The Dr. Friday Radio Show

Tax season is open and Dr. Friday jumps right in, clearing up confusion around tips and overtime deductions and the documentation required. She warns against preparers who charge by refund or fabricate numbers, then takes calls on senior deductions, energy credits, gift tax rules, IRS resolution delays, and business/investment questions.

Q: Is it okay for a preparer to charge a percentage of my refund?A: No. Fees should not be tied to refund size.

Q: If a parent pays off my mortgage, do I owe tax?A: The recipient generally does not report it; the giver may need to file Form 709 if over the annual exclusion.

Q: How do capital losses work against gains?A: Losses offset gains first; up to $3,000 of net loss can offset ordinary income, with the rest carried forward.

This week, Dr. Friday breaks down the Trump account election (Form 4547) and what it means for parents, grandparents, and employers. She also revisits tips and overtime reporting, the new car loan interest deduction, and the recordkeeping needed for basis and mileage. The show closes with guidance on selecting ethical preparers and staying ahead of 2025 filing changes.

Q: What is the Trump account and how do I elect it?A: It is a child savings account elected on Form 4547 with the 2025 return; participation is optional and contributions are not required every year.

Q: What do I need for the car loan interest deduction?A: A qualified new vehicle, lien-secured loan, VIN/FIN, US assembly, and proof of interest paid for that year.

Q: Can I deduct mileage if I am a W-2 employee?A: No. Mileage deductions require business use and logs and generally apply to self-employed or 1099 work.

Kick off the 2025 filing season with Dr. Friday as she walks through the additional senior deduction and how the new tips and overtime deduction works at year end. She stresses documentation, correct W-2 reporting, and the importance of keeping business and personal records separate. Callers ask about overtime calculations, hobby vs business income, filing status after a spouse’s death, car loan interest rules, and selling inherited property.

Q: Do tips or overtime reduce tax automatically on my paycheck?

Q: Who qualifies for the senior additional deduction?

Q: How do I keep a side gig from being treated as a hobby?

While taxes are usually the star of the show, Dr. Friday takes a detour “off the grid” this week to discuss a critical component of business health: cybersecurity. Joined by Matt Folker and Dennis Buzard from Innovative Solutions Through Technology (ISTT), Dr. Friday explores why small and medium-sized businesses are often the most vulnerable to hackers. From “sniff tests” for emails to the dangers of leftover COVID-era remote access, this episode is a must-listen for any business owner looking to protect their data, their employees, and their legacy.

What is ISTT? ISTT stands for Innovative Solutions Through Technology. They are a Kentucky and Tennessee-based IT and cybersecurity firm that provides technical assessments, end-user training, and managed IT support.

What happens during the free evaluation? Dennis Buzard visits your office for 30–45 minutes to run a sample scan on a few workstations. About a week later, they provide a 25–30 page detailed report (in layman’s terms) explaining where your security holes are.

I’m a small business with only a few computers. Do I really need this? Yes. Dr. Friday notes that many small businesses rely on outdated setups from decades ago or “big box store” Wi-Fi solutions that aren’t secure. Hackers often target smaller firms because they lack the robust IT departments of major corporations.

Does ISTT use offshore support? No. All ISTT employees are based locally in Kentucky and Tennessee, though they serve clients across the majority of the United States.

In this episode, Dr. Friday is joined by her long-time friend and colleague, Hank Parrott of Estate and Financial Strategies. Together, they dive deep into the critical importance of the “Team Approach”—ensuring your financial planner and tax professional are working in unison rather than in silos.

As we head into the new year, Hank and Dr. Friday discuss how to maximize your retirement income without triggering unnecessary taxes. They cover complex topics like IRMA surcharges on Medicare, the strategic timing of Roth conversions, and how to turn high medical costs, such as assisted living, into tax-saving opportunities. If you want to ensure you aren’t leaving money on the table or paying the IRS more than your fair share, this is a must-listen episode.

Q: What is IRMA and how does it affect my retirement?A: IRMA stands for Income-Related Monthly Adjustment Amount. It is a surcharge added to your Medicare Part B and Part D premiums if your income exceeds certain thresholds (e.g., over $212,000 for a married couple filing jointly). Dr. Friday and Hank warn that one-time events like selling a house or a large Roth conversion can accidentally trigger this extra cost.

