Federal tax law may or may not change soon. For now, wealthy clients should turn to familiar tax tactics to help their 2021 tax situation.

“The Biden administration has made their intentions clear. Investors are likely to face higher taxes in 2021, whether it be an increased corporate tax rate, a lower estate tax exemption level or revisions to treatment of capital gains or losses for long-term investors.” said Travis Penfield, CEO and founder of 49 Financial, part of Thrivent Advisor Network, in Austin, Texas.

“The biggest fear is that, with the significant deficit through the various Covid relief [programs], tax increases are a foregone conclusion,” said Brent Lipschultz, partner in the Personal Wealth Advisors Group at EisnerAmper in New York City.

“Many wealthy taxpayers still take a do-it-yourself approach to preparing their taxes. They need to consult a professional,” added Dan Henn, a CPA in Rockledge, Fla. “When they can get to the point their money works for them ... the doors open to many additional tax provisions.”

Good tax approaches now include continued tax-loss harvesting, charitable gifting for appreciated assets or increased allocation to such tax-advantaged holdings as municipal bonds, Penfield said. “We have historically low capital gains rates, and due to the high level of monetary and fiscal support, many investors have the good problem of holding highly appreciated assets,” he said, adding “we’re not taking the capital gains rate for granted in 2021 and beyond.”

High-net-worth taxpayers and wealthy families who are stewarding generational family wealth must be prepared to quickly make decisions as early as the first quarter of 2021 and not necessarily by year’s end in some instances, said JoAnna M. Fellon, a CPA and lead partner of private client services at accounting firm Friedman LLP in New York City. “History has given us a solid glimpse into how these tax modifications will be implemented: slowly and with time to address before their full enactment.”

How much time? Penfield predicts that the pandemic will delay any change to the tax regime until 2022, perhaps sooner should the vaccine program accelerate timelines for reopening the economy.

Any new tax changes will probably be phased in over two to three years, said Brian Stoner, a CPA in Burbank, Calif. “I still feel even if the Senate is a 50/50 split, it’ll be difficult for many of Biden’s tax law changes to pass,” he added. “Some may be buried in committee or not brought to the Senate floor.”

One idea Stoner has been discussing with business owners who received PPP loans and who plan to file for loan forgiveness is the possibility of Congress passing a law in 2021 making all the expenses that the loans paid deductible.

“If so, they should file extensions on their business or personal returns, or both, to make sure that if a law passes they don’t have to file an amended return to take advantage,” he said. “They have until the extension date to file, and if the returns are prepared and ready to go with all taxes paid, there’s no penalty wait until the law is changed or the extension runs out.”

“Invest in real estate for the passive income and potential tax benefits,” Henn said. “Start a business. A lot of new businesses are started in a crappy economy. If you can make it in that environment, you can make it any time.”

A Roth IRA conversion also makes sense especially if an individual has net operating losses generated from a pass-through business. “This could defer retirement plan taxes for years to come,” Lipschultz said. “And consider opportunity zone investments or other capital gain minimization or deferral strategies, given the record stock market.” He also recommended looking at the excess business loss and net operating loss rules expanded by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

“Stick to the norm and defer income and accelerate deductions, at least for the time being,” Lipschultz said.