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Key Summary Points
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Approaching 2024 Tax Deadline: Time is running out to file 2024 tax returns. Due to a disaster extension in Tennessee, taxpayers have until November 3, 2025, to file returns and make payments.
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New Overtime Pay Deduction (2025-2028): A new law allows employees to deduct the “premium” portion of their overtime pay (the “half” in time-and-a-half). The deduction is capped at $12,500 for single filers and $25,000 for married couples, with phase-outs for higher earners. Employers will need to track and report this, and employees should update their W-4s to adjust withholding.
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New Deduction for Seniors (2025-2028): Taxpayers aged 65 and older will be eligible for an additional $6,000 deduction ($12,000 for married couples). This is available whether you itemize or take the standard deduction but is phased out for those with higher incomes. This may create an opportunity for strategic IRA withdrawals or Roth conversions.
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Capital Gains on Home Sales: Dr. Friday reminds listeners that the old rule of deferring taxes by reinvesting home sale profits into a new property no longer exists. Gains exceeding the primary home exclusion ($250,000 for single, $500,000 for married) are taxable.
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Medicare IRMAA Surcharges: A large, one-time income event, such as selling a home, can lead to an Income-Related Monthly Adjustment Amount (IRMAA), causing higher Medicare premiums two years later. Dr. Friday notes that successfully waiving this for a home sale under a “life-changing event” is very difficult.
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Business Mileage Deductions: To claim mileage, you must have a clear business purpose for traveling from a specific Point A to Point B. The IRS requires a detailed and timely log including the date, destination, purpose, and mileage for each trip.
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Taxes and Divorce: Filing jointly means both parties are responsible for the tax debt, regardless of what a divorce decree says. If you lack trust in your spouse’s financial reporting, consider filing as “Married Filing Separately” to protect yourself.
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W-4 Withholding Accuracy: Dual-income households should review their W-4s. If both spouses claim “Married” and also claim the children without checking the box indicating their spouse also works, it can lead to significant under-withholding and a surprise tax bill.
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Estimated & Payroll Taxes: Self-employed individuals are reminded that estimated tax payments are mandatory. Due to the disaster extension, the first three quarterly payments for 2025 can be made by November 3rd without penalty. This extension also applies to certain payroll tax deposits, offering a crucial window for businesses to catch up and avoid penalties.
Episode FAQ
Q: What is the new overtime tax deduction for 2025?
For tax years 2025 through 2028, employees can deduct the “premium” portion of federally mandated overtime (e.g., the “half” in time-and-a-half pay). The deduction is limited to $12,500 for individuals and $25,000 for married couples filing jointly and is phased out for higher-income earners.
A: Is there a new tax break for seniors?
Yes, from 2025 to 2028, individuals 65 and older can claim an additional $6,000 deduction ($12,000 for a married couple if both qualify). This can be added to either the standard or itemized deduction but is subject to income limitations.
Q: I sold my house for a large profit. Can I avoid taxes by buying a new one?
No, the rule that allowed you to roll over profits from a home sale into a new property to defer taxes no longer exists. You can exclude up to $250,000 (if single) or $500,000 (if married) of the gain on the sale of your primary home. Any profit above that amount is subject to capital gains tax.
A: What is IRMAA and how could selling my house affect it?
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 Doctor Friday show.
If you have 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.
Hey, I’m Dr.
Friday and the doctor is in the house.
And if you want to join the show, you can very easily.
615-737-9986.
615-737-9986.
Taking your calls.
Talking about my favorite subject, which is taxes.
So if you want to join the show, we can do that.
Again, we’re getting close to our deadline as far as we are in the process of uh having to file our final tax returns here for the 2024 tax year.
So if you are thinking about finishing your taxes, you probably want to do that.
They pretty much need to be done by the end of this week.
You have until 113.
But uh obviously you want to get them done in time, so you don’t want to wait to the very last second if that can be helped.
Uh if you have questions, and at this point you may have questions about your 2025 taxes and we are finding out more and more about um I took a meeting this week with a uh person that has Oh, three, four hundred employees.
And we were just talking about uh the tracking of overtime and how that’s going to need to be effective for the 2025 year using the software that they’ve been using and the way they’ve been tracking.
It may make things a little more exciting Just because this particular company, depending on uh what company the the employees are working for, they could have three or four times their regular way.
They have, you know, double time, triple time, and even quadruple time on certain projects that these employees will work on.
