/
RSS Feed
Summary
-
1099-K Thresholds Clarified: After some initial confusion, Dr. Friday clarifies the final 1099-K reporting rule under the “One Big Beautiful Bill.” For 2025, the threshold is $20,000 in gross revenue or 200 transactions. Most everyday users of platforms like PayPal and Venmo will not meet this threshold.
-
New Tax Deduction for Seniors: A temporary deduction is available from 2025 through 2028 for individuals over 65 receiving Social Security. The deduction is $6,000 per person ($12,000 for a married couple) and is added to your standard or itemized deduction. Income phase-outs begin at $75,000 for single filers and $150,000 for joint filers.
-
Tennessee Tax Deadline: A reminder for all Tennessee residents that the deadline to file 2024 taxes and make any associated payments is November 3, 2025.
-
Strategic Roth Conversions: Dr. Friday suggests that the new senior deduction may create an opportunity. The resulting tax savings could be used to fund a Roth IRA conversion, potentially allowing you to move money into a tax-free account at a lower cost.
-
Filing Status After a Spouse’s Death: For the tax year in which a spouse passes away, the surviving spouse can still file as “Married Filing Jointly.” If a refund is due, Form 1310 will be required to issue the check to the surviving spouse.
-
Gifting Rules Explained: The annual gift tax exclusion for 2025 is $19,000 per person ($38,000 for a married couple). For larger gifts, you can utilize the lifetime gift exemption, which is set to be $15 million per person starting in 2026, without incurring gift tax, though a gift tax return must be filed.
Episode FAQ
Q1: I use Venmo to pay my dog sitter and split dinner bills with friends. Will I get a 1099-K and have to report this as income?
A: No, not unless you receive over $20,000 and have more than 200 transactions for goods and services in 2025. After some confusion, the “One Big Beautiful Bill” reverted the threshold to this higher amount, meaning most individuals using payment apps for personal transactions or small side jobs will not receive a 1099-K.
Q2: I’m 68 and on Social Security. Am I getting a $6,000 check from the government with the new senior tax break?
A: It is not a check or a direct payment. It is a new $6,000 deduction that lowers your taxable income. The actual tax savings depends on your tax bracket. For example, if you are in the 10% tax bracket, a $6,000 deduction would save you about $600 in taxes. This deduction also has income limits and begins to phase out for single filers with a modified adjusted gross income over $75,000.
Q3: My husband passed away in April of this year. What is my filing status for my 2025 tax return?
A: For the year in which your husband passed, you are still considered married for tax purposes and should file as “Married Filing Jointly.” This allows you to use the joint tax brackets and standard deduction. In subsequent years, your filing status will change to Single or potentially Qualifying Surviving Spouse if you have a dependent child.
Q4: I want to give my son a large cash gift to buy a house. Do I have to pay taxes on that?
A:
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.
I get to have one of my favorite people in the studios working with me today, which I don’t get too often.
So I’m already having a great day.
And the weather’s actually nice if you’ve been outside um working in my my property.
So those are both win-wins.
Now I start want to start the show about an email that came in earlier today.
Someone was asking me because I guess over of the weekend or maybe Friday or whatever uh PayPal had sent out a notice about 1099s.
Um and they were a bit confused, but not overly, but they basically are wondering why they’re getting 1099.
And so I need to clarify in 2024, which is the year we just did, or we’re finishing up taxes on November 3rd.
Remember, everybody in Tennessee has until November 3rd, not just people that were affected.
by the disaster, but every county in the state of Tennessee.
Um you the the cutoff for 1099Ks or when they started coming out was $5,000 2025, the year we’re in right now, if you have paid people for goods and services over $2,500.
You will get a 1099K.
And that is you.
If I use PayPal and I pay somebody over these thresholds, I will get the 1099, requiring me to actually turn around and 1099 these individuals.
In 2026, the year we’re going into, that threshold is $600 right now.
So anyone you do goods and service, for example, I have a dog sitter and Usually throughout the year, I pay her probably more than six hundred dollars because I go on vacation or when I’m out of town or whatever.
And so now it’s gonna require me to 1099 that individual, um, which I probably wouldn’t have done before because it wasn’t a business deduction and it wasn’t anything else.
So I want to clarify, this is not payments made for personal use, such as splitting dinner or buying rent or rent or gifts.
It is only for services and goods.
So not for personal transactions.
