As President-elect Biden prepares for his return to the White House, Americans are wondering how he’ll handle everything from COVID to the current economic slump. Taxes also represent a common source of concern.
While it’s impossible to know exactly what the IRS will look like under the future Biden administration, we can look to both the Obama era and campaign vows for clues. Biden’s agenda will also depend on the willingness of Congress to play ball.
With all that in mind, the following are a few of our best predictions for taxes and the IRS in the next four years:
Expanded Tax Credits
While many of Biden’s campaign promises will be difficult to implement, real opportunity exists to expand certain tax credits. The easiest to pass will likely be business-oriented. For example, future credits could encourage companies to keep jobs on American soil or to invest in research and development.
Credits that benefit families are also possible. Many are hoping for additional payments through the Child Tax Credit or the Child and Dependent Care Credit. Others may benefit from a Biden proposal that calls for a 26 percent refundable credit that applies for every dollar contributed to a 401(k) or IRA.
Simplified Taxes for Gig Workers
The gig economy has produced all kinds of confusion for self-employed individuals and contract workers. Many struggle to determine what, exactly, they owe, and whether they can take advantage of credits or deductions.
While the Treasury Department currently requires contracting platforms (such as Uber) to provide tax paperwork to reflect earnings, tax documentation only needs to be passed on when earnings exceed $20,000. Under the Biden administration, updated Treasury Department rules can deliver greater transparency for gig workers.
No matter what happens when President-elect Biden takes office, it’s worth your while to seek tax guidance from an expert. At the Highland Tax Group, we can assist you with several aspects of dealing with the IRS. Reach out to learn more about our services.