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The doctor is in, and she’s unpacking the “one big, beautiful bill” that was just signed into law. On this episode, Dr. Friday gives her first take on the massive tax changes set to take effect in 2025. What does this mean for your family, your business, and your retirement?
Listen in as Dr. Friday discusses the most significant updates, including a huge increase in the SALT deduction, the potential return of the car loan interest deduction, new tax credits for tip and overtime workers, and a major change to how Social Security benefits are taxed for many Americans. While the ink is barely dry and the IRS is still scrambling to create the new forms, Dr. Friday provides the essential information you need to start preparing now. Plus, she answers listener calls about the home sale exclusion, the nuances of the new Social Security deduction, and a crucial update on the Beneficial Ownership (BOI) reporting requirement for businesses.
Episode Summary
Here’s a breakdown of what we covered in this episode:
Breaking Down the New 2025 Tax Bill:
- SALT Deduction: The State and Local Tax (SALT) deduction cap is set to increase from $10,000 to $40,000 for most taxpayers, with a phase-out for individuals earning over $500,000.
- Tax-Free Tips & Overtime: A new credit is being introduced for income tax on tips (up to $1,300) and overtime pay (up to $1,400), primarily for workers in the 12% tax bracket. Social Security and Medicare taxes will still apply.
- Social Security Tax Relief: A new deduction or credit of 4,000−6,000 will be available for Social Security recipients, with income phase-outs starting around $75k for singles and $150k for married couples.
- Child Tax Credit: The credit is expected to be renewed at the $2,000 level, preventing the scheduled drop to $1,000.
- Car Loan Interest: The deduction for interest paid on car loans is back on the table, though specific details (like whether itemization is required) are still unknown.
- Charitable Deduction: An “above-the-line” deduction for charitable contributions for non-itemizers (similar to the one during COVID) is expected to return.
Caller Questions & Key Clarifications:
- A caller’s question prompts a crucial update on the Beneficial Ownership Information (BOI) report: As of March 2025, filing is voluntary for domestic companies with no foreign owners.
- The primary home sale exclusion ($250k single / $500k married) remains unchanged by the new bill.
- Dr. Friday confirms all these new tax provisions are effective for the 2025 tax year, which you will file in 2026.
IRS & Tax Filing Advice:
- Dr. Friday explains why 2024 tax refunds might be delayed, citing increased IRS fraud checks and return complexity.
- A reminder about the federal disaster extension, which pushes the filing deadline to November 3rd for affected taxpayers.
- The critical importance of staying in compliance by making quarterly estimated tax payments to avoid penalties and interest with the IRS.
Episode FAQ
Q: Will my tips and overtime pay be completely tax-free now?
A: Not entirely. The new law creates a tax credit against your federal income tax for tips and overtime pay, up to a certain limit ($1,300 for tips, $1,400 for overtime). This benefit is aimed at lower-income earners, likely those in the 12% tax bracket. You will still owe Social Security and Medicare taxes on this income. Dr. Friday stresses the importance of keeping detailed pay stubs as documentation will be required.
Q: Do I need to file that Beneficial Ownership Information (BOI) report for my small business?
A: This was a key clarification. As of March 21, 2025, the requirement to file the BOI report is voluntary for domestic companies that do not have any foreign owners or partners. If your company has foreign beneficial owners, you are still required to file.
Q: When do all these new tax changes take effect?
A: All the changes discussed from the new bill are effective for the 2025 tax year. This means they will apply to the income you earn in 2025, which you will file on your tax return in early 2026. They do not apply to your 2024 taxes.
Q: Is the deduction for car loan interest definitely back?
A: Dr. Friday mentioned this is included in the bill, but details are still emerging. We do not yet know if it will be an “above-the-line” deduction available to everyone or if it will require you to itemize your deductions.
Transcript
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 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.
Doctor is in the house and we have one big, beautiful bill that has been signed.
And what does that really mean for you and me?
And I’m going to be quite honest with you.
We had kind of the Senate and the house each putting their, their two cents in, but, um, it does look like we’re going to have, um, the salt deduction, which is where we get to deduct our property tax, sales tax, and in some places, state income tax. We all know that that’s been limited to $10,000, married or single, right? And that’s now in 2025 is going to be 40,000.
