Americans voted for higher taxes this year. How can you survive the coming tax tsunami set to kick off in 2021?
This coming year US property owners and residents face a slew of brand new taxes and hikes on existing taxes. For some that also comes at a time when their incomes already aren’t as strong as they were 12 months ago. On top of this many banks are raising their fees and creditors are cutting off access to existing and new credit lines. How do you stay ahead or even just afloat amongst this assault on your finances and ability to retain your home?
New York Governor Cuomo has called for new state income taxes on top of rising federal income taxes. The state is reportedly facing a $63B budget shortfall, though not enough for the governor to put off giving himself a new five figure pay raise amidst the pandemic.
Watch your income tax brackets. Many, many households may find it is better not to earn more and cast themselves into a much higher tax bracket for the next few years. New taxes on those who have the privilege of finding a job working from home have been proposed on top of these other taxes too. Be sure to build in a much larger share of your income to go towards taxes when budgeting your money this year.
Find Tax Saving Vehicles
While the rules on taxing these savings tools may well change soon too, you can still contribute for 2020 and take more breaks on your next tax bill. Consider maxing out contributions to HSAs, ESAs and self-directed IRAs and 401ks.
It has also been proposed that taxes on investments will be changed to be taxed at much higher regular income tax rates. Those changes may not survive the next two election cycles. So, invest with longer term gains in mind versus prioritizing shorter term gains and income for the next four to eight years.
Shop For Deals
If it’s not on sale, you can’t afford to buy it. This is a time for saving, not spending. Unless it is being offered on sale, hold off on buying it. Even when it comes to groceries, household essentials, and gifts.
Appeal Your Property Taxes
Property taxes are the biggest area of waste for most homeowners. Every year, almost half of all bills sent out are flawed and overinflated. Don’t throw away thousands or tens of thousands of dollars unnecessarily. You may need it to cover other tax bills in the coming years. On top of this expect property taxes to go up between more zombie homes and rising property sales prices.