So depending on how it’s labeled, the PayPal and other payment platforms have system for use to indicate the payment for personal business purposes This helps to ensure that the personal payment is not mistakenly included on the 1099K.
This is your job.
Your job is to go out there and see if you’re making payments through Venmo, you’re using payments like PayPal, that you are labeling these either goods and service just for example i brought something recently uh for my my bees and um i used my paypal for it and it will be over $600.
So um it was used for that.
So it was goods and services.
Therefore, I am most likely going to get a $1099K as if it’s merchant services and I will have to turn around.
Now what’s weird is Goods and services, even on most businesses, we don’t services, yes, but when you go and buy your inventory, you don’t usually turn around in $10.
99 that.
So it’s going to be a bit confusing.
So it’s gonna be very important.
That you actually keep your information so you know why you purchase these things.
If they are goods and service and you’re able to 1099 that company, that’s one thing.
If it’s something that you have no idea what it is.
then you’re going to end up having to report because remember 1099Ks are just like any other 1099.
They come on your tax return as income And the only way to reduce that income will be to 1099 these other individuals, or if you paid one individual less than $600, then at least having the receipts for that.
In essence, they’re going to make us have businesses or at least the ability to write off assets against these expenses.
I am going to tell you right now, it is going to make individuals have a lot harder time.
Business owners, we’ve been doing this already.
But if you don’t have a business, for example, my bees, um, are a business more of a hobby at this point, to be quite honest, but I still track everything.
Um And and that’s fine.
That will work out perfectly.
But if you are an individual that buys a lot of stuff through PayPal or Amazon or any of them using PayPal or Venmo type things You’re going to have an interesting time.
And if you’re a service that receives it, like my dog sitter, then that’s going to also create.
a situation where that person may have to be 1099 for me now because it’s already being reported to me under that service.
So uh again, the threshold um Uh I I thought it changed recently, but let’s see.
So the payments you receive in 25, early 20, you should only have received at 1099 If you received more than ah, here we go.
I thought it had went up.
I’m sorry guys.
Not to give everyone my sister’s thing or she was the one that asked me about it earlier.
saying that but they did change the threshold I’m sorry threshold up to twenty thousand dollars but they also have a number that you can use for transactions So I had to go into the one big beautiful bill and and redo this just to um so it drops just six hundred dollars meaning payment platforms would have sent millions of dollars, millions of these out.
So in 2024, it was $5,000 threshold, which were already passed.
2025 The one big beautiful bill changed the meaning and the 1099s for PayPal and all them have now reverted up um to send out.
So you should only receive a Kenai if You have $20,000 in gross revenue or 200 transactions.
Okay.
I um sorry, my did not get to the one big beautiful bill until after that.
So I know I’m confusing individuals Wipe out your brains and start again $20,000 or 200 transactions.
That’s what we’re going to be dealing with.
My dog sitter does not have to worry because um I I was worried that the other before the one big beautiful bill, that was what the situation is.
But let me stop confusing you.
One now under the one big beautiful bill, you have $20,000 or 200 transactions, whichever happens first.
And for most of us, that’s not going to happen So everyday individuals that are doing normal things with PayPal or Venmo aren’t going to have those numbers.
We’re not going to have to worry about those 1099s.
Because I was getting a bit worried.
I forgot all about the one big beautiful bill till I went back in and checked that out.
So um hopefully I didn’t totally confuse you guys.
But the thing is we can take the stress off You’re not going to have to most likely worry about a 1099K unless you have $20,000 or 200 transactions.
That’s all you have to worry about.
And then you’ll be in good shape.
All right, so what else do we have to cover today?
If you’ve got uh questions or you want to join us today, if you’re uh listening, 615-737-9986-615.
737-9986 taking your calls, talking about my favorite subjects, which is taxes and money.
Both of those are great um things and that way I want to make sure that you and I are on the same page.
So if you have anything you want to do or question anything you want to question, give me a holler here at the studio, 615 737-9986 is the number here.
Again, I do want to reiterate that tax day is November 3rd.
This is a one-time or basically as far as I know a one-time situation.
We will be reverting back to the October 15th.
I can’t tell you how many people decided to call.
They weren’t sure.
They they were getting missed signals.
I guess um Um Jackson Hewitt or one of them sent out a big email that today was tax day.
Um and so a lot of people were terrified that they were going to um have a situation where they had to deal with something.
But that being said, not so much to worry about now.
You guys are in good shape.
You don’t have to worry about um Those uh yes they’ll have 11.
