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Dr. Friday opens this Memorial Day weekend episode with practical reminders about the June 8, 2026 Tennessee filing and payment deadline. She explains why extensions only move paperwork, not the need to estimate and pay taxes, then takes caller questions on inherited trust assets, a California home sale, insurance proceeds, commission withholding, ESOP shares, retirement distributions, and IRS notices. The episode stays focused on documentation, timing, and avoiding avoidable penalties.
Summary Points
- June 8 tax deadline: Dr. Friday reviews the disaster-related extension and reminds listeners that payments and estimated taxes still need attention even when returns are extended.
- Estimated tax penalties: She explains why taxpayers can owe penalties even if the full balance is paid by the annual filing deadline, especially when quarterly payments were missed.
- Inheritance and trust questions: A caller asks about Tennessee inheritance tax, revocable trusts, IRAs, annuities, step-up in basis, and whether trust income should pass through on K-1s.
- Home sale and insurance proceeds: Caller topics include filing a California return after selling a parent’s home and whether excess insurance proceeds from storm damage are taxable.
- W-2 withholding and ESOP planning: Dr. Friday discusses commission checks, changing from self-employment to employee status, limited W-2 deductions, and tracking ESOP basis.
- Retirement and IRS letters: The show covers Social Security and RMD filing thresholds, retirement tax planning, IRS direct deposit issues, and paper audit letters requesting income documents.
Episode FAQ
Q: Does a tax extension mean I can wait until October to pay? A: No. Dr. Friday explains that an extension generally extends the paperwork, while taxes should still be estimated and paid by the applicable deadline.
Q: Are insurance proceeds taxable if repairs cost less than the claim payment? A: In the caller’s situation, Dr. Friday says insurance money for property damage is generally not taxable income when it restores the property.
Q: What should I do if the IRS sends a letter asking for W-2s or 1099s? A: Dr. Friday says to provide the requested documents and consider checking IRS transcripts so any mismatch can be found and corrected.
Transcript
Announcer
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-WWTN. That’s 737-9986. So here’s your host, financial counselor, and tax consultant, Dr. Friday.
Dr. Friday
G’day, I’m Dr. Friday and the doctor is in the house and it has been a wild ride since uh the first of the year, I guess you would say, since you consider They initially extended because of the ice storm into May 22nd. Then on April 15th, they extended us out to June 8th Who knows what’s gonna happen in the next week? It makes my life exciting and and fun, but uh always difficult to stay on top of it. So For all of you that are wanting to make sure that you have made your April 15th payment on time, which means paying it by June 8th. then you should make sure that you have at least the payment made. I mean, if you filed an extension, most of us do, a lot of us will go out until October 15th. But keep in mind an extension only extends the paperwork. Sometimes we’re waiting for K1s. We need to make sure everything is right. We’re not wanting to rush through and complete a tax return just to get it done.
Dr. Friday
But, you know, with that being said, you don’t want to turn around and then end up with um owing a dollar amount and paying it back in October, because if you pay it in October. Then you will have interest and penalties that you have to pay. Just that simple. So making sure that you have everything correct and you want to make sure that you’ve done what you need to do. Then, you know, at least get an estimate paid out there so that way you’re not in a situation where you don’t want to um uh end up with you know i owe ten thousand dollars and now it’s october and now you owe twelve thousand dollars or more depending on the penalties and if you made proper quarterlies and yes for anyone that’s listening There is a rule that says you need to make estimated tax payments if you actually owe more than $500 the year before. Now, that does not mean that everybody has to make them. You can make them through increasing your W-2 withholding.
Dr. Friday
You can make it through if you’re older and you may be receiving um RMDs require minimum distributions. You can have them take out the extra payments. So that way you’re not having to make your estimated tax payment. And talking about estimated tax payments, your first estimate would be normally due April 15th. That would be now due 6. 8 or June 8th. Because of the federal disaster extension. So you had have one due on the 8th and the next one due on the 15th of June um to make them filed on time. Many people are getting, at least several of my clients have gotten letters saying that the IRS is um needing them to update their banking information because they have a refund and in many cases these individuals did not have refunds and they do now because Um, at least in in my situation, several of them had uh we had estimated penalties that um got waived because of the federal disaster in 2025. um and in 24.
Dr. Friday
So some of them have them on one of the other. So again, paying your taxes on time could end up giving you a small refund, especially if you had estimated the tax software to charge a penalty or if you did not make proper estimated again estimates are mandated if you do not pay them properly you will end up with a situation where you have to pay a penalty, even though you paid it all by the April 15th deadline.
