Dr. Friday Radio Show – January 4, 2025

No, no, no, she’s not a medical doctor, but she can sure cure your tax problems or your financial woes.

She’s the how-to girl. It’s the Doctor Friday show.

If you have a question for Dr. Friday, call her now. 737 W.WTN. That’s 7379986.

So here’s your host, financial counselor and tax consultant Dr. Friday.

Oops, I have a feeling I wasn’t talking.

This is Dr. Friday.

I’m here live in the studio.

And sorry about that.

We are wishing everyone to Merry Christmas and a Happy New Year’s.

And we’re getting ready to start the 2024 tax season.

And obviously it’s 2025.

So we’re going to get ready to making sure that everyone has their tax appointments, making sure that we’re dealing.

I want to start with the B-O-I business owners information.

You heard us talk a lot about that in the last year, especially in the last month.

And then, no surprise, someone decides they’re going to be taking that particular ruling to court.

So they put a hold on the mandate.

So if you did not comply or you’re not even sure what I’m talking about when I say B-O-I, at the moment, you are good.

You don’t have to worry about doing anything else.

All you have to worry about is getting your tax records ready for the 2024.

And if you’re a brand new company, making sure that you have, you know, starting the new year outright, start out with a good system. That system can be something as simple as pen and paper, to be quite honest with you. There are some businesses that really do do just fine with pen and paper, but the most likely or best system that we have found in almost 30 years of doing accounting and taxes is using Intuit or QuickBooks. It has changed a lot in the last, number of years. It was a little easier when everything I think some ways was on desktop. That may be just making me a little bit older. The online system does work. It’s just a little bit more unique to work with.

But it doesn’t mean you can’t work with it. So if you are looking to start doing something proper, making sure you have everything, then you might want to start. It’s what, January 3rd, 4th. And it’s time to start the new season, maybe go online, look at QuickBooks or Intuit or Online QuickBooks and see about starting your accounting out the right way because, you know, the number one reason most small businesses, I shouldn’t just say small medium and small businesses, which is what we usually deal with.

The one reason they usually get in trouble is not great paperwork, right?

They’re good at doing what they do, whatever that business might be, but they’re not necessarily good at tracking how the income and expenses, or they’re working with some misconceptions that, that, you know, every mile put on a vehicle, if it’s sent home with an employee, could be a tax deduction, or it could not be a tax deduction, buying certain gifts, especially over the holiday season. Sometimes you like to thank your customers for doing things, but if you’re spending hundreds of dollars to do that, you may be in trouble, depending on the proper documentation and all that that goes with it.

So really, and do you have a reimbursement program, a part of your company? Are you non-reimbursed?

So employees cannot write off deductions.

Companies can.

So all these questions come up.

And so really right now, what we want to be concentrating as the first week of January 2025 is really making sure 2025 starts out right and starting to prepare for our taxes for the whole year of 2024.

That means reconciling your 2025, you know, last year paperwork.

Most likely people are just starting to work on that.

and then going through the whole year and making sure there’s nothing in there that you missed.

Was there some sort of accident that you got an insurance payment?

Was there some sort of equipment purchase that didn’t get put on the books?

All these kinds of things come into play.

And you’re really just starting to think, what do I need to know?

What should I know?

What should I not know?

And what am I wasting a lot of times trying to figure out, which may not make as much different.

So all these things come into play, it really makes it.

a fun and exciting situation. All right, let’s hit Steve and Franklin. Thank goodness, an early phone call. I’ve got to figure out, hey, Steve, what’s happening? Well, I hope you’re having a good new year. I am, and I want to ask about quarterly payments. Now, I’m a wage earner, and so I’m W2 and all of that. I do have some other stuff like interest and dividend income, but I’m just concerned.

should I be making quarterly payments?

I anticipate I’m going to have a small liability, maybe $1,000 based on everything that I can But how important is that?

And I’m just going to hang up and listen.

Okay, sure.

That’s great question.

Estimated payments.

Our last one for the year is due January 15th.

Our first one for 2025 will be due April 15th.

And what Steve is asking is even though he’s on a W-2 and he may be paying enough taxes on his earned income, with the fact that he has interest, dividends, stock, other investments that do distribute to him, even if he’s reinvesting that money and still growing it, it has to be taxed.

Is he going to need to be making an estimated payment if he only owes $1,000?

Tax law says we need to pay in a minimum of 100% of what we owed the year before and or were required to make quarterly payments based on what we have.