3 and then if you haven’t made your payment again and this is for estimated payments, any kind of tax payments for payroll taxes, anything, all of those have to be done by 11.
3 or you’re and this is for people that live in Tennessee.
Not if you live in another state.
This is nothing to do.
If you happen to be passing through and you hear this, this is only for Tennesseans that live here and run their businesses or their things from here.
Um, so let’s see here.
What else do we want to talk about other than we are um actually towards the last quarter.
We just finished up the third quarter, so you have your quarterlies.
that you would have normally paid on October 15th are coming due.
And then we have to file your 941 state unemployment.
All of that good stuff will be being paid before the end of the month.
Um so make sure you file all of those reports.
We have had a pretty big influx lately of just Seems like individuals coming in, they’re saying that they’re filing reports uh by mail for 941s and then they’re getting letters from like 2019, 2020 saying they hadn’t received the IRS had not received.
something uh on those and so you want to make sure that they have everything they’re supposed to have um on that so it’s just one of those weird things that you’re like okay Why are you not uh understanding, you know, why this this isn’t working?
So you need to make sure that if you’re doing these things, you you gotta move forward in the right place.
So All right, so let’s see here.
Sorry, I was a little sidetracked there.
If you want to join the show, 615-737-9986-615-737 9986 number here in the studio, taking your calls, talking about my favorite subject, taxes.
I’m an enrolled agent licensed by the Internal Revenue Service.
due taxes and representation.
So if you’ve got a question about maybe a tax bill, maybe you’ve sold something, maybe you’ve done something, then this will be um a time to maybe get that phone call out.
and um make sure that you are getting or understand what the taxes are going to be.
We’re at the end here, so if you’re looking to sell or maybe something has come up And you’re thinking, oh my gosh, am I going to be in a higher tax bracket?
I do um after this next break, we’ll have coming up here, we’re gonna get a little bit into that twelve thousand dollars 6,000 per person over the age of 65 receiving Social Security.
I’ve received a couple different emails recently and one phone call from uh people that are not quite sure exactly um what’s being said or how it’s going to, you know, ex how it applies to them.
So I’ll try to break it down, try to make it simple so that you can understand exactly what we’re expecting, how it’s going to happen.
We know a little bit more than we used to.
So now we’re able to Hopefully break it down for you and get it right the way you want it.
So again, um we’re gonna get ready to take a quick break here.
If you want to join the show, you can 615 737-9986.
As an enrolled agent, I am licensed by the Internal Revenue Service to do taxes and representation.
That’s what I do.
I’m not a CPA, I’m an EA CPAs are certified public accountants licensed by the state.
EAs are licensed by the Internal Revenue Service, and we do taxes and representation.
And so a lot of times people are like, oh, are you CPA?
Nope.
I got friends that, and that’s the way it’s going to stay.
All right.
We’re going to take this break and we get right back.
We’ll talk a little bit more about uh Social Security and some of the credits coming your direction We’ll be right back with the Dr.
Friday show.
Sometimes you just either feel like your question may not be that interesting or you’re not sure if you’re gonna get the right answer.
You know what?
There’s really no silly questions Um and you guys have all heard me over the years.
I am quite sure that um I can grasp it and go from there.
So if you want to join the show, you can 615 737-9986-615-737-9986.
Taking your call, talking.
about taxes because that’s really something all of us have in common, right?
You may do different taxes than the guy standing next to you or the person that you’re listening to But we all have to file taxes.
The only people that don’t file taxes may be people that only receive Social Security.
Or maybe they receive Social Security, but they receive a couple hundred dollars from an annuity every month.
So their income is so low that they’re not qualified to have to file, which is some ways it’d be nice to never have to file taxes.
The problem is you have to live.
Um, either one of two ways.
You have a Roth IRA that you’re totally living off of and you don’t have to worry about taxes, or your income is relatively low.
Now, talking about people that don’t have that gift, but they may be over the age of 65, they may be receiving social security, um, or you have to be receiving social security to get this uh this break and then you’re going to be getting um a new credit um no let me clarify a new deduction it’s going to be added to your Standard or itemized deduction.
It’s part of your schedule A.
And so basically what it comes along with is you are going to have a situation where you’re going to be getting um six thousand dollars for each individual over the age of sixty five.
So married people would be twelve thousand if both of them meet this criteria.
And then you’re going to want um then you’re going to have um to make sure you’re adding it in.
