If Joe Biden wins the presidency and the Democrats win control of the Senate, financial advisors should be braced for higher taxes on their wealthy clients.
In the meantime, they should “educate themselves (and their clients) about the impact that each candidate’s position will have on them, and to help them plan accordingly as election results come in!” wrote Jeffrey Levine, CPA, the director of advanced planning at Buckingham Wealth Partners, in a recent report on proposed changes and year-end planning opportunities focused on the Biden tax plan.
Mishkin Santa, the international tax director of The Wolf Group, similarly told a recent session of the Financial Planning Association’s virtual annual conference that because “change is going to be constant throughout the next couple of years … the best thing to do is to put together short-term plans that can be converted to long-term strategy.”
Both Levine and Santa highlighted tax changes that are part of Biden’s platform, which are much more likely to be adopted if Democrats take control of both houses of Congress. Even then, however, Democrats may not agree to all these changes. They traditionally don’t operate in lockstep and other issues such as the continuing COVID-19 pandemic and sluggish economy are likely to take precedence.
Watch the slideshow above for major highlights of the Biden tax plan, many affecting wealthy Americans. The higher tax rates and fewer deductions for those taxpayers suggest that they “stuff their returns with as much income and with as many deductions as possible” in 2020, wrote Levine. “Year-end Roth IRA conversions would become a particularly attractive option for some.”
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