Q: Can I deduct assisted living costs on my taxes?A: Yes, in many cases. If a resident is in assisted living or memory care primarily for medical safety and requires assistance with daily living activities (like dressing or medication management), a large portion of the monthly fee may be considered a medical expense. This can create a significant itemized deduction on Schedule A.

Q: What is a QCD?A: A Qualified Charitable Distribution (QCD) allows individuals aged 70½ or older to transfer money directly from their IRA custodian to a qualified charity. This counts toward your Required Minimum Distribution (RMD) but does not count as taxable income, offering a tax advantage over withdrawing the money and then donating it.

Q: Why shouldn’t I just pay off my mortgage with my retirement funds when I retire?A: Hank Parrott advises caution here. Taking a lump sum from a tax-deferred account (like a 401k or IRA) to pay off a mortgage creates a massive taxable event in a single year, potentially pushing you into the highest tax brackets and triggering other costs like IRMA. A staggered distribution strategy is often more tax-efficient.

In this episode, Dr. Friday is wrapping up 2025 with critical updates on the “One Big Beautiful Bill” (OBBBA) and what the changing tax landscape means for your wallet. With the holiday season in full swing, Dr. Friday takes a break from her beehives to break down the new 2025 tax brackets, the major increase in the SALT deduction, and the newly established “Trump Fund” for children. Whether you are looking for last-minute year-end moves or planning for retirement distributions, this episode is packed with essential financial strategies.

Q: Did the limit for State and Local Tax (SALT) deductions change for 2025?A: Yes. Under the new legislation (OBBBA), the SALT cap has increased from $10,000 to $40,000. This allows taxpayers to deduct significantly more for property taxes and sales tax, making itemizing deductions beneficial for more people.

Q: Do I need to have taxes withheld from my Social Security checks?A: It is highly recommended if you have other sources of income (like a pension or investment interest). If your combined income (Adjusted Gross Income + 50% of Social Security) exceeds $25,000 for individuals, up to 85% of your Social Security benefits becomes taxable.

Q: What is the “Trump Fund” mentioned in the show?A: This is a new program for children born on or after January 1, 2025. The government opens a $1,000 investment account for the child. Parents and grandparents can contribute up to $5,000 annually until the child turns 18. It functions similarly to an investment fund with penalties for early withdrawal.

Q: Can I deduct the mortgage interest on a second home?A: Yes, provided the combined mortgage debt of your primary and secondary homes does not exceed $750,000 (for loans originated after Dec 16, 2017).

Q: What is a QCD and who should use it?A: A Qualified Charitable Distribution (QCD) allows individuals aged 70½ or older to donate directly from their IRA to a qualified charity. This money is not counted as taxable income, making it a more tax

Is your estate plan a “cure” or a “woe” for your family? In this episode, Dr. Friday is joined by board-certified estate planning attorney Russ Cook of the Cook Telman Law Group. With over 30 years of experience, Russ dives into the critical steps every family should take to protect their assets from creditors, minimize taxes, and avoid the public headaches of probate. From the dangers of putting children on bank accounts to the massive tax benefits of Tennessee Community Property Trusts, this episode is a masterclass in financial peace of mind.

Q: Why shouldn’t I just put my child’s name on my bank account to help me pay bills?A: If that child gets sued, files for bankruptcy, or goes through a divorce, your bank account becomes an asset their creditors can seize. Filing a Power of Attorney with your bank grants them the ability to help you without the legal risk to your funds.

Q: Does a Revocable Trust change how I use my money day-to-day?A: No. A revocable trust is not a separate tax entity during your lifetime; you remain the trustee and beneficiary. You can buy, sell, or refinance assets just as you did before.

Q: Can I put my IRA or 401(k) into my trust?A: You shouldn’t transfer ownership of a retirement account to a trust while living, as the IRS will view it as a total distribution and tax it immediately. Instead, you should name the trust as the beneficiary of the account.

Q: How does a “Spendthrift Trust” work?A: This is designed for heirs who may struggle with addictions or poor financial choices. The money is managed by a trustee who doles out funds for the heir’s needs rather than giving them a lump sum that could be lost quickly.

G’day! In this episode of the Dr. Friday Show, the Doctor is in the house to help you navigate the end of the year and prepare for the 2025 tax season. Dr. Friday breaks down the major changes introduced by the “One Big Beautiful Bill” (OBBB), including shifting tax brackets, new credits for families, and substantial changes for service industry workers. Whether you are looking to maximize your retirement contributions before December 31st or trying to understand the new rules regarding auto loan interest, this episode is packed with essential financial advice.