Dr. Friday
I can’t really tell you after 30 plus years how many times I’ve had someone say, why are they charging me a penalty when I’ve already paid them all of the money why you know and sometimes it’s three four five eight thousand dollars because they paid it by april fifteenth but they did not make proper estimates Now, if this was a one-time sale that happened because you sold some real estate or something and you weren’t required to make estimates because of the situation Um, and you did pay it by April 15th, there may be a waiver, but in most cases they’re self-employed and they’re just paying all of the taxes at one time. All right, if you want to join the show, you can. 615-737-9986. It looks like we have David on the line, which is awesome. Hey, David, how can I help you?
Caller 1
Uh yes, Dr. Friday. I just had a question about uh taxes, inheritance taxes on a revocable trust in Tennessee.
Dr. Friday
Uh-huh.
Caller 1
Is is there an inheritance tax on uh uh funds or cash on a revocable trust?
Dr. Friday
Well, yes. I mean if it’s over, I believe it’s twelve million dollars or fifteen million, I’d have to look up the exact number. If the estate is over, uh Tennessee follows the federal tax law. So it would have to be higher than that to actually do something. But um if they haven’t, I mean if it’s just a normal estate where you inherited, then the only tax you would have to probably look after would be if it’s an IRA or an annuity. There may be taxable dollars involved in um in those funds and you’d have to pay tax on them.
Caller 1
Okay. Would would that be just the tax on the income generated uh on that fund since the deceased Passed?
Dr. Friday
Uh yes. Well in an IRA it would be tax on the entire thing because obviously it would be no different than if it was your own personal traditional IRA. On annuities, usually it’s only on growth, but I have had some people actually put the money in an IRA. I mean in an annuity from an IRA. So the same thing. It could be 100% taxable. It could just be taxable on growth, it really depends on the investment. If it’s stocks, there’s a step up in basis. So those would not be taxable Mainly I find the taxable falls into IRAs, 401ks, or annuities is where most of the taxable dollars without step ups.
Caller 1
Okay. And and what is the difference between a tax rate on these amounts of thirty seven percent or just your normal tax rate, I think, on income for your bracket? What what do you think?
Dr. Friday
37 is the highest tax bracket anyone pays. Okay, so that’s your highest bracket, um, ordinary income. If you if they file it through an irrevocable trust, which becomes revocable, I mean, um, it’s irrevocable that becomes irrevocable when they die. then then you you you can pay the tax through the trust, but the trust starts at twenty-four percent and works its way up to thirty-seven a lot faster than if you give a K1 from the estate and you file it on your own personal tax return. It really depends it’s that is up to the executor So um I’ve had more than one that says, no, I just want to pay the taxes because I don’t know if anyone will pay them and it’ll be just more headache, you know. Um, but normally it’s cheaper for all the beneficiaries if the taxes roll to the tax Players not through the estate.
Caller 1
Gotcha. Gotcha. Okay. Very good. Uh good. I think you’ve answered my questions there.
Dr. Friday
Thank you for calling. I really appreciate it
Caller 1
Thank you very much. Thanks.
Dr. Friday
Bye. All right. We have Sean and Bellevue. Let’s see if Sean has something I can help him with. Hey babe, how can I help ya?
Caller 2
Hey doctor, thanks for taking my call. Sure. So uh in at the end of twenty twenty two, uh went to California to move my handicapped mom out here to to live with me for me to take care of uh take care of her. And she really didn’t have much, but she had a house and we sold the house. And after paying the loan off and and all the fees and so on, she profited about two hundred and sixty thousand dollars Before we left California I talked to her tax person and I said, Hey, you know, do I need to file taxes on this? You know, w what what should I do? And she said, Well, you know, her only income is Social Security at the time she said yes you you should file taxes. She said but the good news is is that you didn’t make enough profit off the house that she doesn’t owe any taxes on that And that’s just how I left it. I haven’t done anything.
Caller 2
So now we’re getting letters from California saying that she needs to do her taxes because I guess California wants their piece of the
Dr. Friday
Well, the good news is you should file California only because it’s likely that you won’t owe anything, but all they know about is a home sale. So they’re assuming that there is a profit. They’re assuming that there is money there for them to have. If you file the tax return because of the exclusion um that’s on the table, then you are she mom ‘s not most likely. I mean, you said if she if she physically had a $260,000 profit She may be looking at 10,000, which on the federal side would be zero tax. I can’t guarantee on California it would be or would not be because of the exclusion. Um, you would think that would be poverty um at that point if she only had social security and ten thousand dollars. So um, you know, it would not be, but I would say filing it, you may find that it’s just a matter of putting it to bed, you know, just get it done so that way you don’t have to worry about it.