The problem that Steve’s going to have to a point is this year, maybe he did great, maybe even cleaned up or did a rebalancing of his portfolio that’s with after-tax dollars.

And so maybe he has a higher capital gains, a lower capital gains.

All of that is sometimes managed by an outside person.

So we don’t always know until we receive the end of the year package that says, hey, this is what we have or this is what we don’t have.

So if you’re consistently making, let’s say, an extra $10,000 a year and that’s costing you.

you roughly $1,000 a year in taxes, my suggestion to Steve would be is I wouldn’t go to quarterly taxes. What I would do is just take that $1,000 divided by 52 paychecks or 26 paychecks or whatever and just have a little extra come out of my paycheck. That’s all I would do. And that’s what I do.

I have a number of rentals and another side business that I do. But my paycheck covers all of my taxes, at least to the best of my ability. If I sell some real estate or something, I will then usually make an estimate based on that particular transaction. But since I have an actual paycheck, I can use that as a vehicle of actually paying. But if you are an entrepreneur, totally self-employed, it is not an option. It is not a volunteer system that says, hey, if I want to pay quarterly, that’s fine. But otherwise, as long as I pay it by April 15th, or I wait till October 15th, which is a total misconception, I’m good. No, tax law says that you need to make full.

equal payments.

Because a lot of times what people will do is they’ll look at their first quarter and say, hey, I had a slow first quarter.

So I’m going to make an estimate of this much.

Second quarter, oh, is a better time.

I’m going to make this much.

Third quarter, oh, I had an awesome time.

I’m going to pay this much.

That is not equal.

They want you to use the prior year.

So in this conversation, whatever happened in 2023 is what we’re looking at.

Did you owe money?

If you’re self-employed, I’m sure you did.

We always owe money.

And then how much have you paid in?

And they want you to take, if you owe $20,000, they wanted you to make four, $5,000 payments on the due dates of the estimate.

Even if you didn’t earn as much money, basically, you can make an adjustment, but they really want that adjustment to be the one that’s being made now, because until now, you wouldn’t have known what your December was.

Now, some people may have closed their business.

There’s always exceptions to some of these rules, but the fact is it is not a volunteer system.

if you owe money every year most likely you pay a penalty if you don’t make quarterly estimates again if you are self-employed you don’t have any choice you need to be making them if you are an employee and you still have a side business or a side investments as stephen might have had but even if you maybe had a side business you can use your w-2 and say hey you know what take an extra hundred dollars a paycheck out so i don’t have to worry about taxes at the end of the year and i don’t have to worry about the mandate of quarterly because I have it coming out with every one of my paychecks, and I’m making those payments in a timely manner.

But, you know, that’s up to you.

If you want to keep your investments away from your paycheck, then in the case of this gentleman, he may be needing to make a $250 estimated payment every quarter.

And that way, then, when he files his taxes, he doesn’t have to worry about a penalty.

Penalties can be pretty hefty.

You know, they can charge up to 25 percent failure to file.

is 25% failure to pay is 25%.

Interest is now almost 10%.

Failure to make proper estimated payments are 0.5% for every month, so up to 6% is going to be for not making those estimated payments.

Now, some people will come right in my office and say, hey, I can earn more than 6%.

I don’t care if I have to pay that penalty.

That’s a choice, totally your choice.

But if you’re asking me, I don’t like penalties.

I prefer to meet the obligations to the best of my ability, so I don’t have to do it.

Sometimes penalties are a fact that we have to deal with as long as we know they’re there.

It’s not, it’s always harder when there is a surprise.

Okay, so if you want to join the show, you can.

615-737-9986.

615-737-9986.

For anyone that may just be new listener or you’ve heard me, but you don’t really know who I am.

I am Dr. Friday.

an enrolled agent licensed by the Internal Revenue Service.

I have never worked for the Internal Revenue Service.

I am licensed by them to be an enrolled agent, which is a represent you, the taxpayer, in front of the IRS, to kind of be a little shield.

So you have someone that knows how to talk to talk and help you manage the mandates and the questions that are going to come about.

So I’ve been doing this for almost 30 years here in the Brentwood area.

