July 14, 2025 • 44 mins
Tax Talk 4 U : Big Beautiful Tax Cuts by One Big Beautiful Bill. Tr President Trump signed H.R. 1, One Big Beautiful Bill Act (OBBBA), into law on July 4, permanently.
extending key Tax Cuts and Jobs Act (TCJA) provisions and introducing new tax provisions. Increased standard deduction, deduction for seniors, Extension with changes to child tax credit, child and dependent care tax credit, No tax on tips , No tax on overtime, Deductible car loan interest, Charitable Contributions deduction.
Tax Talk 4 U is broadcast live Mondays at 10AM ET and Music on W4CY Radio (www.w4cy.com) part of Talk 4 Radio (www.talk4radio.com) on the Talk 4 Media Network (www.talk4media.com). Tax Talk 4 U is viewed on Talk 4 TV (www.talk4tv.com).
Tax Talk 4 U Podcast is also available on Talk 4 Media (www.talk4media.com), Talk 4 Podcasting (www.talk4podcasting.com), iHeartRadio, Amazon Music, Pandora, Spotify, Audible, and over 100 other podcast outlets.
Become a supporter of this podcast: https://www.spreaker.com/podcast/tax-talk-4-u--6333550/support.
extending key Tax Cuts and Jobs Act (TCJA) provisions and introducing new tax provisions. Increased standard deduction, deduction for seniors, Extension with changes to child tax credit, child and dependent care tax credit, No tax on tips , No tax on overtime, Deductible car loan interest, Charitable Contributions deduction.
Tax Talk 4 U is broadcast live Mondays at 10AM ET and Music on W4CY Radio (www.w4cy.com) part of Talk 4 Radio (www.talk4radio.com) on the Talk 4 Media Network (www.talk4media.com). Tax Talk 4 U is viewed on Talk 4 TV (www.talk4tv.com).
Tax Talk 4 U Podcast is also available on Talk 4 Media (www.talk4media.com), Talk 4 Podcasting (www.talk4podcasting.com), iHeartRadio, Amazon Music, Pandora, Spotify, Audible, and over 100 other podcast outlets.
Become a supporter of this podcast: https://www.spreaker.com/podcast/tax-talk-4-u--6333550/support.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The topics and opinions express in the following show are
solely those of the hosts and their guests and not
those of w FOCY Radio. It's employees are affiliates. We
make no recommendations or endorsements for radio show programs, services,
or products mentioned on air or on our web. No
liability explicitor implies shall be extended to W FOURCY Radio
or it's employees are affiliates. Any questions or comments should
be directed to those show hosts. Thank you for choosing
(00:21):
W FOURCY Radio.
Speaker 2 (00:27):
Barry G.
Speaker 3 (00:28):
Fouler EA brings you tax talk for you right here
on W four CY Radio and talk for TV. As
an enrolled agent and a national leader in tax resolution
as well as Trucker bookkeeping and tax planning. With over
thirty years of experience, Barry will break down taxes, bookkeeping,
(00:49):
tax planning, and tax relief for individuals and businesses just
like you. So let's have some tax talk for you
with your hosts.
Speaker 2 (00:58):
Barry G.
Speaker 4 (00:59):
Foul heyday of talking about one big, beautiful bill. You know,
it's amazing to me that we passed legislation and instead
of breaking things down and doing them in small bills,
so they do this one humongous, big, beautiful bill, as
(01:23):
Trump calls it and as it's called in law. Now,
there are a lot of good things that happened in
this bill, and I understand that some thing's going to
take a lot of pages. But this bill is I
believe eight hundred and seventy pages long. It's right around there.
I've looked at it, studied this bill, and we're kind
(01:43):
of dissecting just the tax part of this bill that
President Trump signed into law on July fourth. Now, one
part of this bill, which is great, it permanently extended
key Tax Cuts and Jobs Act provisions and then introduce
(02:07):
new tax provisions as well. So what we've been operating
on for the last roughly eight years, we're going to
continue operating underneath that original Tax Cuts and Job Acts
plus the new provisions that are put in, and we're
going to discuss a lot of those new provisions here
in the show. The new legislation introduces tax relief for
(02:32):
middle class families and workers, and also aim to simplify,
simplify compliance, reduce taxable income for certain earners, and broaden
access to tax benefits. This all built around the twenty
seventeen Tax Cuts and Jobs Act. Now in this bill,
(02:55):
you're going to see the extension and on getting phone
calls in the middle of talking and I thought we
turned everything off, but my watch, it keeps going going off.
Now I got to figure out how to silence that
as well. You know, it's going to enhance the standard deduction,
introduce some notable updates including deduction for overtime, expanded childcare credits,
(03:18):
deduction for seniors, also launches Trump Accounts for young savers.
So we're going to kind of go through each one
of these things all throughout this program. But this is
all going to be geared around the individual side. Now.
You know, we spent many many hours going through this
whole bill and pulling out sections of this bill to
(03:39):
be able to talk about to help you further understand
what this does for you as an individual taxpayer. Now,
next week we're going to enjoys a lot of the
stuff in this bill that involves businesses, and so you
want to make sure you turn tune into Tax Talk
for you next week at ten am Eastern time to
(04:04):
be able to get what this bill does for you
and your business. But this bill, on the individual side,
it does an extension of reduced income tax rates, So
the provision permanently extends the individual income tax rates introduced
by the TCJA that were previously set to expire at
(04:27):
the end of this year. The amendment to the bill
eliminates the sunset class and ensures that they are reduced.
Marginal rates of the ten, twelve, twenty to twenty four,
thirty two, thirty five, thirty seven remain in place. This
provision is intended to lock in those lower marginal tax rates,
(04:50):
prevent automatic rate hikes that were going to happen in
twenty twenty six, provide continued tax relief to individuals and families,
and control the way bracket thresholds grow with inflation for
better targeting of the rate brackets. So that being said,
we don't have to be scared and all of a
(05:10):
sudden in twenty twenty six, all of our rates are
going to jump up and we're going to go back
to some real old code. So that's the good news
in this bill. It's one thing that us as tax
prepayers we're really hoping for, was the extension of the
tax law. With the election of President Trump and Republicans
(05:33):
being in Congress and dominating both houses. We figured this
should go through, and we're glad that it did because
it really ensures that we keep these rates going out
to the future. There are two changes to the standard
deduction rules now. The first, the law permanently preserves the
(05:54):
current tax code enhance the standard deduction amounts under the
prior law increased deduction initially established for years eighteen through
twenty five. Those were set to revert back to the
twenty eighteen levels beginning in twenty six. The law also
(06:14):
increases the base standard deduction amounts beginning in this year.
So we were already getting a jump for inflation, but
we're also getting the jump and increase with this bill.
So the new base deduction is thirty one thousand and
five hundred, so it is an increase over if inflation
(06:38):
adjusted amount of thirty thousand. So Mary finally joint it's
now thirty one to five for twenty twenty five, so
it jumped up fifteen hundred dollars, So the new amount
for single is half of that. That's fifteen thousand and
seven fifty, exceeding the prior inflation adjusted amount for the
(07:00):
year of fifteen thousand, So there's an extra seven hundred
and fifty dollars if you're single, extra fifteen hundred dollars
if you're married filing jointly. Now, this is a standard deduction,
and you know we have seen, you know, unless you've
taken out a new mortgage in the last four years,
many people didn't qualify to itemize. Many people just took
(07:22):
the standard deduction. So that's really a nice provision in
this tax law. So you see a bigger standard deduction
for this year and and then it'll start being inflation
adjusted every year there after. So it's going to give
(07:42):
a direct savings to many many US households starting this year. Also,
we have some termination of permit personal exemptions. Those were
temporarily spended underneath the Tax Jobs Credit Act. This makes
(08:05):
it permanent, so we won't have the individual exeptions coming back.
You just got the larger standard deduction. Now Trump kind
of promised no tax on Social Security. Well, Congress gets involved,
Congress decides they're going to do it a different way.
Now it knits down to it. It basically gives no
(08:28):
tax on Social Security, but it gives the seniors beginning
this year through twenty twenty eight, individuals age sixty five
or older. By the end of the year, you get
to claim new deduction of six thousand dollars on a
joint return. Each spouse may qualify for that six thousand dollars,
(08:49):
giving you a total of twelve thousand in total deductions
as long as you're both age sixty five. Now they
through its phase house, So they say this bill is
only benefiting the rich. These phase outs are because people
make too much money, according to Congress. Not in my opinion,
Congress's opinion, president's opinion. Maybe, but I really think it's
(09:13):
just purely Congress trying to appease certain people and saying, hey,
we're going to continue to tax those be considered to
be rich. Now, believe it or not, this bill has
a six percent phase now on modified adjusted gross income
exceeding seventy five thousand for single filers. I raise your
(09:34):
hand if you consider seventy five thousand as a single
person rich and wealthy. Only the Congress raise their hand.
