The new year will ring in tax developments both good and bad for your wealthier customers.
It’s also good to recall the upcoming elections in 2020, which could well result in changes to the tax code, with the tone and direction to be determined by the outcome at the polls.
Wealthy customers should be aware of changes in income tax rates and brackets next year. The brackets are indexed, so they’ll be rising, while tax rates will decline. In 2017, married couples with incomes over $470,700 faced a tax rate topping out at 39.6%. Next year, the threshold will be $622,051, and the rate will drop to 37%.
The IRS has scheduled other changes that could affect your HNW clients. In 2020, the estate exemption will climb to $11.58 million, a $180,000 rise over the previous year. The gift exclusion will stand pat at $15,000. Maximum retirement account contributions have also been increased in line with inflation calculations.
Changes have been made to the rules affecting healthcare choices. The old mandate penalty assessed on people who lacked health insurance has been dropped, so anyone able to self-insure can now do so without taking a hit from the feds. However, some states still plan to penalize those who don’t have regular healthcare policies, so take care to examine local laws.
The standard deduction has been raised again, presenting planning challenges for people who hope to itemize deductions. Specialists recommend ‘bunching’ deductions and itemizing only every other year. For business owners and landlords, the qualified income deduction has been changed, a matter that calls for proper attention.
For more information, please read:
What Wealthy Clients Need To Know About 2020 Tax Changes | Financial Advisor