If you want, you can always go to DR Friday.com. As an enrolled agent, I am licensed to do representation and taxation. So I basically represent and I do taxes. I do all tax returns. That’s individual businesses, estates, corporations, partnerships, any of those. And we are licensed basically in all states. So if you come from another state and you need help filing it, we can certainly accommodate that as well. So if you want, you can certainly call the show again at 615-737.

sorry, 615-7-37-9986, I think is the correct number.

I may be giving my number out.

And then you can also email Friday at DRFriday.com.

That is Friday at DRFriday.com.

If you want to ask a question or just pursue that interest that’s going through there.

And we’re going to get ready to take our first break.

When we get back, we can get some more of your questions.

And you can certainly, again, email Friday at DRFriday.com or call 737979986.

737979986 is the number here in the studio.

So that way you can, it’s easy if you have a question or whatever.

We’re going to take a quick break and we get back.

We’ll get to your phone calls.

This is a Dr. Friday show.

We’ll be right back.

All righty.

We are back here live in studio.

And thankfully for my listeners, the phone lines are starting to light up.

So it looks like the first one that came in was Robert from Columbia, my neighbor right here.

Hey, Robert, what can I do for you?

Hey, Dr. Friday, how you doing, ma’am?

I am good.

Happy New Year.

Happy New Year’s.

Got a quick question for you.

My mother-in-law currently, she’s lived a trailer I own for the past two years.

And I was wondering if I could claim her on my taxes.

She does not pay rent or anything like that.

the previous, I did have somebody living there before she did, and they did pay rent, but she does not pay rent.

Right.

You’re providing that as a benefit, I guess you would say, being your mother-in-law.

But the answer is if she only has Social Security and you’re providing, obviously you’re providing 50% of her care because you’re providing her home, which would be in, I’m assuming utilities, unless she pays those.

So the rule is she has to be providing at least 50% of her care, which would be, home, utilities, food, insurance, all that kind of stuff.

So I think you would probably meet that.

Did she get other pensions other than Social Security?

Negative.

Just Social Security.

Okay, so I had to figure.

So, yeah, you can claim her without a problem because I doubt she’s filing taxes.

Correct.

She is not filing taxes.

So that would give you a $500 credit on your tax return.

Okay.

Okay.

Okay. You asked my question.

Thank you very much.

Cool. Thanks for listening. I appreciate it, Robert. All right, let’s go to Charles in Nashville.

Hey, Charles. What can I do for you, sweetie?

Hey, Dr. Friday. Thanks for taking my call. It’s an inheritance question with somebody being on Social Security.

Okay.

Mom recently passed in August. There’s four of us, and we settled her estate. So far, I have received about 15,000, and that’s from life insurance policy.

Is that going to affect my Social Security as far as what I get each front?

No, that will have, even if you’re on early Social Security disability or ordinary Social Security, inheritance would not most likely have an effect.

I shouldn’t say life insurance would not.

If you had inherited an IRA, which would come back in as ordinary income, it could affect some disability possibly, not early Social Security or Social Security.

Neither of those are going to be affected because they have to be from earned income.

But that being said, what you’ve listed would have a zero effect.

In fact, most likely you wouldn’t have to, if you’re only on Social Security, you would not even have to file taxes on what you’ve received.

Okay.

I just want to make sure my wife still works and everything.

Right.

So she may be claiming you, depending on how it is, but it still won’t affect your Social Security.

That won’t be an additional bill.

Let’s put it that way if it’s just life insurance.

All right.

Let me, that’s this year.

Now, this coming year, start this year, we have sold in a car and sold the house.

And on a time it’s all split up between us four, I should give me into about $60,000.

Again, I’ve got some really good news for you.

Both the vehicle and the house, you receive what we refer to as a step-up in basis.

So whatever it was worth back in August when mom was alive is what we would have.

unless something amazing happened and the vehicle she had was turned into a collectible or the house she owned went commercial from after, you know, her death, which it doesn’t sound like most likely.

We had actually.

There’d be no tax.

We actually sold it below what the appraised value was so we could get it sold.

Yeah, that often happens.

Sometimes the houses often need a little work sometimes, you know, even though the- That’s what we did.

Yeah.

Yeah.

So they could, they would take care of doing any work on it.

We gave them a discount on it.

Exactly.

No, that’s perfect.

So you will, since all four of you were most likely, was there in a state or trust or was it all just the four siblings signing off on everything?

All four siblings signing off.

She had a will.

And my youngest sister was the executive.

She took care of all of it.

So just curious.