One hundred and fifty thousand for joint filers. How many
of you making that kind of money consider yourself to
be totally rich to start having these phase outs? Only
Congress is raising their hands now. Now a couple other things.
(09:57):
Seniors must possess a valid Social Security number to claim
the deduction. I haven't seen anybody file without a valid
sold Security number. Maybe it TI N number, but you
got to have a valid so Security number. In a
mission or invalid sold security is treated as a mathematical
or lyrical error, authoring authorizing the IRIS to adjust the
return Accordingly, they get to adjust your return. Married individuals
(10:21):
must file a joint return to be eligible. Married filing
separate is not permitted for this deduction. So if you're married,
you got to file a joint return sixty five or older.
You both can get it. If you file married filing separate,
it is not going to be Wow. A lot of
changes already. We're talking quick through this bill, and you
(10:43):
know we only get an hour to do this. We're
going to take a quick break and when we come back,
we're going to talk about extensions. We have changes to
the child tax credit. Right back after this.
Speaker 3 (10:56):
We have only scratched the surface of today's show. Please
stand by as Barry G. Fowler will be right back
with taxtock for you. If you owe the IRS or
are going through an IRS audit, don't go at it.
Speaker 2 (11:12):
Alone. Call Taxation Solutions Tax.
Speaker 3 (11:15):
Relief at eight eight eight nine three zero one zero
one six. We are your solution for IRS, debts, audits,
back taxes, garnishments, leans and levees. Whether you're an individual
or business, you need a solution and a strong, aggressive
tax resolution.
Speaker 2 (11:36):
Don't let the IRS walk all over you.
Speaker 3 (11:39):
Stop the IRS now call eight eight eight nine three
zero one zero one six or go to Taxationsolutions dot
net now for a free no obligation consultation. Let's get
back to tax stock for you with more tax stock
(12:00):
once again.
Speaker 2 (12:01):
Here's your host, Barry G. Faller.
Speaker 4 (12:06):
All right, you got children. What's changed with the child
tax credits? So there's been several changes to the child
tax credits and it takes effect starting this year. So
what we were fixing to do is at the end
of this year, child tax credit was going to drop
(12:28):
back down to the original amount of one thousand dollars.
But this bill, effective twenty twenty five, the maximum child
tax credit for qualifying child increases from the two thousand
to twenty two hundred beginning in twenty twenty six. This
amount is subject to annual inflation adjustments. Now, the refundable
(12:50):
portion of that credit remains capped at fourteen hundred per child,
but that is also going to be indexed for inflation
beginning this year, so we might see some adjustments to
that as well. Now, what do they mean about you know, Hey,
you get a twenty two hundred dollars tax credit, but
you only get fourteen hundred of it refundable. So if
(13:11):
you are paying taxes and you have tax showing on
your tax return, not owing, but total tax, the duck
to twenty two hundred from that total tax, and it
leaves you what's left to be paid. Now, if twenty
two hundred is used to get you down to zero tax,
then you can still get fourteen hundred refundable to you,
(13:35):
possibly depending on how much of that credit was used.
So if you didn't use all twenty two hundred, let's
say maybe you only hit one thousand dollars a total tax,
they'll use a thousand of that twenty two and refund
you the twelve hundred dollars difference plus any of your
federal withholdings that you've paid in. So you know, you
(13:58):
got to look at whether you qualify or not qualifying.
Here again, you must have a valid so security number
must be US citizen or certain legal residents could qualify
as well, you know, so keep those things in mind
as you're going through and doing this. Hey, one of
(14:21):
the nice parts about this bill. We're going to kind
of skip through a few of the sections out here
because there are other enhancements out here, but this is
one of the places that people really wanted to know about.
You heard it, no tax on tips. That's right, Trump
(14:41):
said it, no tax on tips. Congress got involved. Guess
what limitations, of course are. So Section two two four
allows individuals to deduct certain cash tips from their taxable income.
The deduction is available for tax years beginning after December
(15:02):
thirty one, twenty twenty four, so starting in twenty five
through twenty eight. This applies to individuals who receive cash
tips and an occupation that customarily and regularly receive tips.
Now who that is and the professions that are included
is going to be determined by the IRS will be
(15:23):
published sometime this year. Hopefully both employees and self employed
individuals may be eligible, but the deduction is limited for
self employed taxpayers if business expenses exceed income. Now, marry
tax payers are going to have to file jointly to
claim the deduction. So now the one thing I want
(15:44):
to say is the tip's still got to be reported
on New W two. Are still going to be taxed
for Social Security and Medicare, They're just not going to
be taxed for federal income tax. Now that deduction is limited,
and it's capped at twenty five thousand per year here
and phases out if you're modified adjusted gross income exceeds
(16:06):
one hundred and fifty thousand for an individual or three
hundred thousand for joint bi holer. Now, it's amazing, seniors,
you get capped at a much lower level than the
people that are getting tips and are being capped at
a much higher level. Why is that so? What they
were figuring is is that if you're retired and you're
(16:28):
getting above that seventy five thousand as an individual, soial
security and having taxes means you're probably rich and pulling
more money out of retirement accounts than other people. They
were trying to give you just the benefit of no
tax on Social security portion of it. Now, a lot
of people have been asking me what is defined as
(16:51):
a tip? Because you see in the first section and
first time we read through the law. It said cash tips, meaning, hey,
do I actually got to lay down, you know, the
greenbacks on the table for my waitress or a waiter
to tip them, you know? Or can I put it
in my credit cards? So they do later in this
(17:13):
bill state tax tips tips that are not going to
be taxed, and you're going to include cash and card
based payments and amounts distributed through tip sharing arrangements. So
the tip be perfectly honest. Here, it's got to be
made voluntarily by the customer and not subject to negotiation
(17:37):
or determined by the restaurant or the place of business.
Should be determined solely at the customer's discretion. However, tips
received in a specified service trade or business as defined
under Section one N nine are excluded unless the recipient
(17:58):
is an employee or of an employer not classified as
a specified service trade business. I sure hope they're going
to interpret some wonderful rules. I know what this means,
but the normal American taxpayer doesn't. Now, does this rule
mean that Let's say you are the waiter or waitress
(18:20):
and you have a party of ten or more that
you're serving, and there's an automatic tip calculated into the bill.
Does that mean you don't get to exclude those tips.
We're still having a way to see how the IRS
interprets this fun stuff that's in this bill.
Speaker 2 (18:41):
Now.
Speaker 4 (18:41):
I don't think they were meaning to put that in there.
I think they were meaning that if you were in
a specified service and you know, maybe you were required
to leave this give this kind of tip as part
of the service contract, those would be excluded. I just
don't know how they're going to make this work. We
were concerned at the get go of this when they
(19:03):
were announcing no tax on tips, was it going to
include social Security of Medicare? Because you as a tipped servance,
if you're not reporting it and paying tax under Social
Security at Medicare, then you're not going to get credit
for those tips towards social Security and solid security is
based off of your past earnings. So would that mean
(19:25):
that there'd be a huge reduction in what you would
be receiving later in life because we weren't including these
tips over there. So, you know, those are the kind
of things we were kind of concerned about. But it
looks like they're accomplishing that and still having it put
on the W two. The employer is still paying their
portion on tax tips and reported you're paying your portion
(19:47):
on those tips as well, so you know there's still
going to be tips going in. Tax on tips going
into Social Security medicare just no federal income tax on
subject up to the limitation of twenty five thousand dollars.
So just remember the limit is up to twenty five thousand,
and qualified tips that's where the deduction limit is at
(20:11):
has an income phase out at one hundred and fifty
thousand for single three hundred thousand joint tips must be
voluntary and it has to be from a tip eligible occupation.
Speaker 5 (20:26):
Time frame on this thing again is twenty twenty five
through twenty twenty eight. Employers must track and report tips separately,
so there's gonna be another box on your W two
four out there now. The inditial provision to this tax
on tips, and within ninety days of this bill's enactment,
(20:48):
so ninety days from July fourth, the IRS is going
to publish a list of qualifying occupations. So starting also
in twenty twenty six, IRS withholding tables will be updated
to refer like the new deduction, there's going to be
a whole new employee deduction for those that are taxed
on tips, and the bill expands the Social Security tip
(21:13):
credit to cover beauty services.