Episode Summary Points:

Q: Is Social Security income tax-free in 2025?A: No. Social Security can still be taxed up to 85%. However, under the new bill, there is an additional standard deduction for those age 65 and older ($6,000 for singles, $12,000 for married couples) which may reduce your overall tax liability.

Q: Can I deduct the interest on my car loan on my 2025 taxes?A: Yes, but there are strict requirements. The vehicle must be new, assembled in the U.S. (VIN starting with 1, 4, or 5), purchased after Dec 31, 2024, and used solely for personal reasons. The deduction is capped at $10,000 in interest and phases out for high-income earners.

Q: I have a teenager who is working. Can I put money into an IRA for them?A: Absolutely. As long as the child has earned income, you (or a grandparent) can contribute to a Roth IRA in their name. You can contribute up to the amount they earned or the annual limit ($7,000), whichever is lower.

Q: Are there stimulus checks coming for seniors in 2026?A: There are discussions about a potential payment (rumored around $1,390) for low and middle-income individuals in 2026, but this is not yet confirmed. If it happens, Social Security recipients likely won’t need to file extra paperwork to receive it.

On this episode, Dr. Friday dives into critical year-end tax planning strategies and offers expert advice for listeners facing tough IRS issues. From the tax implications of an inheritance to navigating W-4 withholding for multiple jobs, Dr. Friday provides actionable steps to protect your finances. Learn the pitfalls of dealing with national tax resolution firms, the strict rules for vehicle deductions, and the importance of diligent record-keeping for your business. Plus, get crucial advice on coordinating with your financial planner and attorney to ensure your estate plan is sound and your assets are protected.

Inheritance & IRS Levies: If you owe back taxes, the IRS can place a levy on your inheritance. Dr. Friday stresses the importance of dealing with tax issues proactively before they become a family matter.

Choosing a Tax Resolution Firm: Beware of companies promising settlements for “pennies on the dollar.” Dr. Friday explains how to identify legitimate help and avoid firms that delay and overcharge without delivering results.

W-4 Withholding Issues: An employee questioning why federal taxes aren’t being withheld may not be earning enough to meet the threshold. For those with multiple jobs, it’s crucial to either have extra money withheld or make quarterly estimated payments to avoid a large tax bill.

Quarterly Estimated Taxes are a Must: For the self-employed, paying quarterly taxes is not optional. Dr. Friday warns that failing to do so can result in penalties, which are calculated monthly.

Vehicle Deductions (Section 179): Purchasing a large vehicle for your business doesn’t guarantee a 100% deduction. It must be a necessity for your industry, and you cannot claim 100% business use if it’s your only vehicle.

Business vs. Hobby: If you consistently lose money in a side business while working a full-time job, the IRS may reclassify it as a hobby, disallowing your loss deductions.

The Importance of Record-Keeping: Dr. Friday emphasizes the need for small businesses to maintain accurate profit & loss statements and mileage logs. For homeowners, keeping receipts for all improvements is vital to increase your cost basis and reduce capital gains tax when you sell.

Year-End Financial Coordination: This is the time to speak with your financial planner, tax professional, and estate attorney. Discuss Roth conversions, portfolio adjustments, and review your will or trust to ensure it reflects your current life circumstances.

Q1: I’m inheriting some property, but I owe the IRS from previous years. What should I expect? A: You should expect the IRS to find out about the inheritance and place a levy against the estate for the amount you owe. This can delay the distribution of assets and make your financial issues known to your family. It is crucial to contact a tax professional to address the debt before this happens.

Q2: My employer isn’t taking out any federal income tax, even though I requested extra withholding. Why is this

This week, Dr. Friday discusses the approaching 2024 tax deadline and dives into significant new tax deductions for 2025 concerning overtime pay and seniors over 65. The show also covers crucial topics such as the tax implications of selling a home, how large income events can trigger higher Medicare (IRMAA) payments, the right way to deduct business mileage, and how to navigate tax filings during a divorce. Dr. Friday offers practical advice for W-2 employees, self-employed individuals, and business owners to help them stay compliant and financially sound.

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.

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.

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.

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.

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.

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.

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.

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.

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.