Yeah, so you will be reporting the home sale will come to you on a 1099S, and you will have to report it, but it’s going to be zero capital gains because whatever you received was also your cost basis, or maybe you could claim a loss if you had an appraisal done.

So it could work either way.

But bottom line is it will have a zero effect for taxes.

It may even help you in taxes if you can capture the loss on the home sale.

Well, that makes me sleep a lot better at night, and I do appreciate it, Dr. Friday. Thanks for all you do.

No problem. Thanks for listening. I appreciate it. All right. Let’s run to Scott in Nashville.

Oh, thanks for taking my call, Dr. Friday.

Sure, sweetie. What can I do for you?

Okay. I have a crypto question for you.

Okay, I’m ready.

Okay. I’m ready.

And so it’s a function where you basically use USDT, which is Tether, and then it gets on an Ethereum chain, and they basically arbitrage prices between exchanges.

Anyway, on with that.

Technically, I made some money on this, and that’s fine.

But the company that I was trading with has decided to hold all of my earnings hostage until I pay what they consider a 32% profits tax before I get any money released to me.

And I’m telling them, you can’t do that.

Am I right or wrong?

Well, I mean, I guess it would depend on what country, what it’s being run out of, right?

Because with crypto…

They’re saying this is U.S. They’re saying this is U.S. IRS requirements.

No. There’s no 32 percent. I mean, even corporate taxes only 20. So there’s no 32 percent. And I doubt they’re paying your tax. You know, I’m saying. I mean, and that’s even higher than capital gains, but ordinary income tax, depending if it’s short term, could be that high. But they’re calling it a service fee, right?

No.

They’re saying I need to pay, I need, because this is what they claim, and I know they’re absolutely scamming me on this, my belief.

They say, I need to pay it and listen to this.

Since most of the trades are done in Tether, USDT, they say, I need to pay to a tax address, this 32% tax into basically the Netherlands, you know, a USDT account.

that supposedly is a tax account, and then they’ll release my funds.

And I’m like, no, you guys are lying.

Am I right?

I mean, I don’t believe that there’s any U.S. tax guide that says that this is decentralized finance.

And so they’re saying, you know, you can’t have, I don’t know if you’re familiar with DAPs, but those are decentralized financial applications.

And they’re saying that because of that, the U.S. government, due to money laundering, is making a requirement that taxes are paid before you collect any of the profits.

And I’m thinking, I’ve never heard of that before.

And so I wanted to find out from someone who actually understands the tax code.

Yeah.

I mean, okay, so I see here, who owes 32% tax bracket brought Bitcoin, blah, blah, blah, on January.

He failed to pay this.

So they’re withholding.

They’re calling it a USDT or a U.S.D.C.

Stabilizer situation.

I don’t, I mean, I’m going to be honest.

This is on Bitway, which is just one of them I follow.

It’s a blog.

And they do have something in there about it.

And they’re saying that that’s being reported on a form of 89, 49, which is, of course, our capital gains.

So it sounds like from this very quick conversation we’re having, and we need to get much deeper into this.

It’s not one I would go on the radio and finish.

But, Scott, it does sound like there is something they’re claiming that they’re collecting it on your behalf before they reuse it because they’re saying the U.S. Department of Treasury is saying that they’re being held responsible for collecting the tax before removing it so that the tax is not disappearing into the ether.

This is what I’m quickly reading about in this little blog, Scott.

we can we will definitely email back forth more about this but i don’t believe there is a direct tax law but i don’t know if i can honestly say that they haven’t taken and interpreted there’s so much that’s changed in the last four or five years with crypto i mean trying to make it more um visible right making sure people are i mean that there’s now a tax question on our 1040 there’s requirements for making sure that we’re reporting and i would say even in this when you report it into this every time they made one of those exchanges did you report that on your tax return every year even though you get the money was i mean because you could have already paid tax on some of this money oh no this is all new this is all this year oh it’s all one year okay okay i wasn’t sure i mean so it’s all within actually the last quarter so this is all from october okay um i will say that we need to double check and there is some um you know on the irs website we can go back and see if there’s mandate for these holding companies to actually withhold this.

It sounds a lot like the mandate that they have for people that work is 1099s.

There is a mandate out there.

It says we have to withhold 25% if their information doesn’t pass spec.

You know, like if their social security number doesn’t match their name or they don’t have a social security number, then by law we’re supposed to be withholding 25%.

I’m using the same basic language.