Dr. Friday
Likeli this miss mom doesn’t owe anything, but they’ll keep irritating. And they may even assess. California’s funky because Sometimes if you don’t respond to the letters and they do the assessment, you can’t fight the assessment, even if it’s completely bonkus. Um Yeah, so go ahead and and either if she had an old tax person or call her office or whatever, just you know, get the return done because like I said, it may just be be a matter of getting the proper documents to them to show that this was her primary, that you know she only made this much money. And you know Just because she put 260 in her pocket doesn’t mean she earned 260,000, you know, because she had to pay something back in the day for that house. And maybe it was very little. Um, and then she had to um Then she has the 250,000, but you need to know how much she originally paid and then what she sold it for and all the cost that she may have had going into the house.
Dr. Friday
You might need some of that detail before you call the tax person.
Caller 2
Okay, yeah, taking that into into consideration is it’s was probably a wash.
Dr. Friday
It sounds like it’s pretty much a wash. But you know, yeah, exactly. If that’s the case then you know, even though she had money in her pocket doesn’t mean it was actual profit. So yeah, either way you look at it, just get the information, get it filed, and that would probably just take them off her back. And now she lives Here, it sounds like, or outside of California, uh so yeah, you don’t have to worry about it.
Caller 2
So I don’t know if she’s gonna be around all that much longer, but so can can you do this? ‘Cause I asked my H and R block person when I did mine a few months back and and they said they couldn’t But if you can do it,
Dr. Friday
you can call my office. Yeah, we do them all the time. Sure.
Caller 2
All right. I’ll I’ll give you a call after uh Tuesday, I guess. And we’ll just finish this up. All right. Hey, thank you.
Dr. Friday
Thanks, Sean. Bye. All right. We’re going to take uh a first break here in just a second. Again, um, that’s what we do. It’s obviously taxes for people that may not know what I do. I’m an enrolled agent licensed by the IRS. I have never worked for the IRS, but I am licensed by the IRS for the last 30 years to do taxes and representation. Um, we do all states And we do all tax returns pretty much. If you have a question or you’re getting a love letter, we’ll do our best to explain it to you or help you resolve it Uh that is what we do. And if you need help doing that, we are in the Brentwood area for those that may not want to drive across uh the state because I have people that are hilarious. They will drive all over the place just to get to my office, which is a huge compliment But uh just letting people know and if you want to, you can give our office a call on on Monday or Tuesday.
Dr. Friday
I know Monday’s a holiday, so Tuesday, and we will be more than glad to schedule an appointment. Or you can call us on the radio today at 615-737 -9986-615-737. 9986 will be right back with the Doctor Friday Show. Alrighty, we are back here live in studio and uh you can join the show at 615 737 9986 for all those that may have thought that uh again this year’s deadline has just floated along obviously I’m hoping they get back to just allowing April 15th. It’s something we’ve all done for most of our life. It’s a good date to have. Um and then obviously last year it went all the way out to November. This year it went to May 22nd. And then on April 15th, they went at to June 8th. So right now the deadline is June 8th for filing your 2025 without late filing fees for the payment. Again, many of us have already filed extensions as we have in past So the paperwork is extended, but the money is what we’re looking for to make sure.
Dr. Friday
All right, looks like we have Kay on the line. And if she’s already, I will be more than glad. Hey, Kay. Hello, Dr. Fr. Frighty, thanks for taking my call.
Caller 3
Um my question is uh during the ice storm this year, um I had some damage on uh um uh a building uh on my property. And uh I filed uh so I wasn’t sure if I had a a tax liability on it because when I filed um a claim on it uh Um the insurance adjuster came out and gave me uh uh I thought a very generous estimate on it. And um And went ahead and they just deposited that money to my bank. And then it was up for me up to me to get uh, you know, the the property. Which I did And it turns out that my repairs were a lot less than what the money was that they gave me. So I d you know, I don’t know what to do. Should I Should I
Dr. Friday
Are you feeling guilt, Kay? Um well the answer is insurance money is not taxable income. Uh the insurance company valued that barn or building as whatever it was. And if you were able to improve, and I’ve had people not even do the improvement, but you did. improve the property to back to what it was prior to the storm, then that’s fine. The income is just um a repayment of all the years that you filed uh or paid insurance in which you could not deduct that cost, right? The insurance every year we pay. So that’s kind of the way it is. There is not any um it doesn’t normally happen that way. So that was actually a nice story because most of the time I hear the opposite. where they come out, they give a bid, and then getting the job done, it costs them a lot more money, right, than what the insurance company uh had given them. So it’s kind of nice to hear that Um that there is the other side of that story. But
Caller 3
and I w I was I thought uh you know, I didn’t know if there was some sort of form I had to file with IRS about it or I get something from the insurance company, but I don’t have to do anything.
Dr. Friday
There’s nothing. No. I mean, uh, I mean if if you were ever audited, you’d be able to, you would have gotten something, most likely a form or something saying that they had done a settlement um, you know, when you filed your claim or whatever, there would have been something that you could keep with your tax documents, but it’s not something that’s going to uh most likely ever come up, but that would be the only thing you would need and just justify that the income came from insurance.
