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Dr. Friday is back in the house! After a couple of weeks away, she returns to tackle the most pressing financial questions. In this episode, Dr. Friday breaks down the crucial November 3rd tax deadline for 2024 returns and clarifies the rules around estimated tax payments for 2025. She also discusses the impacts of a potential government shutdown on IRS refunds, dives into the major changes from the “One Big Beautiful Bill,” including a massive increase in the SALT deduction and new, larger standard deductions for seniors. Later, she answers listener calls on everything from investing in mutual funds and inheriting IRAs to the best way to handle estate planning for your home.
Summary Points
- Final 2024 Tax Deadline: The deadline to file your extended 2024 tax return is November 3, 2025, due to a federal extension granted to all Tennessee counties.
- Estimated Tax Penalties: Dr. Friday clarifies that even with the filing extension, penalties can still apply for not making required estimated tax payments throughout 2024.
- 2025 Estimated Payments: For 2025, the first, second, and third quarter estimated tax payments are all due by the November 3rd deadline.
- Government Shutdown & IRS: A potential government shutdown could delay IRS tax refunds and halt progress on resolution cases, like offers in compromise, as many IRS divisions would be short-staffed.
- SALT Deduction Increase: The “One Big Beautiful Bill” increases the State and Local Tax (SALT) deduction from $10,000 to $40,400, a significant benefit for those with high property or state income taxes.
- Major Deduction Increase for Seniors: Seniors over 65 receiving Social Security will see a substantial standard deduction increase. A married couple will see their deduction rise to $46,700, and a single person’s will increase to $23,750.
- Tax Planning Opportunities: These larger deductions create room for strategic tax planning, such as performing larger Roth IRA conversions or selling stocks with capital gains at a lower tax impact.
- Inherited IRAs: A caller’s question highlights that inheriting an IRA now falls under new rules requiring the funds to be withdrawn within 10 years, which can create a higher tax burden for the beneficiary.
- Estate Planning for Your Home: Dr. Friday advises a caller not to put children on the deed to a house. Instead, using a will or, preferably, a trust ensures children inherit the property at a stepped-up basis, saving them from paying capital gains taxes if they sell it.
Episode FAQ
Q1: What is the final deadline to file my 2024 taxes if I filed an extension? Due to a federal disaster extension covering Tennessee, the final deadline to file your 2024 taxes is November 3, 2025.
Q2: I’m over 65. How much is my new standard deduction under the proposed “One Big Beautiful Bill”? If you are over 65 and receiving Social Security, the new standard deduction will be $23,750 for a single individual. For a married couple where both spouses are over 65 and on Social Security, the deduction will be $46,700.
Q3: I inherited my brother’s IRA. Do I have to take all the money out at once? Under the new laws, you are required to withdraw the entire balance of the inherited IRA within 10 years. This differs from the old rules that allowed you to stretch distributions over your lifetime.
Q4: Should I add my children to the deed of my house to make things easier when I pass away? No. Dr. Friday strongly advises against adding children to your deed. Doing so can eliminate the “step-up in basis,” which could create a large tax bill for your children if they sell the home. A will or a trust is the proper way to pass the property to them tax-free.
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.
G’day, I’m Dr.
Friday and the doctor is in the house.
I played hooky the last couple weeks.
Some of my listeners obviously caught that when they said it was the same.
information though.
I am back and we are going to start talking about a couple things.
We’ve got obviously a big deadline of 11.
3 for finishing the 2024 taxes.
So if you have not already filed your 2024 or maybe you were just holding back because you know you owed and there wasn’t going to be any major penalties.
Now I do want to cover that.
I had two people come in last week that said uh they were told they didn’t need to pay anything because there would be no penalty.
Let’s clarify that if you are mandated by filing taxes and you’re self-employed, or not even self-employed, but you always owe taxes.
And you did not make your four equal payments of estimated payments, that is still a penalty that’s going to happen.
So I have some people that would normally have filed their taxes and maybe paid them in April, but because of the extension and everything, they said, well, we’ll wait till October or November 3rd.
Those people will be penalized for not making four equal payments in the year of 2025 for their 2024 or in the year of 2024 for their 2024 tax returns.
Same thing is going to be happening in 2025.
Now we have an extension that says the first, second, and third quarter.
um estimated tax payments are all due on November third.
So if you haven’t paid them for 2025, you are actually safe as long as you make all three payments on or before that November 3rd deadline.
And then the last one would be due on January 15th, 2026.
And then you’ll be in compliance.
So again, if you were or needed to pay, make payments quarterly, those people will still have a penalty.
If you didn’t pay 110% in by the due date, those kind of things, there may be some exceptions to that, but um just because you know the extension was put out there not everybody’s going to see a completely tax-free situation so if you want to join the show you can 615 737-9986-615-737-9986 is the number here in the studio.
So you can talk a little bit about that.
I also have gotten quite a few emails about the shutdown.
Um, what’s who’s going to be affected?
Was I going to not get um so the one thing that’s affects my people The reason most of you guys listen to my show.
