give your child a great leg up 10, 15 years from now, when they decide they want to go to college, they want to buy their first house Um or they just want to save it and just keep it going, keep uh, you know, moving it through and and moving it through as the market and just let it be managed till they’re 65.
That would be a huge um way for them to move into the next step of life and have those ex uh extra funds to to do it with. So um if you don’t know what I’m talking about, you haven’t heard any of this, just give our office a call.
615-367-0819 is the number. You can call us Monday morning. We’ll do our f uh best to get you some information out on your questions you have, or just email Friday at drfriday. com.
That really is the easiest way probably to get a hold or get some information on what you have or a well way for us to actually send you additional information um whatever your question might be. And then make sure that when you file your taxes that you’re using a good tax person.
You’re not just out there and you may be a good tax person. Person listening may be a great tax person. If you’re doing your own taxes, not a problem. Just make sure that if you have questions, that you have someone you can ask those questions to.
All right, we’re going to be winding up the show one more time. The office number is 615-367-0819. Hope you guys all stay warm and cozy and we’ll be here again Next Saturday at 2 b. As we like to say, cop ya later.