Planning Ahead: Tax Tips with Brandyn Cox EA
Nov 07, 2020
Plan for the possible with Brandyn Cox, EA
From the looks of it Biden may end becoming the next president. Regardless of how you feel about that, it would be important to understand some of the laws Biden intends to change and how that affects you. Below is a summary of items that Biden will enact:
1) Corporate Tax Rate: Unless you are a C-Corporation. You will largely be unaffected by this. However, if you own a C-Corporation, the tax rate will go from 21% to 28%. This definitely will be a pain point and require additional tax strategy to find ways to pull the money out if the corporation and have less taxes due.
2) Higher Social Security Tax: Right now there is a maximum income level until you stop paying social security tax on your wages. For 2020 it is $137,700. Meaning, once you go over this limit, no matter what. There is no social security tax. Biden's plan will leave that as is, but have it pick back up at $400,000 in wages. Under this proposed plan, if you make $137,701-$399,999 then you still won't have social security tax to pay.
3) Daycare Tax Credit: Currently you can only have $3,000 of qualified daycare expenses for a child (no more than two). This makes a total tax credit between $2100-$1200. For most people, it is the lower of the two amounts. Under Biden plan, it will increase to $8,000 of qualified expenses per child (no more than two). This makes a total tax credit between $8,000-$3,200.
4) The child tax credit will go from $2,000 to $3,000 with a $600 bonus for kids under the age of 6. That will be huge. This tax credit also will become entirely refundable. What this means is that even if you don't owe enough tax to normally get the full credit, you'll still get it.
5) First time home users tax credit will make a comeback and it will be up to $15,000. This was around a long time ago when Obama first became president during the housing crisis.
There are many more parts of the Biden tax plan, but for many people in this group, it would be largely beneficial. Regardless of who you voted for and who will win, it is imperative to understand the future climate of the tax world.
Get with Brandyn now to prepare for tax season! Schedule your free tax savings call