Caller 3
Well that’s good. I had used some of the money, the extra money, to really help do some tree work here to maybe prevent another claim at some point. But you know.
Dr. Friday
Yeah, and unfortunately that’s not something the insurance company normally pays for. You know, I mean if you have trees and stuff. So good investment.
Caller 3
Anyway, well okay, so that sort of relieves me. I wasn’t sure if I should spend this extra money or or do whatever. But anyway.
Dr. Friday
You’re good to go, whatever way you want.
Caller 3
Okay, wonderful. Well, thanks so much. Thanks.
Dr. Friday
No problem.
Caller 3
Bye-bye.
Dr. Friday
All right. Bye. Um, so if you want to join the show, again, 615-737 -9986. 615-737 -9986 taking your calls. And we talk about anything to do with taxes pretty much. Um, you know, we’re already what five months into 2026. So for all of you that may have either worked up all your numbers for 25 and or have already completed your 25, um congratulations. I can honestly say I haven’t uh had mine completed yet But um but my numbers are all worked up. So working on 26 is essential, right? Because if you’re really trying to work the best numbers you can Sometimes waiting till the end of the year or normally the first of the following year, it’s very hard to really get all the tax advantages. Sure, you can still, and right now for anyone that wants to put money into an IRA Um that date extended to June 8th. So if you were an individual that you know wanted to normally you put it in in April or on or before April 15th, you have that extension.
Dr. Friday
But Very few tax advantages can be done after the end of the year. Sure, like I said, retirement counts, yes, you can put some money in. But um buying equipment uh it needs to be in service before the end of the year. So if you just went and purchased something and you’re like, well, I um I I want to put it on last year, which wouldn’t happen because you didn’t pay for it. And remember, we do taxes on the cash basis, people. Very few individuals do taxes on any kind of accrual basis. You do it at the time that you’ve paid for it. Not at the time that you’ve assumed the debt. Now businesses can be different. Some could be on actual tax services, and some of them could actually be on, you know, on accrual, accrual or cash. But most, most small businesses, most businesses do not want to pay tax on money they haven’t received, but they also, you can’t write off debt that you haven’t had a personal responsibility for.
Dr. Friday
So if you just told somebody I’m gonna pay you, but there’s nothing out there, no documentation holding you to pay something, but you know, you’re putting it on as if you paid it. that would be a problem, right? Um so you need to make sure that whatever you’re doing um is basically paid for at that time. Now, sometimes depending on how credit cards are put together, some credit cards have personal guarantees, and therefore if you don’t pay that bill, it becomes a problem, right? Uh I I am a person that likes to pay my credit card off every month. That’s a nice thing to have, right? So pretty much you’re always and at the end of the year I try to pay it by December 31st, don’t it? Because that way all my debts are paid and therefore anything that’s come up. I can do to make it rework. Um, but doesn’t mean it’s going to always be um, you know, perfect.
Dr. Friday
But when you’re doing your taxes, you need to make sure that you are um doing exactly that, that you are tracking the information that you’re following. And if you’re waiting to the very last minute, sometimes that can be very difficult because sometimes people forget what happened in January or February or whatever and you know making sure that things are working or not working and all of that. So Just making sure that you have all the proper details and information and that you’ve had time to review that and even your tax person because sometimes we get pulled in And we’re trying to do the taxes, which is awesome, but we don’t always know what uh the situation is, right? We don’t know um where every dollar of your money went. We count on you to explain it to us, to give it to us, so we have something to work with.
Dr. Friday
But I don’t have a good answer on um How you can maximize taxes, but the best way is to make sure you’re tracking every single thing. Give it all to your tax person so that they can come back and say Were these meals business or personal? Were these miles? Were, you know, what what did you and did you not have that you, you know, that was business versus personal? And keep in mind, again, if you’re a W-2 employee, your cost home office, whatever, um, is not a deduction. If you have a W-2 income, you’re even though you’re working from home There is no tax deduction for that. The government has ruled many times that you’re not having to spend money on fuel and going back and forth to work. and putting wear and tear on your car. So that is the exchange that they see that people have. So what money you would normally put out of your pocket because you’d have to drive to work every single day to do the same job, they’re saying nope.
Dr. Friday
We’re not going to reimburse you for your home because, you know, we we don’t you’re not having to put this so it’s an even situation. I’ve had people argue it doesn’t really make too big a difference because really not much we can do about it. Tax law is what it is. And that way we have the information. Just so you know, I can’t see the stream yard. For some reason it’s going um in and out. Just um I’m not sure if anyone’s on the line or not. But We can come back and circle to that anyhow. So again, if you’re looking to find the best way to save tax dollars, making sure that you’ve got all the documentation, that you’ve done everything that you can do And that you’ve tracked it all on an Excel or that you’re doing it somehow with the way that you want to make sure that everything is going to the best way that you can, that is the best secret you have.