It doesn’t mean that it’s going to actually zero out the taxes.
I do need to make sure that this comes in and you understand.
So basically it’s just a bonus deduction for individuals age 65 and older.
They can add this 6,000 or 12,000 to their standard deduction, but here’s something you have to hear.
If you are single, your modified adjusted gross, modified adjusted gross.
has is 75,000 and if your modifies 150 and then it will phase out from 75 to 175 And then 150 to 250 basically.
Um, you will have a complete phase out.
So there is a window, meaning if you happen to make $100,000 as an individual, you may get a portion of that $6,000 deduction.
Now, this is temporary.
It’s only going to be from $2,020 Five through two thousand and twenty-eight.
So it does go in effect this coming tax year.
Um it’s important to know that it is going to reduce um the the tax.
because of Social Security, but it doesn’t mean it’s going to zero out the tax.
So a lot of people thought they were going to get A6,000.
No, it’s a deduction.
It’s going to be based on your income bracket.
So additional $6,000 at a deduction of 10% means it’s going to save you $600.
Same thing as if your in your income bracket is 20%, it’s gonna save you twelve hundred dollars.
Um, so and then obviously if you’re over those.
brackets you’re most likely going to be zeroed out because your income is going to exceed the limitations that you have.
This says that it should help.
to reduce uh a number of individuals that have paid tax on their social security.
It really is targeting um lower to middle class individuals according to what this article was saying about it.
Up to 88%.
of individuals that pay tax on Social Security in the past will come down to about 64%.
So again, it’s going to help 20, 24% of people that are on Social Security, it it’s not a loss.
The problem is it’s going to be now.
I would say if you happen to be a person that fits that criteria and maybe you do have some money in an IRA.
or uh a a traditional IRA or 401k, now would be the time to talk to your financial planner.
Um, maybe your tax person as well.
I don’t tell people when or how to deal with their finances, but I can help with the tax implication implication that you might have on it.
But when it comes down to it is Basically, you might have an extra $600 or $1,200 that is going to reduce your taxes.
And maybe now’s the time to think about doing a conversion or maybe uh taking out some extra money because it could be almost tax free or zero to you know few dollars Don’t leave money on the table with the conversion, is all I’m saying.
If you can do a conversion, I was talking to a gentleman on um last Friday and that was one of the things we talked about is that if we added the six thousand in his case he was single, he was going to qualify for the six thousand dollar deduction which in his case gave him about $750.
And we were able to do a conversion.
It was like $8,000.
It wasn’t a lot, but it was going to basically pay for itself because obviously, and so maybe looking at the next few years doing this conversion um and letting the IRS pay their own bill.
I mean, you know, why why not?
It it’s it’s extra money at this point.
Most of my people have been paying for taxes and doing that.
So this is a one of those things that’s going to come into play.
So um again, so hopefully it makes sense.
So if you are a person over the age of 65 you’re receiving Social Security if you’re married and both of you and your income is within the um allowable amount then you will qualify to up to six thousand dollars each.
It will fall on your standard or itemized deduction and you’ll be able to take that in addition to what you normally took.
So just just putting that out there.
You have to figure out.
But again, you still have enough time to do a small conversion.
And if it’s something that’s free money, because this is actually free money I mean normally every year you might owe money, so this might get you down to zero, but most of my clients have already calculated and figured out what they owe in taxes normally anyways.
So this would be an addition.
They get to save a few dollars, but instead of saving it, maybe you should talk to your financial planner about doing um conversions that might be a better fit uh for the money versus just you know reducing your taxes.
So up to you just putting that on the table and we also want to talk about the qualified charitable deduction Um, I’m not a financial planner, but um if you are age 70 and a half and older, you can make QCDs, qualified charitable deductions from your traditional IRAs.
And basically it’s it’s a win-win for you and for that charity because the money gets uh taken directly out of your IRA.
given to the charity.
I believe it’s up to $100,000, $108,000 you can do.
And then um and then basically the IRS doesn’t get the money I mean, that’s what it comes down to.
You reduce your RMD and or you reduce your your IRA, and then that money is given.
to the charity directly from them as long as it is handled properly.
As long as you have a custodial, they will do all the work for you.
It has to be a legitimate 501c3 listed on the IRS website.
But other than that, you don’t have to worry about anything.
And now, you know, if you have a requ I know it’s 70 and a half year, a lot of people are saying, well, I don’t have RMDs.