Speaker 4 (21:15):
Such as hair and dale, spa and aesthetics services. These
are fun things in these bills. I can't wait to
see some of the other interpretations by the irs. Hey,
we're gonna take a short break here and then we're
going to talk about no tax on overtime. No tax
on overtime. Right back in.
Speaker 3 (21:35):
We have only scratched the surface of today's show. Please
stand by as Parry Chief Dowler will be right back
with tax talk for you. As an owner operator, you
already spend too much time away from your family. Trucker
Tax Tools handles all your bookkeeping and taxes no matter
(21:55):
what level trucker you are. Life on the road can
be taxing, but that doesn't mean that your wallet or
time with your family should suffer. Trucker Tax Tools makes
your life run smoothly. Go to Trucker tax Tools dot
com for a free guide that will give you the
tools to never worry about your taxes again. Call Trucker
(22:16):
Tax Tools eight seven seven nine sixty six two four
seven seven, or go to Trucker tax tools dot com
now and let the experts keep you trucking, let's get
back to tax stock for you with more tax stock
once again.
Speaker 2 (22:36):
Here's your host, Barry G. Faller.
Speaker 4 (22:41):
Hey, welcome back. Hey, speaking of trucking. If you're looking
for somebody to help you your bookkeeping and your taxes
and your trucker, Trucker tax tools this place to go
to to Trucker tax tools dot com. Give them a call.
Eight seven seven nine nine six two six seven. You know,
talking about taxes, and you know, some of the things
(23:05):
that we really were looking forward to see the interpretation
by Congress and how they're going to implement the strategies
and the plans that Trump is setting forth to lower
your taxes. And one of the areas he promised was
(23:27):
no tax on tips. You know, no tax on tips
sounds great, and we're kind of waiting on the interpretation
out here, because you know, we've read the bill and
gone through the whole bill and we come up with
what we think is no tax on tips, and then
working with some of our associations out there, they come
(23:50):
up with some other ideas what tax on no tax
on overtime is I meant overtime not tips. The tips
portion has been like out you know, really good out there,
although we got to wait on the industries on here.
But no tax on overtime. So here's what's in the bill.
Taxpayers are going to be able to deduct the amount
of overtime compensation received during the taxable year, provided the
(24:14):
compensation is reported on either a W two or an
information return per section six zero four one D four
of the Big Beautiful Bill. Only over time that qualifies
under Section seven of the Fair Labor Standards Act of
nineteen thirty eight is eligible. We got to go all
(24:36):
the way back to the Fair Labor Standards Act of
nineteen thirty eight to determine what is eligible, so that
is pay for hours worked in excess of the standard work.
We calculated at a rate above the individual's hourly rate,
so qualified overtime. Now there are two primary limitations. There's
(25:01):
going to be a dollar amount cap and an income
based phase out. First, the maximum deduction is twelve thousand,
five hundred for single filers, twenty five thousand for married
filing joint. Second, the deduction is gradually reduced for higher
income taxpayers. So for every thousand dollars that you a
(25:23):
taxpayer exceeds modified adjusted gross income of one hundred and
fifty thousand for single three hundred thousand for married filing joint.
That deduction is reduced by one hundred dollars. So if
you're earning over one hundred and fifty thousand or over
three hundred thousand married filing joint, you're going to see
a reduction of one hundred dollars for every thousand you
(25:46):
earn over That is a modified income. Again, this is
taxable years only twenty twenty five through twenty twenty eight,
and again it's only permitted when a taxpayer includes the
recipient's Social Security number on the return, so there's some
(26:08):
good things out there. The deduction, again is only available
if you are married and married filing jointly. So now
here's where the confusion comes in. There is one calculation
where it takes your whole overtime. So if your hourly
rate was twenty dollars an hour and your overtime pay
(26:29):
is thirty dollars thirty times, however many hours of overtime
you have, you're going to get the benefit of the
full amount up to the twenty five thousand as long
as you're below the threshold. The other side of this
is people were coming in interpreting this to be that
just the overtime portion of the rate would be where
(26:52):
you would save it. So you worked, your rate is twenty,
your overtime rate is thirty. Actual overtime rate is considered
to be ten times however many hours you work, and
then you would get the savings based on that. So
if you work two hundred and fifty hours of overtime
during the year, you would only save twenty five hundred dollars.
(27:15):
So that's where people are going to get a little
bit confused. We're waiting to see the interpretation of this,
and because it's retroactive back to January one, twenty twenty five,
there's going to have to be some adjustments in future
W two forms this year and also going to have
to be some adjustments to withholding tables, possibly through the
(27:39):
rest of the year. Now they say they're going to
start adjusting that withholding tables next year, which means you're
probably going to over withhold this year and you'll see
a larger refund due to the changes here. Now if
you happen to be where your threshold modified adjust gross
income is going to be above the one hundred and
fifty or three hundred thousand. Starting in twenty twenty six
(28:02):
when they have the adjusted withholding tables, you might have
to adjust your withholding to make sure you cover enough money,
especially if you're going to be subject to phase out.
So let's say you're married and your spouse has a
very good job and you know, maybe making somewhere in
the six figures, and you're working at a job that
(28:24):
you get tipped. You combine that and you're modified adjusted
curse income goes above that three hundred thousand, and you've
been withholding at a lower level, means you probably end
up owing money when you come back to filing your
capture turn. So you want to keep those things in mind.
(28:44):
This is not going to be something that you're going
to have to itemize. The deduction is supposed to be
added to the standard deduction for non itemizers. IRS is
authorized to regulate and prevent abuse a fun such as
recategorizing wages as overtime. I can see that happening. I
(29:07):
can see people doing that. Your w two's must report
overtime separately in the laws. Also kind of said ten
ninety nine's as well. But you're typically contracts, so I
don't know how they're going to report overtime on ten
ninety nine, but yet that's to be seen. And then
(29:30):
you remember, this deduction is going to go away if
you're twenty twenty eight. I really hate when they put
things like that into this law. Why couldn't they just
make it permanent so that people can understand it a
little bit better going through this, you know, these tax
laws and what they've put in place, and some of
them being temporary. We have to be happy that the
(29:54):
original Trump tax code has been made permanent. Now, how
long does permanent last. Well, at some point somebody is
going to take over both the House and the Senate
and they're going to find a way, just like Trump did,
to pass a new tax code. Something that will change again.
(30:16):
But we can at least say, hey, this is going
to be definitive for us over the next I have
three years with these things in place, and after twenty
twenty eight, we'll see what happens. Maybe they'll come in
and make these permanent for the you know, senior deduction,
for the overtime in the no tax on tips as well.
(30:39):
Maybe they'll find a way to make those permanent out there,
you know, it's kind of like, you know, they do
need to find a way to reduce the debt, reduce
the debt service. You know, part of that may be
reducing the interest rates that the federal government pays, reducing
interest that we pay so that we can get back
(31:00):
to Hey, you know, maybe buying real estate at a
reasonable rate, a reasonable interest rate and uh, you know,
being able to qualify for a home and everything could
all be important out there. Or even being able to
buy a new car. Speaking of new cars, Hey, we're
going to take a quick break and we're going to
(31:20):
talk about deductible our loan interest, which is new in
this tax code. We're right back.
Speaker 3 (31:27):
We have only scratched the surface of today's show. Please
stand by as Barry Chief Fowler will be right back with.
Speaker 2 (31:35):
Tax talk for you.
Speaker 3 (31:38):
As an owner operator, you already spend too much time
away from your family.
Speaker 2 (31:43):
Stop spending time doing paperwork.
Speaker 3 (31:46):
Go to Trucker tax tools dot com a solution filled
specifically for truckers. Trucker tax tools dot Com makes your
life run smoothly. Let's get back to tax talk for
you with more Tax Dog once again.
Speaker 2 (32:03):
Here's your host, Barry G. Fallo.
Speaker 4 (32:08):
Hey, welcome, back. Hey, maybe you're in the market for
a new car. Hey, gon Christ made deductible car loan
interest for tax years twenty twenty five through twenty twenty eight.
Interest paid in a loan the purchase of qualifying passenger
vehicle for personal use may be deducted under a temporary provision. Now.