Well be the fact that some of the IRS refunds could be delayed.
If you’re dealing with anything that has to do with resolution, they will be or or have shut down whole divisions or reduce the number of people that are working in those areas.
So That’s the one thing we’re looking at is that if you are in the middle of a negotiation or some sort of offer and compromise or if you’re looking for your refund because you did file your taxes recently Some of them may be delayed because uh some of it is computerized, but a big chunk of it is not.
So we’ll be waiting for that to get hopefully get some resolution.
But that would be the one thing that the the the federal layoff or the shutdown has affected.
I’m sure there’s other divisions of things that will be affected.
As far as I know, it doesn’t affect Social Security or Medicare.
Um uh I don’t think it affects any of our military.
It may affect them as far as their pay, but as far as I know, they have to work.
But um, but anyway, so That’s my idea on that one.
But if you are working with the IRS, which a lot obviously a number of cases I have open right now, um we’re we’re being told that those could be either delayed or extended because of them not being able to work or there’s only a handful of people showing up in the office to work, therefore we don’t have all that information.
Now we do know the one big beautiful bill also has some pretty good things coming up.
The biggest thing that’s probably gonna help some of my people, my tax people, will be the salt tax.
the state income or um property tax situation.
It was locked in at $10,000.
They’ve now upped that to $40,400.
So some of you that may have had higher sales tax or property tax for multiple properties that may, or if you’re from a different state that has an income tax as well as a property tax, then both of those will come back at us and we’ll be able to hopefully give you a larger itemization than we’ve been taking for the last number of years because of the last tax cut.
So um we’ll see how that works.
It I mean it it will only be a positive.
It won’t probably help individuals that either don’t have mortgages or anything like that.
It’ll just go with the other.
All right, we see that there’s Sunny on the phone.
I’m not sure.
um if I’m able, but let’s see if we can get sunny.
Oops, no, Sunny’s gone.
Sunny is not on the phone.
All right, so we’ll um so back to the salt tax.
We’ve got that covered.
Any other changes that we’re looking at under the one big beautiful bill will be, of course, the 20% tax increase in some states nationwide.
um that’s gonna help reduce people’s state income taxes because of this uh assault tax, right?
So instead of ten thousand dollars you have forty thousand dollars.
That is going to help a lot of people.
Standard deduction obviously every year goes up.
But the one that’s going to be unique is for my seniors because if you’re married finally jointly and you are over the age of 65 collecting Social Security.
Instead of the 31,500 for people under the age of 65, then the you’re going to be at 46,700, a single person.
under the new Obamacare will be 23,750 versus the 15, right?
So you get an additional 6,000 uh plus over the age of 65 you get an additional uh 3200 as a married couple, $2,000 as a single person.
Again, marriage penalty falls into those.
So those are gonna be the the great things, right?
Because People on Social Security.
Now, if you are only receiving Social Security, keep in mind this isn’t going to have any benefit or or situation.
You’re not going to get more money back because If you file your taxes, I had a couple people say, well, now with that six thousand dollars, should I be filing my taxes even though all I have is Social Security?
The answer is no.
This is adding to your standard deduction Which means there’s no refundable dollar amount unless you’ve actually have income above those dollars and you’ve paid in federal taxes.
So uh Social Security is not considered income, therefore it’s not going to qualify for earned income credits.
Um, but what it is gonna do is going to help us understand how to maybe maybe conversions would be one thing I’m thinking.
Maybe if we have somebody that has a conversion and they’re thinking Well, usually I I do $5,000, but maybe with this additional $12,000 for a married couple, standard deduction being about, I mean, uh this the ordinary income tax rate because that’s what you’re looking at.
So on twelve thousand dollars if you’re in the ten percent tax bracket, you’re gonna have twelve hundred dollars extra in in um taxable ordinary income that you can eat up with a conversion.
So that’s the kind of things we’re trying to calculate out, trying to figure out what’s going to be the best way to make that work for individuals.
And then, you know, we can go from there and go forward.
All right, let’s see if we have Russ in Cookville.
Uh, so it looks like he has some investing question.
What do you have, baby?
This is Friday.
Can you hear me?
Hmm.
I can’t hear Russ So um let’s put him on hold and maybe on the break you can see if you can help me because I’m not hearing anything on Russ right now.
So we’ll take it from there.
Um we’re um Russ, I’m sorry, you let’s put you on hold because I’m I can’t hear you.
All right, so let’s keep going on the Obamacare.
Like I said, we’re conversions you might want to consider between the salt tax and the additional uh 12,000 that married or 6,000 than individual, those two things could end up giving you a much higher standard deduction.
giving you more room to think about either other income coming in, taking a larger distribution, doing conversions, maybe selling some stocks that have some capital gains in them.
U Not too sure exactly which way that will work, but either way you have it we’ll be able to make sure that we have that going in.
And this is the time to really do that math, right?
Because we only have a couple more months to do something.
And then once those few months are gone, then we won’t have anything to really be able to um go for or or see what we have.
