Episode Transcript
[00:00:02] Well, hello everybody. Welcome, welcome, welcome back to LEGAL talk. I am John Mitchell host your show. And today we are breaking down some major tax changes that could directly impact working Americans. Now these updates are designed to be put more to put more money back into your pockets pockets of everyday earners.
[00:00:24] But like most tax law, the details are what matters.
[00:00:29] Now let's get started with something that millions of people rely on to get ahead and that's going to be overtime pay.
[00:00:36] So a new temporary tax deduction allows workers to deduct a portion of their overtime earnings from their taxable income.
[00:00:46] Specifically, it applies to the premium portion of overtime. So that's the extra half in that time and a half that we're all familiar with.
[00:00:55] Now, most of this doesn't change your paycheck. The important thing here doesn't change your paycheck significantly in the immediate term, right? So your check's going to be calculated as it always is. But what it's going to do is it's going to reduce the tax bill when you finally get around to filing your tax return, your 1040 form, right? That we all love to do between January and April of every year, right?
[00:01:23] So what has changed here is that workers are now going to get the special deduction for the overtime pay, meaning that part of the extra income won't be subject to federal tax. So here's how it works. Only the premium portion of the overtime, so the extra above the regular rate, time and a half can be deducted. So what that means, let me just break that down for you. Let's say you make $20 an hour, right? I'm going to use nice easy round numbers. That's the way my brain works best, right? So let's say $20. So you make $20 an hour at your job.
[00:02:01] You work over 40 hours in the week. And that's going to be, you know, your overtime rate is going to be $30 now, right? So time and a half, 1.5 times 20, that's going to give you $30, right?
[00:02:16] So that $30, you're going to get it on your paycheck, going to show up on your stub, you get it tax deducted, everything just like normal, right? But when you sit down to do your tax return at the end of the year, 1040 form, guess what, that extra $10, so the 20 is going to get taxed like normal, like nothing ever happened, right? But the extra $10, the premium, the over the overtime portion, right? The premium of that over the irregular $20 rate, that is what's going to be a tax tax free, right. And they're going to make an adjustment and you're going to walk away with a big old bag of money. Thank you, thank you. Thank you, Uncle Sam. Right, okay. But there's limits to this, of course, as you might imagine, right? So the limits are that it's only up to $12,500 for an individual. Now if you're married filing joint and both of you are working and making that big ot the big overtime, it's going to be a $25,000 limit for the married couple. And it does not have to be evenly split. So let's say husband gets $15,000 of overtime. Well, wife got 10,000. It's all going to be deductible because it all fits under that $25,000 limit for the, you know, for the, for the couple, right. For that one tax return. So it's 12,500 if you're a single filer, 25,000 for a joint filer. And it does not have to be 125 and 12 5. Right.
[00:03:52] So now there's also another detail you got to keep in mind here and that is the income phase out. So the deduction begins to phase, phase out. So you don't get dollar for dollar deduction after certain income limits, right?
[00:04:08] So this is going to affect your higher income, higher earning folks, right? So if you make, let's say $150,000 and you're a single person, or if you make over 300,000 and you're a married person filing jointly, well then that overtime deduction is going to fail, phase out little by little, right? So maybe if you had $10,000 worth of overtime, maybe you're only going to get a deduction for, you know, 9,000, 8,000, 7,000, whatever it may be depending on your income at the time that you file your 1040 tax return. So be, you know, be aware of that. There's income phase outs, right? You don't want Bill Gates getting that overtime deduction or anything like that, right?
[00:04:55] So now who's going to benefit from this? That's an important, important point. So hourly workers that regularly work over 40 hours a week especially I'm thinking about your, all your restaurant folks, your retail folks, you know, working hard out there serving the public, manufacturing, right? If you work in some kind of, some kind of factory or something like that, that's going to be good for you right there, you know, so that's helpful.
[00:05:23] Let's see, distribution. I'm thinking of healthcare. Oh my goodness, you Know, you know who works a lot of overtime? Those nurses working in those hospitals. They're taking care of us out there. You know, all the sick people show up. You know, a lot of times those nurses, they're working 10, 12 hour shifts and they get a lot of overtime. Now one of the things also to keep in mind, this role, this overtime follows Fair Labor Standards Act F L S A guidelines. So, you know, some places, some companies have, let's say, union contracts where overtime is paid after eight hours in a day. Right.