So being able to come up with a um fair assessment of what is overtime and of course you know it that is going to be based somewhat on your own personal income uh so if their income is too high that may not make a difference if there is a situation, but you know, we have overtime and individuals that have tips that need to have uh the calculation on their W-2s ideally um so that you can actually file your taxes under the one big beautiful bill their um There is a measure that for 2025 through 2028, there is an employee can deduct up to 12,500 of qualified overtime compensation.
A married couple that will be 25,000.
Qualified overtime applies only to the premium portion of overtime paid required to be part of the Fair Labor Act for time and a half pay.
This is the half portion of the excess amount over time mandated by state law and contracts contractual agreement does not qualify.
So if there is a mandate by the state to do this overtime, but it’s not a part of the federal department of labor, then it will not qualify.
So again, in some states, I’m thinking California, they have a different labor law Than um some.
But in Tennessee, we’re fortunate to the extent that we don’t have to worry as much.
These limitations do uh fall out if an individual makes over a hundred and fifty thousand.
and or a married couple over 300,000 above the line deductions.
Payroll taxes still apply to all of this since this is a retroactive as of January 1st.
The tax forms won’t be updated until 2026.
Employees who have want to account for the deduction in their withholdings for the remaining of 2025 must file a new W-4 with their employer.
So, you know, again, we need to make sure all that information is correct, that it’s all going to go into play, but it will start, it is retroactive to the 1st of 2025.
So you need to make sure that this information is going to fall under actually box number 14 on the W2 is where it’s going to reflect if you have tips and or over time that’s going to be tracked by your employer.
So again, um there you can either have it a part of the W-2 if you’re an employer and if you haven’t been tracking that quite properly you can In 2025, they’re leaving a reasonable method, and you can actually uh have a separate report that qualifies the overtime pay on the W-2 if you don’t have the ability to put it onto the W-2, depending on, but um from 2026 forward, they do require us to have the proper mandates.
So you want to make sure that whoever you’re doing payroll with, be it ADP, QuickBooks, Gusto, any of those, you need to make sure that they have all of that ready to go because there will be penalties.
And fines, as we all know and love when it comes to good old um IRS, if things do not get done properly.
So again, these are things that you need to be doing.
You should be getting a pay stub that would show how much you’re paid over time.
Now that would include time and a half, so you would only be able to uh put on your your tax return the half and you would need a PDF.
So anybody that might be working for a small employer that you’re not sure.
um will be able to comply easily with this.
I suggest and I suggest this to anybody downloading your W your uh pay stubs I can’t tell you how many times we’ve gotten into a situation and uh, you know, and the easiest way to fix something would be get a pay stub.
But the individuals don’t have access to their pay stubs most of the time nowadays, especially with companies like ADP and them.
Everything’s online, right?
I mean it shouldn’t be too difficult.
You can download them, but people think it’s gonna be there forever.
And so when they got need to go back and produce something or have proof of payment, I had a situation with one young lady where she got two W-2s.
Um it sounded or it seems like the employer uh based on what she but she couldn’t really back it up without we didn’t have the the uh the the pay stubs.
So she got a W-2 and then she got a second one.
One was from ADP, the other was directly from an earlier employer.
And she’s like, well I didn’t earn you know said dollar amount.
And I’m like, would you have pay stubs?
She did have some.
That was the blessing.
And we were able to pretty much back it into it.
But um in most cases She didn’t have all of them.
She didn’t show where the one may have continued with the ADP versus the old company.
And I think what happened was The old company wasn’t notified that ADP had taken over and therefore they finalized the W-2s and then ADP who had taken over and done it correctly by putting the year-to-date information in the system and moving forward, they also put the number.
So all these people got doubled up and apparently what should be a fairly simple correction turned into quite the non um simple correction.
So anyways, and in that case we had to obviously file documents and and requests, which is probably going to hold up this young lady’s um refund which uh isn’t easy she’s a single mom and could you always use that extra money so if you need to have more information on these tips and overtime give us a haul of uh same thing we have found out for all my individuals that are 65 older and receiving social security um that uh there is going to be um an additional um credit uh deduction I should say deduction of six thousand dollars um over each one of you so instead of getting the traditional standard deduction, any taxpayer over the age of 65 by the end of the year will get an additional 6,000.
So even if you’re not on Social Security but your age is 65, you will qualify for this.
Um it doesn’t necessarily affect social security one way or the other.
They’re basically using that as a way of helping to um increase your deductions, giving you a little better tax situation.
