Published Friday, September 11, 2020, 8:30 PM EST
It was a mixed week for stocks, and the most important opportunity to manage your wealth wisely right now is in tax planning.
Higher income taxes are expected to hit professionals, business owners, and other high-income earners. Sorry, but the financial balance sheet of the United States recently has been weakened. No matter which party wins the election, higher taxes will be required to pay down the long-term debt of the nation.
Capital gains. Now is the time to start considering selling an appreciated asset in 2020, rather than paying a higher capital gains tax if you think Joe Biden will be elected.
Instalment Sales To Children. Now would be a good time to consider selling property – like real estate – on an instalment loan to your children. Depending on the national election results, you might elect out of the sale on October 15, 2021, after the election and the U.S. tax plan is a done deal.
Payroll Tax And High Earners. In 2020, you're not subject to taxes on wages and salary of more than $137,700. Under Biden's plan, earnings of more than $400,000 would be subject to the 12.4% payroll tax. You may want to consider establishing an S-corp.
The Standard & Poor's 500 stock index closed Friday at 3,340.97, lower by -2.54% from a week ago, but +39.56% over its March 23rd bear market low.
This marks the first time since the height of the pandemic in March where the S&P 500 has posted a loss for two weeks back to back.
Stock prices have swung wildly since the coronavirus crisis started in March and volatility is to be expected in the months ahead.
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