So We’ll um have to go through and and see on each individual what’s going to save you tax dollars.
Is it time to consider doing something different or moving something around?
um on that and and move forward.
You know, I think we’ll take a quick we’re gonna actually take the break early.
Is that okay?
Let’s see here.
Let’s see if I can get an answer for myself because I don’t know.
But um if we can take a break and then we can see if we can get the phone lines working.
Let’s see.
Russ, can you hear me Russ.
All right.
So we’re going to take a quick break with the Dr.
Friday show.
When we get back, we’ll see if we can get the phone lines working, see if it’s something I have uh that I’ve done wrong.
I’m sure it’s not my engineer, but uh that way I love to get my phone calls.
So we’ll be right back with the Doctor Friday show.
Okay, we are back live here in studio and hopefully Russ will be able to hear me and we’ll be able to get that good question because it’s much more enjoyable to hear more than one voice on this radio.
Can you hear me Russ?
Yes, I can hear you.
Can you hear me?
Oh, I can hear you now.
That’s a b Bill Sugan.
Yes.
Tell me what’s going on, Russ.
Okay, well uh well yeah thanks first of all thanks for taking my call here.
But uh what I had a question about like investing like you invest like a mutual index fund.
W when when would you pay taxes on that Well, um, I will first tell you I’m not a financial advisor, but the tax side to that would be is this going to be invested in uh IRA or after-tax dollars?
It’d be it’d be after tax dollars.
What I what I see uh well I’ve I’ve got a required minimum distribution, I’ve gotta take it and what’s you know, though what they’ll withhold and what they don’t withhold, I’m just gonna reinvest it Got it.
Yes.
So you would pay it yearly.
They would show the dividends and interest through your portfolio.
Oh okay.
You’d pay it at the end of the year.
It’d be like a like a Like an interest from a bank account.
Is that the way you’re going to be able to do that?
Exactly.
Same exact thing.
It’d be interest, dividends, capital gains, descending on how what the mutual fund’s done.
But yes, it will just be once a year.
What happen what happens like if you lose money on it if it goes down in value?
What happens then?
You just don’t pay anything, report a loss?
Is that the way it works?
Right.
There’s no well, most likely you’ll pay nothing ’cause you haven’t cashed it out, so you haven’t really retained the loss yet.
Um, assuming you you know you’re just leaving your original investment in there.
If it loses money, it just kind of floats and hope that it will recover and you’ll make money again.
Okay, but once it but once it makes you like it in here if you made money you pay tax on it, then if it drops, I guess then you don’t pay tax Just wait.
Unless you cash it out.
If you cash it out, then you get to claim the loss up to three thousand dollars a year.
in a negative and it would offset other gains.
But most people would just let it ride.
If it’s had a bad year, it could be because of the way I mean theoretically because it’s the way it’s invested, but they may make an adjustment.
That’s right.
Yeah, I let it ride.
What would have like would it have to get back to that to that that point where it started losing money or b before you started Right.
I mean basically they’re they’re gonna offset those losses with the gains before they’ll report the new gains.
Okay, all right then All right.
Okay.
That’s uh it sounds that sounds good.
I appreciate you answering my question.
No problem.
Thanks for calling, Rustin.
Thanks for holding.
Appreciate it.
All right, let’s go to Steve on line uh two, please Hey Steve, what’s happened in the borough?
Okay.
All right then.
All right, okay, that’s right.
Sound that sounds good.
I appreciate you answering my question.
Is Steve on the line?
Yes, ma’am.
Uh my name is Randy Johnson.
Oh, Randy.
I am so sorry.
Go for it, Randy.
Um, it’s pretty complicated, it’s a pretty long story.
Okay.
Give me a shorter version if you can Well basically what I got going on uh owe the IRS about thirty nine thousand dollars and not to my fault my attorney uh that I was using for a different matter, got arrested and he had my taxes in his possession and they got seized and was held for evidence for almost four years And so they done a forced assessment on me and I am in talks with the IRS about um or or actually talking to a an IRS advocate and I don’t know what I need to tell them to try to get most of that wiped away because it wasn’t my fault.
I filed my taxes, they get but they my taxes got lost.
Okay.
Um, if they did this Assessment, all you really need to do, and I’m glad you’re talking to the tax advocates, because they really are a good office in in Nashville at least.
Um, but basically when you filed your taxes, did you pay your taxes I didn’t owe anything.
I I I never I never owed anything.
I had my own business for twenty one years and I never owed the IRS a dime.
They done a forced assessment and said I owed fifty thousand dollars on the eighty three thousand dollars of the income for that year.
So what what you need to do is either uh depending on how it got assessed, but if it’s been assessed and um the advocate office They need a copy of the return that you actually did file.
They need to get that posted.
Um if it was and then they’ll eliminate the assessment based on the original return.
assuming it wasn’t audited.
If you did get audited, then you may have to ask for a reconsideration um and then have the audit reopen because it sounds like maybe the person that was there.
And I don’t know which way it went Randy, but um either way, if it’s an assessment, the IRS will eliminate assessments and the penalties once they have the actual true tax return.