So maybe it’ll help offset some of the taxes that seniors have.
uh when it comes into it.
And this again is going to be means tested.
So full benefits will be individuals with 75,000, married couples 150.
uh to claim the maximum deduction they will um means test it lower and lower and so you know basically a single person will go from 75 to get all 6,000 And then they will get a percentage up until 175.
And then a married person will get a hundred um they’ll get all 12,000 up to 150, and then they will means test out at 250.
50 or more.
So that way it kind of makes it a little simpler.
And so they’re just adding this to be it your uh itemized or standard deduction, uh you’ll add that six or twelve thousand to it.
So hopefully it has a very temporary situation.
We’re hoping um that maybe it will expire in 2028 unless Congress extends it and who knows what will happen with that.
So we’ll just take it for the next few years.
I would suggest anybody that is of that age and they may have a um IRA or something that they take money out of that is taxable and maybe they limit that so they don’t end up with a lot of taxes, you are going to theoretically get some some extra deductions that may allow you to take another couple thousand dollars completely tax free, either be it a conversion or um just lifestyle where you know you you need a little bit more money and you might be able to do that.
every year with a smaller amount, maybe put that into an after tax or a conversion situation.
Not a financial planner, people.
I’m just saying think about it since this is a limited window for 25 through 28.
And anytime we can get free money, seems like a good thing to do.
Maximize it, use it for what we can, and move forward from that.
All right.
So we’re going to get ready to take our first break here.
For some of you who have no idea who I am, I am Dr.
Friday, an enrolled agent licensed by the Internal Revenue Service to do taxes and representation.
This is the highest degree that you can get as a representation from the IRS.
And so if you have love letters, if you are dealing with issues that you’re not too sure are um how to deal with them, how to move forward with them, then you need to give our office a call.
We will do initial consultations are always free.
So that way we can make sure A, we can help you, and B that you’re going to get what you need from our services.
We’re not going to turn around and as soon as you call us say, oh, well, if you pay us this much money You’ll be able to get this and then yes, we can definitely help you.
We don’t know that until we meet, till we sometimes get Pau Vatani.
Sometimes even after that things aren’t quite as smooth as you like.
So if you are interested, you could give our office a call.
Um, but we’re gonna take our first break here with the Dr.
Friday show.
We’re be right back.
Coming out to last.
Alrighty, we are back here live in studio.
If you want to join the show you can at six Six one five seven three seven nine nine eight six six one five seven three seven nine nine eight six is the number here in the studio.
Again, if you’ve got a situation possibly where you might actually need to to consider what’s the best tax advantage, right?
Because sometimes things happen.
Maybe you end up um inheriting money that you’re not sure is taxable or not.
Sometimes things will happen with inheritance and sometimes people are very surprised that it could be a taxable situation, especially if you inherit something a couple years ago and then you finally get around to being able to sell it and maybe that’s partly because you didn’t inherit by yourself or you kept it you know, for other reasons and then the value of that property has increased quite a bit.
That can be quite a different story on that.
So you need to be able to um, you know, take care of your situation and make sure that if there is a taxable situation in front of you that you’re accounting for.
I had a young uh I shouldn’t say a young woman, uh a woman come in.
Um not that she wasn’t young but she was in her 70s.
Um and um she just sold her home that she had lived in for 30 years and you know she had a capital gains of over three hundred thousand dollars after the exclusion for um for your primary home.
And she did go purchase another house, which of course costs more than what she pretty much sold the other house for.
But meanwhile she has to first pay tax on it.
So that’s where she was, she was, and you know, again, I am not a financial planner and most real estate people are not tax people.
Her tax person did not tell her that uh I mean her um real estate person did not say anything about the capital gain.
She thought if she reinvested the money within a period of time that she wasn’t going to have to pay tax.
It’s I mean at one point back in the day that was you had 20 uh 24 months to reinvest and the taxes were there.
But now that is not the tax code.
Now the current tax you have exclusions of $250 for single, $500,000 for a married couple on the sale of a primary home.
Two out of the last five years you had to live in it.
So in her case, you know, we’re looking at probably $50,000 in taxes, which is not something she had budgeted or figured.
And um you know, she’s unfortunately at this moment she had a house without a mortgage and now she has a home with a mortgage.
Um so, you know, it it’s coming out as a fairly hefty dollar amount.
So Anyways, the biggest part of that is she I mean thank goodness she did come in and chit-chat and we were able to at least resolve that number before she goes and puts all the money back down to pay off or pay down a mortgage.
