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Tax season is open and Dr. Friday jumps right in, clearing up confusion around tips and overtime deductions and the documentation required. She warns against preparers who charge by refund or fabricate numbers, then takes calls on senior deductions, energy credits, gift tax rules, IRS resolution delays, and business/investment questions.
Summary Points
- Tips and overtime deductions must be backed by employer-provided numbers; do not make up figures or pay preparers based on refunds.
- Senior Schedule 1A means testing can reduce the deduction to zero; negative values do not carry.
- Energy credits and vehicle interest deductions require documentation like manufacturer IDs and VIN/FIN.
- Gift tax basics: large gifts may require Form 709; recipients generally do not report the gift.
- IRS resolution and amendments can be slow; choose qualified representation and keep records.
- Business and investment call-ins cover HELOC interest limits, capital gains/loss netting with $3,000 annual loss limits, and 1099 deadlines.
Episode FAQ
Q: Is it okay for a preparer to charge a percentage of my refund?
A: No. Fees should not be tied to refund size.
Q: If a parent pays off my mortgage, do I owe tax?
A: The recipient generally does not report it; the giver may need to file Form 709 if over the annual exclusion.
Q: How do capital losses work against gains?
A: Losses offset gains first; up to $3,000 of net loss can offset ordinary income, with the rest carried forward.
Transcript
She’s not a medical doctor, but she can sure cure your tax problems or your financial woes. She’s the how-to girl. It’s the Dr. Friday show. If you have a question for Dr. Friday, call her now, 737-WWTN.
That’s 737-9986. So here’s your host, financial counselor, and tax consultant, Dr. Friday. Today I’m Dr. Friday, and the doctor is. in the house on this wonderfully cold Saturday. Actually very nice to be working in my office because it’s a bit nippy outside otherwise.
So we’re going to be talking today. Obviously, tax season has officially opened. We are working taxes as we speak. There has been some confusion a little bit about the tax um deduction that you’re getting on your uh tips and over time
I had one situation come through the door and I thought it was interesting. And actually I it was confirmed because I had another tax person. You guys hear me talk about Don all the time
She’s always working like I am on Saturdays and things. But anyways, she had the exact same thing happen on her side. So I think I want to put this out more as a warning than anything else because both of us have seen situations where people are preparing taxes for individuals
And you guys know I’m always talking about making sure you have somebody that is licensed, someone that’s going to stand behind the work, someone that’s going to be there when the IRS may send a sweet little love letter saying they’ve changed your return. or anything else and you want to make sure that you have the situation where you’re like, okay, I have this problem.
Well, anyways, they’re using the wrong numbers is what it really comes down to on the W-2. So W-2 box 14 has a number. Now I’ve had it come in in a couple different ways, different labelings.
I had one that was O B B B T T for overtime. I don’t know what TT stood for, but it should have been OT as far as I’m concerned. And then another one came in as like OT premium. On all the ones we worked on, we just called it overtime, trying to keep it simple.
But um that number isn’t something that you can make up. It isn’t something that your tax person, and in one of the cases, the tax person apparently got them like $6,000 back because of their overtime.
Um and that turned around to be um a a six and they took a thousand of it. Never should your tax price ever be based on your refund. Okay, it’s that simple. It should never happen.
So if that is something that your tax person is bringing up, you need to make sure that it is um I would walk away because you know they’re probably doing something fraudulent. All right, we’re going to go right to the phone lines because I am lucky today.
We got Pat online one. Pat, I am here for you. What can I do? Yeah, hi, thanks. I’m I’m talking about the uh enhanced deduction for seniors on Schedule one A. Yep Specifically line 33 and 34.
If the if you do the math on starting with 31 and you subtract 75,000 from 31, line 33 would be zero or less. Do you really put a number in there? Did you really put a negative number in there?
Or do you just move the the Okay, so then on thirty four it’s the same thing. It asked for a a computation. So that would have been a negative number also. Yeah, you can’t go to a negative on a tax return.
So it has to just go to zero. Okay, so then on line thirty-five, if those other two are zero, it says enter to six thousand and that’s the that’s the correct thing. You got it. Yes, ma’am.
Hi, thank you very much. No problem. All right. Thanks. I’m glad Pat’s work you too. Pat is working on her taxes. So um and what Pat was talking about, she’s obviously over the age of 65, and so she’s working on the additional money that you get when you’re over age 65 of $6,000.
She’s talking about the means testing that they do. And the same thing happens guys when you’re filing the additional Schedule 1A for the tips and overtime. Um, so those are going to be the same situation.