All they did was say, hey, he’s single zero, had 1099s for 89,000.
Well I can’t get the original uh tax forms because when the TBI arrested the attorney Um, they seized my original documentation that had already been filed uh four years prior to him being arrested and they lost it.
And they wrote a letter to the IRS saying they lost my taxes, but they still and I filed two or three appeals and and the uh even the attorney that was in charge of my attorney’s estate Wrote a letter saying that they had lost my taxes uh pr uh documents and they still won’t be able to do that.
Tax law specifically says two things.
One If you don’t have the documents, a storm or something has happened and washed away your original, you have to do it to the best of your ability, which means you could go back, get all the bank statements, recreate to the best especially if you’re a business owner, I’m assuming you did not give him every receipt that you had four years ago.
Since we have to keep tax records for seven years, you hopefully have most of that that You need to have a new tax person recreate to the best of your ability that information so that there is a tax return.
Otherwise, they’re going to say, since you’re not giving us anything, this is what we’re going to go with.
You know, I’m not sure if you’re not sure.
I did I did do what you just said by six times.
Six times actually and they still are saying I owe thirty nine thousand a hundred and eighty three dollars and they keep adding penalties and interest.
Um and there’s no way I can owe that much taxes.
I only made eighty three thousand dollars that yeah and I kept all my receipts.
I never owed a penny before.
I’d never been I’ve never been laid on my taxes in the in the you know before that.
Well I mean two it sound it sounds like they still haven’t accepted the return that you filed is what it sounds like.
Now maybe there’s a reason behind what was filed, maybe it’s not getting, but you said you were working with the tax advocate office, is that right?
Yes, ma’am.
I am they’re supposed to call me sometime this month.
Yeah, and and they’re really but and you’ve provided them the original the the the latest version of what you had for the original return for that year.
What you actually have at least in your possession Not the not the actual tax advocate, but they can pull it up on their uh website and they can see where I’ve provided You know, several di I mean they told me the other day when I talked to them that they could see where I had provided the uh uh the documentation that I prepared since The arrests happened.
The arrest happened in two thousand and sixteen.
I’ve been trying I’ve been fighting this since two thousand and sixteen.
Um and in two thousand and nineteen I sat down and completely redone all of my taxes from two thousand and seven.
all the way up to two thousand and nineteen and I didn’t owe ’em a penny, but they say or they actually owe me ten thousand five hundred and thirty seven dollars but they won’t give that to me because they said I filed my taxes after uh March of uh October of twenty twenty uh but I didn’t I filed it in March of twenty twenty.
And um but so it’s I mean it’s a big mess.
If you would like I could call your office later this week in this upcoming week and maybe uh fill you in a little bit more.
Maybe you could you know be mo a little more uh I will be more than glad.
Yeah.
Give my office a closed mu call Monday and we can get you on the schedule and we can at least review and see what you have And then the thing is, maybe at the very least you can give me you know your opinion of what you think I might need to do or say or whatever.
But but I really appreciate you talking to me.
It’s already taken up so much time.
Yeah, no worries.
Yeah, give our office a call.
Well, that does happen, but It sounds like there’s a little bit more playing in this game, but yeah, let’s see if we can’t at least figure out what’s happening and see what the advocates say, okay?
Okay, thanks Dr.
Bradley.
Good evening.
You too, sir.
Hey, let’s go to Steve in the borough now that I found him.
Hey Steve, what’s happening?
Oh, nothing much.
How are you, Dr.
Friday?
Oh my goodness, I am doing wonderful Doing great.
I’m glad glad you’re back.
I have a question that’s uh could be morbid, but um I I’m gonna give you some quick Facts here.
I had a brother, me me and my brother in two thousand seventeen.
We inherited an IRA from my mother.
It was roughly three hundred thousand.
That was divided by two, so we both inherited a hundred and fifty thousand.
My brother was a little bit disabled.
I had financial power of attorney.
I took care of all the money and I’m familiar with the R and D.
laws.
And so we inherited those IRAs under the old laws to where we would just do that formula and we could and and that money’s been growing and it really hadn’t even though we’ve been taking six or seven thousand dollars a year, uh, you know, it’s still almost exactly what we inherited.
Okay, now fast forward.
Uh so he passed away just last week.
I’m going to be in inheriting His money.
I do I do I you know, when I get that seven thousand dollars I do end up paying taxes on it.
Uh he was not in a position where he ever had to pay taxes on it The 2025 RMD, both of us have already taken, but it was that minimum amount.
And I’m assuming I’m going to inherit this new IRA and it’s gonna be under the new laws of gotta take it within ten years You can’t.
And so my question is, um, first off, he’s deceased.
He’s taken uh the minimum amount that he could get by with for taking the twenty twenty-five R and D.
It’s gonna be beneficial to me to at least max that out f to what would keep him from paying any taxes on that money this year But I don’t uh and and I literally have not even been with the financial institution to uh haven’t had time enough to get through all the stuff.
to make them aware that he’s passed away.
