With every new president, we hear that taxes are going to be changed. Some promise to lower them in order to get elected, even though there is no way for them to go down while we spend the way we do, service our huge debts and keep the lights on. Some say they are going up, but only on “corporations, or the rich, or”…and they pick out a villain for everyone to hate. Those people, however, are the people that give politicians hundreds of millions of dollars in order to help them get elected. Those promises fade, get changed and loopholes that are plugged get unplugged. Most of what actually gets passed affects the people or industries that have the least effective lobbyist or no representation in Washington, as they can’t or don’t effectively fight back.
Will there be a new fair and balanced tax code, a flat tax, a wealth tax that the wealthy can’t find a way to get around? All unlikely outcomes, so how do you defend yourself? You focus on your personal situation. Get educated at a basic level first. Many people complain about their taxes, but then on examination they are in a low bracket and will feel overtaxed when they pay any tax at all. Business owners commonly complain about “getting killed” on federal tax, but when the tax return is reviewed, they actually paid zero federal and zero state tax, they are only paying self-employment tax (paying into their own Social Security future).
What people need to do is get a basic education and truly understand what taxes they actually pay. Am I paying income tax or is it actually self-employment tax? Is it capital gains tax that my mutual funds cause even though I’m not taking any money from them and not selling them (yes, that’s a thing)? Then when you know the taxes you pay, look at all the options you have to lower that kind of tax.
All of this can be done with the help of a tax planner. Not a preparer, but a planner. Those people are most often not CPAs, or even accountants, but financial professions that own tax offices and employ CPAs, but also understand the financial tools that can be used as countermeasures against higher taxes. Go find a planner, get a basic education on and about your tax return, instead of waiting for the news story that a president finally solved the problem for everyone. That story’s not coming.