So just making sure that, you know, when you’re looking at these numbers, I have a young lady that came in and She um she’s qualifying for the the additional I believe it’s coming in on uh thirteen B for the purpose of this uh year on ordinary tax. That’s where um the additional deduction in her case was a little over ten thousand dollars is coming in and that does make a huge difference.
She was getting like $1,100 and now she’s getting like $4,400 Um that $10,000 can make a difference. And if if you’re getting that, doesn’t mean I’m going to charge you more. That was the whole point before that.
And so if there are people out there that’s going to talk people into if you have a W-2 and you walk in and they say, well, did you have overtime? And you say, yes. And you may have had over time, but if it’s not reported on the W-2, you better have a letter from the employer that shows it.
Because you tracking the overtime, the hours, multiplying it out, isn’t going to qualify because we need to prove those are the exact same hours that the employer used when reporting this information. And remember, if you’re tracking your total overtime, then you are going to have a situation where it’s a third of it, right?
Because time and a half, right? See the the time is two thirds and then a half of that. So you’re only going to get a portion of that number. You’re not getting a hundred percent of that number.
So You need to make sure that your employer’s number and yours match. If your employer is no longer your employer and they have not provided that information, we are allowed to do our best to recreate But I would be on the safe side on that.
You had better have timesheets or uh pay stubs, something that’s giving us the details of that information. And assuming that you’re just doing time and a half because if it’s double time or even triple time, it asks that in our our form that we’re completing.
We have to tell them, did you get normal to uh overtime? Did you get overtime if it was less than eight hours with someone paying you more in overtime? Um, those kind of questions are what you’re going to answer when you’re on. your tax system. And so uh same thing I had I wanted to bring up uh we are doing some energy credits for 2025 and in the past We have not had to have a manufacturer ID. You do have to have that.
If you have new windows, you need to make sure you call Window World or whoever and I will tell you we called Window World while we’re there in the office with one of my clients and they were very good about getting us that number ASAP. They were quick.
They were efficient. Um, it was wonderful because I kind of figured, oh gosh, we’re gonna end up not being able to get this number. And they had it on file. So they’re probably getting used to having that information, but you need it for your tax preparer or for you to prepare taxes if you have qualified windows, qualified doors. all of that kind of situation. We want to make sure that you have all the proper information so that you don’t lose out.
Remember if you’re if you purchased a car in 2020 You’re gonna want to make sure that you have um the fin number, right? making sure that Finn number qualifies and that you can take off that particular interest.
But you need additional, not just the note that says, hey, I paid this much interest. You need the FIN number. You need to know when the loan was taken over. Was it a fur was it in
A um new car? Was this something that you try to refinance? All kinds of questions are going to be asked. And not hard. We can handle it, guys. But being organized Totally gonna make life easier for all of us.
So just putting that out there, making sure that you and I are on the same page. We don’t want to have any issues when you’re in the office when we’re just trying to kick out those numbers.
We don’t want to have to wait. And then turn around and say something about, you know, oh, we can’t take this because we don’t have this and we don’t have that. Much easier if we can get that information and go forth.
Okay, so if you’ve got questions, maybe you’re working on your tax return, or maybe you have some situation that you’ve been working with the IRS. Um, I will tell you it’s taking me three years, but we have finally got one of my clients.
Um I will say it’s very um as much as you know my clients are awesome. I’ll be quite honest with you. Um but sometimes uh you know They can be extremely tenacious and this one was well worth it.
Finally got someone from the IRS. This was a 2019 issue that we finally Got someone from the IRS to look at what we’ve been submitting for four years, it feels like. I think it’s only been two, but um but you know finally got the right person because you know if the IRS isn’t on the right page, you know what they’re doing?
They’re collecting. Or they’re trying to collect. And the person on collections cannot help you when it comes to I’ve already amended this return. I don’t owe this money. You know, this is bad, you know, and then the client’s getting stressed because they get letters saying they intend to levy or they’re going to seize property and they’re like, okay, should I just pay it?
And, you know, of course, the answer is no. We don’t want to pay something you don’t owe. We want to make sure that we have all the right information. But on the other hand, you want to make sure that you’re doing what you need to do and how you need to do it.
So Just putting that out there to make sure we’re on the same page. We don’t want to have any kind of issues. If you want to join the show, you can. 615-737-9986 615-737-9986 is the number here in the studio.
Um, and we’re obviously talking about taxes. It’s tax season It’s a busy season. I have a few people that say they still haven’t received their refunds in 2024. I will tell you that um if you haven’t received it yet and it was filed on 11.
3 or right around that date because you waited till the last minute. Um you you need to go ahead and either get a hold of someone at the IRS, and we have found that they are answering the phone.