Only people that will be capped are people that are making over 500,000. They haven’t really given the exact. They’re saying individuals with over 500,000, but they’re not giving married, would be a million or would there be a marriage penalty? Again, we don’t have all of the direct information. I haven’t found anything from the IRS giving us exactly how some of this is going to, but that’s good news because I have a number of people that they either have a multiple number of properties, especially people that live in California and New York where their income tax is extremely high and their property taxes as well. And so at this point they have not had the ability to do much. Now, another thing that we have, it looks like the child tax credit looks like it’s probably going to be going down. Again, in comparing the Senate and the House, the House increased it more, the Senate did not. It looks like the current is $2,000 per child was set to drop to $1,000 after 2025. And I believe it’s going to be renewed back up to at least the $2,000 mock, which is obviously good news for most of us. There does appear to be a charitable deduction that’s going to be, many of you guys may remember back in COVID time when they did the $150 for single, $300 for married couples that did not have to itemize. They had it above the line.
And that looks to be something that’s going to be on the new tax form. And most of these seem to be going into effect in 2025. Of course, we all know that the current tax law was supposed to expire at the end of 25. So the funny thing is I just came from a four-day conference with the Internal Revenue Service in Chicago, and they were all talking because at that point we didn’t know what was going to pass, what wasn’t. And so they were all talking about how they are prepping the forms are preparing for this. And I’m not too sure if they’re prepared for all of these changes that are all be coming down. This is going to be a lot to implement for any, anybody, you know, to be quite honest with you. Some of the other things I saw that may, may come into play, student loan interest. If you’re in a payment now, they may turn around and see if they can’t, they may, they give you some options on how or what that’s going to mean and how that’s going to change. They are going to do some earnings limitations, but probably the two big things people want to know about is social security is not going to be taxed for individuals that the household earning looks like it’s under the $100,000 mark or under the 50,000 being if you’re married under the hundred, um, or, or, um, single if it’s under 50, basically the people in the 12% tax bracket looks like they’re not going to, or they’re going to give you a credit up to, um, four to $6,000. And again, I don’t have the exact, uh, situation. Um, they also have the, um, tax on, um, or no tax on tips. This one’s going
to be interesting
guys, because everything I have read about this is, um, definitely going to be income-based. Um, you’re going to have, you’re still going to be doing all the taxes on your, um, W2. Um, it looks like the only tax you’re not going to be paying is going to be on, uh, ordinary income tax. So you’ll still be paying social security and Medicare on your taxes for tips, uh, but you won’t be paying. And then you basically get to report. Now this is where it’s going to get tricky. Um, it just basically says no tax overtime, um, on these things, but, and also this is going to apply to overtime pay for those same people that are basically in the 12% tax brackets. The problem I have or how that’s going to work is how are they going to regulate people that are going to say, Oh, all my money was tips. There’s going to have to be a minimum wage situation. Oh, I worked overtime half the year and I didn’t work half the year. I just worked, you know, straight through 80 hour weeks and then I didn’t work. So half of that would be some sort of exclusion. There’s going to be required documentation. You’re going to have to have, um, it does say something about 1300 for, uh, per tipped worker, especially in 1400 for hourly workers. Um, I think there’s going to be a limit, right? So they’re basically going to say, we’re going to give you a credit if you did 80 hours or more in or in overtime, or if you did tips more than $20,000 up to, and again, it’s going to be limiting people that are in, um, the, uh, 12% or less tax bracket. So it’s going to be a tricky one and there’s going to be documentation. I’m going to suggest anyone that’s not doing it right now, because I know a lot of people that don’t, because when I ask for these, start downloading your pay stubs because that information is on your pay stubs. How much were you paid in overtime? The cumulative number is on the final one, but start downloading those now. So we have the proper documentation. Um, at least at this point, that would be where I would start because your employer is paying you this information. So that would be, um, ideal, uh, to be able to, to do that. So that in my opinion would be great. Um, also, um, make sure that if working typical families. They’re saying that this bill will bring in an additional $10,900 in additional take-home pay. Workers will see an increase in wages of about 7,200.
I’m not sure how that’s being calculated, so I’m not going there and going to really discuss that.
I did see a lot on Medicaid. Interesting things, again, being a person that has, Medicaid is not part of the tax code, so it’s not something I have direct information on, but it does look like they’re going to have requirements of either doing community service or working to make that as part of the qualification unless you are fully disabled.
So it will be interesting to see how they do this.
Also, another interesting thing on here is car loan interest.
Back in, I’d say it’s the 90s, they removed that from the tax law, right?
We can’t take, only interest we’re allowed to take off now is mortgage interest tied to your primary home or if you’ve got rental properties, et cetera.
But we lost credit card interest and car interest.
Car loan interest is back on the table.