She now knows how much Uncle Sam needs to have from that money.
Otherwise, she was going to end up with a tax situation on her hands.
This happens more times than I like to tell you.
Um, you know, also one of the things she didn’t know and she is living pretty much off of her investments and social security And of course, this sale is going to create an Irma situation for her, which anyone that is on uh Medicare probably has heard the word Irma.
Um, it’s how they um Evaluate how much you’re going to pay in Medicare.
So an individual, I believe, has like $100,000, $120,000 that they can get on Irma before it starts.
Going up.
They means test it.
I know I always use that word, but they do.
Um, they basically turn around and they say, oh, this person has this much money, so they can afford to pay more versus someone that doesn’t.
I’m not too sure how health insurance makes a difference.
I mean, I’ll be quite honest with you.
Someone making $500,000 or someone making $5,000, are they using more or less in medical?
Um, it’s a way of I suppose someone would say leveling the playing field, I’m not one of them.
Um, because again, I don’t see why everyone doesn’t have to pay the same amount for these things, but Hey, it when it comes down to it, the bottom part is Irma is an income-related monthly adjustment amount and is surcharged on the top of the standard Medicare B and D premiums for the higher income beneficiaries must pay.
Social Security Administration determines ERMA based on the beneficiary’s income for two years prior to the premium year used for their modified adjusted gross income.
So based on your past income, Irma is being used.
So for 2025, they looked at your 2023.
So this is when it gets a little confusing because in this particular scenario, it’s 2025, she’s gonna have she doesn’t file it until 2026.
So two years from now, in 2027, they’re going to to hit her Irma and they’re gonna adjust her information.
And so at that point in her case, she is going to have um quite an adjustment in um that number as far as I can see the adjustment’s gonna probably go from almost doubling from what she would normally have uh to what she has.
So right now, standard is I believe 206.
And it goes up it’s gonna be almost four hundred for her in the year once this happens.
And that’s a lot because she is not making anymore.
This is a once-in-a-lifetime situation, but If anyone’s listening and has ever successfully had a situation because Medicare or Social Security says if you have a once-in-a-lifetime situation that you’re able to file a particular form and they will then um waive this this IRMA adjustment.
But um In all honesty, I’ve been doing this for nearly 30 years and um I have not yet been able to um get one of those Through.
So if somebody could explain because like this, this would be once in a lifetime.
She’s lived in the home for 30 years.
She sells her house.
She has the ability to make a profit, which will then turn around and give her a higher income.
And then somehow in this it says a life-changing event is what they refer to it as.
And I would say this is a life-changing event, but I have tried in the past to make this adjustment uh for individuals.
Um and I have not yet been able to figure out what a life-changing event is other than Um, I do know they have sometimes like a death of a spouse um or something like that.
So, anyways, if you uh do have a life changing event and it does require you to have a higher income that does affect, I would suggest Calling Social Security, talk to them.
Maybe they can help you with that particular filing.
I’m sure it works for some people.
Like I said, Um, I have had a couple situations where someone sold a rental property, someone has sold their primary.
They don’t consider those, as far as I can tell, as life-changing events, but If someone knows the secret to this, it would be helpful to all of us on the show.
And if you want to join the show, 615-737-9986-615-737 9986, the number here in the studio.
And then when we get back, we’re going to be taking another break in just a few minutes.
And we’re going to go to some of the emails that have come in.
uh this week to try to get uh some of the important questions through that we have going on ahead of individual wanting to understand a little bit more about what can be used for miles.
And I think that’s a great question because I think so often people think, um, for example, if you’re in the real estate market and you’re a real estate agent or broker.
Um I’ve had one gentleman contact me and he said he was told that if he uses miles and he tracks it because he’s driving through a neighborhood and looking for some place to be able to sell or list that those miles were going to be deductible.
The IRS is going to basically argue that point Um, and you have better have good logs because the purpose of miles have to be going from point A to point B with a purpose.
So you driving up and down an entire subdivision looking for a home that I I’m not too sure exactly how works, maybe um for sale by owner and you’re wanting to see about getting it listed or an older home that you think they might be interested in selling.
I don’t know.
They’re going to have a difficult time because you’re not going from point A to point B.
You’re going from point A and back, you know and driving all over, they’re gonna consider that as building miles, and that is not allowed in tax law.
So uh just putting that out there, just driving to make miles is not a deduction.
And you have to have the true information to do this, okay?