[00:06:06] But this is strictly after 40 hours in the week. Another thing to keep in mind, some companies, some unions have contracts, let's say, where overtime is paid at double time rate. So if you're getting, you know, your normal rate is $20 an hour and you work overtime and that's $40 an hour because of your, you know, your, your company's rules, policies, your union contracts, whatever it may be, you're not going to get, you know, $20 tax free. It's going to be $10 tax free because that is going to follow those, those federal guidelines. Right. So you got to keep that in mind.
[00:06:46] And another important thing that you're going to want to keep in mind, right. I know there's a lot of important things. You might want to even rewind this segment and watch it again, make sure you got all the details right. So key takeaway here.
[00:06:59] This is not an immediate tax cut in your paycheck itself. So you're not going to see in your check an additional amount like, like they didn't take taxes out. They're going to take the federal income tax out at normal rates as if. Right. And then you're going to get that big deduction when you're ready to go ahead and file your 1040 form. So it's not going to affect your, your paycheck immediately.
[00:07:30] And another thing also important to keep in mind, this is a temporary deduction. So this brand new deduction for qualifying overtime that's effective from tax years 2025. Now this, interestingly enough, this is part of the big beautiful bill, the OB3, we sometimes call it in the business. Right, the tax business. And what you got to keep in mind that was that was signed into law by President Donald Trump on July 4th of 2025. But this is retroactive. So any overtime that was earned during the 2025 tax year, even if it's January, February, March, whatever it may be, this is retroactive. So this is a good benefit for folks and it goes all the way back to January 1st of 2025. And it's good to go all the way through December 31st of 2028. And so that's that, you know, unless, you know, nothing in life is permanent. So maybe Congress is going to change that. They're going to extend it out probably. I would expect they would.
[00:08:46] So, you know, just but word to the wise, as the law sits right now, it's 2025 through 2028.
[00:08:54] And so that's an important thing to keep in mind when one other thing, one other caveat that I would go ahead and bring out, you know, and mention here is that this tax free or said no tax on overtime. Well, they're talking about no federal tax. Right. So you're still on the overtime portion, the premium portion, that extra kick that you get for working overtime or 40 hours. Yeah.
[00:09:24] That's still going to pay Social Security and Medicare, which, you know, lump those two together. They call it fica. Right. So all your FICA taxes are still going to remain as it is normally. Right. So that 6.2% that you pay and 6.2% that your employer matches, that's also, you know, that's going to stay the same. So it's not going to, you're not getting away without paying anything at all. They are going to take out Social Security and Medicare taxes out of that. Okay. So that's, you know, a lot of caveats to keep in mind here.
[00:10:02] So that's about it for the no tax on overtime. And one of the things that we're going to do right after we take a little quick commercial break, right. We've got to pay some bills around here, you know, keep the lights on. And you know, after that, what we're going to do is take a, a look at another major change that the OB3, the one big beautiful bill has brought upon us. Right. And we're going to talk about something very important that people love to hear about and that's going to be no tax on tips. So come right back. Also, go get your hotter or cold beverage of your choice.
[00:10:46] Get comfortable. Come right back after these commercials and we are going to talk about all your restaurant server folks and all the other service industry folks that get tips. And we're going to talk about no tax on tips right after we get back from these quick messages.