I have never yet heard anyone telling me that they couldn’t, get access to their investment fund, be it crypto or anything else, and have to pay the tax prior to. I’ve never heard of that yet, Scott. But I guarantee you I will be looking into it. Yeah, that’s what I’m thinking too, because I asked them, I said, well, why don’t you, if there’s some requirement, it would be withholding. So why don’t you withhold it? They says, no, we can’t do that.

And I’m like, oh, why not? Yeah, that’s, that would make me very questionable. Because it has to be a withholding they have to be with taking the tax out so in essence it should be paid in advance into your social security number right i mean that would be the the situation but when he says that we can’t do that that okay we’re going to give you 100 000 we’re sending 32 000 to the IRS and giving you the difference that would be the normal situation that they would cash the whole account out and yeah that no they’re saying you have to physically pay it in advance before they give you a dollar that is Exactly. So if I’ve got 100,000, right, if I’ve got 100,000 in profit out there, they’re saying, please send this $32,000 and we’ll release the $100,000. Yeah. See, that doesn’t make sense. No, that doesn’t make sense. The mandate would be for them to withhold the percentage, just like on an IRA, like I said, if we have 1099 people that don’t have EIN numbers or whatever. I’ve never heard having to prepay. That sounds like a scam. Seriously, it sounds like a scam.

Yep.

All right, buddy.

I will look into it more, but I see.

Okay.

Unfortunately, I’ve already gotten to the point where I told them, you know, I’m not giving you another penny.

So.

Good.

Well, yeah.

I mean, I’m pretty sure, but it’d be interesting to see what the regulations on their side, if you have the ability to get your money out is the problem.

So you have to keep us informed on that and let us know.

Yeah.

Unfortunately, you work in the world of crypto.

All right.

Bye.

Thanks, buddy.

Bye.

All right.

We’re going to take our second break.

When we get back, you can join us at 615-737-9986-6-15-737-9-9-89-6.

We’ll be right back.

All righty, we are back live here in studio.

And you have Jim on the line.

I love it, guys.

Thanks.

Let’s see what Jim has to share today.

Hey, Jim, what can I do for you?

Yes, my question is about the required minimum withdrawal from an hour.

A, you know, as you get to that age.

It was my understanding last year that you were able to, you know, if you gave directly to a charity of that, you would not then count it on your income.

You would save income tax.

Is that going to be, what are the requirements on that?

I know it would have to be a registered or approved charity.

Right. Okay. So let me jump in with Jim, just so other people may not know what you’re exactly.

Jim is talking about required minimum distributions, usually on 401Ks or IRAs. And he’s also talking about qualified charitable deduction, right, Jim?

Correct. Okay. And I will say, go ahead. Part of the money that you want to withdraw, it goes directly to a charity.

Instead of coming to you, you would avoid the income tax on that. Is that correct?

That is correct, but the one thing I want to change is it does get reported. I mean, so you’re going to receive a 1099R from your distribution, whoever it is, fidelity or whoever’s handling it. And then on that, there is a place on a tax return to list how much of that, maybe all of it, maybe part of it, went to a qualified charitable deduction. So it shows on the front of the 1040 in box A, which is the total distribution, and then box B, would be what is still left.

It could be zero if you gave it all, or it could be a portion of.

So there is a reporting system that does go through.

But your thought is correct, Jim.

When you give, let’s just say you have a $10,000 RMD, require minimum distribution, and you want to give all 10 to your church, which is a qualified charitable deduction.

You will not pay tax and you don’t have to, you don’t have to itemize, which is what most people have to do.

You don’t have to itemize to meet that mandate.

It will come dollar for dollar off your tax return.

Right.

And is that going to be also in 2025?

To my knowledge, they have made that permanent.

So unless somebody decides to take it back off the books, we are good to roll.

Yeah.

Okay.

Okay.

Oh, thank you.

And I’m so glad Jim brought that up.

Qualified charitable deductions, guys.

I do want to bring this, and I need to probably talk more.

about it. You can’t, you can’t go backwards. You should have already taken. If you are age 73 or older, you should be on RMDs. Some people may have hit it at 70 and a half, which is what it was a few years ago.

And so, bottom line is when you are required to take money out of your retirement accounts, at this point, the government says, hey, we want our share of taxes. You’ve saved it all your life. Now it’s time to start giving our tax money back to us. So they mandate how much you have to take out. And the only way, and this is great for, especially for people older, because most of the time they’ve paid almost their mortgages off, or they don’t itemize in most cases, and they almost always are giving to some organization. So instead of taking it out, instead of taking your RMD and putting it in the bank, which that means you had to pay tax, um, you.

