2020 Financial Services Year-End Tax Planning AlertAnchin AlertDecember 8, 2020
As we publish our annual year-end tax planning alert, we are frequently reminded that 2020 is no ordinary year. What began as a normal filing season was extended to July 15, 2020, and came with other ramifications of the COVID-19 pandemic -- quarantine in place, working from home, CARES Act, social and economic turmoil as well as a still-unsettled election and political environment.
The Tax Cuts and Jobs Act of 2017 (TCJA) made sweeping changes to income taxation, estate and gift taxation and international taxation. Since enactment, the Internal Revenue Service has continued to provide guidance in many areas, some of which are addressed in this alert while some require further clarification. This has created many challenges for individuals, businesses and tax professionals in addressing certain tax issues.
All of this has created opportunities as well as areas of caution for taxpayers. In addition to the current second wave of COVID-19 and continuing economic uncertainty, tax rates could change depending on the election results. The prospect for increasing tax rates could hinge on control of the Senate, especially if President-Elect Biden enters the White House in January (as currently appears to be the case). While a change in control of the House of Representatives has not occurred and is not anticipated, control of the Senate is still up for grabs with two Georgia Senate seats due for run-off elections on January 5, 2021.
With many facing difficult and uncertain times, solid financial and tax planning is required now more than ever before. The sooner that one focuses on their tax situation and the available tax planning opportunities, the more likely they are to put themselves in a better tax position. We know that the changes under the TCJA and CARES Act as well as related guidance that we have received to date may be weighing heavily on your mind. While we cannot predict the future, we can assist you with your tax planning.