[00:11:09] Well, hello there, everybody. Welcome back. Oh, my goodness. Thank you. Thank you so much for being here in our audience. We really, really, really appreciate you taking time out of your busy days, you know, to sit and watch, you know, our little show Here, man, oh man, we're like family, right? I hope that you feel this warm embrace. Right. So again, you know, in case you didn't know, John Mitchell here I am the host of your show here, Legal Talk. We're talking about some important tax updates that we just had come, come out, right. Just a few months back there. They're still pretty, maybe not hot off the presses, but at this point they're at least still kind of, they're kind of warm, kind of warm off the presses, right? They're pretty new. So this law we're talking about, the OB3, which I call it and several other people are calling it, that one big beautiful bill and that was signed into law July 4, 2025 by President Donald Trump. And these are some key tax law changes for individuals not getting into business stuff in these segments. But right now, just talking about some, you know, some, some important things that this law has brought about as far as, you know, individual taxpayers. Right now there are workers out there, millions of workers out there. Might I say that, you know, they're kind of tips are very big, very important part of their income, right. So workers that rely on tips now, they have an opportunity to deduct a large portion of that income whenever they get ready to file their tax return, whenever they get ready to sit down with a big giant cup of coffee and some sharp pencils and the forms, you know, we don't do it like that anymore really, I guess. But, but you know, you get the idea, right? You say you sit down, you get ready to file your taxes and you know you're going to have a nice little deduction if you are a worker that depends on tipped income. Right. So this is going to be a pretty big and significant shift for workers that in the service industries, right. Where tip income can really make up a big bulk of the money that you bring home on the day to day. Right. So there's a few key points that we want to go ahead and, and discuss here, right. Number one, right. The first thing to know is the overview, the big zoom out, right? When you work, what it is that has changed here. If you work in a tipped job like restaurants, we're talking bars, saloons, hospitality, you know, certain other services like, you know, massage therapy, all that good stuff, things that normally get paid in tips, right. You now can deduct a big chunk of that tip income when you file your taxes. Right. A lot of that's going to be, the tip is going to be tax free. And here's the way that works Right.
[00:14:16] So let's say you get, you work in the service industry, you get some tips, you report those tips to your employer, of course, because that's the way that works. And, and then they include that in your W2, right? So what we do is the first 25,000 in qualified tips from your taxable income is going to be not subject to income tax. Right? Again, you know, income tax only, sir and madam, income tax, not talking about fica. So those that tip income is still going to be subject to Social Security and Medicare taxes, right? Not going to get out of that. Neither is your employer going to get out of that. So you can't reclassify a bunch of income as tipped income and then get out of everything, right? You're still going to have to pay Social Security, still going to pay Medicare, your employer is still going to pay their portion of that. Right. But $25,000 is a pretty big deal and that's going to be no tax on the first 25,000 federal income tax wise. Right?
[00:15:24] Now one thing to keep in mind about that also is if you are getting that tipped income, it's showing up on your W2 form, right? That also is going to affect your eligibility for other credits, things like the child tax credit, the EIC earned income credit. So you know, you got to keep in mind that that money needs to be reported on your W2 and it's going to affect your eligibility for your other credits, right? Now another thing, important thing to keep in mind here. This benefit is for your lower end spectrum, you know, income type folks, right? So if you're out there making those big tips and you're over $150,000 and you're single, well, guess what, that deduction on your tip income, that is going to be, you know, phased out a little bit, right? So you're not going to get the whole 20. Let's say you make 20. Yeah, let's say you made 150,000 and then you made 100 and you made 25,000. Got me doing math. Live, live here, right? So, so let's say you got your 150 and then you got your tips on top of that 175k. I don't know, maybe you work at high end steakhouse, whatever it may be, those tips, because you're over 150,000, you're not going to get that totally, completely 100% tax free. It's going to be a portion. So you might not get the deduction of 25,000. You might get 20,000, 21 22,000 might be a little less 15,000, depending on how high your income goes. Now, that is if you are filing a 1040 return, and that is if you are a single filer. Right? Right. Now if you are a married filing joint, then that, you know, they ease up a little bit on that. Right. So your new phase out is going to start above, over and above $300,000 for joint filers. Right. That's very important.
[00:17:27] Now, what is it that to qualify, as you remember I said back in the beginning, qualified tips, Right. Well, tips that are reported on W2S or other tip reporting forms count and non cash tips typically still do get taxed. So if somebody walks into the restaurant and tips you, sir or madam, with, you know, a nice little, I don't know, a gold coin, right? That's not cash. And so the value of that should still be reported on your tax return. And, and, well, lo and behold, I'm sorry, that's not going to be subject to the $25,000 max, you know, tip deduction. Right? So it's only cash tips that get this, and it's only tips that are reported on your W2. You can't get audited by the IRS, and the IRS finds out there was, you know, some cash tip money that didn't make it onto your tax return. And, and you say, oh, no, no, no, wait a minute, you know, you know, tips, you know, $25,000 deduction. These qualifying tips, in order to qualify for the deduction, they've got to be reported on your W2. Right. So, you know, keep that honest and make sure you report at the end of every shift. Usually is the way this works, you have to go ahead and report to your employer whatever tips you got during that shift. Right? So keep that in mind. Now, again, who does this? Who does this benefit? This benefits service workers, like, let's say, waiters, waitresses, right. Bartenders, hairstylists. Very important one, right? I always tip my hair stylist. I like when I get my haircut. I like for my haircut to turn out nice and straight. Straight and look good, right. I want to be all wonky. I don't want to be all lopsided, cut shorter on one side than the other. So my hair stylist always gets a few extra bucks at the end of the day whenever I get my hair cut. Right. John's hair stylist is taken care of. Yes, sir. Yes, ma'. Am. Okay, so delivery drivers, you know, think about your Papa John's, your Pizza Hut, your Dominoes even your, you know, today, you know, in these days and times, we might think more of a Grubhub or DoorDash or Uber Eats. So all these delivery drivers that typically would get tipped, you know, those tips that they get that are otherwise qualifying, those are going to be qualifying tips and they're going to be able to get that big tax deduction, right? Valet attendance and similar type service workers, Right. The main thing to keep in mind here, the deduction can really lower your taxable income for your federal tax return if tips are a big part of your earnings and that means more take home pay for you. Right?