Again, all I know is that they’ve put it in the bill.
I do not know if that is going to be part of itemizing requirements.
or not. So, um, it’s going to be interesting. And obviously, um, any of these things, we have to have, um, a social security, uh, active social security card, um, basically proving citizenship to qualify for any of these credits. None of these will be available for, um, W sevens, um, individuals or, uh, people that are here under, um, work, work permits. So if you’ve got a question, maybe you’ve got something you want to add to the show, you certainly can. 615-737-9986, 615-737-9986 is the number here in the studio. And you can certainly join us here and we can see what we have. But today we’re going to be talking about taxes because you know what? We still haven’t filed our 2024 taxes for many people. I have a number of people that it seems like they’ve been asking where’s my refund. Um, and it’s not showing up either on the IRS webpage. That was one of the big questions we had at the seminar. How long can it take for a person to get their information either in their ID.me or sometimes tracking your, um, because sometimes people will get it in their five days, right? They file it five days later, they’re tracking their refund. And then other people. It can be five weeks. And the IRS basically said because of a lower number of people, depending on the complication of the return, because everyone thinks that just because we e-file as tax preparers, that we’re e-filing these returns, that somehow they’re not being tracked or touched by individuals. And the IRS is saying, no, that’s not the case. They’ve got to go through fraud. They have to go through the child tax credits, all these different things.
And that can create quite a difference in the way they’re handled.
So, you know, again, not to say that you shouldn’t double check and make sure that there isn’t something holding things up, but you do need to make sure that whatever you’re dealing with is going to be primary, you know, your situation.
Because, again, they have put a lot of steps.
They’ve been working very hard and trying to stop fraud.
pretty amazing some of the things they’ve got going on um and moving that direction um all right let’s see if we can get alan real quick and then we’ll go from there hey alan what you got going
uh i’ve called in the past about uh when my wife was on social security and i used to be on disability but it switched over to social security when i turned
67 and uh we’re
selling a home you we talked to you about that. Has that bill changed that where you sell a home and you say you can take the money from the home?
Right. I mean, right now they have not changed the current. So basically you have $500,000 exclusion. If you sell your home above what you’ve already paid for the home.
So if you guys brought the home for a hundred thousand, you could sell it for 600 and not pay a dollar tax if it’s a primary
home yeah yeah and uh since i was on disability and it switched over
oh yeah yeah well
will that affect that money that we gave no it should not
now that you’re on actual social security because what you were talking about there were certain limitations um that you you had to keep so much they only allowed like three thousand dollars in the bank blah, blah, blah for disability. But as a person that’s 67 or older, you are now on actual social security. So nothing you have now has limitations.
Yeah. I just heard somebody says they might go back five years or something. No,
there is a look back period, but that would not most likely apply in your situation because all you went from was disability to Medicare. The look back period is usually if, if, um, if you ended up in a nursing home, for example,
just saying, um,
there is a look back period to make sure you didn’t give money to your children or if you sold the house and
the money was
given somewhere, but that’s for all of us.
Okay. Well, I appreciate your time and enjoy your show.
Thank you, sir. Appreciate you listening. All right. We’re
going to take a quick
break here and we get back we’ll take some of your calls at 615-737-9986 615-737-9986 we’ll be right back in studio this is the doctor friday show and if you want to join us you can at 615-737-99 866-1-5737-9986. Taking your calls. So I do have a little clarification under the one big, beautiful bill. It is a maximum, um, credit of $1,300 for people that have tips. They still haven’t really gotten down to how we get to that 1300. Do you have to have a hundred, a hundred and $50 in tips or do you have to have 1300? The second is $1,400 for overtime pay.
Again, these are going to only be most likely individuals that are only in the 12% tax bracket.
And it’s going to help obviously, you know, put more money in the pocket of those individuals.
So this is going to be interesting to see how they’re going to require the proof that you receive these tips.
And on my side, what kind of documentation will be required to help my tax clients maximize those tax deductions.
Okay, let’s get Jack in Brentwood and see if I can help him.
Hey, Jack.
Yes, Dr. Friday.
I have on the Social Security, it said that an article that you and your wife would each get $6,000 credit or extra deduction
of
your Social Security.
But it would also be phased out between $150,000 and $250,000.
If your adjusted gross income was $150, it would be no deduction.
But it goes out if you make $250 as far as your adjusted gross income, then you lose that totally.
But I also wondered, you know, right now you get a 15% discount on your Social Security.
You only count 85%.
Yeah, you’re a smart man.