The QCD law up until at least unless someone knows differently had not changed.
So you can do a qualified charitable deduction as of 70 and a half.
And obviously the date of RMD’s required minimum distributions is slowly shooting up.
By the time I get there, it’s going to be 75.
Um, so that’s great news.
I mean, people are living longer, but it’s also nice to keep our money longer in a retirement account instead of being mandated to taking it out.
So um I like that idea.
All right, we’re gonna get ready to take our next break.
If you want to join the show, and I realize it’s a beautiful Saturday outside, um was out there myself working on my lavender plants, but if you um are near the radio and you’ve got a question, maybe something came up with how you’re going to prepare your 2025 taxes, or maybe you’re still thinking 2024.
Number here in the studio, 615.
737-9986-615.
737-9986.
Remember, if you’re getting love letters, if you’re getting any kind of communication from the IRS and they will not be calling you, they will not be emailing you.
But if you’re getting other types like normally love letters or certified letters or intent to levy letters We need to talk.
We need to get that under control and see if there’s a way we can keep the IRS from doing anything crazy while you’re in the process of trying to figure out how you’re going to make payments.
If you want to join the show, 615-737-9986.
We’ll be right back.
Alrighty, we are back.
Here live in studio.
Uh, if you want to join the show, shows halfway through 615-737-9986.
Let’s go to Steve in Franklin and see if we can help him out.
Hey Steve.
Can you hear me Steven?
Okay.
I can hear him Big so let’s see if there’s a reasonable Are you there?
Ah, there’s my boy.
Hello, Steven I got nothing.
Oh my goodness, I can hear you.
Okay.
He’s gonna try back Um, okay, so I’m not too sure, but that will be something my boy in the studio will handle.
Meanwhile, um when we took a break, we got a couple texts here.
Sorry, I’m multi-testing because a lot of times Uh at the phones or people don’t really like to get on the phones, they are emailing or texting me.
And so I’m trying to answer those as we go Making sure that we’re getting the information on those and uh going from there.
It looks like Steven’s back on the line, so we can see if he just join him in if he’s there Let’s see if we can get him on.
Hey Steven.
Can you hear me?
Oh, yeah, yeah.
Um I am great.
Okay, we’re talking.
We’re talking taxes.
Hey, uh question about uh QCDs on an inherited IRA
Okay.
To my knowledge.
Um Put a little caveat, I’m not financial planner.
My understanding that qualified charitable deduction can only be done out of your own personal IRA or RMDs.
Cannot be done from an inherited one.
And if someone knows the difference, call the show.
But that’s my theory.
Thank you.
No problem.
Thank you, Steven.
I appreciate it.
And that’s a great question because I’ve been asked that question in the past and to my knowledge I’m correct.
But again, if there is a financial planner listening Um, I do not want to be thought of as doing that incorrectly, but that’s what I have been told is that it has to come from a traditional IRA from the individual, not from the inherited, um, unless.
I I think there’s there may be some clause when it’s a spousal situation.
But again, um too bad because again, I have a client that inherited a fairly healthy IRA and what would have been noise is if the person that had um done the inherited because he’s trying to give a big chunk of it because the person that he inherited from Really wanted this money to go to a nonprofit, but he was POD’d on the IRA.
So now he’s trying to give the money to the nonprofit without having to pay tax.
And so I I think we we may find a way of doing that, but um it’s not gonna be as simple as if it happened at the time of this person’s passing.
Um so making sure, again, this is not my expertise.
I’m not an attorney, I’m not a financial planner, but you know, making sure you have a good trust and or will.
I prefer trust only because I think trusts only have pour over wills that go through probate versus a will has to fully be probated.
So I don’t like the world to have to know about certain things.
But other than that, make sure those documents are in line.
We none know when our last day is here.
And if you have it organized, it’s going to make it so much easier for everyone else.
All right.
We have Lynn here in Tennessee.
He’s got a text question What can I do, Freelan?
Hey, good afternoon.
Um my husband passed away this year.
And um thank you.
From everything I’ve read, I do our taxes just like normal, uh married siling jointly, which is what we’ve done um in the past.
Mm-hmm.
But answer your question, yes, a hundred percent.
Just for this year.
Now did you leave any was there any minor children or anyone at home?
No.
Okay Okay, then yeah, you’ll do the year in which someone passed away, you’re still married because they were still there, and the next year you’ll be single.
Okay, and how like It in former tax years his name was always first on the tax report too.
I I do.