So if you do drive and you have a point A to point B, you have to have a reason for it.
For example, if you’re a business owner and you’re coming to my office to do taxes or to consult, that would be a reason, right?
I went to see my accountant.
That’s a tax deduction for businesses.
And so then they from work to there are back.
And if your home is work, well then from home to my office and back Um, those are the important questions or things that you want to be doing.
You also need to have a why, what, and where kind of thought.
So mileage IQ is what I use, but I don’t have a ton of miles nowadays, but I do suggest that for anyone that is going to need a log because they do require The government requires a log to track your miles.
So you can either um put that together or you can do a calculation, but making sure that you have something that says who did you meet?
What was the purpose of the meeting and where, you know, where you went, that is what we have to have.
And what they prefer is starting miles on your vehicle and ending miles on your vehicle, not just, oh, I did 20 miles for this and 50 miles for that and 10 miles for this.
They want to know what the ending and starting miles was because they want to be able to make sure if this log is well maintained that you were driving and you can have multiple vehicles.
Sometimes people say you can’t, but you can have multiple vehicles.
But you have to be able to track which vehicle, what was the starting, what was the ending, what was the purpose, who did you meet?
Um, and then That way you have an actual log to justify because let’s be honest, a lot of times people will come in and they’ll say, Well, I did about 10,000 miles.
Well, what does that mean?
You did about 10,000 miles.
Did you do 10,000?
Did you do about 9,999?
I mean, it’s not an educated guest situation.
You need to have this log because if you’re ever audited It’s almost guaranteed, especially for real estate or people that have high miles, that is the first thing that’s going to trigger an audit.
Not the home office, which so many people think, but actual miles.
So we can talk a little bit about that if you want to join the show.
615.
737-9986-615737-9986.
We’ll be right back with the Doctor Friday.
show all righty we are back here live in studio if you want to join us you can 615 737 Nine nine eight six six one five seven three seven nine nine eight six talking about taxes.
on this beautiful Saturday and I can see there’s a ton of people working on taxes like I am, obviously not quite as many as you might think But we are working on trying to finish up obviously all the individual and C corporations that are out there.
If you’re an LLC or a partnership, hopefully you’ve already filed those because your extension did end already.
So that was Obviously back in September.
So if you have a questions about taxes or you’re a little shy and you’re not too sure what the best way to go about it, you can certainly Email us at friday at drfriday.
com, that’s Friday at drfriday.
com, and we can see if we can can help you figure out what it is that you’re wanting to um work on or figure out.
Okay, also don’t forget that we’re almost at the end of the year or end of the quarter.
So for any of you that file your own 941s or state unemployment.
Make sure all those are done by the last day of this next week, October 31st, which is also Halloween.
So you’ve got all the good stuff happening there.
So When you’re working and planning for your taxes, one of the biggest things you need to consider is also life changes.
So sometimes, especially this year, I don’t know if it’s just me.
but we seem to have had a number of people unfortunately getting divorced.
And um I know I share this sometimes with you guys, but obviously the timing of a divorce can be um detrimental to your taxes.
So all I’m saying is, is if you are in the process of a divorce or separation, and um sometimes it it doesn’t work out as easily as people like to think.
So one thing is You do not have to file with the other individual.
It doesn’t always work out well for you if you don’t, but um if the person will not sign or release on the tax return.
then your best bet is married filing separately, filing your own taxes.
Or if you don’t feel that the person that you’re filing with at this point, some of the trust factor has disappeared in your relationship.
So if that is the case, then you might need to consider filing your own return.
And that way then you don’t have to worry about taking on someone else’s tax debt.
Um, I will tell you that I have been doing this for nearly 30 years, and every time I hear someone come in and they’ll say, well, my husband’s supposed to be taking care of all the tax uh past tax debt because he was the one that was self-employed or my wife, whatever.
I’m just saying the other individual.
And then now they’re getting love letters from the IRS saying that they are um going to levy or lean and they’re you know they’re like, well what am I supposed to do?
I wasn’t supposed to have to be responsible.
The IRS does not care about what a court says about someone paying taxes.
If both of your names are on that tax return and you have filed as a joint couple and there was a balance due, the IRS is going to come after the most likely, if not both of you, at the same time Because they can.
They can be giving both of you could be in a payment plan to pay the IRS.
If you’re legally divorced and you’re not communicating.
both people could end up paying and getting the the issue once it’s paid off, obviously then that’s over, but they don’t care and they they their answer when you go into and say, hey, well my husband, I have court documents that say my husband They’re going to be taken back to court.