Dr. Friday
Seriously, that is the best way to do everything you you need because then you can come back, you can say what’s going on, and I can even see from my side, I can say, wait a second, I can see where this is happening here and this is what I need to do there. And that makes life so much better than you just basically coming in the office and I hate to say it, but sometimes I I promise you, people are just um guessing, estimating. And if you’re ever, I mean, you know, there are times, ah, there we go. I’m back in business. Okay Um, let’s hit. I’m sorry, I was just going off trying to stall because I couldn’t see my screen. Guy in Franklin, let’s hit him real quick, and we’ll take our break. Hey guy. Uh
Caller 4
hey dog, can you hear me okay?
Dr. Friday
I can. Perfect, yes.
Caller 4
Okay. Um thank you for what you do. This is uh this is really really helpful to us here. Um I would fall into the category of what you just talked about, the people to guess. Um and I’m trying to not be that person anymore. So I work for a wholesale dist distributor in construction material Um here in Nashville, Tennessee, my salary, I get paid salary plus commission
Dr. Friday
Okay.
Caller 4
So and I’ve noticed on my paychecks that my taxes are fluctuating heavily from my commission paycheck to my regular weekly paycheck
Dr. Friday
Sure.
Caller 4
So how should I go to my accounting department and say like how should I be safe? Alife also works um in the school system. I don’t know how her taxes are set up. Like how should I be structuring this so that we’re maximizing the amount of money that we’re that we’re making or paying to the government, whatnot.
Dr. Friday
Right. Yeah, we don’t like giving loans to the government. So I may I ask, are you getting a healthy refund or are you pretty close to breaking even?
Caller 4
Uh I think our last refund was kinda was I think it was pretty healthy. I used to own a landscaping business. Okay. Um And our our refunds were very healthy then because of the amount of money that I spent on equipment that we would develop. Right. Uh and that has dropped substantially since I I’ve left that industry and went into sales Um but our our last one was you know it was a couple grand, you know, it was it wasn’t bad. Um but I just want to make sure that we’re maximizable
Dr. Friday
If you’re yeah, I mean if you’re actually, you know, I mean, because the fact is commissions are going to be taxed ridiculously high, but the fact is you’re jumping tax brackets with those commissions a lot of times or going higher into tax brackets. your regular salary is probably more minimal. Um not saying but you know I mean I mean normally your commission is where the the bigger taxes are coming out. And if you’re balancing out at the end of the year with just a couple thousand dollars, you’re really doing everything you can because there is no back in the day when you had your own landscaping business, you had a lot of tax deduction You were able to write off your your equipment, you were writing off your miles, you were writing off your home office. You had just a ton.
Dr. Friday
Now that you’re a W-2 employee as a salesperson, you have no tax deductions with the exception of And I, you know, depending on possibly a schedule A, but that means you have a fairly healthy mortgage if you’re actually itemizing or you give a lot of money to charity. Um, so a lot of people don’t itemize is all I’m saying. So at this point, you know, you don’t have the same game you can play guy than you were a few years ago with sound like when you were actually Working possibly, but still had your landscaping. The landscaping business probably on paper did not look like you were making a lot of money You know, I mean, even if you were making some because you were always putting it back into the business or buying a new toy, et cetera, et cetera. In this business, there’s not going to be the only thing you have is retirement that you can actually contribute to or an HSA, something along those lines.
Caller 4
Okay. Next question would be, so my company is an employee-owned company
Dr. Friday
Uh-huh
Caller 4
and in five years I’m fully vested. Um how does that look like taxing like when I’ll get shares of the company out? Like what should I be looking for in that aspect of an eSOM? I’m very new to this business. I started in February. Um and I’m inside sales, so my base salary is actually more than my commission. And then when I move to outside sales, that will flip. Um Sops
Dr. Friday
are great. If the business is a good business, I’ve got clients that have been buying into their e you know, e-sops when they’re offered stocks or they’re gifted based on bonuses and things, stocks. Um the difference is when that happens, you’re gonna see a difference in your paycheck because usually what happens is they basically buy it through your wages. And so it looks like you’ve gotten this bonus. And so your W-2 could look a little bit wonky because you’re like, I didn’t make that much money. But that’s because the way they sell and buy the ESOP into your paycheck. And then you have to usually sit on it for a period of time before you can sell if you choose to. And then the sale price you have to kind of track it. That would be something if you want to take a meeting or whatever, um, not easy on the radio, but there is some ways you need to track once you get into buying ASOPs. tracking that cost basis that they’re buying at.