(32:32):
To qualify, the loan must be incurred after December thirty one,
twenty twenty four, and secured by a first lean on
the vehicle. The interest is only deductible if the taxpayer
includes the vehicle's identification number on their return. Refinancing of
such loans is also eligible for the deduction, but only
(32:54):
to the extent a refinanced amount does not exceed the
original loan principle. Now, hey, we're subject to several exclusions.
Interest on loans for fleet sales, commercial use, least vehicles,
savage title vehicles, vehicles intended for scrap or parts is
not deductible. Additionally, loans from related parties are excluded from eligibility.
(33:20):
Deduction is capped at ten thousand OFT per taxable year.
It's also phased out for higher income taxpayers. Now, if
you're modified, adjust to gross income exceeds one hundred thousand
or two hundred thousand for joints one hundred thousand single
two hundred thousand dollars joint. Amazing, how these different levels here.
(33:41):
Couldn't they have at least kept everything simple where the
phase outs come in. If you do hit the phase
out of MAUNT, it's going to be reduced by two
hundred dollars for every thousand or part thereof. Don't know
how they're going to accomplish this. You know, if you
remember back we they one time talked by just having
a postcard defile. That postcard has gotten expanded and expanded
(34:03):
and expanded, is now a full page postcard and has
schedules and subschedules, so you know, again, you know, we're
making the tax codes a little bit more complicated than
it's going to be simplified. And now it's become even
more complicated on the return. So you know, we've got
to watch how this is going to be put in.
The Only way I can think is that they're going
(34:25):
to have another schedule and then it'll go to Schedule
one and then come over to the main tax return.
Now we've got all the confusion out there about this.
How have they defined a qualified vehicle. So the way
this bill is defining, the qualified vehicle must be intended
for the taxpayer's original use and primarily manufactured for use
(34:46):
some public roads. Eligible vehicles includes powers, minivans, vans, SUVs,
pickup trucks, motorcycles as long as they have at least
two wheels and a gross weight rating under fourteen thousand pounds.
Vehicle must also be classified as a motor vehicle under
the Clean Air Act and assembled in the United States,
(35:08):
not completely manufactured here, but has to be assembled here
in the United States. This deduction is available to both
people that itemize and those that do not itemize. So
if you don't itemize, you're going to be able to
claim the deduction as an above the line adjustment to incount. Now,
(35:32):
if you're in business, one thing to be very clear,
it does not this does not cover you in the business.
The interest you still incur on business use vehicles still
remains deductible for the percentage of business use of that
vehicle on the business return associated with the use of
(35:55):
that vehicle. So, if you buy a car or a
truck or some vehicle that qualifies under what's the qualified vehicle,
you're going to be able to dug the interest and
appreciate that vehicle still on your business portion of the return,
so that doesn't change for business purposes. This is only
(36:15):
a change for individuals that are buying a vehicle or
personal use. So does this benefits you if you were
going out to refinance your current vehicle out there? Yes, no, Maybe,
depends on where your mondified adjusted gross income is. Depends
on what the change of the interest rate is as well.
If you bought a vehicle several years ago and the
(36:38):
interest rate was lower on your vehicle, you may not
want to refinance because it may not benefit you. However,
maybe you bought the vehicle within the last year, you
bought it sometime in twenty twenty four, and you want
to go in and refinance it. What we see in
this book, as you in the bill, is that you
may be able to go in and refinance. You've got
(36:58):
to look at your mondified adjusted gross income and see
if you're going to be subject to that phase out.
So maybe you can reduce your interest rate by refinancing,
or even if it adjusts your interest rate by a
little bit, maybe you'll be able to write off take
ten thousand dollars off the top. Now, taking that ten
thousand off the top and you're only in a ten
percent tax bracket saves you a thousand, but you may
(37:22):
be paying more in interest because your interest rate may
be going up. You may even pay less, So you
got to kind of run the numbers. So have your
tax preparer look at this with you and make the decision.
Now with this, you need to really analyze how all
these things impact you on your tax return. So I
(37:45):
hope you have a good tax preparer who can go
through this stuff. Changes to charitable contributions, so this bill
had an amendment that applies a half a percent for
against the sum of charitable contributions that a taxpayer makes.
The amount of charitable contributions above this floor can be deducted.
So Section one seventy b one states that an individual
(38:08):
taxpayer may only deduct charitable contributions to the extent that
the aggregate amount of your contributions exceeds half of percent
of their contribution base, generally half a percent of your
adjusted gross income. So that means you are not going
to receive a tax benefit for the first half a
(38:30):
percent of your contribution base donated to charity. The only
amounts contributed beyond that thresholder eligible for a deduction subject
to other existing percentage limitations charitable deductions. So you know,
if you are rich, this is going to impact you
(38:52):
more than if you have less income, because you've got
to get over that floor of the half a percent.
Section one seventy bash one that G was updated to
clarify the sixty percent of just to gross income for
cash contributions to public charities. The maximum deduction for cash
contributions remain capped at sixty percent for the tax payers
(39:15):
contribution base under sub Paragraphs A and G now coordinated
explicitly to avoid exceeding combined deduction limits, ensuring consistency in
applying percentage ceilings across different category. Many taxpayers aren't going
to worry about this, aren't going to be impacted by this.
You're going to see this impact mostly on the wealthy
(39:36):
that are out there again trying to impact on the
top one percent. Now, if you don't itemize this permanent
charitable contribution deduction is available to you, Okay, So it
reinstated and increase the above the line deduction limit for
terrible contributions made by non itemizing individuals. Remember we had
(39:59):
that six hundred doll deduction at one time. Now we're
going to have a maximum deduction for single filers one
thousand dollars above the line. If you're not itemizing married
filing jointly, it's two thousand, and it's going to be
applicable for years after twenty twenty five, So this is
going to start twenty twenty six. So just remember that
(40:24):
if you're an individual taxpayer, you're not going to be
able to deduct the first half a percent of your
contribution base. And so a good example here, taxpayer with
one hundred thousand dollars of just gross income, you have
to contribute five hundred dollars before any charitable deduction is allowed.
Any disallowed contributions due to the new floor can be
(40:46):
carried forward if total contributions succeed other applicable deduction limits,
preserving the tax benefit future years. Taxpayers were smaller charitable
giving patterns, or those with income volatility could see deducts
reduced or eliminated in low income years. Planning to bundle
donations in alternate years increases contribution levels and may help
(41:08):
increase your tax benefits. So you know there are strategies
you can use out here depending on your income levels
to you know, group your contributions. Hey, remember, if you're
a senior and you have required minimum distributions, so you
have to take there is a way to make your
required required minimum distributions directly to a charity to avoid
(41:32):
taxability level. You know, there's a lot of things in
this tax law. We've only scratched the surface.
Speaker 2 (41:39):
You know.
Speaker 4 (41:39):
Next week what we want to do is come back.
We want to talk about QBI qualified business deductions. We
want to talk about Trump's new accounts, the Trump accounts.
We want to talk about lowering and expanding the salt
limitation state in local tax I have twenty nine plans.
(42:01):
All these things have changed, So we will try to
fit some of these things in next week when we're
talking about this one big beautiful bill business deductions and
how it impacts businesses. But we'll continue to talk more
about the different things that are in this bill that
(42:21):
affects you and I on the individual level for tax payers. Hey,
remember we're just scratching the surface of what this bill
is going to do for you as the individual taxpayer.
So there's a lot of good things in this bill.
You just got to stay tuned. Hey, make sure you
(42:42):
connect with us on Facebook. Find us at tax talkforu
dot com. Go over there and like us, share it
with your friends and family. Get this information out to everybody.
This one big, beautiful bill helps most Americans across the board.
It is something that can provide you a great way
of saving money. How does this impact you? Come back
(43:05):
next week a tax off for you again, like us
on Facebook, share it on Facebook. Get the information out there,
but tune in every Monday here at ten am Eastern
time on tax Talk for You. You can also check
out Taxation Solutions dot net, Taxation Solutions, tax Relief on Facebook,
Trucker Tax Tools dot com, Trucker Tax Tools on Facebook.
(43:29):
Connect with us learn more about what we can help
you and how to help yourself save money on your
taxes right here on tax Talk for You tax Talk
for You dot com, W four Cy Radio. Thank you
having guide blood glorious and awesome week, and we'll be
back next week.
Speaker 3 (43:49):
Are you an individual or business that wants to understand
taxes and how they affect you? Are you looking for
specific tax advice for self employed business owners and truckers?