[00:20:30] Now keep in mind also this deduction is also only a temporary measure, right? So it's good. January 1st of 2025 through December 31st of 2028. Right. So this could really lower quite a bit, you know, lower down your taxable income, get you a bigger refund back on your big 1040 form. And that is good, good news for everybody and for all of us, right?
[00:21:02] So that's the good news. No tax on tips. Got a few caveats there. But you know, that's, that's the dealio, right? Tax law is not simple. Otherwise, you know, there wouldn't be guys like me running around. Right. So anyways, that's it for this segment. We're going to go take another quick break, right? And as soon as we do, we're going to come right back with a big segment number three, and we're going to talk a little bit about deducting car loan interest on your tax return. Man, oh man, exciting stuff. It's been years, years and years since we've been able to deduct those car loan interests. But now, you know, at least for the time being, that's going to be a thing, right? So stick with us, you know, stay, stay tuned. And we'll be right back after a couple of quick messages. And we'll be talking about that car loan interest deduction right after this.
[00:22:04] All right, everybody, welcome back to Legal talk. Man, oh man, like they say in Latin, tempest fugit time flies. Time flies when you're having fun. And boy, oh boy, I am having some fun here we are able to talk about some good income tax topics. Man, that is right up my alley. And so we'll jump right in and talk about the next topic theme that we have for today.
[00:22:30] Now for the first time in years and years, Americans are going to be able to deduct interest that you pay on your automobile loan for personal use purpose. Now keep in mind, we're not talking about businesses here, not talking about businesses at all. Because if you have a car that you're using for business, that's a whole nother deal. That's a whole different topic, right? That is already deductible. This is even better because this is your personal use vehicle, the one that you, you know, wash up for the weekend, take your girl out cruising, whatever the case may be. Hey, we're equal opportunity around here. Maybe you're a girl, maybe you're taking your guy out cruising, right? Whatever the, you know, whatever the case may be, right? This is your personal use automobile, your personal, personal use vehicle, your means of transportation, right? If you have a car and you have a car note, you know, if you meet the qualifications. And we're going to talk about those, make sure that you meet them, right? But those car loans, you can now take a deduction, an interest deduction for the interest that you pay on your car loan. And that's free the first time that's been available to us for a good long time now, right? Now there's, you know, as always in taxes, right? As always, the devil's in the details, right?
[00:23:58] So there's a few points to cover. Few, few things to kind of keep in mind, right? So what is it that has changed? First time in decades, and I mean decades. Interest that you pay on your car loan, you can be deductible on your federal tax return. And that is really similar to how mortgage interest has been deductible for a long, long time. Forever in a day, right? I mean, I think the first cavemen were taking interest deductions on the, the payments on their caves, right? I think that might be a thing, right?
[00:24:32] So how does it, how does it work? Right? So you can deduct this deduction is an above the line deduction. Well, talk about that in a few seconds. You know what that actually means? You hear that, that terminology, you know, you hear that term thrown around in tax circles, right? I'm going to explain what that means. Above the line, right? So you got your above the line deduction, $10,000 per year of interest that you have paid on a qualified auto loan, right? So that's the key, right? I want you to ears should perk up your radar should be going off when you hear me say qualified, right? So now your next question in your mind should be what is it that qualifies, right? So if you have a loan, let's say a vehicle, as I said, first of all has to be a personal use vehicle. If it's business use. That's a whole nother topic. That could be deductible also. But right now we're talking about personal. Personal, okay. So the loan has to be used to purchase the vehicle. So you can't have a vehicle. And you put that vehicle up as collateral, right. And you get a loan to go on vacation, right? I need $10,000. I'm going to go on vacation. Here's the title to my car. So, you know, folks out there putting their car title up for some kind of a, you know, some kind of financial arrangement personal loan and your car is your guarantee that's not going to qualify. It's only loans that are actually being used to purchase that brand new vehicle. Right. Now there's some income limits as of course, you might imagine, right? So this deduction of the interest starts to phase out.