Will I be allowed to move if that number you know, just shoot from the hip, I’m guessing he’s I I can’t do anything after the After the date of passing, it’s gonna be it’s basically yours or his estate, whichever way you want to look at it, since you are his beneficiary.
So if you were to take additional money out to to increase his distribution, it will come to you.
It’ll be tax under you.
It would come to me.
Okay.
Yeah.
All right.
Well, I I I figured they had How old are you?
May I ask?
Just ballpark?
What old are you?
I I oh yeah, I’ll be sixty five uh February first.
So I’m sixty four.
But you know, fix things are fixing to change and that’s another thing is that Yeah, I am on uh, you know, uh Obamacare the uh the the f the that program and and I’ve had multiple years where I always I’m prepared for it when I I take the maximum subsidy and but I’ve had multiple years where I had to pay back penalized and peptide.
Twenty twenty thousand dollars, you know.
But I’m always prepared for it.
And I’m trying to keep keep that stuff from happening but um Okay’s not a lot of places to move it unfortunately it would have been in hindsight’s worth a million dollars obviously it would have been good to probably knowing what you know today and this is never helpful but would been to convert his over into a Roth at some point having him pay because he would have been a lower tax bracket than you, but that doesn’t help you today.
So it doesn’t really Um maybe other listeners that are doing what you have maybe something to consider.
Sometimes it’s nice to keep the taxes down, but then if you’re going to be inheriting, then you’re gonna get hit in a higher tax, putting you in a a different situation.
Um and now with the new tax laws, like you said, it used to be we just had that small amount that went over your entire lifetime, but now with the mandate of ten years that we have to take that money out.
Now you’re forced to be taking a minimum of fifteen to plus thousand thousand a year out of his to make the 10 year, assuming that’s 150,000 or whatever.
Um, so that’s you know, that puts you in a different uh situation.
Um And there’s no because of your age, I don’t think you can do a qualified charitable deduction, even though this is an RMD, but I think you’re too young.
I think it has to be on your own.
But it might if you have a financial um guy, you might ask him, and I don’t know if there’s any any charities you usually give money out of your personal pocket to because if you can give it through the RMD it’s tax free and therefore reduces your ordinary income, which is what we need to do to keep you in Obamacare.
Lower, right?
Um so it still gives the same.
But I don’t I don’t know if you can do that on inherited IRAs.
I and that’s not my expertise, but something to ask your financial guy is if there’s any kind of qualified charitable deductions you can do with this money because even if it’s a five hundred or a thousand dollars a year you give to your church or to Red Cross or whatever, if you can do it directly through there, that would reduce your actual income by that 500 or 1,000.
And again, it’s not Not big dollars, and maybe you give a lot more than that, Steve.
I don’t know, but I’m just saying, you know, that would be the only thing I could think of that might give you um a potential way of reducing your income, but still taking your RMDs out.
Um, but otherwise, yeah, you’re you’re gonna be in a little bit sorry for the loss of your brother also, um, but you’re you are gonna be in a little bit of a pickle there All right.
I can’t tell am I on the air?
Yes, sir.
Oh oh I’m sorry.
It kinda volume change.
Uh well thank you for for saying that and uh I knew you would have the answers and uh that and that’s a great idea.
I should I have been converting my my own personal IRA.
I have been doing the raw thing And and I should have been thinking about that with his, but he was only four years older than me, so he was only sixty eight, so it was somewhat Yeah.
And you never knew how long, I’m assuming how long he may or may not live and how he’ll need his money and all of that.
And and you know, you were you were doing the best as far as management.
But You know, hindsight’s worth a lot, Stephen, in life.
So just it’s always nice to be able to look back and say that’s right.
Could have done this, but anyways, thanks for calling.
All right.
Thank you guys.
Thanks so much.
All right.
Bye-bye.
Bye.
All right.
We’re going to take our second break here.
And um when we come back, we’ll get to more of your phone calls.
If you want to join the show, you can.
615.
737-9986-66.
737-9986.
We’ll be right back with the Dr.
Friday show.
Alrighty, we are back here live in studio.
And if you have a join the call, you can 615-737-9986 615-737-9986 taking off calls here live in studio today.
Um I did get a during the break, someone was asking me again about if they were over the age of 70.
So we’re gonna go with over the age of 65 because anyone 65 and older this will apply to so if you are 65 and older and married The standard deduction you’re going to get, assuming both of you are receiving social security, will be $46,700.
Now it would have been $3,200 plus $31,500.
So that was 0053.
Should have been $335.
If you’re not on Social Security, that difference of $12,000 is coming from the one big beautiful bill.
So again, married, both on Social Security, over the age of 65, $46,700.
Single.
The standard deduction in 2026 is 15,750.
But if you’re over the age of 65 and receiving Social Security, you’re going to be at 23,750.
Again, that’s $2,000 for being over the age of 65 and another $6,000 for the new Obama one big beautiful bill, help for Social Security, trying to make Social Security not tax.
And that’s that’s a bit of a stretch.
I’ve been working with a couple clients because again, we are getting some extra money.
