We have reached it, the last blog I will write before Election Day. It is a time when so much feels wrapped up in the choice we will make that it touches every aspect of life. As such, I have written recently in this place about what some of the financial and tax picture aspects of the decision could be. And whichever way one leans, it is now time to make a choice.
I try my best to remain nonpartisan in this space because when it comes to policy and what it means for one’s finances, there are genuine debates to be had over what is fair, what is necessary, and what should be done. It then becomes our job to help our clients work within the ground rules that are set. This does not have to be done with great emotion – we have worked under different rules in the past, we work with one set of rules now, and we will work under different rules in the future.
This does not mean, however, that one should not hold passionate beliefs about what those rules should be. Again, there are some genuine differences in belief that cover a wide range. I believe that everyone owes it to themselves to be informed in a way that allows them to make an educated decision on policy matters.
Part of seeking that information should then necessarily involve knowing where the other side falls and what evidence informs their final answer. You do not then become obligated to agree with their decision, but you at least then can appreciate how someone arrives to it.
So no matter where things fall, let us embrace that spirit of understanding. True ignorance only lies in thinking there is only ever one undeniably correct answer. If that were the case, we would have been able to find it in a history of thousands of years of democracy. Instead, different times call for different actions.
It is easier – and flashier- to look at extremes and find how much those views can polarize those on the opposite end. In between those, however, is much more that draws us together that pushes us apart. Let us embrace that instead of the division and try to make it ring as loud as the differences.
For no matter how you feel about who gets elected, and you can feel it strongly, you are going to have to deal with some people who disagree with you. And in that relationship, a little respect can go a long way.
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The tax season without end has finally ended. The deadline of October 15 passed last week for those who got an extension on their taxes. And you know what that means now? There are fewer than three months left until 2021 (yes, we are all that ready to leave 2020 behind that the countdown can begin). And you know what that means now? Time is running short to make some changes to your tax picture for next year.
Just what can you do to make those changes? Well the answer to that depends upon who you are and what you are trying to do. In this year of all years (even if that has been achieved through a horrible ranking), though, I think it is a time when more people than ever should be asking that question.
Through the year’s series of endless debacles, many people are in a different financial situation than is shown on their 2019 tax return. In many cases, this means things have taken an unfortunate turn. It could then be possible to put less away for taxes over the final months of this year and still have fulfilled your tax obligation. In this time of financial stress for many, any chance to get a little more money into your bank account can be of great benefit.
But even for those who have been lucky enough to move in the other direction and are in a better financial situation, you also want to make sure that your tax obligation is being fulfilled. In this year when life have proved it can massively change in littles time, you don’t want to end up in a precarious situation with an unexpected tax bill that you can not afford to pay.
In either case – and really in any case when it comes to your finances – planning and preparation are key. We cannot foresee every twist and turn that life will take. After all, I certainly never expected to be writing an article like this a year ago, trying to help people navigate a struggling economy due to a pandemic would have seem alarmist. Taking action is what helps you get through those times, though. A wait-and-see approach sometimes turns out to be okay, and can even result in favorable outcomes, but why not just know the good outcome is coming? Making moves is a can’t-lose situation because it sets you up in the best possible situation. There is empowerment to be had by doing it, too, and feeling empowered is something that can be difficult to find in this time when so much is out of our hands.
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As I am sure everyone is only all too aware, we are deep in an election season with less than a month to go until votes start being counted for president. As always, the economy ranks high when people are asked what they weigh when deciding their vote, so I thought it was worth spending some space here to go into what a vote for each side could mean in a financial sense.
One of the biggest accomplishments of President Trump’s time in office has been the Tax Cuts and Jobs Act that gave the country’s tax system a large overhaul. This largely shows Trump’s financial outlook and how he prefers to steer the economy. It may be impossible to say that Trump would be able to extend, or even continue, all the cuts in his original plan if reelected, as spending has already greatly increased due to the coronavirus pandemic, with both political parties talking about how further aid will still be needed.
From the other side, though, Joe Biden has already stated that he would plan to raise tax rates on the wealthy (those with an adjusted gross income of more than $400,000). He also has other differences in tax policy beyond the income tax, looking for increases in other areas, as well. If you want to get into deeper details on that, click through to this article from Accounting Today.
On the surface, when only one of two major candidates is running on increasing taxes, that would not seem to bide too well for Biden. The Democrats’ nominee, though, got a rather surprising nod from the financial sector last week, when Goldman Sachs released a note that said if Biden was elected in a ‘blue wave’ that also resulted in Democratic control on Congress, it would likely result in faster economic growth as the country recovers from the pandemic.
This forecast essentially comes down to how that blue wave outcome would allow the Democrats to push through a large fiscal stimulus package to help jumpstart the economy. For even as Republicans also currently work toward something in that area, the packages authored by Democrats promise to be larger. No matter the final numbers, though, getting anything passed would be a boon to the country over the current government impasse. And again, if anyone wants to get deeper into this projection, read this article from Business Insider.
Beyond that, even if you do not care to get any deeper into either of these issues, please read other articles about the issues you care about and read them from multiple sources. We all have instinctual feelings that we want to be true when it comes to politics and the future we hope it brings. There are enough people publishing information out there, that a Google search can uncover an article to back up any of those first-wave feelings. Do not stop there, though, and keep reading. Find pieces written from a nonbiased point of view and find pieces written from the opposite point of view. Only then can we be confident that we are voting in the way we should be, after having weighed various viewpoints and evidence.
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Last week I wrote about the New York Times story concerning President Donald Trump’s taxes, and well, quite a bit has happened since then to push that to the background of the national conversation. In this space, however, we will linger there for one more week.
As I said last week, there was no great revelation of wrongdoing in the report. The issues one could have with it are more with the system than the actions taken within it. What story one extrapolates from there can vary depending on where you want it to go. Does this show someone who is not a strong businessman, has racked up continuous losses, and now stands on the verge of everything bursting? Does this show someone who knows how to work the system and has his money going in the right directions so that he pays as little in income tax as possible while keeping a strong overall portfolio?
There is probably a real answer somewhere between the two, but we do not have any actual financials from the president and were not sitting in any board rooms when decisions were made. Without that information, it is very possible that what appears to be a giant loss in some aspect of business could have been a strategic plan to offset numbers somewhere else.
Either way, there are good lessons that can be taken from this situation. First, this shows the importance of good tax planning. Trump’s tax returns did not come together by looking at the numbers once at the end of the year when it came time to file. They happened because of many willful actions. And sure, most people do not have the means to make THAT many moves, but there is always something to be done to your advantage.
Another lesson is how much you need to make a business plan that fits your needs and goals. I mean, Trump has had a level of success in business that is more than minimal and undeniable. What he has accomplished did not happen by pure accident. Again, there is room in the story for mistakes to have been made, but it also seems he is doing a lot of what he wants to be doing in the way he wants to do it.
Business owners should make choices that fit the vision they have for where they want to go. Working within the system to get the results you want is how you get to the pinnacle of success – you just have to decide what you want your pinnacle to be. One way to get there is to surround yourself with those that can help you accomplish those goals and share in your vision. So if there is anything we can do facilitate your journey, let us know.
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