Okay.
And then you’ll might if there’s a refund and Sometimes there are, you’ll need to do a 1310.
It’s just a form that’s in your normal forms if you use an online system of any sort.
And it’s basically so that they can issue the refund to the surviving spouse.
Okay.
Because obviously both names.
Oh, okay.
So it’ll come in but it will come in both names?
Yes, it will come in both names.
So you’ll need to make sure you keep a bank account with both of you on it.
They’ve already been closed.
Okay.
Um, so when you file the 1310, there’s a place that says who will, and you need to make sure it just has your name.
I mean, you know, normally it automatically fills both because of being a joint turn.
Just make sure the 1310 has your name only and your current address in case It’s different than what it was the year before, and you’re fine.
You’ll be perfectly fine.
And then they won’t do a direct deposit, which you probably have had in the past if there was refunds, they will require a check being mailed So it’ll take a little longer.
Okay.
Okay.
And um so the online tax serv services, our our taxes have always been super simple.
Sure.
Um It’ll probably ask the question or absolutely.
If there’s a refund, it should ask you a question about who’s to receive the the money, you know, I mean the refund.
And like I said, it should be uh a form called a thirteen ten.
We do unfortunately a number of those.
Um and so yes, in your case it’s relatively simple because you’re the surviving spouse, unlike like a child that’s doing their parents, you know, or something like that.
Um but yeah so you should be able to do it and get just go right onto your normal software and do it and just change your name As uh I do 90% of my tax returns, man and then woman.
I don’t know why, probably because my dad taught me.
Uh, but uh you’ll need to make your name first Okay, and but it will ask me as I go through the tax return, d did anybody pass away or anything like that?
it should and then you’ll need to have the exact date of passing because that will actually print across the top of the tax return.
Okay, and that’s what I read that if you’re filing a paper you just write decease on it and I thought well I can’t do that if I’m e-filing.
So Yeah, exactly.
It does it all electronically for you.
Um, so again, you shouldn’t have any major issue with the rest of it.
It it should almost any software should ask, you know, did anyone pass away?
put yes, date of passing, you know, if it’s the taxpayer or the spouse, and since you’re changing those, you’ll just make sure it shows as the spouse.
So okay.
All right.
Well thank you so much.
You I’ve been so worried about that because I really need that deduction this year.
Yeah, no problem at all.
Again, sorry for your loss, sweetheart.
Great.
Oh, thank you so much.
Thanks to talk to you.
Bye.
All right.
So yeah, she, I mean, she which the what Lynn’s dealing with is something unfortunately all of us eventually in some case, either for your parents or someone you love or your spouse.
And that was the same thing I had with a person that’s getting divorced.
And uh they’re going to sign their divorce papers on December 15th.
And I I specifically said, is there any way you can delay that till January 1st?
And he’s like, what’s the big difference?
And I said, because he’s been claiming married on his W-2, and he’s the main breadwinner.
for the entire year.
And he when once he signs that document that day, then he is actually considered single for the entire year Not just for the last 15 days.
There’s no way of splitting.
You’re either single or you’re married.
Can’t be both.
And so he would have not had enough withholding To offset the the fact that he’s single, right?
Because he goes into a higher tax bracket.
He won’t be able to claim his spouse, even though he’s like, well, I supported her the whole year That’s the one of those deals you really need to have that conversation.
No one likes to, but this is one of those times when you sit back and you’re like you’re more than halfway through the year and divorce is on the table, then you need to either reconsider um at the time of doing the the distribution saying hey we have to file taxes and since I’m going to be single and I have been paying the majority this needs to come into The tax situation and the money needs to be set aside out of our equity or whatever to cover the taxes.
Again, I’m not an attorney.
I don’t know how all this works, but I am usually the one that’s dealing with the person that now is single and owes $10,000 in taxes because they had to pick up a big chunk of money.
Um and so again, if you are divorced anytime in that year, you are single for the entire year.
If you are married any time of that year, you are usually considered married.
Now there is a waiver you can file for younger 18, 19 year olds that might be in college and the parent, you know, you got married in October and November and someone else.
wants to claim them.
There is a way of doing that, but most people, you’re married, you’re married, you’re single, you’re single, you’re divorced, you’re divorced.
Right?
So looking at the dates of when these things happen, you might want to consider that to be more important.
All right, we’re getting ready to take the last break of the show.
So again, if you have anything you want to join us with, 615.
737-9986.
