{"id":15634,"date":"2020-11-13T20:56:24","date_gmt":"2020-11-13T20:56:24","guid":{"rendered":"https:\/\/fi-nancialplanner.com\/?p=15634"},"modified":"2020-11-13T21:08:52","modified_gmt":"2020-11-13T21:08:52","slug":"financial-planning-president-elect-bidens-tax-proposals","status":"publish","type":"post","link":"https:\/\/fi-nancialplanner.com\/index.php\/2020\/11\/13\/financial-planning-president-elect-bidens-tax-proposals\/","title":{"rendered":"Financial Planning for President-Elect Joe Biden&#8217;s Tax Proposals"},"content":{"rendered":"<p>In this video, I walk through Biden&#8217;s proposed tax changes and some planning opportunities if each of them became law. It&#8217;s important to note the likelihood of passage of any of these proposals is small at the current moment given that control of the Senate is still up for a runoff in Georgia, and that the proposals are from the Executive branch vs the Legislative branch where laws are actually made!<\/p>\n<p><iframe loading=\"lazy\" title=\"Financial Planning for Biden&#039;s Tax Proposals\" width=\"1200\" height=\"675\" src=\"https:\/\/www.youtube.com\/embed\/JWd1cetphGE?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen><\/iframe><\/p>\n<p>Here&#8217;s a bullet point summary:<\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Significant changes for those earning over ~400k &#8211; both on the tax rate side and on tax deductions:<\/span>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Top tax bracket back to 39.6% (as it was in the Obama years), but now applies to taxable income over 400k (whether single or married filer) &#8211; net impact +2.6-4.6%<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Wage earnings above 400k (per earner) would be subject to FICA again, whereas it phases out at 137k now &#8211; net impact +6.2%<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">QBI deduction (20% reduction on business income) above 400k &#8211; net impact +10-11.6% (was previously 80% of 37% = 29.6% effective marginal rate)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Cap the value of itemized deductions at 28% &#8211; net impact +11.6% on deductible expenses<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Planning strategies &#8211; to the extent possible, pull income and deductions forward to be taxed at a lower marginal rate and to preserve deductions<\/p>\n<ul>\n<li>Other proposals:\n<ul>\n<li>Long Term Capital Gains with income over $1m would be subject to ordinary tax rates (i.e. 39.6% vs 23.8% previously)<\/li>\n<li>Tax deferral on 1031 exchanges eliminated if income over 400k<\/li>\n<li>Flat tax credit to replace reduction in taxable income from traditional retirement account contributions<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Planning strategies &#8211; manage controllable income for capital gains and losses and sales of real estate where possible.\u00a0 On retirement contributions, you should compare your current and future projected tax rates to the 26% proposed cap.\u00a0 We would try to determine whether it&#8217;s worth taking a 26% credit now compared to paying a higher rate in the future combined with today&#8217;s rate.\u00a0 Higher income taxpayers would likely be better with a Roth account whereas lower income earners would likely be better off with a traditional account and a 26% tax benefit.\u00a0 I&#8217;d be more than happy to talk through the nuances of this with you!<\/p>\n<p>Here&#8217;s a link to the <a href=\"https:\/\/www.kitces.com\/blog\/biden-tax-plan-cuts-democrat-proposal-capital-gains-396-increase-estate-exemption-retirement-credit\/\">Michael Kitces summary<\/a> I mentioned.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this video, I walk through Biden&#8217;s proposed tax changes and some planning opportunities if each of them became law. It&#8217;s important to note the likelihood of passage of any of these proposals is small at the current moment given that control of the Senate is still up for a runoff in Georgia, and that&hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-15634","post","type-post","status-publish","format-standard","hentry","category-uncategorized","category-1","description-off"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Financial Planning for President-Elect Joe Biden&#039;s Tax Proposals<\/title>\n<meta name=\"description\" content=\"In this video I discuss Biden&#039;s 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