Thank you for joining us for Episode 27 of our Money Wisdom Question Series, where we answer common financial and retirement investment questions. Today’s question is, “What are some tax tips for the end of the year?”

Tax Changes Based on the 2020 Election

This is a tough question to answer because everybody’s situation is a little bit different. Based on the outcome of the election, if the Democrats win the state of Georgia and take control of the senate, we will probably see a drastic change in tax laws. We won’t know this until January, but if that happens, we’re going to want to have done some estate and tax planning this year.

If the Democrats control Congress and the White House, there are things that could expire this year. Lower capital gains taxes and gifting rules that are much more liberal for estate planning purposes. You want to look at possibly paying some taxes this year at a lower rate than you might in the future. Again, it’s a little uncertain, but these are things that you should absolutely look at.

Maximize Your Deductions

Also, make sure you’re maximizing your deductions. It’s very important to make sure you maximize your 401(k). If you have some gifting that you’re trying to do for kids and grandkids, make sure you make those gifts this year. Take advantage of that.  Obviously, make sure your financial situation is in order first before you gift.

Take Advantage of Tax Laws Before the Year-End

Everyone should assume that taxes are going to go up in the future and I seriously doubt that they’re going to go down at all for a long time. Take advantage of some of these tax laws before the year-end. It’s tough to be specific here, so you should get a hold of a certified financial planner that’s a fiduciary, a fiduciary, or a tax specialist. Not just an accountant, but a tax specialist. They can help you decide if maybe you should pay some taxes this year so that you don’t have to pay taxes at a higher rate in the future.

Thanks for joining me and I hope you found this information helpful!