Are you going to get
that before you do this other deduction, or does that go away?
That’s some of my questions.
So the one that I’ve read here just recently, it says, obviously at one point they were trying to eliminate tax on Social Security benefits.
That didn’t make it.
The Senate provided the $6,000 deduction for age 65 and older for three years, or four years, 25 through 28.
Just so you know, these both have limitations.
The house came back and say they wanted to cap it at four. So I don’t know. I haven’t been able to find, but your numbers are, mine says basically if it’s, you have to be under $75,000 and age 65 and older.
Well, that makes sense because Social Security is only for me.
Otherwise, you’re on disability.
And then for a married couple, 150.
Now, you read something that said the phase out, which is usually the way they like to do it, right?
They usually give us a
period to
do the phase out.
But I’m not too sure which one actually made it.
Was it 4,000 or 6,000?
It was a 6,000.
It was a 6,000 and 150 to 250 is a fade out period for a couple.
Gotcha.
Well,
that would be right.
And I’m not, you know, again, I’ve, there seems to be so much information out
there to
be quite honest with you, because the house and the Senate both made their changes. And I’m not too sure. I was, I’ve been trying to find out what was actually signed by the president, you know, what, what made through, right.
Because they both put their versions together and then somewhere in the middle, I’m assuming they came up with a final version.
I don’t know what that was exactly.
But income, my understanding is they’re still only looking at the 85% that’s taxable.
There has been no conversation of looking at the full Social Security and then changing this.
So I think they’re still going to give us that 15% non-taxable for individuals or married, whatever.
And then this is going to play a second step.
And they do say we won’t have to itemize, which is great because a lot of my people that are 65 and older or 67 and older and on social security, they don’t have big deductions.
Unless it’s charity, most of my clients aren’t itemizing because of mortgage interest or something.
So
it looks
like it’s going to be something that’s going to be added to page one or two.
And then you’ll be able to, I’m hoping it’s going to be based on just straight income.
And then it means test it out.
But yes, so I’m not helping a whole bunch because I’m not sure of the exact answer on a lot of this.
But I will keep you informed as soon as I see the actual form so we know how to plan for it.
At least the clients that can.
Some of my clients, I mean, you know, they don’t have that option because they have distributions or whatever they have to deal with.
But you do expect it to be retroactive to.
Oh, absolutely.
Everything
I’ve read, all these things are going into effect for the tax year of 25.
Yes, sir.
OK, thank you.
No problem.
Thanks for listening, Jack.
Appreciate it.
All right.
So if you want to join the show, you can, 615-737-9986, 615-737-9986.
If you want to join in and find out what we have as far as additional information.
Like I said, I have been looking at the Hill in different formats.
The problem I have on many of these websites is they seem to have been like when the Senate passed theirs or when the Congress passed theirs.
And so I’m just trying to get something that’s actually going to be what goes through, what really got onto the desk of the president and what do we have for documentations or whatever.
So we’ll keep that going and making sure that we have all the proper documents.
As soon as I know more about it, I will definitely be sending you guys or at least sharing it here on the radio so we have more information to work with.
Because, I mean, this is probably the biggest that’s going to happen as far as most of the things.
And I will be honest, I was reading the actual physical bill that they claim was signed by the U.S. House and representatives.
And there’s a lot of things in there, guys, probably worth anyone that has the time to be able to read what they have.
Now, you know, a lot of a lot of people have put together some of the bullet points and they’re saying that people that make under 50,000 are going to have additional savings of almost 15 percent.
People making 50 to 111 people over 110.
And it’s going to add to a household family of four about $10,900.
I’m assuming they’re taking new accounts.
Somebody’s working for tips.
Somebody’s getting, you know, the higher tax credits.
It does seem to really have went back through and basically saying that the tax cuts about 21% for working families that are making 15 to 30%.
so again we’re just waiting for the final delivery of the tax you know relief and what’s uh what’s going to come through on that so if you want to join the show you can 615-737-9986 615-737-9986 taking your cuts talking to to see what we have on on the different situation it does look like they’re going to keep the child tax credit 2,500. If you’re in, I do a number of people that have farms.
They have changed some of the death benefits for inheritance on some of those things.
I haven’t seen where they’ve changed anything on the inheritance tax laws as far as, you know, we get the step up in basis. But if you have an estate, at one point when Biden was in office, He wanted to bring the estate tax back down to a million dollars.
And obviously that wasn’t going to be a win-win for, for a few people, especially with real estate prices going up as high as they have.