Dr. Friday
So when you sell, you do have potentially capital gains that will happen. Um, but that could be years and years down the road.
Caller 4
Yeah, but something to definitely look out for and people on the radar. Awesome. Yeah, well I may actually uh I may actually look you up and and probably pursue another conversation further. This is great. I don’t want to take up any more of your time for other people.
Dr. Friday
All right, thank you. All right, we’re going to take an uh break. And if you want to join the show, you can at 615-737-9986. We’ll be right back Oops, here we go, back live here in studio. You can uh join us 615-737-9986. 615-737 -9986. And this is an awesome show. The phone keeps ringing. Hey, we’ve got Roy in Hendersonville. And if Roy is ready, I will have him jump on. And if he’s not yet, well, then I’ll just keep talking because that’s what I do Um when he’s ready you can join. So anyway, so we were um talking about the one thing I wanted to bring back about the last gentleman I was talking to is the the the tough time it is when you’re um When you’re an employee, and especially going from self-employed to an employee, it sounds like you actually make more in salary, you said, and then the bonuses were actually smaller.
Dr. Friday
A lot of times in sales it’s the opposite, but either way, um the one thing I will suggest is not to play with those bonus checks. Right, not to play with that stuff because it it usually will work out. Sometimes it feels like, and again, I have some people that when they get their commission on the quarter, sometimes they’re you know Six digits, right? And so they have this huge dollar amount that comes out. And then in that case, sometimes we’ll try to balance out the dollar amount because the tax code looks as if you’re getting that check every single month or every single week, depending on how often you’re paid. And that can be very distorting when you have 60,000 of the hundred coming out and and withholding because the IRS thinks that, you know, you’re getting and making millions.
Dr. Friday
So it’s just a matter of making sure, but don’t play with your S with your uh itemizing, in my personal opinion, your exemptions, um, unless Unless you know what you’re doing there, because it can usually come back and backfire, and there’s nothing worse than the IRS coming back and saying, oh yeah, you owe this much money, whatever it is. All right. Is Roy ready to join the show? Yeah. Oh, there we go. Hey Roy, what can I do for ya?
Caller 5
Uh I’m recently retired about three years ago. And uh I haven’t paid taxes in the last three years and uh my on my investments they took out nine thousand dollars For uh to take what is that uh
Dr. Friday
RM your federal withholding from RMDs or from withhold withdrawals?
Caller 5
RMDs. Yes Okay, they took out nine thousand dollars. That’s my only income. Do I need to pay any taxes this year?
Dr. Friday
Well
Caller 5
the twenty five
Dr. Friday
So are you saying that your required minimum distribution was $9,000 or that they took out withholdings of $9,000
Caller 5
No, they sent me a check for $9,000. Okay.
Dr. Friday
And they didn’t take out any taxes of that, correct? That you know of? Correct.
Caller 5
No.
Dr. Friday
So you have Social Security and that $9,000. That is your only income
Caller 5
Yes.
Dr. Friday
Okay. Then you are not required to file.
Caller 5
Okay. Okay. What what uh how much do they have to take it?
Dr. Friday
The additional tax code comes out to fifty percent of your social security that adds up to $25,000. So unless you’re making $50,000 in Social Security, the $9,000 is not going to trigger it
Caller 5
Okay. That’s all I need. Thank you very much.
Dr. Friday
No problem. Thanks for listening. Thanks.
Caller 5
Bye. Thank you.
Dr. Friday
All right. Yeah. Bye. All right. So that was a good question. Uh provisional tax code is what people that have hit retirement is looking at, which is always fun about taxes, is that there’s You know, there’s several different tax codes that work within the tax code, right? You have the ordinary income tax and then you have um the provisional tax code and then um you know different capital gains and different ones that fall within the tax code. So it when you hit the age that you hit retirement, that doesn’t always mean that you’re taking RMDs, but I was guessing um require minimum distributions. And he may not be on a requirement, but he may be taking him because he finally hit retirement But Social Security in itself, remember, is not taxable. If you live only on Social Security, you don’t have any requirement to file taxes.
Dr. Friday
It comes down to the provisional tax code, which basically taking half of your social security and then adding all of your other income if that adds up to twenty-five thousand dollars you may be required to start filing. Um The standard deduction comes in and so sometimes it’s a little higher than that. Especially right now if you’re over the age of 65, you’ve got that additional $6,000. as a deduction on the books for anyone that’s 65 and older. Even if you’re not on Social Security, that’s still on the tax code. So um so that makes the provisional even higher in essence. So if your only um only income in this gentleman’s situation was the 9,000 plus whatever he was earning in Social Security um he will be fine.
