Three Ways to Plan for Potential Tax Increases
New administrations can often bring about changes to the tax code. Sometimes an administration wants to cut taxes in certain areas and other times they want to raise taxes. So, it’s no surprise that potential tax increases are a popular topic of discussion these days.
Over the last few months, we’ve received many questions about what individuals and businesses should do if there is a tax increase. As we always say, each person’s situation is different, so it depends. That said, there has been no definitive decisions made on a tax increase or decrease so it’s hard to speculate. However, here are three things to remember when anticipating a possible tax increase:
Make decisions based on what is happening.
As we write this blog, there have been no tax increases and that’s important to keep in mind. You don’t want to make hasty decisions based on something that’s pulsating through our screens and airwaves. You don’t want to plan for what might happen. You want to plan for what is happening. Keep an eye on things and consult with your financial advisor as the discussion evolves.
Understand what will be impacted.
There is an array of different taxes including individual income tax, corporate income tax, capital gains taxes, wealth taxes, the list goes on. Often when people talk about taxes their minds go to income tax because that directly affects your paycheck, but that’s just the tip of the iceberg. If changes occur, make sure you understand what is impacted and how that might affect you and your financial space.
Don’t make moves based on adjustments and tax rates.
Should taxes go up or down, you shouldn’t make adjustments based on that. On the other hand, it could also be a reason to make adjustments. The point here is, don’t be reactive based on what is happening in the tax code relative to shifting the overall tenor of your portfolio unless it makes sense for you. Simply moving away from whatever may be a higher taxable element may or may not be beneficial to you.
If tax increases should happen, take some time to get over the shock value. Then understand what it means in real time for you. From there, if it makes sense relative to your long-term goals, pivot to a space that is more advantageous for you.
If you have questions about your financial goals or would like to talk with us further about our services, give us a call at (412) 928-8801 or visit us at www.oakwoodfinancialgroup.com. If you wish to schedule an introductory meeting, we would be happy to meet with you at no cost or obligation to you.
These Blogs are provided for informational purposes only and should not be construed as investment advice. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of SagePoint Financial.
