Biden Administration Tax Law Changes Overview

Whenever I’m in a car with other people I prefer to be the one driving the car. A lot of that has to do with the fact that as a child, I used to get motion sickness really bad. But, when I’m driving the car, that doesn’t happen.

The bigger factor is that I’m a self-described control freak. I like to have control of those things that are going on around me.

As a financial advisor I encourage my clients to take as much control as humanly possible. This control changes depending upon your life situation. For those of you who are employed and in your working years, you don’t have a lot of control over the things that other people do.

Retirees have a lot more control over their taxes.

When you have a paycheck coming in the door, you don’t have a ton of control over your taxes. But as a retiree, you have a lot more control. You can’t control the government. You can’t control the actions of the state that you live in.

You can’t control the rules and the laws, but you can control your income.

In the United States we pay taxes on our income. When you’re working, when you have that paycheck, you want that income. Your company is going to pay you that paycheck whether you like it or not, but when you retire, you get to decide what your income sources are going to look like.

We are in a year of presidential transition, and we are in a year of a congressional change in leadership, a change in the political party. Anytime we see this political changes we have tax law changes.

Now more than ever, taxes are going to be a very important factor when it comes towards your retirement plan.

Everything’s important when we talk about where your money’s going to come from and where your money is going. Your investments, long-term care, etc are all important.

But right now, taxes are very, very important. For a lot of our clients, they might see an increase in taxes.

Please realize that “might” is the key word here, but you have to understand that maybe right now is when you want to recognize income. In doing so there’s three big tax areas that we look at.

1. Income taxes

These are taxes on your income, filed on your tax return. These taxes could be from wages, rentals, and things along those lines. If you’re retired, these taxes will mostly likely come from 401k and IRA distributions.

How you time these out is going to be extremely, extremely important.

2. Capital gains taxes

The next big thing that’s coming down the pipe is going to be capital gains tax changes.

The way that this law is being sold, or the way that this law is being communicated to the general public, is that these capital gains changes won’t hit the average person. I talk about these changes in my recent capital gains video.

But these capital gains law will actually hit way more people than they’re going to try and tell you that it does.

3. Estate taxes

The estate tax is applicable when somebody passes away, and how the overall value of the estate gets taxed at a federal level. There’s some changes coming down the pipe for that as well.

Regardless of your income, you want as much control as humanly possible. You may have a very short window of time to exercise some of that control so it can be better for yourself, better for your family, and that you have as much of that control over your finances.