Now resolutions are running a little slow, but they have been for a number of years. So it’s not something really brand new. But it is something that we want to make sure that we have going in the right direction.
So if you have a situation and you need help or you You’ve got a tax issue out there. Well, you know, that’s what we do. I’m a that’s tax resolution, right? I’m an enrolled agent licensed by the Internal Revenue Service to do taxes and representation.
I have never, ever, ever worked for the IRS. Let’s clarify that just in case somebody thinks I have. I have not. But I have been, I have passed all their exams and I have made it to a point where I can do resolution.
I can help people. do what we need done and go from there. But you know, again, it really does come down to if you have an issue with the IRS, your best thing is to move forward with some sort of resolution.
And um I do want to say, you know, if you’re working with one of those really big companies, one of the worst things I have to say about that is plain and simple Most of the people A aren’t someone you can sit down and talk to because they usually um sell your account to somebody that works for the big guys. So they’re also small companies that work with them.
Again, you may end up with an awesome person. So that’s not necessarily, but if they’re in Texas and you’re here, it can get a little frustrating. And then also if you haven’t Um, you know, if you haven’t heard, normally they’ll just start billing, right?
They say, oh, well, we you know it’s gonna cost you $10,000. So start paying us $500 a month or whatever they work out with you But meanwhile, you really haven’t found out what they’re going to do for you.
I mean, almost always do they have a minimum amount they’re going to charge you before they even know really what they’re going to do for you Personally speaking, doesn’t work for me. So you need to make sure that you are already dealing with this information the right way, right?
So if someone’s gonna do resolution, find out what kind of resolution. And then find out what it’s going to cost. And find out if they’re supposed to file five years of taxes for you, if they’re doing whatever it is that they’re doing.
I mean Just make sure that you’re not signing a contract and then moving on with that contract to go from where you’re at. All right, we’re going to take a quick break and then we’ll get to Logan.
That way we can spend plenty of time with him. We’ll be right back with the Dr. Friday show. Alrighty we are back here live in studio and Logan thank you very much for holding through that break and I will be more than glad to hopefully answer your question.
What can I do for you Logan? Yes ma’am. Uh I think you touched on it a little bit earlier. Uh bought a uh natural gas tank list water heater to replace electric tank water heater uh just at the end of last year and when I got it it said something about a uh rebate or a tax rebater uh six hundred dollar tax credit.
Yep Right. And uh so I needed to I’m just kinda curious to know what all I need documentation wise, I guess when I have my taxes done. Yes, you will need to have I ideally in my world I like to see the uh the invoice, the receipt, whatever you have, and then make sure on that, because the one the at Birch is windows, the manufacturer
ID number was not on it. It’s a five digit, four or five digit number, letters and numbers that they will provide to you. It’s not a real long number. But it should be provided by the company.
So if you brought it Home Depot or whatever, I’m assuming it might be on the receipt, but if it’s not, you might want to try to call before you get to the tax office because they will need that to get you your credits. Okay.
And that’s the manufacturer ID? Yes, manufacturer ID. Okay. I appreciate it. I will do that. No problem. Yep, and I’m glad I found out too because I mean normally up until now we haven’t had to have that.
You know what I mean? So that’s just a new thing for 2025. Okay, okay. Sounds good. Appreciate it. Thanks, Logan. Okay. Thanks. All right. Let’s get Kim on the line. See if I can help her.
Hey Kim. Hopefully you’re staying warm. I am. Thank you for taking my call. Hey, I am in a really wonderful position where my mother is wanting to pay a hundred and fifty thousand dollars on my house mortgage.
And um I don’t know how she’s gonna just directly pay the mortgage company. And I don’t know, do I need to claim that on my taxes or what what do I need to do No, um you will not do anything.
Um and thank you, Mom. Um so in mom’s case, since it’s gonna be 2026. It’s called a 709. It’s a gift tax return. Theoretically, she can give you 19,000 without filing this form. And I’m assuming this money sitting in the bank someplace she saved the money.
So she’s like, hey, honey, you know, let’s just make life easier, pay off the mortgage, whatever. Um, which is an awesome mom. Anyhow, um So whoever does mom’s taxes or if you help her, make sure the year she does that that they file the 709.
And basically all this does is it takes it out of her lifetime, which is like 15 million she can give away. So most of us will never get close to that number, but it’s just a form we have to file.
There is no taxes to her either, assuming that the money she has is like sitting in the bank. Not that she’s taking it out of 401k or you know I’m just saying assuming it’s already in an after-tax situation neither of you will pay any kind of tax So she just needs to have a paperwork of 709.
