Everyone is feeling the financial impact of the coronavirus crisis, even your high-net-worth clients. And while the CARES Act can certainly help those clients with their business taxes, their personal taxes are another situation all together.
Business owners affected by COVID-19 have the opportunity to receive help the fastest. From carryback provisions for net operating losses (NOLs) to an increased business-interest deduction limitation to the loosening of loss restrictions through partnerships or similar structures, clients with payrolls are the first to receive aid from the Federal government.
While the CARES Act certainly helps everyone, there are both positives and negatives when it comes to tax strategies for high-net-worth individuals. Of course, postponing filing till Wednesday, July 15, 2020 can be helpful, especially considering the recent direction of the market. Nonetheless, wealthy individuals without a business will see basically no change to their tax situation.
There’s been a lot of chatter about relief from mortgage payments, and how one could avoid paying mortgages for 90 days. Unfortunately, this a deferment, which will put you right back where you were before, just with a much larger single bill.
Wealthy individuals who don’t need distributions right now and are able to defer required minimum distributions from retirement accounts can benefit from the CARES Act. Not all retirement plans, however, allow for the Coronavirus-Related Distribution.
Overall, the benefits high-net-worth individuals can receive are somewhat limited, especially for those who don’t own a business.