They’re like, far as we’re concerned, you are legally responsible.
So take them back to court.
And that way, if you want to get your money back, you can get it from him.
We’re not going that direction.
So again, if you’re in a situation where there is a divorce or a separation or even just If you’re in a situation where the one person is self-employed and you’re not positive or comfortable with the numbers that that person is filing, Then you need to consider, you know, file, marrying, filing separately.
There are certain penalties.
I’m not going to tell you that there isn’t.
But it’s not as bad as having to pay someone else’s tax bill or them trying to have you help pay their tax bill.
So uh, you know, it it’s a matter of opinion and it’s certainly a matter of a relationship, but when relationship starts to go bad.
This is one of those very contentious areas where people are, you know, money’s a big reason people get divorced.
Um, and when you’re with somebody that might have a tax, and it doesn’t have to be a self-employed, the last person I had come in recently.
Um both of them work regular W 2 jobs, but somehow we still owe $4,000.
The income you know is pretty easy to see when they worked multiple jobs and have very little coming out of federal withholding.
So, you know, you’re making choices.
The If you’re a married couple and you’re both and you have one or two children, let’s say you’re married and two and you’re both claiming married and two.
Uh it’s not too much of a wonder that you probably owe taxes every year.
You’re both claiming the children.
And remember, unless you’ve checked the box on a W4 that says that your spouse or the other person you’re claiming is working or that they’re employed, so they want to be taxed at a higher bracket, you’re claiming your married spouse.
So married means two.
And so if you’re claiming married and you don’t have the box checked on the W4 that says that your spouse works.
then you are taking out not enough taxes to cover your income and that person’s unless the other person is claiming single and zero, um, which normally is not the case.
So both people that claim married, make sure you both check that box.
And don’t both of you, unless you’re at a very um low to middle income, then you might get away with it, but you know, don’t both claim the children.
That’s the simple answer.
But that is often what I have found is that, you know, everyone goes in there and goes, Hey, I’m married, I have two kids.
And then the spouse goes to work and says, Oh, I’m married and have two kids And then they wonder why the taxes are too high, especially when the kids become 17, 18 years old.
They’re not in college yet.
You’ve lost the $2,000.
They’re down to $500.
And and now you’re you’re way off because of that.
And every year before that, you were getting refunds, right?
So again, you need to if you if you need help, you can certainly call our office, but This is a simple mathematical situation.
Go to your W4 and if nothing else, take a look at what you usually owe, divide it by the number of paychecks, and make adjustment on line four of the W4 where it says I want additional withholding.
and have them start taking out that additional amount.
At this point, you’re already nine, ten months into the year, so you’re never going to catch up for the year of 2025.
But at least you can have it there.
So in 2026, by the end of that year, you’ll be caught up and everything will be back to the way it was, at least where you’re you’re doing If you’re fortunate and your income is below 175 as a married couple, um, or I think 80 if as a single person, um, you’ll be able to qualify some college credits, right?
And that will help make up for some of those shortfalls.
But I always think that once your child hits 17, you need to remove them from your W4.
You need to reduce it by that number because at some point here they’re going to either be on their own.
Or they’re going to be in college in which you need the extra money to basically pay for college.
So you might as well get used to having that difference in your situation So making sure you have that, and that’s the same really for my self-employed, all of us that are self-employed, point of fact Estimated um estimated tax payments are not a choice.
It’s not, oh, well, I think I’ll make my estimates today or not.
It is a mandate It is no different than if you were working for somebody and they take out payroll taxes every time they do your paycheck.
The IRS does require four equal payments based on the prior year of your taxes.
So if last year in 2024 you owed $10,000 in taxes, then they’re going to expect, and at this point, the first three for 2025, because of this Amazing extension we’re under, I’m gonna call it that.
Um if you haven’t made your first three, but you’re able to by 11.
3 pay your first, second, and third.
So in this example, when I said you owed $10,000, $2,500 or $7,500 could be paid on $11.
3 for the tax year of 2025.
And then you make the fourth payment on 115, you will have no penalties.
Normally you have to make one in April, which is always hard for all of us because at that same time we’re usually Trying to pay our current tax bill.
Then you have one in June, another one in September, and the last one in January.
Um, that is the year, you know, times that you have to normally pay those.
But if you haven’t paid them this year alone, 2025, because we’re under a disaster extension, not the typical extensions that we have.