$15,000, $12,000 for married couples, $6,000 for married.
single plus we got the bump or the standard deduction that went up.
So people are like, well, can I use that money to give myself uh to do a bigger conversion or to take more money out of retirement?
And absolutely you can do that.
But if your tax bracket is 12% versus your tax bracket being 20%, that’s a big difference.
And that makes a huge difference because the savings you’re going to get It’s not really saying, hey, my Social Security is not going to be taxed.
So, you know, if I have $40,000 and I’m at the uh 20% tax bracket, that’s $8,000 in savings.
Where that 12% that they’re adding to your standard deduction is really only gonna be like 2400.
So the the the comparison isn’t that.
Okay, so I’m just trying to make sure people understand that when you’re looking at these comparisons and stuff, there is not a simple, I’m going to basically get free social security and not have to worry.
If people are in the lower, lower your tax bracket.
In some ways you’re gonna have less because you don’t normally at 85% of your Social Security is not taxed.
If you’re in the higher tax brackets, you are going to be at a higher tax bracket than what you’re saving on that twelve thousand dollars.
So, um, you know, it’s a it’s a great thing.
It’s gonna work out.
I mean, anytime they want to give us a credit for some I mean uh an additional deduction for something Perfect.
But just make sure you understand you will be still reporting your Social Security.
It’s not tax-free.
All right.
I think it’s George.
Is he on the line?
I mean, hopefully I said that correctly.
Is it George?
Yes.
Oh, hello, sweetheart.
What can I do for ya?
I’m not it’s going in and out.
I’m not too sure if it’s him or someone else.
Try one more time, sweetheart.
So check it out for the stomach and everything for the maybe for the insecting and the and the everything and me No interpreter?
No interpreter, I’m so sorry.
Okay, and needing the text Yeah, maybe try texting me and I’ll see if I can convert that and and you can text my cell phone number six one five three six seven oh yeah Okay, feel free.
Text it.
All right.
Um okay, thanks.
All right.
Looks like we have someone else coming on the line.
We’ll go from there.
You can hang up on George and we’ll see what we got there.
Is Mike ready?
Let’s see if Mike’s on the line.
Hey Mike, you there?
Yes.
Oh, hello Mike.
What can I do for ya Well, I heard one of your nice commercials and I didn’t catch all the facts on it, but I think I heard you say that those of us that have taken an extension to file, which would be due on ten fifteen, uh went someplace in November now Right, because we we went out of the traditional extensions you’re 110% correct.
1015 is always our deadline.
But Tennessee fell under a federal extension because of disasters.
We had so many different ones, they extended all of our counties to 11.
3.
Do we have to mark it in any special way that I’m taking that extension?
No.
Um there isn’t really an I mean your address hopefully shows Tennessee.
Yes, it does.
Okay.
Then you will be fine if uh if for some reason you’re under a different state or city but you consider Tennessee yours, then there would be an additional uh document.
For all of us that live here, your address will suffice.
Because they gave the whole state.
Okay?
Wonderful.
All right.
Thank you.
Thanks for listening.
Appreciate it, Mike.
Thanks.
Bye.
Bye Alrighty.
And if you do want to join the show, you can.
615-737-9986-615 737-9986 is the number here in the studio.
And we are definitely getting some great questions today.
So hopefully we can continue that.
Um, and I’m making my poor phone guy, Louie.
Um, he is uh having to move up pretty quickly there.
And I’m gonna push him some more.
It looks like um Rodney from Fay at Velware is gonna bring him on the line so we can get him before the next break.
Thank you, sweetie.
Appreciate it.
Hey Rodney, can you hear me?
Yes.
Yeah I can.
Uh got a quick question for you.
R You just talked about the big beautiful bill.
My wife is 65.
I am 60.
I still work.
She’s retired.
How would that deduction work That’s a great question.
I didn’t really cover the split situation, did I?
Um so it’s gonna be uh so basically she would if she’s is she 65 Yes.
Okay.
So she would qualify for sixteen hundred dollars that is and that’s been on the tax bill for a while, uh, for the additional and she would get the six thousand dollars for her share.
So you would go from the thirty one five hundred add another seventy six hundred dollars to that standard deduction.
So in that case you would be seven eight nine thirty nine thousand 100 would be your standard deduction this year.
Um so it will just it will add to your standard deduction and all of that Penny if you do your own taxes or whatever, but it’s all gonna be based on dates of birth and then if she’s on social security.
Right.
All right.
Thank you very much.
Hey, that’s a great question.
I forgot to go that direction.
Thanks, Rodney.
Yeah, thank you.
For some reason I think.
Oh Everybody is married or everybody is single.
That’s not the world world we live in.
Okay, so we’re gonna be taking a quick break here in just a second.
Again, if you have been listening and you’re wanting to get on the phones now will be the time to do it because we’re getting ready to go into our last break And if you’ve got a question, maybe it has to concern with maybe you’ve inherited property, maybe you trying to find out if it’s taxable or not.
