Dr. Friday Radio Show – May 17, 2025

Join Dr. Friday, your go-to financial counselor and tax consultant, in this May 17, 2025 episode. Dr. Friday addresses pressing IRS concerns, including “love letters” for late business filings, processing delays, and the crucial three-year limit for claiming refunds. She dives into strategies for handling back taxes, the realities of the Fresh Start program, and settling tax debts. Callers bring real-world scenarios, discussing Tennessee’s unique tax filing extension, RMDs while still working, capital gains on property sales, and smart IRA withdrawal strategies in retirement. Get practical advice on AMT, the importance of wills and trusts, 1031 exchanges, and making informed financial decisions.

Topics Covered:

• IRS “love letters” for late business tax filings (LLCs, S-corps) and first-time penalty abatement.
• Current IRS processing delays and potential impacts of budget cuts.
• The three-year statute of limitations for claiming tax refunds.
• Consequences of filing multiple years of back taxes, especially regarding older refunds.
• Strategies for dealing with IRS debt, including the Fresh Start program and Offer in Compromise realities.
• Rules surrounding bankruptcy and its application to tax debt.
• Tennessee’s special federal tax filing extension to November 3, 2025, due to storms, and its impact on individual returns and estimated payments.
• Explanation of the Alternative Minimum Tax (AMT) and who it might affect.
• The importance of having a will or trust for estate planning.
• Caller question confirming the Tennessee tax filing deadline of November 3rd.
• Discussion on making quarterly estimated tax payments, especially with the extended deadline.
• Caller question about Required Minimum Distributions (RMDs) for a self-employed individual still working and contributing to retirement accounts.
• Caller question regarding capital gains tax on the sale of an investment property, including calculating basis and tax rates.
• Caller question on how much can be withdrawn from an IRA annually to minimize or avoid income tax in retirement.
• Brief mention of 1031 like-kind exchanges for investment properties.
• Considerations before using 401(k) funds to pay off a mortgage.
• The importance of seeking tax advice before making significant financial decisions.
• Overview of various IRS penalties (failure to file, failure to pay, failure to make proper estimates).

FAQ about the Episode:

• Q: Is there a special tax filing extension for Tennessee residents mentioned?
  • A: Yes, Dr. Friday confirms a federal extension for Tennessee residents to file their 2024 individual taxes and make certain payments by November 3, 2025, due to severe storms. This also applies to 2025 Q1, Q2, and Q3 estimated payments.
• Q: What is the time limit for claiming an old tax refund from the IRS?
  • A: Dr. Friday states that you generally have three years from the due date of the return (or the date filed, if later) to claim a refund. For example, 2019 refunds would likely be unclaimable by May 2025 unless specific circumstances apply.
• Q: Can I really settle my tax debt with the IRS for “pennies on the dollar”?
  • A: Dr. Friday explains that while programs like Offer in Compromise exist, they have strict eligibility requirements based on your assets and income. It’s not a simple negotiation, and having significant assets (like home equity or retirement funds) can make qualifying difficult.
• Q: What advice does Dr. Friday give about handling IRS problems?
  • A: She advises addressing IRS issues promptly, understanding the specific processes involved (like penalty abatement or