They extended all these payments until 11.
3.
So if you haven’t and you’re looking and listening to Dalks at Friday and you’re like, okay, this will be the year we’re going to actually be current.
with 2025.
So when we file in 2026 for the tax year of 2025, we’re not going to owe or we’ll have very little due.
And then we can start really concentrating on just staying ahead instead of always playing catch up.
And then also the penalties, right?
Because I’ve got people that pay three, four, five thousand dollars easily in tax penalties because of these delays.
So, you know, you don’t like penalties.
A lot of times people are like, well, why did I get these?
But you’re not making the payments properly.
Then you’re going to get hit with the the penalties And there isn’t a lot of excuses, okay?
Sometimes you can request a waiver, but most of the time, guys, it’s not that simple.
It’s easier to do things the way you want than it is to go through and make all of these.
payments and you can set them up to auto draft.
You can set them up through the um ACH or you can go to EFTPS.
gov which is a a government website.
You can set up your estimated tax payments You can go to irs.
gov and pay them electronically right through there.
Um, but you know, so right now before 11.
3, if you can pay all you owe for 24 And your first three estimates for 2025.
And even for some of you that have 941 issues, payroll tax.
Fiduciary issues, and you have been behind, but maybe right now you could catch up.
It’s not easy, but maybe if you were to pay all of your 941s that were due for the year of 2025.
after April 8th, but up until um October 31st, whatever, you pay them all by 11.
3.
Again, those penalties are not going to be there.
So if you haven’t paid January, February, March, and April or part of April, you’ll have a penalty.
There’s nothing we can do.
But after April 8th Until now, if you haven’t paid your payroll taxes, your 941 taxes for the year of 2025, because something happened, you got behind, but maybe you can find those funds you could save a ton in penalties.
All right, we’re gonna take our last break.
Again, if you want to join the show, 615-737.
9986 will be right back.
Alrighty, we are back.
This is the final part of the show.
So if you’ve been waiting, you can Certainly join us 615737.
9986 615737.
9986 taking calls talking about taxes.
I did have someone email me during the break just asking about payroll taxes and what I was talking exactly about.
So let me clarify that.
Every um on the 15th and or every payroll, most of our people do it every payroll, you have to make payroll taxes.
You are fiduciary for the payroll taxes as an employer.
So you have the employees taxes plus the matching Social Security and Medicare.
Um, and so we have to pay those.
Like I said, we we try to do it with every payroll.
It just makes it simpler for our people.
That way the money’s out of the bank.
But in some cases, you have until the following month at on the 15th.
So you make those payroll taxes and then every quarter uh by the end of the uh month following, so September was the end of the quarter, by the end of October we have to file what’s called a 941 or a 944, depending if you’re a small or medium-sized business.
And in some cases, you’ll have a Schedule B which will show all your tax payments.
And those payments have to be made.
So under the current extension that we have, everyone would have filed their first quarter just as we normally would have filed, paid and done.
Second quarter, you hope that you continue to do that, but if something happened and we all know life happens and something happened and you were not able to make your April, May, June, July, whatever payments up until now, or you’ve been making partials, or you’re delayed.
There is this little window That says if you have second, third, and fourth quarter or second, third quarter, let’s go, second and third quarter, tax payments haven’t been made, or you made partials, and you you have the ability to finalize those You need to do it by 11.
3 because those payments, even though normally due on or before the 15th or with every payroll, the third day after, whatever your system is.
You haven’t been able to do it because of some reason, but you have the funds, you need to do it because you’re accumulating a lot of penalties.
And normally those penalties, to be quite honest, are not very easy to be waived.
You’d have to have a natural disaster, hello, that’s what we’re under, to really get them waived.
Otherwise You might get a month, you might get some small delay, but when you’re looking at three, four, five, six months of being behind, I mean, you could have as much as you owe almost due in penalties.
So Think about the ability if you haven’t made those payments, maybe you could make those payments and you will then save not only a ton of money in penalties.
But you’ll also be caught up, hopefully being able to now start moving forward.
Payroll taxes are very serious, unlike paying your own personal taxes.
Um, not to say that that isn’t serious, but fiduciary tax.
They will even come after the bookkeeper, someone that may not even have an ownership in a business.
I had a case about 10 years ago where the bookkeeper was making choices, trying to keep a business open, paying the rent.
making payments on other things, but not paying the payroll taxes and they came after her.
