Oh, you thought I would tell you who I thought would win the presidential election?
Nope, I’m not going there.
I’m a tax professional though, and I’m not immune to conversations about proper planning for either eventuality. In my opinion, however, the BEST advice about what to do for your Washington DC business is “wait and see”.
Here’s what I mean: history suggests that new presidents (if Biden wins, for example) will try to put their new tax policies through Congress during their first year.
That means that if (again, in this example) Biden wins, AND he follows that particular pattern, then his new tax policies — whatever they might be — will likely impact your 2021 or 2022 tax returns.
And, of course, if new tax legislation is passed in 2021, it probably won’t be effective until 2022. Congress very rarely makes tax increases that are retroactive.
*If* you believe that Biden will be increasing taxes on Washington DC business owners, one strategy could be to accelerate income into 2020 or 2021 so it can be taxed at the lower rates. You might also be considering taking your “minimum required distribution” from certain retirement accounts (and maybe a bit more) this year, in 2020, even though current law allows you to forego that. In this way, you could accelerate income to be taxed at today’s lower rates.
All of this is assuming things play out in this particular way.
Which is why I advise: wait and see. Then, we will listen together to see what whichever President we have says about their tax plans … and react accordingly.
This is what we do here at AccountAbility … we pay attention to these very specific tax things so you don’t have to.