Um, and then some property because I know sometimes um like Steve had called in and a lot of times people think, oh, if I inherit nothing is taxable and Steve can contest.
That is not the case.
If we inherit um 401ks, IRAs, anything that has deferred income in it, you will be paying tax when you have it.
And now under the new IRA.
um distribution situation.
They’re accelerating that.
The government is really wanting their money out of the IRAs.
They used to do a little better giving us time to kind of trickle it down the line.
That’s not happening very well at this point.
But anyway, so if you um if you are inheriting different things, maybe you’ve got a question or maybe you’re trying to think of ways you can um pay in less taxes.
We’re all working on that.
But if you have a question, I might be able to help you or at least let you know if you’re thinking about the right way.
Sometimes people Just assume and never do assume with tax law because what may have been good 10 years ago may have changed under the current tax laws.
But either way, if you want to join the show again, 615 737-9986.
615-737-9986.
We’re going to take some calls.
and then we’ll wrap up the show but hopefully you guys are having a beautiful Saturday you can’t complain about this weather and we’ll be able to get back with you in just a few This is the Dr.
Friday Show.
I’m an enrolled agent licensed by the Internal Revenue Service, and we’ll be right back.
Alrighty, we are back.
This is the last part.
of the show so if you’ve been holding your breath you should be giving us a call 615-737-9986 is the number here in the studio we have David from the borough Let’s see if I can help David or not.
Hey Dave, what’s happening?
Uh yeah, I’m trying to figure out if I should have my children on my deed or not.
I’m seventy four years old so I’m trying to figure out if I can make a will or a trust or Just to keep them from paying if they sell the house, all the taxes on it, everything.
So you definitely wanna have a will, you definitely don’t wanna put them on the deed Um because what we want to do is do the inheritance where if they’re already on the deed, it seems like they have ownership, right?
Um, so basically what you want to do is leave a at least um if it’s on if your house is your main thing, then at least a will.
That way they can go to probate and they’ll be able to put it in their name and there’ll be no taxes.
They’ll get a step up in basis.
So whatever the house is worth when you eventually die will be what they would inherit it at.
And no taxes would be due.
Make it a will.
Don’t don’t uh quick claim it or add them to anything because that eliminates that step up and basis, and you don’t want to do that Okay.
I’ve been told that I also need a trust because it will have to go through probate, but then a revocable or irrevocable trust doesn’t Right.
Um a trust doesn’t, well, I shouldn’t say that.
There’s called a pour over will, and the will does go through probate, but it’s a little different process.
than having to go into the whole probate situation.
A pour over basically says everything in this trust will be distributed based on the rules and it’s basically stamped, right?
There’s no court, there’s not, I mean there’s no major thing Um, where yes, they would have to, but and I’m gonna be honest, I’m an advocate for trust for two reasons.
One, I don’t think anyone in the world needs to know what David owns or doesn’t own, and therefore if it goes through probate.
It is listed in tax documents and everyone finds out what David had, right?
I don’t think it’s anyone’s business.
Yeah, exactly.
And then the second reason is is just what you brought up.
If when you pass away the house, it would be quick claim immediately into this trust, the people that run the trust, whoever the beneficiaries or the executor of the trust, they can then sell the house and the step up and basis happens.
They don’t have to wait six or eight months for the court to quick claim it over or whatever.
But there’s a cost.
It’s probably three, four thousand dollars to set up a trust where a will maybe three, four hundred or maybe five hundred.
I’m not an attorney.
I don’t know what they cost anymore Uh, but if they have to probate, your children will most likely have to hire an attorney at that time, which could still cost them three or four thousand dollars to probate it.
So I’m always about let’s go ahead and just pay the lawyers up front, do the trust.
And therefore it’s fairly straightforward and you don’t have to worry about a lot of attorneys unless unless it gets contested or, you know, life gets messy sometimes, but not under the normal situation.
where a will then has to go through probate and normally you have to hire an attorney anyway.
So you pay up front or you pay when you’re dead.
One way or the other your money’s going to an attorney.
I’ll just let my kids pay for it.
There you go.
Out of the house sale that they’re gonna reimburse themselves.
No, I’m just gonna Yeah.
You got it, buddy.
Does that help?
Uh yeah, a little bit.
Yeah, I think so, yeah.
Okay, cool.
Well thanks for calling.
I appreciate it.
Thank you.
No problem.
Bye.
All right.
So that was a good question.
And I know um you should always I’m gonna put this little caveat always talk to an attorney because there are probably uh especially nowadays like I was joking with uh Rodney a little earlier.
I don’t think about, you know, a married couple, one person being under the age, one, oh the I should.
A lot of my clients are that way.
Well same thing when you have a lot of individuals where they have their children, our children.
his children, whatever.
Um, and there is a lot more moving parts and I’m sure that an attorney would probably have a better answer, especially a good estate attorney.
I use uh Jack McCann or Russ Cook.
Both of them are awesome, known him for Well, Jack probably 30, 35 years, at least 30 years, and and um and then Jack McCann probably a good 20 years.