Right now we’re at $11 million per person or thereabouts 12 million.
And I haven’t seen if that has been preserved or if that’s something that’s going to have to, if that’s something that’s changed, you know.
So hopefully we’ll be able to give you guys a lot more information on what we have going on and how we’re going to be able to move forward.
Some interesting on the Ways and Means website, they’re saying that the average family savings here in mid Tennessee is going to be 1,284.
And the small business claim for the 199A will be about 53,000.
And the family farms, we have about 10,000.
998 farms in this area. It’s kind of an interesting website. So anyways, you can join the show if you don’t want to, you can also email or text us email would be Friday at dr friday.com. Or you can obviously just call the office on Monday at 615-367-0819. All right, get ready to take our second break. And don’t forget, we do have taxes still. We are under a federal disaster extension, which is until November 3rd. So if you haven’t filed or you’re looking at a year that you really want to get caught up, this would be the year because on the 2024 taxes, many of the penalties, now it does not, I had someone say, well, I got penalized. And I said, it doesn’t stop making proper estimated tax payments. That doesn’t stop. It doesn’t, you know, failure to make proper estimated tax payments, those kind of penalties are still going to be there. Failure to file on time if there’s not a proper extension on a business, unless you have truly direct, if you were directly affected by one of these disasters that happened in 24, then absolutely, you would most likely qualify for a different type of waiver, not just a waiver, but because of the hardship filing. But other than that, you know, we just want to make sure that everyone’s thinking about, Hey, let’s get ready. Let’s get filing. Let’s make this happen. You can, um, reach the radio show again at 6 1 5 7 3 7 9 9 8 6 6 1 5 7 3 7 9 9 8 6. We’re going to take a break. When we get back, you guys can hear more about who I am. Dr. Friday and enrolled agent licensed by the internal revenue service to do taxes and representation. Um, we’ve been doing this show now for about 15 years. So if you want to hear more, just keep listening. We’ll be right back with the Dr. Friday show. All righty, we are back here live in studio. This is the Dr. Friday show.
Again, I am an enrolled agent licensed by the Internal Revenue Service to do taxes and representation. I have never worked for the Internal Revenue Service, just for all those that sometimes think I have. I have enjoyed doing this for about 30 years here in the Tennessee area.
And so if you have questions or you are thinking, maybe I need to get caught up on my taxes, or maybe you’re having some tax issues, the love letters have come in and you’re like, oh my gosh, I don’t know what I’m supposed to do. How am I supposed to make this work? It’s all there. And there is processes in play. I’m not going to say that the IRS is going to work fast. I’ve had some people that’s come in and said, oh, we’re going to be getting married soon. And, you know, she owes all this money. We want to see what we can do about getting this resolved before we get married.
And I think that can be a very good idea. But if your marriage is two weeks from after you’ve met with me, nothing’s going to get moving that quick, unless you just want to write a check to the IRS.
Sure, that will eliminate it. But normally, if you’re coming to my office and asking me these questions, it’s not that you want to pay. It’s more about what you want to do, moving that forward and how that’s going to work for you.
So just making sure we’re on the same page and you have the same situation going forward and we’ll see what we got from that.
But if you have questions or if you have a situation where you’ve gotten some love letters and you’re not too sure what do they really want from you?
Well, one thing they want is to make sure that you’re not ignoring them.
Another thing they want is to make sure that you are complying.
Those are important words that they’re always using at these conferences and actually on the phone if you talk to them.
what is compliance for you may be different than what compliance for someone else’s.
So making sure you understand what that compliance is, is really what it’s going to come down to. All right, let’s hit bill.
Who’s on the phone. Let’s see if we can do something with bill. Hello, bill.
Happy 4th of July.
Oh, absolutely. I hope you had a wonderful day.
And I went into a fellow the other day who started his own business.
And
I have forgotten who has to file the magic who owns this business form, and I can’t even say the name of it.
So would you review that for us, please?
Do you mean as far as the Schedule C where he needs to file for the IRS, or are we talking state forms like business license, franchise excise?
Do you know if he’s operating as a sole proprietorship or is it like an entity, a single member?
He is operating as a sole proprietor.
and uh uh it’s the uh it’s the new form that nobody tells you okay i know what you’re talking
about you’re talking about the um owners but schedule c doesn’t have to file for that um uh what’s it called my goodness i’m going blank as well i know exactly what you’re talking about but uh ownership that we have to reply with the foreign tax uh
all of that stuff
yes ma’am yes
business owners. But
I will go, yes, I will cover that for you.