You take your RMD and you tell the custodial, the person that’s holding it, like I said, Fidelity or whoever it is, you say, hey, I would like to have a check made out to, you know, Cayenne Warriors or to my church or whatever it is.

And I would like to have that check made out to them.

They have to be a certified or an IRS.gov has a list of everyone that qualifies.

You have to be a 501c3 or one of those versions.

And they make the checkout.

They usually mail the check to you.

You then give it to the organization and you get credit for it, but you don’t have to itemize.

Like if I write a check to an organization, I have to put that on my personal tax return.

And unless I have enough to itemize, I don’t get to deduct.

And it’s not dollar for dollar.

It is more of a credit when you look at a QCD where if I give and I do qualify, mine’s a deduction, right?

So it’s only based on my income bracket.

So again, very, and I believe you can give us.

up to $100,000 in a QCD, but most of the time, you know, that’s not an issue for for most the people that are doing it. But I do have people to give $20,000 and $30,000 a year out of their QCDs to charities. And it’s great because they grew that money tax free, right? Because it was in an IRA.

And now they’re able to give it to a tax, to a nonprofit tax free. And, you know, and it’s letting the money work harder at that level.

They don’t have to pay the IRS, which gives you a way of getting around paying taxes on money that was partially for taxes, right?

So it’s a nice thought.

It’s a great plan to work with your financial planner as well, your tax person and financial planner because a lot of times they have some really good insight to that kind of situation.

So if you have questions or you need some help, you can certainly call the show today.

615 737-9986 615 737-9-896. I’m assuming a lot of people are probably out and about today because supposedly we’re getting a pretty bad cold front coming through, which means not a whole bunch is going to probably be happening on Sunday or Monday. But our office will be open on Monday. So if you’ve got some questions or taxes that you don’t really want to have to go through, you can always email or talk to us via that as well. And, um, Now is the time, you know, just take yourself a Manila folder and write on the outside. Who do you get money from? Is it Social Security Administration, my W2? Do I have any kind of 1099 R’s, which could be annuities? They could be IRAs. Did you take money out of an IRA, even if you’re not retired? Sometimes people have to borrow from IRAs to accomplish that. And they, or maybe you’ve lost your job and you had a loan.

with that company, again, one of those situations where you could end up having to pay taxes.

You need to make a list now.

So that way as the forms start coming in, because I have found that a lot more forms, they send an email saying you can now download, but they’re not mailing those forms.

All right, really quick.

Let’s hit Tom and Brentwood so he doesn’t have to wait through the next break.

Hey, Tom, what can I do for you?

I want to go back on those QCDs and RMDs.

Yes, sir.

QCD, I don’t believe can come out of a full.

a 401k, I think it can only come out of an IRA.

It can come out of a 401k if you’re 73.

Because then the mandate, unless you’re still working at the same company, and then obviously you’re not mandated, it only falls when people are mandated for required minimum distributions.

And they would be mandated on a 401k as well as an IRA.

Okay.

I stand corrected then.

That’s right.

And I believe the QCD can be made.

at 70 and after you are right you are right that they never changed the date on a QCD I used to try to say that then I was confusing people because you could be 70 and a half and even though you’re not required to do an RMD you can still do a QCD out of an IRA and you would not be able to do that out of 401k you could only do it out of an IRA at that age and And QCDs are, I agree, QCDs are a great way to reduce your taxable income, especially if you want to do charge.

You want to, don’t want to do itemized deductions.

Yeah, and that was great, Tom.

I didn’t think about the 70 until you said it and triggered again, but because there are people that might want to, it’s a great way to go ahead and start giving, I mean, a lot of times people want to reduce their estate and the portion of it.

They want to give to charity.

Why not do it while you’re alive?

you know and um and do it tax free i mean that’s pretty sweet especially when iras are not tax free when you die right i mean that money now becomes taxable to the people that are beneficiaries um unless it’s an i unless it’s a non-profit but anyways thank you tom that was great thanks for your show i appreciate it no problem um yeah tom was spot on there um especially with the uh the qcd’s being at 70 and a half i honestly forgot, but they never did change the ruling. So it used to be that RMDs were also 70 and a half, right? But a few years ago, they up the age to 73, but they left the qualified charitable deduction. So if nothing else, if you have a financial planner and you’re sitting here going, I don’t know what Dr. Friday’s talking about. Write down the letter Q is in quote, C is in Charles, D is in dog, and ask your financial planner about it or qualified charitable deduction. It is a a great tool for anyone that is 70 and a half and older that will be mandated to take money out of an IRA.