And it’s really that simple. It’s um we do them all the time. Uh but you know, as long as uh you guys are both US citizens, which it I’m sure I mean you are, then we don’t have any limitations for gifts or anything like that.
Wow, that’s wonderful. I I wasn’t expecting it to be that easy. Yeah, we try to keep it simple. But yeah, no problem. So just if she decides to do it, just and all she’ll need is your social security number or whoever does the taxes, social security number, address, and legal name.
That’s all She’ll need from your information so her tax person can complete that form. Okay, okay. And the 709 form for her. But I don’t I don’t know. Nothing. It doesn’t show up at all on you
Nothing. Wow. Okay. Thank you so much. No problem. Thanks for listening. Okay, thanks. Thanks. Bye. Okay. Bye-bye. All right. So that was a great question because I meant to bring up the fact that in 2020
You can have $19,000 per person. So theoretically, if mom wanted to give her $19,000, she could do that without filing this form, the $709. None of that has to play in. to it. If uh if one of them is married, they can each give 19,000.
If she has uh you know so if she’s married mom could have given her daughter and then the daughter’s husband each nineteen thousand but um You know, in this kind of situation, it’s just very easy. And so there are ways.
I have a number of parents that are pretty awesome, to be quite honest with you, that are um likely to put a down payment on a house for their children, pay off a mortgage, have more than one of them that’s done that. Um, you know, all those kind of situations.
I’m not a financial planner, so I’m not gonna tell anyone, but I think it’s pretty nice that any parent might want to I mean a lot of times it’s your inheritance anyways, but they feel better. Hey, you know what?
This takes the pressure off and I can do this without, you know. causing any kind of conflict. So um no big deal. You’re in great shape. So the exemption again is 19, but if you want to give more you can.
Only people that we have any limitations would be non-US citizen spouses, you have a limitation of $194,000. But theoretically you can give just about any person $19,000 without any kind of pay paper trail.
You just need to have name, uh, if ever audited, you would need the name and Social Security number of that person. But other than that, no pap Issues. Okay, so uh that being said, if you want to join the show, you can 615-737-9986-615-737-9986.
So we have a couple things that are different this year than we haven’t had in uh in the past or last couple years at least. We used to be able to write off Your credit card interest, your car interest, all of that on a schedule A back in the day.
But that’s been a long time. And now we do have the auto interest Again, this is a no tax on car loan interest provided under the LBBB. Deduction is available for purchase of new vehicle.
Not a lease, not a use. It has to be a new vehicle. And you know, there is some other expectations there that you have certain type of car. And all of that. So you do need to make sure these are the kind of things if you purchase the new car, you need to bring in the paperwork for the new car.
One, you might qualify for the sales tax as well. Um, and then you might want to make sure that it has the You know, the fin number is 100% most important thing. You can only write off to $10,000 of the interest.
So if you went and bought yourself a Maserati, I don’t know if it would qualify, but if it did, you’d only get $10,000 of the interest interest. So not one of those things that you’re going to have, but um again, the other thing is overtime and the other thing is tips.
So again, be very careful on the whole conversation of tips overtime because I just feel that we’re opening up a situation where there is going to be a lot of preparers that or people, I shouldn’t call them preparers. These are people that throw some numbers on a tax return, don’t have any accountability, don’t even put their name on these tax returns. usually and then they’re saying hey we’ll get you six grand back and you’re gonna pay me a thousand when you get it it really upsets me to be quite honest. It’s like any profession when you find out there are people out there that cheat that profession And you’ve worked hard for 30 plus years in doing it and trying to do your best.
I’m far from perfect. I’m sure I’ve made more than one mistake, but never intentionally. Never did that to to do something like that. I may have, you know, may have made a typo or two.
I won’t say I haven’t because after you do the number of returns I’ve done, there are times when that will happen. But I stand up, you correct it. Anybody that actually does taxes, if I make a mistake, people, I’m gonna stand behind that mistake.
I I will fix it or I will pay the penalties. I won’t pay your tax because you would have paid it no matter what. Um, but I would pay the penalty because that is a mistake I made If you make a mistake, we’ll help you negotiate penalties, we’ll help you negotiate interest.
But you know, again, you have to be accountable for the mistakes you make. That’s the way I have always done my business and hopefully more people do that. So if you’re interested in enjoying the show, you can 615-737-9986.
615-737-9986. I had someone email and say, I can’t Keep saying EA. What is an EA? Sorry. I just assume everyone knows these things. An enrolled agent is an individual that is licensed by the Internal Revenue Service, meaning we’ve taken exams that they have done and three different exams. And we have passed and then we have been certified and background checked and all that good stuff. And then we’re allowed to represent taxpayers in front of the IRS.