Dr. Friday
Now if he was married and his wife was still working and all these other incomes come about, that would change the scenario again So um, you know, just make sure that you um run those numbers by somebody that you’re expert as long, you know, again. I know that sometimes on the radio I don’t get all of the information. So just keep in mind that this information here is being provided, but I haven’t looked at everything you provide, so I don’t have the ability to necessarily give you a yes or no direct. I always think that I try to lead you guys in the right place and then hopefully from there you will be able to um confirm that information because maybe you have interest or maybe you’ve got capital gains or maybe you’ve received um bonds interest or you know even though you don’t think it’s taxable it does add back into the provisional tax code So, you know, there are things that people forget to say when they’re on the show.
Dr. Friday
So just making sure that if uh the information is perfect. you’re fine, but uh if you’re unsure, then I mean I’m sure you can contact our office or other offices and we can run the exact numbers and make sure that you are required or not required to file taxes. No one has to I mean I shouldn’t say it. Most of us have to file taxes. But when we don’t have to any longer, it is sweet not to have to file taxes. Maybe that’s the best way to put it I don’t know too many people that actually, even when they’re in full retirement, do not have to file taxes, but I will say it does happen. All right, so If you want, we’re going to be taking our last break for the end of the show. You can reach us in the studio right now, 615. 737 -9986-615 -737 -9986. We’re going to take some calls We’re talking about my favorite subject, which is taxes, which you know is kind of amazing because there’s so many different taxes in the world.
Dr. Friday
But basically, I’m talking about income tax, tax preparation dealing with you know estates or or businesses. Obviously we do all the different uh 1065s, 1120s, 1120s, along with the typical 1040 and all the forms that go with it, 1041s, 990s. All of that comes together because many times those feed off each other with the exception of the 990, which is for a nonprofit. All right, so if you want to join the show, 615-737 9986. We’re going to take a break. We’ll be right back with the Dr. Friday show. Alrighty, we are back here live in studio. And if you want to join the show, 615-737-9986. And it looks like we have Libby from Nashville. Let’s see if I can get Libby on the phone and help her out. Hey Lib. Hey Doctor Friday, how are you today? I am doing fabulous. How about yourself?
Caller 6
Doing great. I had a question. My spouse will be retiring in about a year or two and I’ve self managed our retirement funds. And do you assist folks in planning for RMDs and I ha I’m a self-employed realtor and so I’m trying to watch it all and I’m curious am I catching all the things I should be catching
Dr. Friday
What I can say is I can say yes, totally. What I do is more on the line of helping you prepare for the tax liabilities. on that aspect. I’m not a financial planner, so what you know it sounds like you’ve been managing that perfectly fine. Um I can help you tell you when we need to take out what we can do to possibly defer Talk about QCDs if he’s actually gets the point where you’re six uh seventy-three or seventy and a half or older if you have charities. Um we can do those kind of plannings absolutely I can also suggest people that would help you on the other side if you needed some assistance and knowing, you know, having assistance helping to plan the financial side. as far as planning the 401ks or IRAs or whatever you may have in since you’re self-employed, I’m going to guess that a lot of it’s in uh maybe a SEP or something, but maybe a combo. Who knows? That sounds great. Well, thank you so much. No problem. Thanks, Libby.
Dr. Friday
All right, we have Mary in Hendersonville. Bye-bye.
Caller 7
Hey, Mary. Hello. Thanks for taking my call. Sure. Um I had a question. Um we did our taxes with TurboTax, and it gave us the option to either Um, send a check in or the direct deposit. Mm-hmm. Yeah. So we chose to send a check, mail the check. Okay So um we didn’t hear anything back and then finally we got this IRF notice CP53E Maybe you’re familiar with it. They tell us that we needed to do the process with direct deposit and they needed the information on that. So we sent that back hoping that we would get it to the direct deposit, but we did not. So I finally called IRS and I finally was able to get a live person So she put in the system that we wanted a check. And so we did get the refund in the mail. We got a check from IRS So then later on we get this uh LTR12C where they wanted to for us to send in the W-2 form 1099 I’m w not not sure is this a scam or is this um paper audit?
Dr. Friday
Right. Um one should have nothing to do with the other. It’s just that it’s feeling like they’re kind of No So it is a paper audit. Um not knowing are you self-employed, may I ask Mary? Or are you guys just
Caller 7
No, we just retired we retired to
Dr. Friday
security Okay. So your paper audit will be very simple. What may not be matching, you know, they do a match, obviously. So whatever you showed as income plus withholdings, it’s not matching their system. For whatever reason. So whatever was put on the tax return, so you have two things. One, you can certainly, you’re going to have to submit the documents they request. But also you might want to see if you can order your transcripts, yours and your husband. Sounds like you’re married. Um and and just check and make sure that maybe something a stock sale, um something that, you know, wasn’t reported on the tax return may not, you know, or isn’t showing up the same way. uh just to make sure that the tax return the IRS has, that that way you don’t have any surprises, right? Because somewhere I will tell you something’s not matching. It could be that they’re wrong, that you reported something that didn’t show up in their records.