Yeah, he will be fine with that, but I will cover that a little bit because there is a lot of people out there because of that delay that happened that many people did not file that form. So I will bring up that information. Thanks for letting, refreshing my memory because, you know, I forgot to be honest about that. Business they need to file that so that way many people stay in compliance because it is still in play you are
100% correct. I remember that it was you only had like 90 days to take care of it or you’re in big trouble.
Yes and actually
starting this year
starting in
2025 it was only 30 days from the date that you opened the business. The
penalties haven’t
been I haven’t seen anybody assessed the penalties yet, but I think it’s a matter of time. You know, I mean, once they get enough information, they feel people have been notified. It’s kind of like, well, we all know we have to file a tax return. Everyone should know that they have to file their owner’s information under the FBAR situation. So I think they’re just waiting and then people are going to see that $500 a day penalty. But that’s a great question. Thank you, Bill. I will get that out there for people
all right well thanks thanks
uh that really was a good question for a while there um i was talking a lot about it but then um you know we we kind of just let it go by the wayside thinking that you know everyone probably had that covered or if you have an accountant or something a lot of people probably um you know are are basically getting it done by them uh but that is not the best way to go about doing that. But there is a mandate out there, people. And that mandate does require you to go to FBAR and to file the business owner’s information. This is really made for multiple members, partnerships, corporations, and they’re looking for people with foreign partners is what they’re looking for. They’re trying to make sure that the foreign partners are being treated properly.
There was actually quite a conversation on this at the conference I was at where the IRS is truly trying to make sure that people that are from other countries that may invest into our country, how are people required to pay, right?
or from our standpoint, from taxpayers, what do we need to make sure is being done? Because many times, beneficial owner and documentation, you can look that up at the irs.gov. It does tell you who is an individual that’s international, a business with international people, and then the foreign tax count, which is probably FBAR, which more of us probably deal with. But they are looking for individuals that are foreign investors to basically be able to go out there and file the 1040s and, you know, the NRs and what kind of beneficiary, what kind of forms need to be filed.
There are forms that foreign individuals should be filing. That way they can get a number and then owners will be able to withhold tax reported under that number that is not a social security number.
Just want to make sure you understand just because you come into this country and you can get a W-7, which is a form that you can use to obtain a Social Security number, but it’s not based on citizenship.
It’s just the number used to be able to track non-aliens and foreign investments.
And that way we can make tax payments for those individuals because they need to comply.
If you’re living here in the United States and, you know, no matter how you want to look at it, you do have certain requirements that are going to be required for you to file.
And if you’re an owner of a business, I mean, there are penalties out there if you don’t comply with that information.
So it is very important that if you’re an owner of a business or you have something and you want to make sure you have all the proper information, you do need to go and do that.
As of March 21st, 2025, the Beneficial Owner Information Reporting is voluntary for domestic corporations.
VINCEN removed the requirement that U.S. companies and U.S. persons file a foreign report company still for individuals.
Foreign companies still have to file.
So for all of us that are only using U.S. citizens, now this would also apply if you have, you know, an individual that is here working maybe as a green card or something else.
you would need to continue to make sure that you have this information.
It is voluntary.
I know I had a number of clients because we did probably 70, 80 of these for our clients.
When we first heard about this in 2024 and everyone was hearing $500 penalties, if we don’t do this, it did get taken to court.
And this was the outplay is that as of March 21st, 2025, the beneficiary ownership information reporting is voluntary to domestic companies. As long as you don’t have any foreign individuals in your company, it is voluntary, which basically means for most of my clients, not going to happen. I don’t know if there’s any benefit to doing it. Like I said, and it is a one time unless something changes, right? So if you right now are domestic because everybody is a U.S. citizen, maybe you bring in someone that isn’t a U.S. citizen but still lives here and works here, then that person would be required for you to file that information and get that status. And you’re not going to want to not do it. The penalties are still extremely steep for people that are not complying with that non, you know, because non-resident alien or foreign entities, those are a big area the IRS is working with. Under this administration, I’m just being honest, it’s a big thing. And even on all these tax cuts and different things we’re talking about, I have a number of people that may file 1040s with a W-7. In all honesty, from what I’m finding out, they should be filing 1040 NRs because they’re non-resident.
And the tax code is different.
That’s really the big difference of what’s the difference between an NR non-resident versus a person that has an actual citizenship here, and then they file under the regular 1040 rules.
So again, just making sure that you have that information, making sure you’re complying properly with it.
