Americans will have decided who they want leading the nation and the policy directions they want the government to pursue for the next four years by Nov. 3. That decision is being made against a backdrop of an ongoing COVID-19 virus pandemic, brutal politics and continuing civil unrest.
Many taxpayers may face decisions that could have implications far beyond 2024, say three professionals whose business it is to advise Arkansans on matters that affect their clients’ pocketbooks in the short and long term.
Going into the Nov. 3 election, the two topics garnering the most attention in the market, said Jason Jennings of Searcy, were “politics and COVID-19.” Jennings is a financial adviser with Crews & Associates.
The measures taken in early 2020 by the United States and other nations in an effort to get a handle on the COVID-19 pandemic — restricting travel, closing “non-essential” businesses and implementing social distancing and mask-wearing policies — quickly had financial consequences.
The S&P 500 stock index plummeted 34% from its high in mid-February to its bottom on March 23. That drop is said to be the swiftest decline in the history of the index. However, those losses were fully made up by the third week of August, less than five months later. Stocks were up more than 8% this year through late October. The market has been buoyed by investor optimism that the country will find a vaccine or some treatment for COVID-19, Howard Silverblatt, a senior analyst at S&P Dow Jones Indices, told CNBC.
During the period of the swift decline, Jennings said, Crews & Associates was fortunate to have “clients who are good listeners” and understand that the market is subject to fluctuations.
“We don’t have a lot of ‘doomsday preppers’ who think it’s going to hell in a hand basket,” Jennings said.
Savvy investors realize a presidential election can have implications for the market, Jennings said. Therefore, it is important to have what he calls “a pretty good feel for our clients’ concerns.” He does that by having meaningful and detailed conversations with his clients to develop a long-term financial strategy. “If we do our jobs going in,” Jennings said, their clients’ strategies should be sound for the long haul. While “there could be a pullback or a hiccup,” Jennings said, “nobody’s hitting the panic button.”
Jonesboro attorney Chad Oldham’s practice areas include estate planning, elder law, probate and trust administration, estate and trust taxation, charitable and not-for-profit planning, business succession, wealth preservation planning and special needs planning. Because of his areas of practice, he recently has seen a number of hardships tied to the pandemic, with the most troubling instances occurring around healthcare situations.
He has handled at least two executions of documents outside care facilities, with documents prepared “over the phone … while I stood outside.”
“I think people [were] seriously concerned about health issues of all kinds during this past political season,” Oldham said. “Healthcare in general was brought to the forefront” by the election, he said.
Oldham said he believes the pandemic “could have spurred people to take a look at getting their affairs in order.” Among the at-risk population, he said, “We’ve seen an uptick in clients who want [legal assistance] in basic estate planning, end-of-life-decisions, DNR [do not resuscitate] orders, living wills” and other advance planning directives, he said.
Whether clients come to him for advice regarding financial planning or wealth preservation planning or for other legal advice, he always encourages them to focus on the difficult long-term healthcare pre-planning decisions that can have financial implications for them or their families.
Brent Stidman of Jonesboro, a certified public accountant and the managing partner of the accounting firm of Jones and Co. Ltd., said “there are just a lot of unknowns” heading into the new year regarding how clients will handle some aspects of their 2020 tax returns.
“I think we’re going to see tax changes” in the new year, Stidman said, making it difficult to advise a client whether to sell a certain holding before the end of 2020 or to wait.
“A lot of people make decisions based on how much tax they’re going to pay,” he said.
Stidman said this year is “bird in hand,” meaning accountants and their clients know what the rules are. “While the ultimate tax plan is defer, defer, defer,” Stidman said, “It might be better to pay now.”
That would be especially true if the occupant of the White House and the makeup of the Congress make it seem likely that 2021 tax rates will be higher than 2020.
Many businesses took advantage of the Paycheck Protection Program, or PPP, loan program that was a part of the broader COVID-19 relief program called the CARES Act. Stidman said, “When you read the CARES Act, the intent was for them [PPP loans] not to be taxable but the IRS has said ‘Whoa, hang on here,’” Stidman said. The IRS has indicated that if necessary business expenses were paid by PPP funds, they may be taxable, he said.
“We’re waiting to hear if they’re going to fix that. [Pres. Donald] Trump says he’ll fix that, but I think both parties will fix that. There are just a lot of unknowns and it is hard to advise taxpayers,” he said.