Our political and tax landscape is about to change dramatically.
It's been over a decade since an elected Democratic President has had control of both the House and Senate. I guarantee you, what happened in the past will happen again. You will be impacted by two major changes.
Two major changes that will jeopardize your wealth
Historically, democrat controlled government will increase marginal rates of taxation and work to phase-out deductions and benefits for high-income earners (typically anyone making over $250,000. Even more concerning is the historical precedent of a fully funded, aggressive enforcement arm of the IRS
Over the last decade, the Republicans have reduced the IRS enforcement workforce funding to the point where it is now effectively the size of what it was in the early sixties when the US economy was a fourth of what it is today. Expect that to change quickly. President Biden has publicly committed to a massive increase in IRS funding to close the tax gap. Audits, collection activities, and overall efforts to redistribute wealth will dramatically increase over the next four years.
Unfortunately, you have to rely upon the accounting profession to give you a strategy to control the cost of taxation but that can be problematic. Most accountants are black and white compliance-oriented. They’re historians. They tell you how much money you made, how much you owe in taxes, when and where to file your taxes, and how to pay tax liabilities. I have found that most CPAs leave 30% or more of their clients’ money on the table in the form of overpaid taxes, simply because they fail to focus on planning.
You need a strategic roadmap on how to reduce your taxable income and how to keep as much as you can, and... it's not rocket science. Tax mitigation essentially is a systematic process of using the correct entity structures for your active and passive income streams, learning how to pay for fringe benefit expenses with pre- rather than post-tax dollars, and learning how to take compensation out of your business in the most tax-efficient way. With a sound strategy, you can more than double your investment base over a 10-year period.
We have found that most CPAs leave 30% or more of their clients’ money on the table in the form of overpaid taxes, simply because they fail to focus on planning. You need a strategic roadmap on how to reduce your taxable income and how to keep as much as you can, and... it's not rocket science.
The other area you need to focus on now is audit proofing. In the last 3 years, I have had not one client get audited, simply because I take the time to cleanse my clients’ Form 1040. You must take action now to ensure you are protected, as the IRS has three years to look back. And when the IRS is properly funded, many unprepared clients will be getting unwanted notices for examination.
Taxation is ever more important today. Every time we make an investment put money in a retirement plan, or take money out of our business, we have to think about tax planning.