We’re also allowed to file, e-file, tax return. And we have to every year have a number of CE credits to keep up our education. And and continue to do that. So if you have someone that doesn’t have uh either an EA or a CPA, then you have someone that’s probably not really been licensed.
Now I’m not gonna say maybe they’ve been doing taxes forever and they are they are educated in the world of taxes, but you know, if they are registered, then they should be registered one way or the other. Um, as far as I’m concerned. concern. But if you really want someone that’s going to be there year round to protect you, then you need to make sure you go to an office that’s going to do that. One of my biggest pet peeves of the big houses, you know, the the companies that only do taxes during tax season is that uh in my world love letters from the IRS don’t just come January through April. They come all the year round. And sometimes they pop out of nowhere and they come back at us even when we think we have resolution and different situations or
You finally get one thing and then the IRS comes back with a whole nother situation. And if you’re not, if you don’t have someone that’s going to be there year-round to represent you, then you’re trying to represent yourself.
Or You’re paying someone else to do what maybe should have been done by that person in the first place. I’ve had a couple of cases this year where even simple things, you know what I mean, like something needed to be amended.
And uh the person basically wasn’t there, so amendment couldn’t be done because their offices are closed and they send them to someone else. You need to have that because, you know, statements come in late.
People change things, amended 1099s, amended W-2s, and then you might have to amend your tax return and your tax person needs to be reached so you can do that. All right, let’s see if we can take a really quick break and then I’ll get Charles so that way I don’t have to cut it really tight.
We’ll be right back with the Dr. Friday show Alrighty, we are back here live in studio. And so let’s get Charles who was nice enough to hold through that break. See if I can answer his question.
Hey Charles Hey, how you doing? I am good. What can I do for you today? Uh well let’s see. Uh I’ve got a kind of a a deal I’m gonna work on and I want to get a uh Helco loan. And with that money I’m gonna uh buy some land and uh use it for a a business.
Mm-hmm. Can I write the interest off on the Helco Um well uh h you m you mean a heatlock, right? Like a it’s secured against your house. Yeah, he’ll lock. I’m sorry. Okay. No, it’s right.
No, I knew what you meant. Um but the answer to your question is um theoretically it it would probably it would depend on how you set it up. You may want to set up the property. Since it’s in your name, Charles, and the business, it may be is it a sole proprietor or is it gonna be some sort of LLC?
Do you know how that’s gonna be right now? Okay, what I got is it’s um some just plain land anyway. I’m really interested in land and uh I’m thinking that I could put some sort of like a landscape business on it or a convenience store or something like that, you know. Uh right. I mean I love dirt. Don’t get me wrong. I think that’s great. But dirt in itself can’t be depreciated. So and it’s very hard to rent, I mean you can rent it. I mean people can grow crops and things and you can receive a portion of it as a a farming thing. Or you can go into like you said landscaping convenience store put a double wide on it and have someone
And rent it for their business, something. I mean, depending on how much you’re wanting to invest. The building that you put on it, we can depreciate. The land is not, but the whole loan could be, if you have rental income off of that property, you can then. take the interest off it along with all the repairs, maintenance and things like that that you have going into it. Okay, what about my equity loan? The interest I’ll be paying on that
Well I mean the HELOC is secured against I mean you have yes the the HELOC will be secured against your primary home but you’re using that as the funding to that property, correct? Correct, right.
Yes. So you’re not going to be able to do it. Right. I mean you’ll just have the HELOC. You won’t have another mortgage. The HELOC will be the hundred percent that you have or your cash plus the right so yes the interest would be tied to that property
Okay, but I can write it off, right? Yes. Okay. All right. And uh one other one too. Um okay, wait a minute, let’s see. I’m uh I’m just not quite clear, crystal clear on that. Uh I just my money wanna buy the land and I really don’t know what I’m I’m gonna do with it.
I do have some you know, some ideas but that’s what I was asking. Is it you know, it may be a year or so before I get anything going on there. You can’t write it off until you actually have a functional rental.
So if you start buy it today and you don’t do anything for the year, the interest is not going to be a tax deduction because it’s not tied to an to a passive investment or anything else. Now HELOCs themselves can be written off if it’s less than 100,000 right on your Schedule A, but nowadays people have a difficult time meeting itemization and you’re tying this to your rental property.