So they’re both very good attorneys And they both um do a lot with estates and wills, which is the important thing.
You don’t just want someone that says, hey, I do traffic accidents over here, and then I can do divorces and I can do estates.
I don’t know, it’s kind of like a a tax person doing financial planning.
I’m not nothing against it.
I just think there’s a lot to learn under taxes to have to add all the financial planning side.
I think sometimes you spread yourself too thin or you’re relying a lot on software.
So I think sometimes it’s better to have a good team of people that each specialize in what they do very, very well.
versus one person that’s doing a lot of the different jobs because at some point you you may even end up with a conflict of interest As a tax person, I want to do uh traditional IRAs, I want to do CEPs because that’s going to save tax dollars, but You know, if the person’s in the 12% tax bracket or they’re soon to retire, I know a lot of my financial planners may say it’s better to pay the taxes now.
So that way in the big picture they won’t pay as much later Um, that’s what their job is, to figure out the five and ten year plan where most tax people are actually looking at instant gratification.
Sure, we can do a five-year tax plan, but it may not tie into a financial plan.
You know, um, it may be that we’re going to do a bunch of conversions because that way when you hit retirement, you don’t want to have to file taxes.
Maybe you can live off your Roth.
and your Social Security and you no longer have to file taxes.
But that’s not the norm.
And I think most of us will always be filing taxes.
I have a 90 We’ll just say she’s 90 plus years that comes in every year, even during COVID.
The girl was crazy.
She’s like, I meet you every third Tuesday of the year on February and I’m coming in Um, and she will be filing taxes till she’s no longer alive because just her way her finances are set up.
Um, you know, it’s a good problem to have.
But on the other hand, most of us would love to know and she’s every time she goes.
Friday have I hit the age I no longer have to file taxes and I said not going to happen.
She keeps hoping it will happen, but it’s a little inside joke that we like to play with each other But um, you know, uh it it does seem like at some point in life we might not have to pay for taxes.
But right now under current tax law, age has nothing to do with filing taxes I mean, I’ve got kids that could be 10 or 12 years old that have started their own businesses and they file taxes and they’re taxed at their parents higher rates because of the kitty tax laws.
And then of course you have seniors, same thing where, you know, they they’ve made good investments or, you know, they have business investments most of the time.
They have real estate or investments that are feeding extra money through, which leads them to paying um some pretty healthy taxes sometimes.
And All that being said, the secret to doing good tax planning and good financial planning.
is having a good attorney that knows how to document everything so it’s no one’s going to be here forever.
And if you want to make sure that your estate is going to go to the children or the the spouses or whoever it is that you want it to go to, you need a good estate attorney.
And then you need a good financial planner to make sure that money is going to keep coming in and being managed by those same people.
And then the last would be a good tax person.
That’s who I am, an enrolled agent licensed by the Internal Revenue Service to do taxes and representation.
I’ve been doing this for almost 30 years here in the Nashville area, um, 15 plus years on the radio.
So if you have questions on how to do some situation within your taxes or maybe your tax person is retiring, you’re looking for a second tax person.
Or just a second opinion on how to do taxes and your situation.
Maybe something’s changed and you’re not sure if everything’s being done.
be more than glad to give you a second opinion.
Many times I find that the tax person you have is doing just a great job.
But there are times when we don’t find that and making sure that you’re maximizing the tax deductions.
And like anything else, there is interpretation as far as when you should accelerate depreciation.
Some people like to take straight lines, some of us like to take instant gratification, and it’s not always the same for each client.
It could depend on the situation that you’re in.
So making sure you’re getting and understanding your taxes.
I think that’s so important because so often people file taxes and they trust the person, which is great.
You need to trust the person doing the taxes.
because that is their job.
But it would help if you’ve got questions and you’re not getting them answered, like why do I owe more money this year than I did last year?
And they can’t explain the difference Usually it’s because you either had more income.
That usually leads to more taxes, or maybe you had an accelerated depreciation and now you don’t.
Different reasons it could have been that maybe some of the money was in some sort of annuity and now you’re getting more of a taxable income than than non-taxable.
But all these different things can add up.
It helps you understand.
So it helps you plan for what it is you’re going after.
And that’s the important thing.
Understand where your money is.
Where can we save tax dollars?
And sometimes it is important to pay taxes now so you don’t have to pay it later.
All right, so we’re gonna wind down to about the last minute of the show here So we’re going to give out that important information.
If you want to call my office Monday morning, you can at 615.
367-0819.
So 615-367-0819.
You can also email me Friday at drfriday.
com.
Again, Friday at DRfriday.
com.
Check us out on the web.
Maybe you don’t know what we have.
The calendar for this next tax season will be opening soon.
If you are an existing client and you haven’t received an email to book your appointment, please contact our office so we can get you booked uh before we open it up to the the the newbies as we like to refer to them as So again, if you’re an existing client and haven’t received a link to schedule your appointment, please contact the office so we can get you scheduled.
All right, if you have questions, I hope you guys are enjoying your Saturday.
As we always say, cop ya later.