Published Friday, April 23, 2021 at: 8:24 PM EDT
The window of opportunity to act before taxes are hiked is about to close.
At Tuesday’s State of the Union message, President Biden will likely talk about his plan for higher taxes, which he campaigned on. The details of the President’s plan to end the step-up basis on inheritances is perhaps the most significant change.
Other tax proposals Mr. Biden campaigned on include a sharp reduction in the favorable treatment on profits from investments, a new top tax rate of 39.6%, and expansion of the 12.4% Social Security tax if you earn more than $400,000 in adjusted gross income annually..
It’s possible the tax hikes about to be negotiated in Congress could be retroactive, which would make planning maneuvers fruitless. That’s unlikely, however, but the window of opportunity to act is about to be closed.
If your annual income is higher than $400,000 or your family has an estate worth more than $3.5 million, please let us know if you have questions.
Despite details of the coming tax hikes on wealth and investments emerging in press reports this past week, the Standard & Poor’s 500 stock index closed Friday at 4,180.17 – a gain of +1.09% from Thursday and down -0.12% from last week, ending a four-week winning streak. The index is up +60.54% from the March 23rd bear market low.
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This article was written by a professional financial journalist for Preferred NY Financial Group,LLC and is not intended as legal or investment advice.
An individual retirement account (IRA) allows individuals to direct pretax incom, up to specific annual limits, toward retirements that can grow tax-deferred (no capital gains or dividend income is taxed). Individual taxpayers are allowed to contribute 100% of compensation up to a specified maximum dollar amount to their Tranditional IRA. Contributions to the Tranditional IRA may be tax-deductible depending on the taxpayer's income, tax-filling status and other factors. Taxed must be paid upon withdrawal of any deducted contributions plus earnings and on the earnings from your non-deducted contributions. Prior to age 59%, distributions may be taken for certain reasons without incurring a 10 percent penalty on earnings. None of the information in this document should be considered tax or legal advice. Please consult with your legal or tax advisor for more information concerning your individual situation.
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