[00:26:22] In the case of single people on a joint, on a single tax return, marry single tax return, 1040, the phase out starts at $100,000. So if you make more than $100,000 and you have $10,000 worth of interest on your car note, yeah, maybe you don't get a deduction for the entire 10,000. It might be 9,000, might be 8,000. Could go all the way down to zero. Right?
[00:26:55] Now that phase out for a married couple starts at right around $200,000 if you are filing a married filing joint tax return. Right? So that's where it starts to phase out a little bit. You're a little bit higher income. Maybe the government has thought maybe you don't need, you know, as big of a break, whatever Congress said, yeah, higher income folks need to, you know, pay a little bit more of their fair share and not get as much of a benefit from it. Right. So that's why that, you know, that deduction starts to phase out after a period of time, right? So car buyers financing a brand new vehicle is who benefits here, Right? So this helps if you're lower income, lower bracket type folks out there, you know, blue collar, working man, working lady, you know, this is right up your alley, right?
[00:27:50] So that's who's going to benefit here. Because what it does is now you still have to make your car payment, you still have to pay that interest throughout the year, but you're going to get a little break, going to get a little kickback from that. Whenever you do go ahead and file your Form 1040 form, right? So it's going to be up to, up to $10,000. And for the qualifying purchase, which means it's to, you know, the loan is to purchase the vehicle and you're going to get up to $10,000 deduction for the interest that you paid. And you know, you're going to write that into your 1040. It's going to go right there in the calculations and get you, you know, a tax refund, a little bit bigger tax refund than you might have gotten if it weren't there, right? It's going to be kind, it's going to be nice, nice beneficial thing for you, right?
[00:28:43] Now here's an important point, right? So this is not like itemized deductions that only help some taxpayers, as you might know, or if you don't know, let me give you the quick 30 second rundown, right? When you do your tax return and you are going to calculate your taxes, you, certain part of your income is tax free, Free the first part of it, right?
[00:29:08] And you can either be one of two ways, right?
[00:29:13] To deduct that you can take a standard deduction, which is a fixed amount and you don't have to show any receipts or justify it at all. Just take your standard deduction, right?
[00:29:25] And then if you have extra stuff, like I'm thinking about things like medical expenses, for example, gigantic, you know, big, big charitable deductions, things like that, you can get over and above what that standard deduction would give you, right?
[00:29:43] But that's a schedule A, and that is your itemized versus your schedule deductions. Now, when I remember when I said I was going to tell you a little bit about that terminology, right? That, you know, above the line deduction. Well, what does that mean? What do we mean when we tax nerds start talking about above the line deductions, right? Well, this is a deduction that does not have to go on schedule A. And what does that mean? Well, that means you can take your standard deduction and you can get this, you know, this deduction over and above even that, right? So it's, you know, it can be very lucrative, very nice kind of thing, you know, nice way to go. And so above the line just simply means before you calculate adjusted gross income, right? AGI, we call it, don't have to worry too much about what AGI is, but just know that if you look at your tax return very near to the bottom, the last line of the page, page one or the top of page two, you're going to see adjusted gross income. So take your income, take some deductions out, and, and those are your adjustments to income and then that's your AGI So this temporary stopgap measure, if you want to call it that, right, this temporary deduction for car loan interest is above the line. So that's before you calculate AGI. So that's a very big advantage tax wise when you're talking about calculating your 1040 form right?
[00:31:23] Now, again, we gotta, you know, gotta underscore, we gotta highlight, pull out the big old yellow highlighter and mark this for you. Because this is also only a temporary deduction, right? So Congress has authorized this retroactive through January 1st of 2025, so all of 25, and then all the way through December 31st of 2028.