Are you behind on taxes and your bookkeeping. Are you
dealing with dirs and ready to have some relief, then
(44:10):
you need Tax Talk for You, hosted by tax and
trucker expert Barry g.
Speaker 2 (44:16):
Fouer EA.
Speaker 3 (44:17):
Tune in ten am Eastern Time every Monday right here
on W four CY Radio and Talk for TV. Don't
forget to check this and past episodes at tax.
Speaker 2 (44:28):
TALKFORU dot com.
Speaker 3 (44:30):
See you next week at W four cy dot com
The topics and opinions express in the following show are
solely those of the hosts and their guests and not
those of w FOCY Radio. It's employees are affiliates. We
make no recommendations or endorsements for radio show programs, services,
or products mentioned on air or on our web. No
liability explicitor implies shall be extended to W FOURCY Radio
or it's employees are affiliates. Any questions or comments should
be directed to those show hosts. Thank you for choosing
(00:21):
W FOURCY Radio.
Speaker 2 (00:27):
Barry G.
Speaker 3 (00:28):
Fouler EA brings you tax talk for you right here
on W four CY Radio and talk for TV. As
an enrolled agent and a national leader in tax resolution
as well as Trucker bookkeeping and tax planning. With over
thirty years of experience, Barry will break down taxes, bookkeeping,
(00:49):
tax planning, and tax relief for individuals and businesses just
like you. So let's have some tax talk for you
with your hosts.
Speaker 2 (00:58):
Barry G.
Speaker 4 (00:59):
Foul heyday of talking about one big, beautiful bill. You know,
it's amazing to me that we passed legislation and instead
of breaking things down and doing them in small bills,
so they do this one humongous, big, beautiful bill, as
(01:23):
Trump calls it and as it's called in law. Now,
there are a lot of good things that happened in
this bill, and I understand that some thing's going to
take a lot of pages. But this bill is I
believe eight hundred and seventy pages long. It's right around there.
I've looked at it, studied this bill, and we're kind
(01:43):
of dissecting just the tax part of this bill that
President Trump signed into law on July fourth. Now, one
part of this bill, which is great, it permanently extended
key Tax Cuts and Jobs Act provisions and then introduce
(02:07):
new tax provisions as well. So what we've been operating
on for the last roughly eight years, we're going to
continue operating underneath that original Tax Cuts and Job Acts
plus the new provisions that are put in, and we're
going to discuss a lot of those new provisions here
in the show. The new legislation introduces tax relief for
(02:32):
middle class families and workers, and also aim to simplify,
simplify compliance, reduce taxable income for certain earners, and broaden
access to tax benefits. This all built around the twenty
seventeen Tax Cuts and Jobs Act. Now in this bill,
(02:55):
you're going to see the extension and on getting phone
calls in the middle of talking and I thought we
turned everything off, but my watch, it keeps going going off.
Now I got to figure out how to silence that
as well. You know, it's going to enhance the standard deduction,
introduce some notable updates including deduction for overtime, expanded childcare credits,
(03:18):
deduction for seniors, also launches Trump Accounts for young savers.
So we're going to kind of go through each one
of these things all throughout this program. But this is
all going to be geared around the individual side. Now.
You know, we spent many many hours going through this
whole bill and pulling out sections of this bill to
(03:39):
be able to talk about to help you further understand
what this does for you as an individual taxpayer. Now,
next week we're going to enjoys a lot of the
stuff in this bill that involves businesses, and so you
want to make sure you turn tune into Tax Talk
for you next week at ten am Eastern time to
(04:04):
be able to get what this bill does for you
and your business. But this bill, on the individual side,
it does an extension of reduced income tax rates, So
the provision permanently extends the individual income tax rates introduced
by the TCJA that were previously set to expire at
(04:27):
the end of this year. The amendment to the bill
eliminates the sunset class and ensures that they are reduced.
Marginal rates of the ten, twelve, twenty to twenty four,
thirty two, thirty five, thirty seven remain in place. This
provision is intended to lock in those lower marginal tax rates,
(04:50):
prevent automatic rate hikes that were going to happen in
twenty twenty six, provide continued tax relief to individuals and families,
and control the way bracket thresholds grow with inflation for
better targeting of the rate brackets. So that being said,
we don't have to be scared and all of a
(05:10):
sudden in twenty twenty six, all of our rates are
going to jump up and we're going to go back
to some real old code. So that's the good news
in this bill. It's one thing that us as tax
prepayers we're really hoping for, was the extension of the
tax law. With the election of President Trump and Republicans
(05:33):
being in Congress and dominating both houses. We figured this
should go through, and we're glad that it did because
it really ensures that we keep these rates going out
to the future. There are two changes to the standard
deduction rules now. The first, the law permanently preserves the
(05:54):
current tax code enhance the standard deduction amounts under the
prior law increased deduction initially established for years eighteen through
twenty five. Those were set to revert back to the
twenty eighteen levels beginning in twenty six. The law also
(06:14):
increases the base standard deduction amounts beginning in this year.
So we were already getting a jump for inflation, but
we're also getting the jump and increase with this bill.
So the new base deduction is thirty one thousand and
five hundred, so it is an increase over if inflation
(06:38):
adjusted amount of thirty thousand. So Mary finally joint it's
now thirty one to five for twenty twenty five, so
it jumped up fifteen hundred dollars, So the new amount
for single is half of that. That's fifteen thousand and
seven fifty, exceeding the prior inflation adjusted amount for the
(07:00):
year of fifteen thousand, So there's an extra seven hundred
and fifty dollars if you're single, extra fifteen hundred dollars
if you're married filing jointly. Now, this is a standard deduction,
and you know we have seen, you know, unless you've
taken out a new mortgage in the last four years,
many people didn't qualify to itemize. Many people just took
(07:22):
the standard deduction. So that's really a nice provision in
this tax law. So you see a bigger standard deduction
for this year and and then it'll start being inflation
adjusted every year there after. So it's going to give
(07:42):
a direct savings to many many US households starting this year. Also,
we have some termination of permit personal exemptions. Those were
temporarily spended underneath the Tax Jobs Credit Act. This makes
(08:05):
it permanent, so we won't have the individual exeptions coming back.
You just got the larger standard deduction. Now Trump kind
of promised no tax on Social Security. Well, Congress gets involved,
Congress decides they're going to do it a different way.
Now it knits down to it. It basically gives no
(08:28):
tax on Social Security, but it gives the seniors beginning
this year through twenty twenty eight, individuals age sixty five
or older. By the end of the year, you get
to claim new deduction of six thousand dollars on a
joint return. Each spouse may qualify for that six thousand dollars,
(08:49):
giving you a total of twelve thousand in total deductions
as long as you're both age sixty five. Now they
through its phase house, So they say this bill is
only benefiting the rich. These phase outs are because people
make too much money, according to Congress. Not in my opinion,
Congress's opinion, president's opinion. Maybe, but I really think it's
(09:13):
just purely Congress trying to appease certain people and saying, hey,
we're going to continue to tax those be considered to
be rich. Now, believe it or not, this bill has
a six percent phase now on modified adjusted gross income
exceeding seventy five thousand for single filers. I raise your
(09:34):
hand if you consider seventy five thousand as a single
person rich and wealthy. Only the Congress raise their hand.
One hundred and fifty thousand for joint filers. How many
of you making that kind of money consider yourself to
be totally rich to start having these phase outs? Only
Congress is raising their hands now. Now a couple other things.
(09:57):
Seniors must possess a valid Social Security number to claim
the deduction. I haven't seen anybody file without a valid
sold Security number. Maybe it TI N number, but you
got to have a valid so Security number. In a
mission or invalid sold security is treated as a mathematical
or lyrical error, authoring authorizing the IRIS to adjust the
return Accordingly, they get to adjust your return. Married individuals
(10:21):
must file a joint return to be eligible. Married filing
separate is not permitted for this deduction. So if you're married,
you got to file a joint return sixty five or older.
You both can get it. If you file married filing separate,
it is not going to be Wow. A lot of
changes already. We're talking quick through this bill, and you
(10:43):
know we only get an hour to do this. We're
going to take a quick break and when we come back,
we're going to talk about extensions. We have changes to
the child tax credit. Right back after this.
Speaker 3 (10:56):
We have only scratched the surface of today's show. Please
stand by as Barry G. Fowler will be right back
with taxtock for you. If you owe the IRS or
are going through an IRS audit, don't go at it.