I mean what you’re calling investment property. Maybe I should call this an investment property. And so we have to make sure you understand. Okay, so I will not be able to write off any of the interest I’ll be paying on the Helco uh loan
No, is that what you’re telling me? Um not until it’s actually an active rental. No sir. It has to have a rental you have to have the ability to make, otherwise it’s just an investment
And it’s not a deduction. I uh I I personally would be owning the business on there. So how does that differentiate with the rental situation? Well I mean If I mean if it’s part of a business, then the business is uh generating income and you could tie it to the expense, but I think any tax person would tell you it’d be better to keep the property separate than a business if there’s a lawsuit.
You really don’t want I mean you would want to have them separate. I would definitely talk to an attorney if you’re buying dirt and running a business because you might want to protect that asset just in case somebody sues you There are ways of it.
So uh so there would be no way Is that I could just buy that land and write the interest off uh on the uh the loan on on my residence. Not without turning it into a farm or turning it into a business You have to have some reason to write it off.
Otherwise, it’s just an investment and that is not a deduction. Okay. All right, so I’ll read Now there’s no uh uh w whatever value to to uh rental and stuff like that that they go through.
So if I rent the thing out for a hundred dollars for a year and and have a guy uh use it to cut hay on that that would fly, right? Not necessarily you have to charge fair rent because otherwise it sounds like you’re underestimating i mean if you paid ten thousand dollars for and you’re charging a hundred dollars maybe that would be fair but if you paid a hundred thousand dollars and your mortgage is you know, a thousand dollars a month, I’m just saying, or whatever, and you’re only collecting a hundred, they would say possibly you’ve underpriced the rental. So again, there is some rules you have to abide by if you’re gonna do farming and things.
Which is what you’re talking about, land leasing. You would need to make sure it’s the same price as if somebody rented somewhere else. Yeah, it’s the the the uh property is located right on a major highway, just right at it
Addiction and uh I’m looking for ten years down the road, you know, it’s big enough that you know you can put Kroger on there or something. It’s a big big big corner lot, yeah. And uh so I mean the investment is there, it’s just the question is
I mean, will you be able to immediately be doing something with it or not? I’m not sure. I mean that would be some planning, but I would say, you know, the best thing to do would be to turn around and have that conversation with a good tax person and I would definitely say once you’ve purchased the land, talk to an attorney to make sure you’re protecting yourself because you don’t want one to to put something else in risk is all Right, yeah, yeah. That’s all I figured, yeah.
I need to get some an insurance policy on that code of liability. Yeah, okay, wait just one more. I got uh capital gains. Okay, um let’s see. Uh right now let’s see example here. I’ve got ten thousand in long
And I’ve got uh that’s a gain, and then I’ve got twenty thousand in short, that’s a loss. What can I do with that So you have $20,000 in short-term capital gains and a $10,000 in long-term capital gains.
Right. Is that what you said? 10,000 is gained, yeah. 3,000 of that once you’ve passed the the negative. So the 20 will wash the 10, leaving you with a $10,000 loss. Your tax return will show a $3,000 loss.
The other seven will roll over till next year. Okay. And how long can that in other words if I next year I don’t use I don’t use that seven. Is that what it is? Okay. So I mean just saying in these numbers
The seven you’ll get to claim another three thousand dollars. You’ll claim another three thousand dollar loss in twenty twenty six, for example, and then it will only be four. And that three thousand every year will go off, you’ll be able to use it in the next couple years or wash it against future gains if something happens in the next year or two. I hope so. I hope uh our good president keeps his mouth shut. We will find out. I’m hoping you didn’t put any bets on that. though we all know that okay well i really appreciate your information all right thanks all right if you thank you bye bye all right if you want to join the show you can 615-737-9986. 615-737-9986.
Taking your calls. Talking about taxes. Many of you have um a lot of different uh situations going on and um you can easily just give me a call, give me a scenario, and I’ll do my best.
But otherwise you may want to email or call um our uh our office at 615-367-0819 on Monday. No one will be answering before then but on Monday um and we can set up a time to help you as best we can and then set up an appointment if you’re a returning client make sure Make sure you are on our calendar or make sure you’ve uploaded your documents into the Smart Vault so we can get you started.
And now I know many of you, I mean some of you have started, but I mean let’s be honest. Carol Schwab’s not going to have anything out till probably the middle of February. So many of us are going to be holding off on some of that.