615-737-9986 is the number here in the studio.
I am Dr.
Friday.
If you’ve never heard that you’re just driving and just turned on the radio and you’re like, who is this crazy?
You can also check us out on the web at drfriday.
com or you can email if you’re a little afraid to call the show at friday at drfriday.
com because not everyone wants to join the radio.
It isn’t always their major um event for their life.
So we’ll be right back with the Dr.
Friday show.
Alrighty, we are back here.
In case you want to join the show, 615-737-9986.
We got a gentleman waiting on the line, so let’s see what he would like.
Greg, what’s happening, bud?
Hey Dr.
Friday, how are you today?
I am good.
How about yourself?
I’m great.
Thanks.
Listen, I don’t know if you’re the right person for this or not, but let’s throw it out there.
Uh what can you tell me about uh gifting and amounts that are allowed now after the changes with this big beautiful bill uh annually?
lifetime and what you recommend what’s the best course of action here?
Right now the uh lifetime gifting starting in 2026 at least will be 15 million per person under the one BBB Um so that we have non-itemized taxpayers will get a contribution of $1,000 for single, $2,000 for joint filers beginning in 2026.
Um, and then as far as I think it’s 19,000.
I don’t know if that’s part of the one big beautiful bill.
I’m pretty sure it’s not.
Um for if you want to give gifts to like your fan, well, anybody basically.
Um, I want to say it’s 19,000.
Uh standard deduction.
Here we go.
Let’s see.
Joint filer survivors.
No, doesn’t tell me on this one.
I was trying to pull up the OBB just to see if I can tell, but it’s not part of that particular bill for family.
Well, most of the time it’s kids where parents want to give um, you know, gifts every year to their children or something.
Um to 2026, let’s see what we’ve got.
Does that answer your question as far as the basics?
I mean, unless you’ve bought 30 million as a husband and wife or 15 million, I think the biggest conception I have most people um uh i is that you know they can’t I can’t buy a house for my kids because um it’s over that nineteen thousand dollars or whatever the the current number is.
And that’s not true because under the lifetime you can file a gift tax return and give somebody two hundred thousand a million.
I mean, in theory, I wouldn’t have that to give to somebody.
Um you know, but it is out there.
Why why is there both?
I mean it it it uh i th if there’s uh annual uh limit and a lifetime limit, why would would you not just opt for a lifetime limit?
Well, because you have to some people don’t like the idea of filing a gift tax return, which I don’t know why, because it’s really I mean it does It does list who you gave it to, right?
So, um, if if you’re gonna do it.
And I do have people that will buy you know a house for a child or gift a house to a child.
Now if you’re gifting a house to a child, you have to gift them at your basis, where inheriting a house would be smarter, right?
Because you get a step up in basis.
Uh but in 2025 the gifting is $19,000, $38,000 for a married couple, but lifetime.
Honestly, Greg, I don’t know why you wouldn’t either.
Why you wouldn’t if I mean if it’s something you want your child to have or whatever, it doesn’t even have to be a family member.
I say child, but doesn’t have to be a family member.
You could gift your neighbor a million dollars if you wanted to.
Um, you’d have to have their name, social security, and address.
But other than that, there’s no taxes because you, the gifter, has to pay all the taxes before the person receiving the gift gets it.
They don’t pay anything.
Okay.
That’s that’s kind of the way I understood it.
So I I’m I’m uh trying to figure out what the advantages of our of doing it annually Or again, just a whole yeah.
I think it’s just the the fact that they don’t want to have to file tax returns.
Uh I’ll give you thirty-eight thousand husband and wife every year and then that way over the next ten years I’ve given you what I need to versus a one-time situation, but I can’t honestly say there is any logical reason why you couldn’t just go and give somebody and I do have a client that did that.
I mean he he’s nephew was going to inherit anyway.
So he just gifted him uh at cost a portfolio of uh like three million dollars and just wanted to see what he would do with it because he was going to inherit a lot more Um, and so I think he was testing him, but you can do that, right?
I mean, the biggest thing is if you inherit, you get the step up in basis in stock and property If I give it to you today while I’m still alive, I can only give it to you at the basis I have.
So that’s the real disagree, you know, problem I would have, Greg.
But that’s property, correct?
Cash is different.
Property or yeah, cash is different.
No, yeah, cash doesn’t go or anyways mu most of mine is stock or property.
You’re right.
If it’s cold cash, the value is the value Right.
Okay, good.
