When?

How?

We made a short video discussing what could happen, along with 3 steps you can take now to potentially maximize your tax savings in 2021.

You can watch it here.

Happy Tax Planning,

Chris Mullis, Ph.D., CDFA® Founding Partner Reduce Taxes. Invest Smarter. Optimize Income AskNorthStar.com       (704) 350-5028

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Transcription:

Hi, I’m Dr. Chris Mullis with NorthStar Capital Advisors, and I’m here to help you make the most of your tax savings opportunities.

In this video, I’m going to talk about what could happen, and what you can do to potentially maximize your tax savings before the rules change.

We don’t know when tax laws might change but we know they will at some point. That’s what tax laws do.

Our philosophy at NorthStar is that we have a moral obligation to pay the IRS every dollar we owe, but “leaving a tip” doesn’t make us more patriotic.

And if we ever save you “too much” in taxes, you can donate the difference to your favorite charity or even against the national debt for which you’ll receive a deduction which is better than overpaying your taxes.

Now before we describe some of the current-event driven opportunities, please let me remind you an essential truth — playing the long game is where we win in taxes.

The way that most people prepare taxes is one year behind. What happened last year and what do I need to minimize that tax bracket. The problem is you’re playing the IRS’s game and you’re going to lose looking at it one step at a time.

We may or may not be able to beat the IRS working in this narrow, one-step fashion, but you give us time and tax planning, and we can save hundreds of thousands of dollars.

Now that we’ve underscored the criticality of long time horizon in successful tax planning, let’s pivot to more time-sensitive issues.

We have a new administration in Washington, and the Democrats control the House and the Senate. So, what’s next for taxes?

In the near term, we can expect lawmakers to focus on urgent issues, like vaccine distribution, stimulus aid, and the economy. But at some point, a new tax plan is likely to show up.

The Biden administration is likely to raise taxes, at least for some folks. Hopefully, not until the pandemic settles down and the economy gets stronger.

If 2022 sees tax rule changes, 2021 might be our last chance to take advantage of the current rules.

So, what actions can you take now to make the most of today’s low tax rates?

Here are three key areas of your taxes you want to consider in 2021.

Point #1: Biden’s proposed plan targets high-income earners for an income tax hike. If that’s you, 2021 may be an excellent time to consider accelerating income (especially if you own a business) or completing a Roth conversion.

These are big moves with financial consequences, so you’ll want to get advice before you pull the trigger.

Point #2: Estate and gift tax exemptions went up to $11.7 million this year, but they might drop again under a new tax plan. That makes 2021 a critical year for estate planning.

Please don’t think new laws couldn’t affect a much smaller estate, either. As recently as 2001, the federal estate tax exemption amount was just $675,000.

It’s not likely that new rules would go back to such low levels, but I don’t want you to be caught flatfooted by a change.

Point #3: Deductible retirement plan contributions might be treated differently for tax purposes in the future. If you’re a high earner, maxing out deductible contributions this year and considering a Roth-style plan in the future might be smart.

Tax laws are in a constant state of flux. We don’t know when the rules will change or what they’ll look like once Congress gets done haggling, but we can take some proactive steps now.

Part of my job as a financial planner is to help you stay on top of the rules and maximize your opportunities every year.

Remember — tax planning is a cornerstone of real financial planning. And it’s a game of chess won with a multi-year perspective.

If you have a question about what I’ve discussed in this video or you’d like to speak personally about what’s going on, please reach out. I’ll respond personally.

Take care, stay safe, and
Happy Tax Planning!