Dr. Friday Radio Show – July 19, 2025

On this episode of the Dr. Friday Show, the doctor is in to dissect the massive new tax law, the “One Big Beautiful Bill” (OBBB). Have you heard that Social Security is now tax-free? Dr. Friday clarifies the misinformation and breaks down what the new $12,000 Social Security tax credit really means for retirees. Are you an employee who earns tips or overtime? She explains a new deduction that could put thousands back in your pocket and what this new reporting means for both employees and employers. Plus, she covers other surprising provisions like new “Trump Accounts” for newborns and the expiring electric car credit. Later in the show, she answers listener calls about avoiding estimated tax penalties, the specifics of the Social Security credit, and the strict rules for selling investment property. Tune in for essential, practical advice to help you navigate the 2025 tax year!

Summary Points

• De-Mystifying the “One Big Beautiful Bill”: Dr. Friday breaks down the key provisions of the new tax law passed on July 4th, focusing on what you need to know now to prepare for the 2025 tax year.
• The New Social Security Tax Credit: Learn about the new credit of up to $6,000 (single) or $12,000 (married) for Social Security recipients. Dr. Friday explains the income phase-outs and the many unanswered questions about how it will be applied on your tax return.
• A Big Change for Tipped and Overtime Workers: A new deduction of up to $25,000 (for joint filers) for income from tips and overtime could mean big refunds. This also creates new reporting responsibilities for employers and highlights the need for employees to be vigilant about their pay stubs.
• Advice for Employees and Employers: Dr. Friday stresses the importance of checking your pay stubs now to ensure tips and overtime are tracked correctly. She advises employers to get their payroll systems ready for the new W-2 reporting requirements.
• Planning for 2025 and Beyond: Discover other OBBB provisions like government-seeded “Trump Accounts” for newborns and the impending phase-out of the electric car tax credit in September 2025.
• Warning on IRS “Pennies on the Dollar” Schemes: Dr. Friday cautions listeners about misleading ads for tax settlement. She explains the reality of IRS negotiations and that the IRS will look at all your assets—including 401(k)s and home equity—when determining your ability to pay.
• Caller Q&A: Listeners get answers on how to avoid estimated tax penalties, the specifics of the new Social Security credit, and the strict rules of a 1031 property exchange.

Episode FAQ

Q: The government sent a notice saying my Social Security benefits won’t be taxed anymore. Is that true?

A: Not exactly. While a new tax credit has been introduced for 2025, it’s not a complete elimination of the tax for everyone. Under the new law, taxpayers with a Modified Adjusted Gross Income (MAGI) under $75,000 (single) or $150,000 (married) may receive a credit of up to $6,000 or $12,000, respectively, to offset the tax on their Social Security benefits. The standard calculation of taxing up to 85% of your benefits still applies; this credit then works to reduce or eliminate that tax liability. The credit phases out completely at higher income levels ($175k for single, $250k for married).

Q: How does the new tax deduction for tips and overtime work?

A: For the 2025 tax year, workers can take a deduction for up to $12,500 (single) or $25,000 (joint) of their combined income from tips and overtime. To claim this, the income must be properly reported on your W-2 form by your employer. This is a new requirement, so it’s crucial for employees to check their pay stubs throughout the year to ensure accuracy and for employers to update their payroll systems to track and report this income separately.

Q: I sold an investment property and want to use the money to buy another one to avoid capital gains tax. Can I do that?

A: You can only defer capital gains tax on a property sale if you follow the strict rules of a Section 1031 Exchange. This must be set up at the time of the sale. The proceeds from the sale must go directly into an escrow account held by a qualified intermediary and cannot be touched by you. You then have a limited time to identify and purchase a “like-kind” replacement property using those escrowed funds. If you have already received the money from the sale into your personal account, it is too late to perform a 1031 exchange.

.css-j9qmi7{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:row;-ms-flex-direction:row;flex-direction:row;font-weight:700;margin-bottom:1rem;margin-top:2.8rem;width:100%;-webkit-box-pack:start;-ms-flex-pack:start;-webkit-justify-content:start;justify-content:start;padding-left:5rem;}@media only screen and (max-width: 599px){.css-j9qmi7{padding-left:0;-webkit-box-pack:center;-ms-flex-pack:center;-webkit-justify-content:center;justify-content:center;}}.css-j9qmi7 svg{fill:#27292D;}.css-j9qmi7 .eagfbvw0{-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;color:#27292D;}