A Mississippi man thought he was doing the right thing by stepping in to help his parents with a tax bill. But when he explained the situation on “The Ramsey Show,” personal finance expert Dave Ramsey said that the plan could make things worse.
Brandon called into the show because his parents owe about $27,000 in taxes for 2024. His mother receives 1099 income and earns around $130,000 a year, while his father brings in about $90,000, putting their household income at roughly $210,000 annually.
Brandon said a late 1099 form arrived, increasing the amount owed. His parents had money set aside for taxes but ended up using it for other expenses, including housing-related repairs.
Because they didn’t have the full amount available anymore, Brandon considered taking out a loan himself to help them cover the bill.
But Ramsey quickly shut down the idea. “The answer to your question is no. You don’t borrow the money,” he said. “But, let’s help them anyway. Let’s figure out how we can help them.”
Ramsey added that the situation made even less sense once Brandon revealed his parents’ income.
“You borrowing money for these people that make $210,000 and are out of control is a really bad idea,” Ramsey said.
Brandon also admitted that he is already in debt himself, which made Ramsey even more direct about the risks.
“You borrowing money to go get them out of this when they make this kind of money and are this disorganized and chaotic is really suicidal for you,” he said. “Please do not do this.”
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Ramsey argued that the late 1099 explanation didn’t fully explain the situation.
“You don’t get a 1099 for $100,000 you didn’t know was coming because you have the $100,000,” he said. “So, this is what’s scaring me is that this is going to go on and on and on and on and on.”
Instead, Ramsey said the problem was a breakdown in basic financial discipline.
“In this case, you don’t have a tax problem,” Ramsey said. “You have an accounting problem because you didn’t set the money aside to pay your taxes.”
According to Brandon, his mother had been setting aside money for quarterly tax payments but didn’t reserve enough. The money that had been saved was later spent on other needs around the house.
Ramsey said that once tax money is set aside, it should be treated as if it no longer belongs to the household.
“That money is sacred,” he said. “You do not touch it.”