[00:31:49] And that means that you get that deduction. Now here's an important point also, you know, just popped into my mind. This has got to be. There are qualifying vehicles here, right?
[00:32:02] So you can't get, God, I don't even know, knock on wood, I'm not a car guy. But you can't get, let's say a German made, you know, Mercedes imported from Germany or something like that, right? It's got to be, it's got to be American made. And so there's a way, and I forget what it is, but when you look at the VIN number, but you can always Google this, right, Neil, at the altar of Mr. Google, right? Make sure that you look this up if your car, you know, and if you're buying a car, of course you're going to ask your, your car salesman and then you're going to double check what he tells you because, you know, car salesman, right? So, you know, you, yeah, you know what I'm talking about out there. So make sure though that this, the car that you're financing here that you want to take that big deduction for. Make sure that that is, you know, mostly made in America vehicle. And make sure that the loan is not some kind of refi, where you put your car up for collateral to get a personal loan to go, you know, go with your new girlfriend to the Bahamas or something like that. Like that, right? Make sure that the, the vehicle has been purchased with the proceeds of this funding. And if you do all of that, you should probably be able to deduct up to $10,000 above the line. And that's going to be a big tax deduction. It's going to be a great. For you, right?
[00:33:29] So that's about it for this.
[00:33:31] Good luck, everybody. Go out, buy a new car, finance it, get that big tax deduction. And, and you know, I will be right with you right after these quick messages. And we're going to bring it on in down the home stretch and we're going to talk next segment a little bit about tax breaks for Americans over 65 years old. Man, oh man, you do not want to miss this. So stick with us and we will be right back.
[00:34:06] Well, hello there, everybody. Welcome back to Legal Talk once again, I am the host of your show, John Mitchell. Man, oh man, time has flown right by. We're so happy, so pleased that everybody has been able to join us and stick with us through this important bunch of tax updates that we're talking about here. Man, oh man, I hope this is useful information and, and I hope that you are really able to, you know, sink your teeth in, really do something with this and make it be beneficial for you. That's what we're really after here. Right? So senior citizens, right?
[00:34:42] Age 65 and older. And now if you're a senior Citizen, you're over 65, you can get an additional above the line deduction. And, and that's going to give you some relief on your 1040 tax return. If you're a senior citizen, you probably file in that 1040 SR they call it, right?
[00:35:05] So what is it that has changed here? Right? So if you're over 65, you get that additional, that additional deduction. And how much is that deduction? Right. I know you're holding on with bated breath, really hoping to get that number out of me. And, and here we go. That is a big six big ones. $6,000. Yeah. Up to $6,000 per eligible individual. So if you're doing a single tax return, 1040 for them and you're all by your lonesome, $6,000. If you are doing a married filing joint tax return, no, no, no, you do not have to share your $6,000. If both of you are over 65, you can get both of you a $6,000 deduction. So a married couple each over 65 walking away with a big $12,000.
[00:36:03] A big $12,000 deduction. Very huge, very nice. Right.
[00:36:08] Now there are limits on this as there is for everything, right? Income limits. So it fits phases out for some higher income folks, right? So if you're a senior citizen out there and you're making over $75,000 and you're single, or if you are married and you're filing that big married filing joint tax return, the number you're looking at is $150,000 for you joint filers out there, right? So keep that in mind.
[00:36:40] Income limitations. And again, just like all the others, this one Begins to phase out after those income limits have been hit. Right.
[00:36:51] Okay, so who is it that benefits? Well, mostly we're talking, since we're Talking about over 65 here, we're mostly talking about retirees and other senior citizens, especially the people that are out there. And I know people like this, my heart goes out. Right? They're out there, you know, the struggle is real. They're making it happen. They're out there with their fixed income. Right. I know a lady, she says, john, you know, my Social Security check, it feels like it shrinks every month. Man, I am right there with you. I understand. I'm, you know, not 65 yet. Knock on wood. God knows that hopefully God gives me a chance to live that long and I can, you know, live off that big Social Security check and feel like that it's, you know, slowly disappearing, been eaten away little by little. Right. But in any event, that's who mainly benefits from this. You're on fixed income, Social Security, pension, whatever the case may be. Right now, the key takeaway here, number one thing that you got to keep in mind, it gives you a bigger tax break because of your age. And that can also preserve a lot of, you know, it can solidify, it can make things better with that limited retirement income that we all have to live on when we get up to be 65 and older. Right. It's going to reduce your tax burden. So again, just like the rest of these, it's not necessarily putting more money in your pocket month to month or week by week, day by day, whatever the case may be. Now, you still have to wait until you file your tax return at the end of the year to go ahead and be able to claim this and get the benefits of that. Right? So nothing, my friends, nothing is immediate, I think. Right. Okay. The other thing to keep in mind, this is also like the other credits that I've mentioned, like the other special things that, you know, the, the big bag of goodies that the OB3 has brought for us.
