Set aside your Election Day anxiety and focus on what you can still control: your 2020 tax bill.
Don’t let Election Day anxiety drive your tax decisions. There are still plenty of chances to trim your 2020 tax bill — regardless of who wins the White House. Democratic presidential candidate Joe Biden has pitched a detailed package of tax proposals, including a tax hike on taxpayers with income exceeding $400,000, as well as reducing the amount of money people can pass to heirs without being subject to estate and gift taxes. Meanwhile, President Donald Trump has floated the idea of lowering capital gains taxes and further tax cuts to increase take-home pay. In order for an overhaul of the tax code to take place, Democrats will need to sweep the White House and the Senate, as well as maintain a majority in the House. Keep your focus on 2020 for now. „This is an area where if you wait too long, you get busy with the holidays and it gets pushed aside,“ said Robert Hollmann, a certified financial planner and president at Nobilis Wealth in Stamford, Connecticut. „Early November is a great time to make a checklist and see if you’re doing everything you can to reduce your taxes,“ he said.1. Dump losing investments Tax-loss harvesting is a strategy in which you rack up losses in a taxable brokerage account by selling holdings that have declined in value. You then use these losses to offset capital gains stemming from appreciated positions you’ve sold. If your losses exceed your gains, you can apply up to $3,000 a year to offset ordinary income. Don’t just sit on the cash proceeds you get back from selling your losers. Work with your financial advisor to redeploy the money and rebalance your portfolio, said Hollmann. Avoid violating the wash-sale rule, which bars you from deducting the loss if you’ve sold the position at a loss and bought back substantially identical stock or securities within 30 days.
