Skip to main content

Potential Tax Law Changes Under New Biden Administration

With the change of Administration in Washington, it is likely significant tax law changes will be made in the coming year. The following highlights some of the potential changes in tax law we believe may be made to increase federal tax revenues as well as some potential actions that can be made in anticipation. 

Potential targets for tax increases as we see them

  • Increase in tax rates
  • Reduction or elimination of favorable capital gains and qualified dividend tax rates
  • Reduction or elimination of the qualified business income deduction
  • Reduction or elimination of immediate expensing of capital purchases
  • Reduction or elimination of business tax credits
  • Reduction or elimination of retirement savings incentives
  • Caps on deductible compensation of highly compensated employees

Strategies in anticipation of these concerns (actions to consider now, while benefits from the current tax law are still in place)

  • Sell assets eligible for favorable capital gains tax rates
  • Acquire investment and business property that is subject to favorable depreciation rules before potential law changes
  • In contradiction to the point above, delay acquiring investment and business property to save their write-offs for offsetting against higher tax rates
  • Delay selling business property that would generate a loss
  • While Congress would not want this to be the result of its actions, raise prices on products and services in anticipation of future higher tax rates

While these strategies may help to mitigate the negative consequences of future changes to tax law, there is a potential caveat. Typically in the past, mid-year law changes have been made effective on the date Congress first contemplates a change or at some future effective date. However Congress does have the ability to make retroactive law changes, for example back to January 1, 2021. 

Please contact us or your personal tax professional for more details or advice on specific responses that you might consider for your family or business.


Popular posts from this blog

Review: Form 1099 Payments to 501(c)(3) Organizations

Question: A church rented space from another church last year. Should it request a completed Form W-9 and issue Form 1099-MISC? Answer: Payments from one 501(c)(3) organization to another 501(c)(3) organization are not subject to Form 1099-MISC reporting. The IRS Instructions for Form 1099-MISC state that "payments to a tax-exempt organization" are exempt from reporting a Form 1099-MISC.  The following are typical examples of payments of $600 or more by a church which are subject to reporting a Form 1099-MISC: Rent paid to an individual (non-corporation) Payments for services rendered by individuals who are not employees (e.g. janitorial service, facilities, snow removal, guest speakers) Support sent directly to missionaries

Special Topic: U.S. Olympic Champion Ben Peterson's Autobiography "Road to Gold"

Road to Gold , by Ben Peterson We are privileged to serve our client Ben Peterson and Camp of Champs, the wrestling ministry he founded   and directs. Ben wrestled for more than 16 years, coached on a collegiate level for 28  years, and has directed Camp of Champs for more than 40 years. We have read his autobiography and found Ben's dedication to the sport and his faith to be inspiring. If you are looking for a good story we highly recommend Ben's  Road to Gold. In Road to Gold , Ben shares the lessons he learned throughout his upbringing and how they led him to achieve Olympic victory. Ben states a key element of his youth was the consistency of his parents. He was encouraged to read the Bible every day from an early age, which he now describes as the most stabilizing habit in his life. Throughout his story Ben also emphasizes the importance of confidence, solid goals, hard work, and consistency. These qualities helped Ben throughout his life and wrestling career, from learni

When you don't know what you don't know

Here at MinistryCPA, we recognize that many churches rely on volunteers and/or part-time treasurers and financial secretaries.  With this in mind, we seek to come alongside ministries in providing the much-needed support to ensure that they are operating in a manner that is both compliant with governing authorities and taking advantage of opportunities for improved stewardship of ministry and employer financial resources.  Please consider this brief checklist to determine if your ministry needs to look further into areas that could be classified as “We don’t know if we are compliant.” Please check all compliance requirements that are currently being met: File quarterly Form 941 or annual Form 944 with the IRS Issue Forms W-2 to all employees and File Forms W-2/ W-3 with SSA Ministerial Housing Allowance is only listed in box 14 of the Form W-2 – it is not included in box 1 Obtain Form W-9 from all individuals/businesses that are paid the cumulative total of $600 or more in the year f