Most of these deductions that come in, If you have a social security number that starts with, I think, nines or sevens, those will not get these credits that are coming out with for tips and all them.
They have put in the language that they must have an active social security number and W7 numbers are not active social security numbers.
So just putting that out there, we’re going to be getting ready to take our last break for the show.
So if you’ve been holding on and you’ve got a question or even a statement to make, it’s always fun to hear.
615-737-9986.
615-737-9986 is the number here in the studio.
And it’s a beautiful Saturday right now.
And hopefully you guys did really enjoy your 4th of July.
I know I did.
And it was actually a beautiful night here in Spring Hill.
So we got a win-win situation, but we’re going to be take this quick break.
When we get back, we’ll take some phone calls.
We’ll talk a little bit more about the one big, beautiful bill, as well as maybe some of the things we need to be looking at to make sure we’re staying in compliance.
We’ll be right back with the Dr. Friday show.
All righty, we are back here live in studio on this beautiful Saturday.
And if you want to join the show, you can 615-737-9986, 615-737-9986, taking your calls, talking about taxes.
Obviously, I’m an enrolled agent licensed by the IRS, which basically means, guys, I’ve got 30 years of experience dealing with the IRS, dealing with taxes, helping people try to get in compliance.
That is such an important part of this conversation.
So often people are sitting there and they’re like, oh, I don’t know about this or that.
But, you know, the fact is to make any deal, to do anything with the IRS, you are in a situation where they’re going to basically say, you know what, if you want us to do this, you need to make sure you’ve paid your quarterlies.
You need to make sure you’ve made, you know, that you have a deal as far as staying in compliant with all your tax returns.
And then let’s talk and see what we have.
And have you made adjustments so that every year you’re not owing the IRS?
Because in most cases, it is something that can be stopped.
I know a lot of times people are like, well, that’s, you know, it’s a lot easier said than done.
It’s usually us, the self-employed that make the hardest because times are hard sometimes.
And then you use that money and you’re like, oh, I’ll pay the IRS later.
and later becomes never. And that becomes a problem. So it just really comes back to making sure that you have the same situation when it comes to dealing with the IRS. First things, make sure you’re making your quarterlies if you’re self-employed. I don’t care what anyone says.
They are not an elective. It’s not, oh, I want to do this when I want to do it. It is a mandate.
Now, some people may be, if you’re good with money and you say, hey, you know what, I’ll pay that 6% extra money at the end of the year because I want to keep my money as fast, long as I can. I’m not saying that’s an option, but as long as you’re paying every year, the IRS is not really going to say anything. It’s really that simple. They’re not. They’re not going to say anything. They don’t care. They’re just going to let it all go the way it is. And then it’s going to be, that’s fine.
you know, but if you are in a situation where you don’t have that and you’re making and you’re not making the payment every year when you file your taxes. And so now you have this situation where you owe for two or three years or you had just a really good year and now you’ve got a really big tax bill and you don’t have the funds because you’ve reinvested it. Then the IRS does look at that as a, as is a point where you, you should have been making quarter lease. So failure to
proper court
of lease, failure to pay on time,
failure to
file on time or whatever. They have all kinds of failures to do something. Trust
me.
They love those words. Um, and many of them are able to be, um, reviewed and taken care of, but in some cases they’re not, I mean, some cases the IRS is correct, right? The, basically the, the IRS is sitting there going, okay, we’ve told you, you know, these are the rules. It’s the rules for everybody. This is how it should work.
And then you turn around and you’re like, okay, cool. All right. We got this covered. We know what we’ve got going. And then you decide, you know, that you owe money, but you don’t have the money to pay. Then that’s a problem. I’m just being honest. It is a problem. You don’t have the money to pay. Then you have a situation where you need to be dealing with this on a more direct, you know, no one stops you from actually filing the taxes.
especially estimated taxes every month, every, every week. I have people that like to make their payments more often because of that fact. They just want to be able to make them, get them done out of the way. Life is good. And then you’re in good shape, but you know, not everybody is for that. Not everybody wants to deal with that. And so you’re like, okay, well, we’ll have to figure it out. But you know, everyone is different. Everyone needs to figure it out. But the first thing you need to figure out is how can you stay in compliance? Because whatever you’ve done in the past, whatever problems or situations that happened in the past makes really no difference because you can’t change the past. What we can change is the future. We can change the future. We can say, okay, here’s what we have. Here’s where we’re going to go. And this is the best way we’re going to do it. And you can make a plan and you can make those changes in the future. Can’t, you know, so why not go ahead and make that happen so that you have the ability to move forward. Because that’s really what I’m thinking you need to do is that you need to be able to sit down and say, okay, you know what? 2025 with this federal extension that we’re under, which normally we never have once in a lifetime, I call it. Then you could start making estimates now for 2025 and get yourself on track for the tax year of 2025. You’ve got what? Five, six months to be able to pay what you might owe by the end of the year. And this will be the first year. And then you won’t have those penalties as long as you paid in, you know, basically the first three estimates equivalent to the first three by November 3rd. Um, but you can pay them weekly, bi-weekly, whatever you want. It’s truly up to you, but you need to figure out what’s going to be the best way for you to do this.
