With President Biden planning the first major federal tax hike in nearly 3 decades, higher taxes are inevitable for many Americans — and not just the wealthiest. Do you need a financial investigator and New York Times best-selling author to share how people can shield their savings?
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Take Action to Protect Yourself from Higher Taxes
Federal debt has surpassed the size of our entire economy for the first time since the end of World War II, and Americans will be paying for it for decades. Passing the $1.9 trillion COVID relief bill was just a start. President Biden’s wish list for government spending includes infrastructure, climate initiatives, and programs for poorer Americans and more. Biden wants to deliver on his promises to increase numerous taxes, including:
- Eliminate the Trump tax cuts.
- As much as double the capital gains tax rates on investments.
- Raise the corporate tax rate by 33%.
- Reduce tax advantages for so-called “pass-through” businesses, which would impact most small businesses, professionals and sole proprietors.
- More money for Internal Revenue Service enforcement (more IRS audits are likely).
With the administration looking for ways to pay for all this spending, “the reality is that they can’t possibly raise enough revenue taxing just the ‘wealthy,’” Pamela says. To help people protect their savings, she recommends the Bank On Yourself safe wealth-building strategy.
Here are six ways this strategy protects savers from higher taxes
- Funds can be accessed tax-free, under current tax law. The income isn’t reported to the IRS.
- Income isn’t subject to capital gains taxes.
- Reduces the taxes you may have to pay on your Social Security income. It’s fairly common, even if you’re a middle-income earner, to owe taxes on up to 85% of your Social Security benefit. However, the income you take under this strategy is not included when the IRS determines whether (or how much) of your Social Security check is taxed.
- Can reduce Medicare premiums. Income from conventional retirement plans like 401(k)s and IRAs can increase premiums by as much as 350%.
- Income tax-free money for your loved ones when you pass away. Since the strategy relies on a high cash value, low-commission, dividend-paying whole life insurance policy, it comes with an increasing death benefit that passes to your loved ones income-tax free.
- Tax-free cash to pay for long-term care, nursing home care and home health care. Many of these policies allow you to access a significant portion of your policy’s death benefit during your lifetime to pay for chronic or terminal illnesses.
“You can grow your nest egg safely and predictably every single year, protect yourself from taxes that can only go higher, and enjoy liquidity, flexibility and control of your money,” Pamela says.
About the Author:
Pamela Yellen is founder of Bank On Yourself, a financial investigator and the author of two New York Times best-selling books. Readers can get a free copy of her latest book, “Rescue Your Retirement: Five Wealth-Killing Traps of 401(k)s, IRAs and Roth Plans — and How to Avoid Them” here for a limited time.