It also is a great way for you to reduce, to give to a charity while alive and or because if you pass away and the money’s being left to a child, then they’re going to pay taxes.

Maybe there’s a way of you saving more money on one side, converting, doing something else and using part of your active IRA that is, already got taxes built into it and using more of that for charity and using others for conversion.

And I am not a financial planner. So you need to go through and do all of that with someone that knows you and your situation. But they have some really neat ways of maximizing your tax liability or minimizing your tax liability and maximizing contributions to the things that really are great.

So it sounds like a lot of my listeners are using it. But if you have not heard of it or you haven’t really started, maybe you’re getting to that age and you’re thinking, hey maybe this is something I can do because again if you’re giving 10 15,000 dollars think about it you could be saving 2,000 three thousand dollars a year in taxes where right now you’re putting the money paying the taxes and give it to the charity now you can be giving more to a charity without costing you any more money once you hit that age all right we’ll take our last break and we get back where I’ll take more of your calls 615 7379986 we’ll be right back with the doctor Friday show All righty, we are back to your live in studio with the Doctor Friday show.

This is the last part of the show.

And we’ll be able to take your calls for a last few minutes.

615737-9986, 615737-9-8986, taking your calls.

Talking about my favorite subject, which is taxes, which is now the season, right?

It is tax season.

We are now going to be thinking about not only what happened in 24, but if you have a new job, If you were already making small payments to the IRS, this will be a big change for you.

So do you need to adjust your W2 now to take that child?

instead of being married in one, maybe you go to married in zero.

So now you’re compensating for the fact that your child is now what the IRS is considering more of an adult.

So we need now in January, it’s so easy to make these adjustments.

When you have to wait until April, May, June, when you’re actually talking to your tax person, you’re halfway through the year.

And it’s harder to make the adjustment because it may be a bigger, a dollar amount, where you’ve got all 26 paychecks or 24 or 12 or 52, whatever it might be, depending on when you’re paid.

Um, it’s easier to have a few pennies come out every month, every week than it is to actually pay thousands at the end of the year.

Okay, let’s hit Roy in Hendersonville really quick since our time clock. Hey, Roy, what can I do for you?

How you doing? I love listening to any of your show. Thank you. Um, I got to take out $8,500 this year from my, uh, from my account. I’m 74. And now last year, my tax person, said that I’m getting it all back because I’m not making any other income. Do I need to file a tax return? If you only have 8,500 plus Social Security, I’m assuming you have Social Security, you would not be required to file taxes. You’re not making enough to offset the standard deduction. Okay, that’s what I wanted to find out. Last year, it cost me $100 to get it filed, and I only got $750 back.

And I would honestly say you might want to consider talking to whoever you’re finding, you’re leaving money on the table.

If you’re taking 85 and you can take out 12,000 tax free, you might want to consider taking just a smidge more because it’s tax free.

And if somebody inherits or whatever, they may end up paying taxes, you could use that and invest it after tax.

That’s just a, I’m not, again, not a financial joy, Roy, just thought maybe I’d throw that out there.

Thank you very much.

I really appreciate it.

Thank you.

Okay, let’s take Devin and Franklin while we have a few minutes. Hey, Dev.

Hi, can you hear me? I can hear you. All right. So I had a question about I was setting up a trust in a Roth IRA to give my son, you know, some, I guess, an investment account for whatever happened. But I didn’t know what like the taxability of a Ross IRA versus like a regular traditional IRA would be.

as far as if there’s any, I don’t know, write off for one or the other.

So pros and cons really quick.

Again, let me give you the tax pros and cons.

It’s from a Roth IRA.

You pay tax today and it grows tax free.

So especially if it’s a kid, and I’m assuming this child is working, is the Roth your money or you’re setting this up for your son who is working a job and then you’re going to put money in the Roth for him?

So it’ll be the Roth will be under my name and the beneficiary will be the trust.

He’s three years old.

Okay.

Little young to put him to work already.

Sorry about that.

