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Fact: When you pass, you will leave behind an estate, and somebody will need to settle it. Your estate may be worth a little or a lot, but there’s no escaping death and taxes.

So why do so many families put off their essential estate planning until push comes to shove?

Estate Planning Is an Act of Love

Early in 2021, Congress passed the American Rescue Plan which included a provision that increased the child tax credit amount and upped the age limit of eligible children. Normally, the credit was $2,000 per eligible child under age 17.

Today, in a whole new year, let’s talk about parts versus wholes. The theme is hardly new, but it bears repeating, lest we forget how essential they both are — to each other, to us, and to our financial well-being.

“The American marketplace is an economic jungle. As in all jungles, you easily can be destroyed if you don’t know the rules of survival… but you also can come through in fine shape and you can even flourish in the jungle — if you learn the rules, adapt them for your own use, and heed them.” — Sylvia Porter

In our last two pieces, we covered some tools of the tax-planning trade, as well as how to deploy them for tax-efficient investing.

However, tax planning isn’t just for your investments. Life happens. Often, we cannot predict its next moves, but we can weave each event into the tax-planning fabric of your financial life.

Over the last 3 years, the Internal Revenue Service has been engaged in a virtual currency compliance campaign to address tax noncompliance related to cryptocurrency use. The IRS’ efforts have included outreach to taxpayers through education, audits of taxpayers’ returns, and even criminal investigations.

Believe it or not, another year has rounded third base and is dashing toward home plate. That said, there’s still time to make a few good plays in 2021 while positioning yourself to score more in the year ahead. Here are six financial best practices for the record books. 

Your goal should be to get the IRS to owe you money. Of course, the IRS is not likely to cut you a check for this money (although in the right circumstances, that will happen), but you’ll realize the cash when you pay less in taxes.

KEY TAKEAWAYS

On November 19, 2021, the House of Representatives passed their proposed version of President Biden’s Build Back Better Act, which was substantially pared down from the original version. The Senate will now take up the legislation, and without question, there will be changes.