And so you know hurry up and wait is often the way we work around. here but if you have the ability to get everything in prior to that that’s awesome we’re working on taxes as we speak many of them we’re trying to get prep now i will tell you you some corporations and even individuals on uh some of the forms the IRS has not yet released so we’re not able to completely finish everybody’s return but within the next few days I think they’ll have a lot of them I think two seven was the last time I saw one of the the forms I’m waiting for will be we cleared off so another week or so and then we’ll be in good shape to finish finish up everything we need to finish. You do want to remember 1099s, W-2s, if you’re an employer, my suggestion would be is to put together a little note or even just have an Excel spreadsheet in your office so when people call they have the ability to receive those overtime and tip numbers if you did not already put them on box 14 um maybe even just putting together some sort of notice and and emailing it out to each client uh or employee excuse me and making sure that you have 1099 all of your subcontractors and that would also include all of us that have rental properties Remember if you have rental property and you have a repair guy that does your heating and air conditioning or you have a handyman that goes out and does things, you have a lawn guy that cuts the grass.
We are responsible for doing 1099 to those companies and making sure that we have submitted those forms out to them. And so they are due Monday. So if you haven’t done them, it’s not too late, but it’s also a good practice because is um one of the things that happens if you are ever audited. It certainly is one of those wonderful things they turn around and say, ah, you know what, you didn’t do that. So prove you paid it.
And then there’s a penalty that they can charge up to $500 for each. 1099 we didn’t issue so we don’t like penalties, right? All right, we’re gonna take our last break if you want to join the show 615-737-998
We’re going to be right back with the Dr. Friday show. Ex-services, planning, business, and IRS negotiation. Visit drfriday. com. Alrighty, we are back for the last bit on the show.
So if you’ve been waiting to join the show, probably now’s a good time to pick up the phone 615-737-9986 and we’ve got Stuart on the line so let’s see if I can help Stuart Hey, how are you doing? I’m good.
Stu, what’s happening? Hey, um, I’ve got a question. I was uh working for a sales company for about two years And they hired their sales representatives. This company has business in multiple states.
They hired us as sales reps as ten ninety-nine employees, but they required us to do meetings, do trainings. um travel for trainings, uh things of that nature. And I received a letter in the mail.
I do not I no longer work for that company, but a couple of the other employees Um, I guess there is now a lawsuit for the way that the company is. Management of employment? Yeah. Sounds like that.
Yes, that is correct. And so I didn’t know if that is something I should even look into or kind of a waste of time. The main thing that they were saying is that this company I’m not gonna say the company’s name obviously.
Um uh failed to provide its workers with the pay and tax treatment afforded to employees, including payment of overtime if earned, and failed to provide its workers with employee benefits including but not limited to health, retirement benefits, paid time off. Worker compensation over time unemployment.
I didn’t know if this is something that I should have. I mean there’s probably nothing wrong with it. I mean the fact is when you were hired there was probably disclaimers telling you, hey, you’re being hired as a subcon.
I don’t know this. I mean they should have made sure they understood you were being hired as a subflub, even though they may have told you certain times you may have had the ability to handle your own schedule.
You may have been able to work from home. Um, you know, there there may have been some, and that’s lawyers, you and I outside that my pay grade, to be honest. I will say if it gets settled, you’ll probably end up with certain amounts of of uh income and it would be reported as income. So it would become a taxable situation. But hey, every dollar you get, what you pay 20%, you still keep 80? I mean I’m just saying uh not a bad not a bad thing
Um, it just I guess just depends on um what you feel if there was misrepresentation or not. Because it sounds like to me they feel they should have been employees and I have been More than once on this radio, I even talked about situations where people misclassify employees versus subcontractors.
And it is a savings for employers in some ways. uh because we don’t have to pay the 10% match on Social Security and Medicare if we don’t list them as employees. And then if you’re a bigger company, there’s health insurance, you know, matches on 401ks.
There’s a lot of different things that are cheaper for me to make you a subcontractor than an employee. So I will say a lot. Salespeople do end up with I don’t know if they would actually have had to pay overtime.
Most salespeople don’t get overtime because the commission is over sand uh over normal What is it called? Minimum wage. You usually already make more than minimum wage. So usually the overtime is already built into your salaries.
But Some of the stuff they’re saying probably makes sense, especially if it was truly misclassification. So I guess it just depends if you’re still in that same industry, would your name come across, you know, would there be anything listed that could put you into a situation where you might not like to be listed, you know, between you and I?
That’s the only thing I’m thinking. But from the tax standpoint All I will tell you is if they win the case, it will be taxable income to you. But other than that, that’s not necessarily a bad thing.
If they truly misclassified you, we need to make sure that companies are not doing that because it’s it’s bad for all of them. Okay. And that was kind of my main question because they they classified us as a ten ninety nine, but they we were not able to set our own schedules.