So again, the nice thing about a Roth is, it sounds like you’re also fairly young, is if you can put money into a Roth and just let it grow, when that person, God forbid, something happens to you and it goes into the trust, it’s all tax free.

There’ll be no taxes to that child.

So all the money that you’ve accumulated will be able to be used to help finish his education, whatever has to be done, you know?

Where if it’s a traditional IRA, you will get a tax deduction today, but they will have to pay taxes whenever they inherit.

For whatever values in that.

It’s either I take the taxes now or I put it off on him later.

Right.

And I guess it really depends on your tax bracket to be.

quite honest I tell people if you’re in the 24 or higher bracket then it’s probably smart to go ahead and pay use a standard traditional and take the deduction because you know most likely I mean again we don’t know your son could be 45 50 years old and you know I mean fully growing and not he may be pushing this to his grandchild but um and that’s what we hope but in the other case if it were to happen as a younger child um or you’re making you’re in the 12 or 22 percent so you’re tax bracket it’s probably smart to you go ahead and use the current lower tax rates and go ahead and put pay the tax today and let it grow tax free so that’s just my rule of thumb no specialty i make about 80 so i think that might put me in the 22 or right well 80 i mean i’m assuming you’re married or am i wrong uh no single so i’d be i’m single but not had a household okay so you’re single basically not have households so you are in the 22% tax bracket yes so again my rule of thumb would be go ahead and pay taxes today and again a financial planner may be better at this but that’s what i usually just say pay taxes today because taxes are most likely going to be higher in five to 10 years especially the way the government spends money okay hey well that that works thank you very much for your time and your knowledge all right thanks for listening i appreciate it devon thanks all right this was a Great show, guys. Thank you for all the phone calls. I wasn’t too sure on the fourth day of January if people would be out and about ready to take on taxes yet. So I really appreciate that. We’re getting ready to wind down the show. So again, if you haven’t made a tax appointment, there’s Chris or myself. Sorry, my dog is in the background again. If you want to go to the website, DRFriday.com, you can set up an appointment.

Or you can email Friday at DR Friday.com.

You can also call my office on Monday morning, 615-367-0819.

615-367-0819.

If you’ve got questions and you’re just not too sure, go ahead and email Friday at DR Friday.com.

We’ll do our very best to get back with you because, you know, one thing is if you can at least get an answer or, led in the right direction, depending on what the questions are, obviously. We can help you at least make the decision because if you go ahead and do something based on what you think is the right answer and maybe it is or maybe it isn’t, if you make the wrong choice, that could cost you a lot of money. I mean, I can’t tell you how many times we’ve dealt with people with RMDs that forgot to take the requirement on distribution because no one told them they had to take it or they had multiple accounts and they only took it out of one. And the penalty on that guys is 50%. 50% of what you should have taken out. That’s a huge penalty for a lot of people. So again, just making sure that you know when you should be taking out estimated payments. Again, then you should have been most likely unless it was a one-time situation. Okay, you sold a home, you sold something and you ended up owing taxes, or you had a big change of life, but that same thing didn’t happen in 2024, you might not have to worry about it. But if you’re self-employed, nine times out of ten, every single year you’ve owed money and you’ve either just elected to make the payment, hopefully on April 15th, or you’ve pushed it off until October, and now you’ve paid, you know, a huge penalty, about 12% just for failure to file.

penalties or failure to pay penalties are 25%. So, you know, there are ways of asking for forgiveness.

I had a gentleman come in the other day and, you know, during this whole time, his wife was in the hospital. She had passed away this last January. So, I mean, there are reasonable cause for people to be able to get a relief from the IRS. But if you can get the thing done right the first time, you won’t have to be asking for forgiveness. And they really only give you one of those every three, years and it have to be a pretty good reasonable person that’s really trying their best to file their taxes. So that being said, just making sure, again, if you have questions, you can email Friday at DR Friday.com. You can check us out on the web, DR Friday.com, or you can call the office 615-367-0819. That is the number there. And again, I hope you guys are having a one- wonderful Saturday. We’re going to be getting into a lot more tax this next few weeks. And don’t forget to set up your tax appointment. I know our calendar is just about full. If you’re a returning client and you don’t see a time available, please call the office. We will always have time for returning clients. Otherwise, we’ll, you know, Chris can take you. We have a new EA in the office that can help take up some of the people. He’s awesome. So again, I hope you have a wonderful Saturday. Stay warm. Cop you later.