Is The President’s Tax Plan Going To Impact You?
You might or might not have noticed that President Biden began discussing a long-term tax plan in April, and there are a lot of unknowns in it. The challenge, of course, is that even though much of his proposed plan targets high-income or high-net worth individuals, the threshold that keeps showing up - $400,000 – is concerning.
In short, the plan places far higher tax burdens on the wealthy, in terms of capital gains taxes and the Medicare surtax (created from the Affordable Care Act).
Long term, this could place capital gains taxes at over 40%.
What’s that mean?
Well, nobody really knows.
On the other hand, the problem is this: it’s obvious that capital gains and the “wealthy” are being viewed as targets for taxation, and, depending on your retirement strategy, that could cause you to encounter far higher taxes when you retire as a result.
For example, if you have a 401(k) and plan on supplementing that with short and long-term investments in retirement. Suddenly, you’ll not only have to pay taxes on your 401(k) withdrawals, but you could potentially pay nearly twice the capital gains taxes on your investments. (Currently, short-term capital gains – less than a year – are taxed as income.)
The real challenge right now is the short-term reactions on the markets every time this conversation arises: The day this story started, the NASDAQ, Dow Jones, and even crypto markets all took a dramatic downturn.
Ultimately, they all recovered, but it showed that many traders’ reactions whenever this conversation begins is to sell off immediately – never mind it would potentially be years before such a tax was actively imposed.
My point in all this is simple: when it comes to retirement savings, don’t make ANY assumptions. You have to stay vigilant on how politicians are planning on spending your money and what the tax landscape could look like when you actually retire. At the same time, you also need to actively explore all your options – both new and established.
Does that mean crypto? A Roth IRA? A so-called “Golden” IRA? Precious metals?
It might mean all of them, but if you’ve already got a plan for retirement, then you need to be reviewing that plan and its suitability at least once every quarter. More importantly, you need to be focused on what it affecting that plan every day.
What you focus on expands, and if your plan is to retire rich, then knowing the dirty little secrets of taxation BEFORE they affect you is critical.
Now, none of this is written to scare you, it’s really just to inform you. If you are worried about what options you now have – or might have – then give me and the team a call to discuss where you money is and how it might be able to work a little harder.
IMPORTANT: Our firm specializes in tax resolution. We serve clients virtually so don't hesitate to reach out. If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm, so we can schedule a confidential consultation to explain options to permanently resolve your tax problem. Click here to make an appointment! Or, call Toll-free 1-855-254-1892.