Speaker 2 (11:12):
Alone. Call Taxation Solutions Tax.
Speaker 3 (11:15):
Relief at eight eight eight nine three zero one zero
one six. We are your solution for IRS, debts, audits,
back taxes, garnishments, leans and levees. Whether you're an individual
or business, you need a solution and a strong, aggressive
tax resolution.
Speaker 2 (11:36):
Don't let the IRS walk all over you.
Speaker 3 (11:39):
Stop the IRS now call eight eight eight nine three
zero one zero one six or go to Taxationsolutions dot
net now for a free no obligation consultation. Let's get
back to tax stock for you with more tax stock
(12:00):
once again.
Speaker 2 (12:01):
Here's your host, Barry G. Faller.
Speaker 4 (12:06):
All right, you got children. What's changed with the child
tax credits? So there's been several changes to the child
tax credits and it takes effect starting this year. So
what we were fixing to do is at the end
of this year, child tax credit was going to drop
(12:28):
back down to the original amount of one thousand dollars.
But this bill, effective twenty twenty five, the maximum child
tax credit for qualifying child increases from the two thousand
to twenty two hundred beginning in twenty twenty six. This
amount is subject to annual inflation adjustments. Now, the refundable
(12:50):
portion of that credit remains capped at fourteen hundred per child,
but that is also going to be indexed for inflation
beginning this year, so we might see some adjustments to
that as well. Now, what do they mean about you know, Hey,
you get a twenty two hundred dollars tax credit, but
you only get fourteen hundred of it refundable. So if
(13:11):
you are paying taxes and you have tax showing on
your tax return, not owing, but total tax, the duck
to twenty two hundred from that total tax, and it
leaves you what's left to be paid. Now, if twenty
two hundred is used to get you down to zero tax,
then you can still get fourteen hundred refundable to you,
(13:35):
possibly depending on how much of that credit was used.
So if you didn't use all twenty two hundred, let's
say maybe you only hit one thousand dollars a total tax,
they'll use a thousand of that twenty two and refund
you the twelve hundred dollars difference plus any of your
federal withholdings that you've paid in. So you know, you
(13:58):
got to look at whether you qualify or not qualifying.
Here again, you must have a valid so security number
must be US citizen or certain legal residents could qualify
as well, you know, so keep those things in mind
as you're going through and doing this. Hey, one of
(14:21):
the nice parts about this bill. We're going to kind
of skip through a few of the sections out here
because there are other enhancements out here, but this is
one of the places that people really wanted to know about.
You heard it, no tax on tips. That's right, Trump
(14:41):
said it, no tax on tips. Congress got involved. Guess
what limitations, of course are. So Section two two four
allows individuals to deduct certain cash tips from their taxable income.
The deduction is available for tax years beginning after December
(15:02):
thirty one, twenty twenty four, so starting in twenty five
through twenty eight. This applies to individuals who receive cash
tips and an occupation that customarily and regularly receive tips.
Now who that is and the professions that are included
is going to be determined by the IRS will be
(15:23):
published sometime this year. Hopefully both employees and self employed
individuals may be eligible, but the deduction is limited for
self employed taxpayers if business expenses exceed income. Now, marry
tax payers are going to have to file jointly to
claim the deduction. So now the one thing I want
(15:44):
to say is the tip's still got to be reported
on New W two. Are still going to be taxed
for Social Security and Medicare, They're just not going to
be taxed for federal income tax. Now that deduction is limited,
and it's capped at twenty five thousand per year here
and phases out if you're modified adjusted gross income exceeds
(16:06):
one hundred and fifty thousand for an individual or three
hundred thousand for joint bi holer. Now, it's amazing, seniors,
you get capped at a much lower level than the
people that are getting tips and are being capped at
a much higher level. Why is that so? What they
were figuring is is that if you're retired and you're
(16:28):
getting above that seventy five thousand as an individual, soial
security and having taxes means you're probably rich and pulling
more money out of retirement accounts than other people. They
were trying to give you just the benefit of no
tax on Social security portion of it. Now, a lot
of people have been asking me what is defined as
(16:51):
a tip? Because you see in the first section and
first time we read through the law. It said cash tips, meaning, hey,
do I actually got to lay down, you know, the
greenbacks on the table for my waitress or a waiter
to tip them, you know? Or can I put it
in my credit cards? So they do later in this
(17:13):
bill state tax tips tips that are not going to
be taxed, and you're going to include cash and card
based payments and amounts distributed through tip sharing arrangements. So
the tip be perfectly honest. Here, it's got to be
made voluntarily by the customer and not subject to negotiation
(17:37):
or determined by the restaurant or the place of business.
Should be determined solely at the customer's discretion. However, tips
received in a specified service trade or business as defined
under Section one N nine are excluded unless the recipient
(17:58):
is an employee or of an employer not classified as
a specified service trade business. I sure hope they're going
to interpret some wonderful rules. I know what this means,
but the normal American taxpayer doesn't. Now, does this rule
mean that Let's say you are the waiter or waitress
(18:20):
and you have a party of ten or more that
you're serving, and there's an automatic tip calculated into the bill.
Does that mean you don't get to exclude those tips.
We're still having a way to see how the IRS
interprets this fun stuff that's in this bill.
Speaker 2 (18:41):
Now.
Speaker 4 (18:41):
I don't think they were meaning to put that in there.
I think they were meaning that if you were in
a specified service and you know, maybe you were required
to leave this give this kind of tip as part
of the service contract, those would be excluded. I just
don't know how they're going to make this work. We
were concerned at the get go of this when they
(19:03):
were announcing no tax on tips, was it going to
include social Security of Medicare? Because you as a tipped servance,
if you're not reporting it and paying tax under Social
Security at Medicare, then you're not going to get credit
for those tips towards social Security and solid security is
based off of your past earnings. So would that mean
(19:25):
that there'd be a huge reduction in what you would
be receiving later in life because we weren't including these
tips over there. So, you know, those are the kind
of things we were kind of concerned about. But it
looks like they're accomplishing that and still having it put
on the W two. The employer is still paying their
portion on tax tips and reported you're paying your portion
(19:47):
on those tips as well, so you know there's still
going to be tips going in. Tax on tips going
into Social Security medicare just no federal income tax on
subject up to the limitation of twenty five thousand dollars.
So just remember the limit is up to twenty five thousand,
and qualified tips that's where the deduction limit is at
(20:11):
has an income phase out at one hundred and fifty
thousand for single three hundred thousand joint tips must be
voluntary and it has to be from a tip eligible occupation.
Speaker 5 (20:26):
Time frame on this thing again is twenty twenty five
through twenty twenty eight. Employers must track and report tips separately,
so there's gonna be another box on your W two
four out there now. The inditial provision to this tax
on tips, and within ninety days of this bill's enactment,
(20:48):
so ninety days from July fourth, the IRS is going
to publish a list of qualifying occupations. So starting also
in twenty twenty six, IRS withholding tables will be updated
to refer like the new deduction, there's going to be
a whole new employee deduction for those that are taxed
on tips, and the bill expands the Social Security tip
(21:13):
credit to cover beauty services.
Speaker 4 (21:15):
Such as hair and dale, spa and aesthetics services. These
are fun things in these bills. I can't wait to
see some of the other interpretations by the irs. Hey,
we're gonna take a short break here and then we're
going to talk about no tax on overtime. No tax
on overtime. Right back in.
Speaker 3 (21:35):
We have only scratched the surface of today's show. Please
stand by as Parry Chief Dowler will be right back
with tax talk for you. As an owner operator, you
already spend too much time away from your family. Trucker
Tax Tools handles all your bookkeeping and taxes no matter
(21:55):
what level trucker you are. Life on the road can
be taxing, but that doesn't mean that your wallet or
time with your family should suffer. Trucker Tax Tools makes
your life run smoothly. Go to Trucker tax Tools dot
com for a free guide that will give you the
tools to never worry about your taxes again. Call Trucker
(22:16):
Tax Tools eight seven seven nine sixty six two four
seven seven, or go to Trucker tax tools dot com
now and let the experts keep you trucking, let's get
back to tax stock for you with more tax stock
once again.
Speaker 2 (22:36):
Here's your host, Barry G. Faller.
Speaker 4 (22:41):
Hey, welcome back. Hey, speaking of trucking. If you're looking
for somebody to help you your bookkeeping and your taxes
and your trucker, Trucker tax tools this place to go
to to Trucker tax tools dot com. Give them a call.
