Tax law changes are as uncertain as ever, as Congressional bills are often stuck with a split Senate and individual representatives debate differing agendas. Given this uncertainty, the best tax advice is to stay flexible. But what about the economy and new inflationary challenges? Here is a preview of the tax landscape and some suggestions.
What could change: There is a desire to raise both income and capital gains tax rates on higher-income taxpayers. Rates could rise to over 39% for both high-income and high-investment earnings. There are even proposals to make the change retroactive to minimize your ability to plan for the change.
What could change: Many in Congress want the expanded child tax credit to be made permanent. Your best bet is to plan for the lower credit, but to be alert for an expansion of the benefit.
What could change: As with the child tax credit, there are politicians who want to expand the higher benefit. Plan for the lower amount, but be prepared to act if the increase is brought back in 2022.
What could change: An even greater expansion of these reporting requirements as the IRS focuses attention on unreported income and underreported sale of digital currency property.
At this point it is hard to tell what will pass into law, if anything. On the other side of the coin, the mounting debt situation is becoming more troublesome to hide or pass down the road. Your best bet is to stay alert and ask for assistance.
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