We don’t have to worry about it.
No, okay.
It’s f let’s say this is sitting in an account.
Um another option is just to have a joint account.
I don’t like that idea.
What do you think?
I don’t like that idea either because what if something happened in um uh you know lack of uh a a lawsuit or someone gets in a car accident and then they sue for that money that isn’t really theirs per se Um, I would either have um paid on death or put them put the money into a bank account that they have full access to and you don’t have to worry about how or what they do with it ‘Cause otherwise if it’s jointly held, you’re likely to end up with some problem, in my personal opinion.
Yeah.
On both sides.
Both there’s liabilities.
Both yeah, both sides.
There’s liabilities for whoever it has.
Where this way, if you’re gonna really gift it, go ahead and gift it.
Because if I mean some people would say, well, if I put my name on it, no one’s gonna know that they’re taking money in and out of this account.
So how would they know?
Well Theoretically, there are lifestyle reports that the IRS pulls on all of us.
So if this person now has access to a million dollars their lifestyle may change, you know.
Um so it could create um a questionable audit situation.
May never, who knows?
But um to keep it clean, it would be better just to gift it.
There’s no excuse not to if it unless unless you have fifty or sixty million dollars and then there is other ways of giving money to people.
But for us normal individuals, I think $15 million per person probably is going to be more than enough for me at least to have to worry about giving anything to anybody.
Yeah, that should cover it.
Uh one l again, I’m sorry, one uh last thing here.
If it if money comes from a different state Uh are is there anything else to look for or just do my due diligence and look to see what the state laws are and what pay for You got it a hundred percent Greg.
That would be what I would tell you.
Do the due diligence.
Most states, Tennessee of course doesn’t have a state income and we follow the Fed.
But some states, California comes to mind, doesn’t follow the federal.
They may have less money that can be gifted by the state rules than the federal.
without a state without a gifting tax.
So there could be a tax on the state level even though the Fed doesn’t have one.
Awesome.
Well you’ve been very helpful.
Well thank you for listening.
I appreciate it.
All right, thank you.
Thanks.
All right, that was good.
And uh gifting is not a bad thing.
Uh again.
Just depends on what your big picture is.
And I would definitely say, um, you know, talk to a good estate attorney, talk to a financial planner.
Because sometimes what you might be thinking, um, like I said, if it’s in a stock portfolio and you uh gift the stock portfolio, that’s one thing, but if you’re gonna cash it out and then give that cash You’ve just created possibly a healthy tax situation, possibly even an IRMA if you’re on if you’re on social Medicare, uh an effect to your you know, lifestyle.
So just again, making sure that those numbers aren’t going to be um contradictive to what you’re trying to achieve.
That’s all.
Uh and and again, Greg was a hundred per spot on because some states still have the million dollar.
And again, for most of us We’re not giving away millions of dollars.
So it’s not something that we’re going to ever have to take on.
But there are nowadays you know, individuals that may have done very well with their investing and, you know, always uh putting some money aside for that rainy day.
And if they did and they happen to live in a state where they have like a lifetime gifting of a million dollars.
And and in some cases, I’m not a an expert on every state, but I have heard of cases where even though the lifetime is a million dollars, which is where Greg was saying, why not just do the lifetime, you can only do so much per a year.
even with the the maximum of the lifetime.
So again, if you happen to live in a state that has a state income tax andor inheritance that doesn’t follow the federal then you need to double check with a good attorney or um a great financial planner that understands you don’t want to wave it go do something you think is going to be really awesome and then turn around and find out you just triggered some serious tax situation.
That’s all.
All right.
We are winding down.
We only have about a minute left.
So let’s go through the basic information again.
I am Dr.
Friday, an enrolled agent licensed by the Antonal Revenue Service.
to do taxes and representation, you can um reach me at six one five three six seven Zero eight one nine, six one five, three, six, seven, zero eight, one, nine You can email Friday at drfriday.
com.
Again, Friday at drfriday.
com You can also just check us out on the web, which is drfriday.
com, and you can also send your questions right through the website Um if you are a current client, if I’ve done your taxes in the past and you are currently my client, we should have already uh scheduled or you should have received an email to schedule your tax appointment.
If you have not scheduled your tax appointment, please contact the office at 615-367- 0819, 615-367-0819, so we can get you booked before we open the calendar up I hope you guys have an awesome Saturday and you know just enjoy the sunshine.
As we always say in Australia, cop you later.