Eight seven seven nine nine six two six seven. You know,
talking about taxes, and you know, some of the things
(23:05):
that we really were looking forward to see the interpretation
by Congress and how they're going to implement the strategies
and the plans that Trump is setting forth to lower
your taxes. And one of the areas he promised was
(23:27):
no tax on tips. You know, no tax on tips
sounds great, and we're kind of waiting on the interpretation
out here, because you know, we've read the bill and
gone through the whole bill and we come up with
what we think is no tax on tips, and then
working with some of our associations out there, they come
(23:50):
up with some other ideas what tax on no tax
on overtime is I meant overtime not tips. The tips
portion has been like out you know, really good out there,
although we got to wait on the industries on here.
But no tax on overtime. So here's what's in the bill.
Taxpayers are going to be able to deduct the amount
of overtime compensation received during the taxable year, provided the
(24:14):
compensation is reported on either a W two or an
information return per section six zero four one D four
of the Big Beautiful Bill. Only over time that qualifies
under Section seven of the Fair Labor Standards Act of
nineteen thirty eight is eligible. We got to go all
(24:36):
the way back to the Fair Labor Standards Act of
nineteen thirty eight to determine what is eligible, so that
is pay for hours worked in excess of the standard work.
We calculated at a rate above the individual's hourly rate,
so qualified overtime. Now there are two primary limitations. There's
(25:01):
going to be a dollar amount cap and an income
based phase out. First, the maximum deduction is twelve thousand,
five hundred for single filers, twenty five thousand for married
filing joint. Second, the deduction is gradually reduced for higher
income taxpayers. So for every thousand dollars that you a
(25:23):
taxpayer exceeds modified adjusted gross income of one hundred and
fifty thousand for single three hundred thousand for married filing joint.
That deduction is reduced by one hundred dollars. So if
you're earning over one hundred and fifty thousand or over
three hundred thousand married filing joint, you're going to see
a reduction of one hundred dollars for every thousand you
(25:46):
earn over That is a modified income. Again, this is
taxable years only twenty twenty five through twenty twenty eight,
and again it's only permitted when a taxpayer includes the
recipient's Social Security number on the return, so there's some
(26:08):
good things out there. The deduction, again is only available
if you are married and married filing jointly. So now
here's where the confusion comes in. There is one calculation
where it takes your whole overtime. So if your hourly
rate was twenty dollars an hour and your overtime pay
(26:29):
is thirty dollars thirty times, however many hours of overtime
you have, you're going to get the benefit of the
full amount up to the twenty five thousand as long
as you're below the threshold. The other side of this
is people were coming in interpreting this to be that
just the overtime portion of the rate would be where
(26:52):
you would save it. So you worked, your rate is twenty,
your overtime rate is thirty. Actual overtime rate is considered
to be ten times however many hours you work, and
then you would get the savings based on that. So
if you work two hundred and fifty hours of overtime
during the year, you would only save twenty five hundred dollars.
(27:15):
So that's where people are going to get a little
bit confused. We're waiting to see the interpretation of this,
and because it's retroactive back to January one, twenty twenty five,
there's going to have to be some adjustments in future
W two forms this year and also going to have
to be some adjustments to withholding tables, possibly through the
(27:39):
rest of the year. Now they say they're going to
start adjusting that withholding tables next year, which means you're
probably going to over withhold this year and you'll see
a larger refund due to the changes here. Now if
you happen to be where your threshold modified adjust gross
income is going to be above the one hundred and
fifty or three hundred thousand. Starting in twenty twenty six
(28:02):
when they have the adjusted withholding tables, you might have
to adjust your withholding to make sure you cover enough money,
especially if you're going to be subject to phase out.
So let's say you're married and your spouse has a
very good job and you know, maybe making somewhere in
the six figures, and you're working at a job that
(28:24):
you get tipped. You combine that and you're modified adjusted
curse income goes above that three hundred thousand, and you've
been withholding at a lower level, means you probably end
up owing money when you come back to filing your
capture turn. So you want to keep those things in mind.
(28:44):
This is not going to be something that you're going
to have to itemize. The deduction is supposed to be
added to the standard deduction for non itemizers. IRS is
authorized to regulate and prevent abuse a fun such as
recategorizing wages as overtime. I can see that happening. I
(29:07):
can see people doing that. Your w two's must report
overtime separately in the laws. Also kind of said ten
ninety nine's as well. But you're typically contracts, so I
don't know how they're going to report overtime on ten
ninety nine, but yet that's to be seen. And then
(29:30):
you remember, this deduction is going to go away if
you're twenty twenty eight. I really hate when they put
things like that into this law. Why couldn't they just
make it permanent so that people can understand it a
little bit better going through this, you know, these tax
laws and what they've put in place, and some of
them being temporary. We have to be happy that the
(29:54):
original Trump tax code has been made permanent. Now, how
long does permanent last. Well, at some point somebody is
going to take over both the House and the Senate
and they're going to find a way, just like Trump did,
to pass a new tax code. Something that will change again.
(30:16):
But we can at least say, hey, this is going
to be definitive for us over the next I have
three years with these things in place, and after twenty
twenty eight, we'll see what happens. Maybe they'll come in
and make these permanent for the you know, senior deduction,
for the overtime in the no tax on tips as well.
(30:39):
Maybe they'll find a way to make those permanent out there,
you know, it's kind of like, you know, they do
need to find a way to reduce the debt, reduce
the debt service. You know, part of that may be
reducing the interest rates that the federal government pays, reducing
interest that we pay so that we can get back
(31:00):
to Hey, you know, maybe buying real estate at a
reasonable rate, a reasonable interest rate and uh, you know,
being able to qualify for a home and everything could
all be important out there. Or even being able to
buy a new car. Speaking of new cars, Hey, we're
going to take a quick break and we're going to
(31:20):
talk about deductible our loan interest, which is new in
this tax code. We're right back.
Speaker 3 (31:27):
We have only scratched the surface of today's show. Please
stand by as Barry Chief Fowler will be right back with.
Speaker 2 (31:35):
Tax talk for you.
Speaker 3 (31:38):
As an owner operator, you already spend too much time
away from your family.
Speaker 2 (31:43):
Stop spending time doing paperwork.
Speaker 3 (31:46):
Go to Trucker tax tools dot com a solution filled
specifically for truckers. Trucker tax tools dot Com makes your
life run smoothly. Let's get back to tax talk for
you with more Tax Dog once again.
Speaker 2 (32:03):
Here's your host, Barry G. Fallo.
Speaker 4 (32:08):
Hey, welcome, back. Hey, maybe you're in the market for
a new car. Hey, gon Christ made deductible car loan
interest for tax years twenty twenty five through twenty twenty eight.
Interest paid in a loan the purchase of qualifying passenger
vehicle for personal use may be deducted under a temporary provision. Now.
(32:32):
To qualify, the loan must be incurred after December thirty one,
twenty twenty four, and secured by a first lean on
the vehicle. The interest is only deductible if the taxpayer
includes the vehicle's identification number on their return. Refinancing of
such loans is also eligible for the deduction, but only
(32:54):
to the extent a refinanced amount does not exceed the
original loan principle. Now, hey, we're subject to several exclusions.
Interest on loans for fleet sales, commercial use, least vehicles,
savage title vehicles, vehicles intended for scrap or parts is
not deductible. Additionally, loans from related parties are excluded from eligibility.
(33:20):
Deduction is capped at ten thousand OFT per taxable year.
It's also phased out for higher income taxpayers. Now, if
you're modified, adjust to gross income exceeds one hundred thousand
or two hundred thousand for joints one hundred thousand single
two hundred thousand dollars joint. Amazing, how these different levels here.
(33:41):
Couldn't they have at least kept everything simple where the
phase outs come in. If you do hit the phase
out of MAUNT, it's going to be reduced by two
hundred dollars for every thousand or part thereof. Don't know
how they're going to accomplish this. You know, if you
remember back we they one time talked by just having
a postcard defile. That postcard has gotten expanded and expanded
(34:03):
and expanded, is now a full page postcard and has
schedules and subschedules, so you know, again, you know, we're
making the tax codes a little bit more complicated than
it's going to be simplified. And now it's become even
more complicated on the return. So you know, we've got
to watch how this is going to be put in.
The Only way I can think is that they're going
(34:25):
to have another schedule and then it'll go to Schedule
one and then come over to the main tax return.