And so I think that’s kind of the same thing. You should have had the ability to make your own schedule. You should have had the ability to um choose your clients in some cases. You know, there there is a rule of what an employee versus a subcontractor.
People hire me as a subcontractor. I tell you when to come in. You, you know, I mean just saying I have more control. And that’s where the misclassification comes, to be honest with you.
But I would say it can’t hurt to get a lot more information because it really does sound like and there are a ton of people that misclassify employees. Just let you know. Yeah. Okay, Steve.
I appreciate your time. Love your show. Thank you so much. Thanks, sir. All right, let’s see if we can get Steve on the line real quick here. Uh we have about five minutes. Let’s see if we can get him on.
Hey, Steve. Hey, I just I think mine’ll be quicker than five minutes. I work for a local government as a fire captain and we just got a notice From HR saying that our overtime is not going to be tax free because we have an administrative role, even though we’re out in the field with the firemen.
They have a lot of little clauses that people are gonna find out about. I mean I I only found out about a couple of these recently. But they’re basically gonna say that administrators don’t qualify and if they’ve got you listed as an administrator or a manager, they don’t qualify.
So basically they’re trying to you know, limit the people that are going to get the qualification. Um but yes, I I have read that that is you True that administrators or or even uh upper management are not going to qualify even though you do have and they do put you on overtime. that you’re not going to fit the criteria for. It’s under the Federal Department of Labor. They’ve got a whole bunch of rules they’ve put in to see who’s qualifying, who’s not. Where’s the best place to find that list of rules?
Um if you go under Federal Department of Labor, you’ll find it right there. I just read some of it today Okay, thank you. No problem. Thanks. If you can’t find it, just um email Friday at DR Friday and I’ll send you that’s Friday at drfriday. com and I can send you the link Thank you. Okay, thanks. All right. That was less than five minutes. Steve was a hundred percent correct. And I think that we’re gonna be finding a few more of these little things because um again, I am gonna be quite honest.
I think as a tax person, we are trying to figure out what this is. This is a brand new tax law. We’ve never had this one on the books, even bringing it back. We haven’t had tips and overtime being um. uh something we’ve dealt with in the past and uh the law was kind of brought in for what they consider the I mean a fireman you think is a working class in many ways, but um they’re they’re trying to bring it in. They limited it by income, $75,000 for an individual, $150 for married, and it kind of means test is out Um, and then they’re trying to bring it down to I think they’re trying to find companies, not to find ways for companies to be paying overtime and then giving it like as a kickback in a sense. I don’t know that for a fact, but um it is uh you know part of the OBBBA situation. I I really think that they’re they’re trying to come up with a way of making this a situation where it’s a little bit better for some. But anyways, it’s going to be confusing and make sure again there are boxes that are required to be checked on the tax return. If you are doing your own taxes and I’ve had more than one person that turns around and says, oh, you know what?
I checked this box and I had a smaller refund than if I checked this box. So I went ahead and checked the one that gave me the bigger refund. You don’t do that. Okay. You need to make sure if it says that are you qualified for the Federal Department of Labor rules and it says yes or no, you have to know the answer to that because one is going to give you the credit, one is not.
And if you don’t qualify for it and you say you do, it is going to come back at you with penalties, with interest, and that’s going to hurt a lot more because I really do think this is going to be one of those areas that IRS will open up for audits. Because 2025, a lot of employers are not putting that information on the W-2s, which means a lot of people are guessing, man, are doing their best to figure that out.
But it isn’t going to be easy for anybody. So just Make sure you answer that question. If you don’t know the answer, make sure you find out the answer before you check the box so you have something that works well on your, you know, meaning how you do it, how you’ll track it, how it’s going to work for you. All right. So we are down to the last oh minute of the show. So let’s go through some of the information you might need.
If you want to set up a tax appointment, you can go to the website drfriday. com. There is some, I think there’s still a few openings on there And if you’re a returning client and you don’t see anything, please call the office direct.
615-367-0819. 615-367 0819 is the number you can call Monday and set up an appointment. Or if you have some questions and you’d like to try to get the answers to those we’ll do our best to get to you.
You can also email Friday at Drfriday. com again Friday at Drfriday dot com and we’ll do our best to return your um your questions uh as fast as we can and then hopefully you guys are actually having a wonderful Saturday.
This has been um a great uh day and we’re getting ready to work on more and more taxes. Things are being updated as we go. But again, if you need help with taxes, you can call our office 615-367-0819
And um if you’re in the Mount Juliet and you have a appointment you want to have up there with Donna, hey, call our office and we will give you direct information for her. Um but if uh you want appointments, give us a call. As we always say in Australia. Cop ya later