[00:38:53] This is a temporary thing, 2025. So 1-1-25 through December 31st of 2028, unless, unless Congress decides to take action at that time and go ahead and extend these out. Right. But that's, this is a, you know, keep that in mind. It's a temporary thing. Right. Now, why do I mention that also? Right. You can do some, a little bit of tax planning. When you think about this the right way right now, you know, this is going to be a big deduction for these three years. 25.
[00:39:31] Well, four years I guess 25 through 28, right? Now, what you can do, pay attention here, oldsters, because if you've got, for example, a regular ira, right, individual retirement account, and you did not pay money on the taxes, so you took the deduction when you made your contributions to your ira, right?
[00:39:55] Now, Roth has some kind of cool, you know, things about it that are advantageous, right? Got some good advantages. And it comes about a time when you want to talk to your financial planning folks and you want to sit down, put pen to paper and kind of try and figure out if it's worth it and if you should be doing Roth IRA conversions, right? So if you do that, you know, whatever money was in your regular IRA that you switched over to Roth, well, now that is a taxable event, right? And so that means that when you do that conversion and you're going to pay taxes on that money, right? And so one of the things that we can do here is a little bit of planning. Let's say, you know, that you have money in a regular ira, a traditional ira, and you want to, you know, move that over into a Roth, right? You, you and your financial folks have sat down, you put your heads together and decided that that's a good thing to do, right?
[00:41:04] Well, this brand new senior tax deduction, $6,000 can help offset some of that, right? So maybe if you're thinking about doing a Roth IRA conversion, maybe it's time to hurry up and do that sooner rather than later so that you can kind of offset some of those taxable gains, some of that taxable event, right? You can offset some of that with this and, you know, come out, yeah, just a little bit slightly better, right?
[00:41:36] Okay, so that, that, you know, word to the wise, right? You can do some tax planning around all of this right now, let's say, okay, so this deduction is designed to help seniors of obviously, of course, going to keep more money in your pocket, right?
[00:41:52] And so that, that is that big opportunity there for all of the credits that we've mentioned today. And big opportunity also for the senior deduction, which is also, again, an above the line deduction for senior citizens. Very important, right? Very big, very big news. Very big deal for the OB3, the one big beautiful bill, right? Now, these four temporary tax changes are making a meaningful distant difference for workers out there, right? Families, retirees, but only if you understand how to claim them properly, right? Very big deal. Tax law is full of opportunity, but also it's full of fine print, believe you me. I know firsthand. Be proactive, Keep good records and make sure that you consult a qualified tax professional to help you out, guide you through the maze and let you see how these new deductions can apply to your, your particular situation.
[00:43:02] Now I'm going to give everybody my contact information.
[00:43:06] It's the very end of the show. I know you've been waiting for this. If you are sitting out there and you think, hey, I need to talk to John, I need to find out, you know, what to do about my taxes, you know, going to do some planning or God help, you know, knock, knock, knock on wood. God forbid you should have a problem with the irs. I am your guy. So you can find me a couple of different ways, right? You can go to my website. My website is www.99, like number 999-taxhelp.com www.tax help.com. right? And my telephone number is 1-899-tax-help-1-899, tax help. See how those two kind of, kind of go together there, right? So that is the way that you can get in touch with me also. Attorney Mitchell. A T T O R N E Y M I T C H E L L Attorney Mitchellm me I love to be of assistance and you can contact me and say that you saw me on the big show. Free consultation, right? Now if you send me a thousand page worth of documents and say, John, I need to take a look at all these documents and we'll talk about them, that's a different deal, right? But if you call me for 10, 15 minutes, whatever, we'll sit there, we'll chat, I'll try and give you an idea if I can help you out with your situation or not.
[00:44:37] So I am John Mitchell again, host of your show. This has been Legal Talk. Stay informed, stay prepared and we will see you next time.