Dr. Friday
And so they’re trying to follow it up as well. But one way or the other, you and the IRS are not on the exact same page. So if that’s the case, then we need to make sure that we um get on the same page because you can also file an amended return And you can submit it to them under this letter with all the documents and say, hey, we reviewed our taxes and here’s our transcripts and we see this discrepancy. Here’s all the forms we have. And then it just makes it less. But if If you pull those and you don’t see a thing different, then just provide them. Okay, again, you’re going to have a few moving parts. You’re going to have interest and dividends, possibly 1099 Rs. Social Security statements. Um, so it’s not as simple as, oh, here’s a single W-2 and voila, you know. Um, but I would definitely say if if you need help, you can contact us.
Dr. Friday
It’s not that complicated, and you can upload almost all of those documents right to the IRS website Um and in your case, the only time it really gets complicated is when you’re self-employed. You know, I’m just being honest. That way you have to justify expenses. But these are all documents that you have and they have. So something’s just not quite tying together. And I have had it more than once where the IRS did not have the same form from a 1099R um than we did. But like they never received it, right? And we had a copy of it. And so when we submit it, they then can update their records, but it never made it into their system, even though it was a legitimate form. So it’s it’s just sometimes it’s just more frustrating, but I don’t think it will be very painful. Just more having the tediousness of dealing with it. But yeah. If you have any questions, you can give us a call on Tuesday. I can certainly walk you through.
Dr. Friday
But it it sounds like you’re pretty straightforward. Just in probably all the documents you’ve already set aside that you normally give to your tax person or you do yourself Those are the exact same documents you’re going to basically be providing to them.
Caller 7
Oh, okay. Okay, well thank you very much.
Dr. Friday
No problem. Thanks for listening. I appreciate it. Bye-bye. Bye-bye Okay, guys, we are winding down the show. We’ve got about three minutes left. So let’s talk about a couple deadlines again. Um, June 8th. 2026 is the final day, which is a Monday, to file your 2025s for payments. That’s what I push for most people. It’s not so much that you have to file it. Um Because an extension extends paperwork, most of my clients we extend automatically. Because what if something happened to me Um I always worried, you know, I’m a huge office. I know a lot of people think we probably are, but we’re not. And so I always try to make sure that extensions are filed so that way documentation can be delayed or taken care of until October in most cases or September if it’s a business. But Payments, right? We do not want to pay a dollar more to Uncle Sam than we have to. So to keep those payments down, we need to be paying these by June 8th.
Dr. Friday
making an estimate, filing the tax returns, whatever the situation might be. We also, just as a heads up, we seem to be getting quite a few letters From clients and from people that are just listeners asking about the IRS requesting identity, right? You have to call them up to prove identity. We seem to have a lot of delays in refunds because of either a bank account wasn’t provided just like Mary said and then you know she had to get a hold of them. Uh the IRS is pushing to remove or to stop mailing checks. And I I mean to be honest with you, I kind of get it. Um mail is slow, it’s expensive, and then the checks have the time or many times they get lost. They don’t get deposited into the right accounts, then people have to go searching for them. Direct deposit is much easier. But sometimes if that account number is wrong, it’s a little harder to get back.
Dr. Friday
But either way, tracking a bad check or a bad deposit is a whole different conversation. Um but the IRS is basically wanting direct deposits and direct refunds. That is going to be so I have some clients that have pretty much said we never want to give the government our banking. Never. But yet they get a refund every year, right? Or they have to pay the IRS. So I have suggested go to a separate bank or go to your bank, get a bank account that you only use. for the IRS. And keep in mind, the IRS knows about every bank account, every forum, anything that has your Social Security number on it, which you can’t normally open a bank account without one they know about, right? So you’re not necessarily hiding your banking or your IRAs or your investment accounts, your stock portfolios. None of that is being hid because the government already knows about it.
Dr. Friday
But if you want to have a Pacific bank account that they can only go in and out because they’re not legally available to just go in and out anytime they want They would have to have a court order um to do a levy or a lien. But you know, so I say get a separate account, use something that you never use, a savings account, whatever So that way then you know they’re not going in and out of your regular general checking account, right? It’s pretty simple. All right, so this is the end of the show. So if you’d like to reach us on Tuesday, 615-367. 0819 -615 -367 -0819. You can also email Friday at DRFriday. com. Again, Friday at drfriday. com or just check us out on the web at drfriday. com. Hope you guys have a wonderful Memorial Week in Cop you later