We had to prove in the big picture that that person did not actually make those choices that the boss had told uh the owner had made the choices for them because if you think you’re helping out the the owner of the business by making these tough choices, sometimes it has to happen, especially as bookkeepers.
You’re making choices, don’t do it.
I’m serious because if you make a decision not to pay the IRS overpaying a vendor or paying a um the landlord um or even just paying the paychecks to the employees but yet you’re still taking the taxes out you’re in trouble because you are now making a choice That says we’re not going to pay them, but this other person was more important.
The IRS is going to say we are the most important.
That’s their job.
That’s what they’re going to say.
I’m not Thank goodness I’ve not been in that particular situation, but I have sat on the desk where I’ve heard other people tell me what their situation was like.
And they were doing what they thought was best.
Make sure that if you are a bookkeeper, an accountant, a CPA, whatever that is making these kind of decisions, that you have something in writing from the boss, from the owner saying, This is what I expect from you.
And it specifically says that you’re not supposed to pay the IRS unless they unless there’s funds or you need to have some sort of actual proof that says you’re not making this decision, that decision, because even if you have the ability to sign a check, I had one that this person was never even in the office And the the IRS came back for payroll taxes on the company and they came back to them because their name was on the checking account.
The blessing we had was that they hadn’t actually signed any checks in over two years.
They hadn’t really been a part of the company making this decision.
But again, if they had been writing checks, for other things, not making decision to or not to, they could have ended up being held personally responsible for those payroll taxes.
So As a bookkeeper, you can be held personally responsible for the money that this company owes to the IRS.
They can come after your home, they can come after your paycheck, they can come after your assets.
because of these choices that you think you’re helping and really just being a great bookkeeper, just be very, very careful because Again, we’ve had a number of these cases over the last 30 years, and it hasn’t been we’ve been lucky because we’ve actually either had great owners that were able to step up take care of the issue or we had um the ability to prove that they didn’t have the authority that the IRS says they did or thought they did, I should say they they do this whole examination and that’s how they find out if they do or don’t have it.
But it’s not an easy situation and you certainly would prefer not to ever have to go through it.
So if you are listening and you are a bookkeeper and you’re making decisions that you think are helping this company But one of those decisions is not to pay the IRS, you need to, you know, rethink that decision because seriously, you can put yourself in jeopardy and your personal assets, especially for a company that might not be thriving at this time.
All right, so we’re going to be winding down on this show today.
Um, if you do uh want to contact our office on Monday, we can set up that free consult and talk about your situation.
The phone number to the office is 615-367-0819-615-367.
For some of you that have no idea, I am Dr.
Friday, an enrolled agent licensed by the Internal Revenue Service to do taxes and representation.
That’s all we do.
My brother handles the bookkeeping.
I do taxes and representation.
We’ve been doing this for over 30 years in the Britwood area.
And so if you’re looking for someone that you want to hopefully be able to help you.
get straightened out as well as move forward in doing taxes, then give us the opportunity to see if we’re willing to work together.
That’s the reason I do free consultations, because I really do want to make sure that my clients as well as myself, we’re all on the same page.
If we’re not, it’s never going to be a good relationship.
And since I still have my very first client I like to believe that I um can can give a good service when we’re all on the same page.
So if you have questions or you have a friend that hasn’t filed taxes for a number of years Now’s a good time to get those squared away, get the information.
If they don’t have the documentation, guess what?
There are ways of us getting it.
The IRS is making it a little slower.
We’re not getting our 2848s or our POW of attorneys through quite as fast as we’d like.
Um I think part of that is because they are on a slower shift, but uh that’s hopefully will resolve itself relatively soon and we’ll be back out there doing what we need.
And I mean they also have this huge uh um one big beautiful bill.
They’re trying to gear up for, right?
So it’s gonna be a little bit challenging to see how all that comes out.
But if you would like to uh work or do something, you can give us a call at 615-367-0819.
Also, if you are a returning client to the Dr.
Friday Tax and Financial Firm, to me Um, please call our office if you have not yet seen uh an email with your ability to book a appointment for next year for your taxes coming up in in February, March, April.
So we can get you on the calendar and then we can open up the calendar for new clients.
But for all you returning, I want to make sure I have you all in and organized.
And if you don’t need an appointment, just confirm that we’ll be doing your taxes.
That way we can make sure we have time and everything set up.
All right.
So if you have a question, 615-367-0819, the email Friday at drfriday.
com or you can check me out on the web at drfriday.
com