Dr. Friday Radio Show – June 21, 2025

On this episode of the Dr. Friday Show, the doctor is in to cure your financial woes with a masterclass in tax-saving strategies. Dr. Friday tackles the complex financial decisions that come with major life events, from caring for aging parents and managing inheritances to navigating unexpected job loss. Discover the crucial difference between gifting property and inheriting it, learn how to leverage pre-tax dollars for nursing home care, and get expert advice on handling IRS collections. With calls from listeners covering everything from dependent care credits to capital gains on a home sale, this episode is packed with practical, actionable advice to help you keep more of your hard-earned money.

Topics Covered

Retirement & Estate Planning:

• Tax-efficient strategies for paying for nursing home care using IRA funds.
• Understanding the 10-year rule for inherited Traditional and Roth IRAs.
• A “dollar-for-dollar” strategy to offset taxes on inherited IRA distributions.
• The importance of using a will or trust to transfer property to preserve the step-up in basis.
• The tax pitfalls of adding a child’s name to a property deed (quitclaim deeds).
• Using IRAs as a vehicle for charitable donations.

Tax Credits & Deductions:

• Qualifying for the Child and Dependent Care Credit with summer day camps.
• Claiming aging parents who live with you as dependents.
• Rules for claiming grandchildren or other relatives living in your home.
• Warnings about improperly claiming a significant other’s children.

IRS & Tax Issues:

• The 3-year statute of limitations for claiming an IRS tax refund.
• How to appeal to the IRS for a late refund based on extenuating circumstances (COVID, death of a spouse).
• How to handle tax debt with the IRS and state tax authorities (Alabama).
• What assets the IRS considers during collections (home equity, extra vehicles, second homes).
• The importance of compliance before making an Offer in Compromise.
• The risks of having your name on a minor child’s bank account when you have tax debt.

General Tax Questions:

• The tax implications of gifting money to an adult child (annual gift exclusion).
• Managing capital gains tax on the sale of company stock through payroll withholding vs. quarterly payments.
• Calculating the tax basis of a primary home after making major improvements.
• Understanding the primary home sale exclusion ($250,000 single / $500,000 married).

Episode FAQ

Q: The IRS says I filed my return too late to get my refund. Is there anything I can do? A: While there is a strict three-year rule for claiming refunds, you can write a letter of appeal to the IRS. Explain any extenuating circumstances that caused the delay, such as the death of a spouse, personal health issues, or other significant hardships that prevented you from filing on time. Q: My elderly parents moved in with me and only have Social Security income. Can I claim them as dependents? A: Yes. If you provide more than 50% of their support (which includes housing) and they live with you for more than half the year, you can claim them as dependents. Their Social Security income is not considered earnings and does not need to be reported on your return. Q: I’m helping my adult son financially while he’s unemployed. Is this tax-deductible for me or taxable income for him? A: It is neither. This is considered a gift. You can give an individual up to the annual gift exclusion amount ($19,000 for 2025) per year without any tax implications or need to file a gift tax return. The money is not considered taxable income for your son. Q: I’m selling my home for a large profit after my spouse recently passed away. What is the tax exclusion? A: For the year your spouse passes away, you can