Now we've got all the confusion out there about this.
How have they defined a qualified vehicle. So the way
this bill is defining, the qualified vehicle must be intended
for the taxpayer's original use and primarily manufactured for use
(34:46):
some public roads. Eligible vehicles includes powers, minivans, vans, SUVs,
pickup trucks, motorcycles as long as they have at least
two wheels and a gross weight rating under fourteen thousand pounds.
Vehicle must also be classified as a motor vehicle under
the Clean Air Act and assembled in the United States,
(35:08):
not completely manufactured here, but has to be assembled here
in the United States. This deduction is available to both
people that itemize and those that do not itemize. So
if you don't itemize, you're going to be able to
claim the deduction as an above the line adjustment to incount. Now,
(35:32):
if you're in business, one thing to be very clear,
it does not this does not cover you in the business.
The interest you still incur on business use vehicles still
remains deductible for the percentage of business use of that
vehicle on the business return associated with the use of
(35:55):
that vehicle. So, if you buy a car or a
truck or some vehicle that qualifies under what's the qualified vehicle,
you're going to be able to dug the interest and
appreciate that vehicle still on your business portion of the return,
so that doesn't change for business purposes. This is only
(36:15):
a change for individuals that are buying a vehicle or
personal use. So does this benefits you if you were
going out to refinance your current vehicle out there? Yes, no, Maybe,
depends on where your mondified adjusted gross income is. Depends
on what the change of the interest rate is as well.
If you bought a vehicle several years ago and the
(36:38):
interest rate was lower on your vehicle, you may not
want to refinance because it may not benefit you. However,
maybe you bought the vehicle within the last year, you
bought it sometime in twenty twenty four, and you want
to go in and refinance it. What we see in
this book, as you in the bill, is that you
may be able to go in and refinance. You've got
(36:58):
to look at your mondified adjusted gross income and see
if you're going to be subject to that phase out.
So maybe you can reduce your interest rate by refinancing,
or even if it adjusts your interest rate by a
little bit, maybe you'll be able to write off take
ten thousand dollars off the top. Now, taking that ten
thousand off the top and you're only in a ten
percent tax bracket saves you a thousand, but you may
(37:22):
be paying more in interest because your interest rate may
be going up. You may even pay less, So you
got to kind of run the numbers. So have your
tax preparer look at this with you and make the decision.
Now with this, you need to really analyze how all
these things impact you on your tax return. So I
(37:45):
hope you have a good tax preparer who can go
through this stuff. Changes to charitable contributions, so this bill
had an amendment that applies a half a percent for
against the sum of charitable contributions that a taxpayer makes.
The amount of charitable contributions above this floor can be deducted.
So Section one seventy b one states that an individual
(38:08):
taxpayer may only deduct charitable contributions to the extent that
the aggregate amount of your contributions exceeds half of percent
of their contribution base, generally half a percent of your
adjusted gross income. So that means you are not going
to receive a tax benefit for the first half a
(38:30):
percent of your contribution base donated to charity. The only
amounts contributed beyond that thresholder eligible for a deduction subject
to other existing percentage limitations charitable deductions. So you know,
if you are rich, this is going to impact you
(38:52):
more than if you have less income, because you've got
to get over that floor of the half a percent.
Section one seventy bash one that G was updated to
clarify the sixty percent of just to gross income for
cash contributions to public charities. The maximum deduction for cash
contributions remain capped at sixty percent for the tax payers
(39:15):
contribution base under sub Paragraphs A and G now coordinated
explicitly to avoid exceeding combined deduction limits, ensuring consistency in
applying percentage ceilings across different category. Many taxpayers aren't going
to worry about this, aren't going to be impacted by this.
You're going to see this impact mostly on the wealthy
(39:36):
that are out there again trying to impact on the
top one percent. Now, if you don't itemize this permanent
charitable contribution deduction is available to you, Okay, So it
reinstated and increase the above the line deduction limit for
terrible contributions made by non itemizing individuals. Remember we had
(39:59):
that six hundred doll deduction at one time. Now we're
going to have a maximum deduction for single filers one
thousand dollars above the line. If you're not itemizing married
filing jointly, it's two thousand, and it's going to be
applicable for years after twenty twenty five, So this is
going to start twenty twenty six. So just remember that
(40:24):
if you're an individual taxpayer, you're not going to be
able to deduct the first half a percent of your
contribution base. And so a good example here, taxpayer with
one hundred thousand dollars of just gross income, you have
to contribute five hundred dollars before any charitable deduction is allowed.
Any disallowed contributions due to the new floor can be
(40:46):
carried forward if total contributions succeed other applicable deduction limits,
preserving the tax benefit future years. Taxpayers were smaller charitable
giving patterns, or those with income volatility could see deducts
reduced or eliminated in low income years. Planning to bundle
donations in alternate years increases contribution levels and may help
(41:08):
increase your tax benefits. So you know there are strategies
you can use out here depending on your income levels
to you know, group your contributions. Hey, remember, if you're
a senior and you have required minimum distributions, so you
have to take there is a way to make your
required required minimum distributions directly to a charity to avoid
(41:32):
taxability level. You know, there's a lot of things in
this tax law. We've only scratched the surface.
Speaker 2 (41:39):
You know.
Speaker 4 (41:39):
Next week what we want to do is come back.
We want to talk about QBI qualified business deductions. We
want to talk about Trump's new accounts, the Trump accounts.
We want to talk about lowering and expanding the salt
limitation state in local tax I have twenty nine plans.
(42:01):
All these things have changed, So we will try to
fit some of these things in next week when we're
talking about this one big beautiful bill business deductions and
how it impacts businesses. But we'll continue to talk more
about the different things that are in this bill that
(42:21):
affects you and I on the individual level for tax payers. Hey,
remember we're just scratching the surface of what this bill
is going to do for you as the individual taxpayer.
So there's a lot of good things in this bill.
You just got to stay tuned. Hey, make sure you
(42:42):
connect with us on Facebook. Find us at tax talkforu
dot com. Go over there and like us, share it
with your friends and family. Get this information out to everybody.
This one big, beautiful bill helps most Americans across the board.
It is something that can provide you a great way
of saving money. How does this impact you? Come back
(43:05):
next week a tax off for you again, like us
on Facebook, share it on Facebook. Get the information out there,
but tune in every Monday here at ten am Eastern
time on tax Talk for You. You can also check
out Taxation Solutions dot net, Taxation Solutions, tax Relief on Facebook,
Trucker Tax Tools dot com, Trucker Tax Tools on Facebook.
(43:29):
Connect with us learn more about what we can help
you and how to help yourself save money on your
taxes right here on tax Talk for You tax Talk
for You dot com, W four Cy Radio. Thank you
having guide blood glorious and awesome week, and we'll be
back next week.
Speaker 3 (43:49):
Are you an individual or business that wants to understand
taxes and how they affect you? Are you looking for
specific tax advice for self employed business owners and truckers?
Are you behind on taxes and your bookkeeping. Are you
dealing with dirs and ready to have some relief, then
(44:10):
you need Tax Talk for You, hosted by tax and
trucker expert Barry g.
Speaker 2 (44:16):
Fouer EA.
Speaker 3 (44:17):
Tune in ten am Eastern Time every Monday right here
on W four CY Radio and Talk for TV. Don't
forget to check this and past episodes at tax.
Speaker 2 (44:28):
TALKFORU dot com.
Speaker 3 (44:30):
See you next week at W four cy dot com
Popular Podcasts
My Favorite Murder with Karen Kilgariff and Georgia Hardstark
My Favorite Murder is a true crime comedy podcast hosted by Karen Kilgariff and Georgia Hardstark. Each week, Karen and Georgia share compelling true crimes and hometown stories from friends and listeners. Since MFM launched in January of 2016, Karen and Georgia have shared their lifelong interest in true crime and have covered stories of infamous serial killers like the Night Stalker, mysterious cold cases, captivating cults, incredible survivor stories and important events from history like the Tulsa race massacre of 1921. My Favorite Murder is part of the Exactly Right podcast network that provides a platform for bold, creative voices to bring to life provocative, entertaining and relatable stories for audiences everywhere. The Exactly Right roster of podcasts covers a variety of topics including historic true crime, comedic interviews and news, science, pop culture and more. Podcasts on the network include Buried Bones with Kate Winkler Dawson and Paul Holes, That's Messed Up: An SVU Podcast, This Podcast Will Kill You, Bananas and more.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com