So that way you can make sure you’re getting in track. And then you can start talking about, can we make a payment plan? Can we even pay a payment plan? I mean, one of the people we’ve been going back and forth, do you take the money out of a 401k payment, you know, take a loan from your 401k? What will that cost you compared to if you just make the same payment to the IRS?
Because either way, it’s coming out. But, you know, you also take into account that the IRS is like the world’s worst loan officer. So what’s the interest and penalty is going to be continuously going if you don’t pay them versus if you borrow from your 401k, there is no penalty. They just charge you a set dollar amount. You’re basically paying yourself back, but if there’s no penalties or interest really going into that whole thing, it’s just like a set dollar amount. The IRS is looking for more and more ways to be able to take more money. So it’s very important that you’re looking at the big picture of how do I make sure that I’m doing the best for me and my family.
There is a situation in some cases like this, this one person I’m thinking of, he’s got a child that’s not, he never knows when he’s going to end up in the hospital.
Sometimes they end up having to pay for certain procedures because he’s, you know, he’s been sick for a long time and, you know, insurance companies are slow in delaying payments and things.
So do you really want to potentially put your family’s health or something by taking this loan where you might not, where you might need that for life or death in essence in this family?
So, and there are ways of having some of these conversations with the IRS. If you can document enough where the child’s been in and out of the hospital so many times that, you know, you never know when you’re going to have to take off work, therefore not have, you know, the funds coming in for that kind of situation.
All of that is there, but it’s really important for you to understand what, I mean, the IRS doesn’t know you from anything else. We are all numbers and we all have to meet into these different boxes.
And the only way to get into a certain box, the IRS assumes everybody has the ability to pay unless they have somehow had all the proper documents to tell you otherwise. Sometimes people think they don’t have the ability to pay, but they do. They really do. They just don’t want to borrow against their house because they’ve almost paid it off. And now they owe the IRS 50 grand and they don’t want to have to pay that back to the house. That is a choice that you made a long time ago before your house was almost paid off. To be honest, in many cases, you’ve made that choice saying, Hey, I’m going to make a mortgage payment when I should have been making a payment to the IRS by making those payments or even making extra payments, then building up that equity, you, you allowed the IRS to be a loan officer that you may not have wanted to have as your loan officer.
But you know what, when you kept making those payments or when you’re paying off your credit card bill, but not paying off the IRS, or, I mean, they had all kinds of things.
I mean, they, the story is some of these revenue officers, I mean, they keep their kids in private school, but they can’t pay the IRS.
Again, that is a choice.
Now, if that child needs to go to a private school because it’s for an autistic situation or disability situation where they, you know, where this school is a better place for that child, the IRS does understand those things.
But most people just say, hey, I’m sending them to this Catholic school because I went to a Catholic school.
Yet you’re paying $10,000 a year for that and the IRS isn’t being paid.
They’re not going to let that slide.
So keep that in mind when you’re thinking about who you’re going to make your loan officer.
The IRS is not going to be your best bet.
Okay.
All right.
We’re down to about the last minute of the show.
If you want to reach me Monday, 615-367-0819, 615-367-0819.
You can also check me out on the web at drfriday.com, D-R-F-R-I-D-A-Y.com, or email DrFriday at friday at drfriday.com.
Again, friday at drfriday.com is my direct email.
We’d love the opportunity to review your information.
Again, we’ve got 30 years of experience.
We can help you either deal with the IRS or maybe you just need someone to help you do taxes.
We do individuals, businesses, trusts.
We handle all of the basic 1040s and 1065s, 1120s, 1041s.
So if you need help, 615-367-0819.
I hope you guys enjoy this weekend.
Put some prayers out for those kids in Texas.
Happy 4th and
Paul.
Are you self-employed and
owner of a small business?
Do you need help with your bookkeeping, payroll, or both?
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