On July 22, 2024, US Vice President Kamala Harris and Second Gentleman Douglas Emhoff landed from Air Force Two in Wilmington, Delaware, USA.
Erin Schaaf | via Reuters
As Vice President Kamala Harris runs for the nation’s highest office, her personal financial records are coming under new scrutiny.
Experts say recent tax filings show she and her husband, Second Gen. Douglas Emhoff, kept their finances largely simple while serving as vice president.
“Her returns are pretty basic,” said Craig Hausz, a certified financial planner and certified public accountant who is CEO and managing partner of CMH Advisors in Dallas.
However, this approach can cost the couple as they are left with unclaimed tax savings through additional deductions and other missed financial strategies.
The financial disclosure could raise some red flags for her public career. Unlike most other Americans, Harris and Emhoff can avoid missing out on those savings.
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“Even if she doesn’t win the presidency, as a former vice president, she always has a lot of money coming in,” said Carolyn McClanahan, CFP and founder. life planning partner In Jacksonville, Florida.
“They’re never short of money, so they really don’t have to worry too much about their (tax) efficiency or how much money they save,” said McClanahan, who is also a member of CNBC’s FA committee.
Harris’ office had not responded to a request for comment as of press time.
Catherine Valega, a Boston-based CFP and enrolled agent and founder of Green Bee Advisory, said the couple’s recent tax filing mirrors the situation of millions of other Americans.
“They took a conservative approach and it was the right thing to do,” Valega said. “You’re not going to see them trying to do anything super creative here to reduce taxes.”
What tax savings Harris might have missed
Overall, Harris’ return would have been more aggressive in reducing tax liabilities, experts say.
House explained that “someone like her would probably have more deductions,” specifically for her book income.
So far, Harris has reported total book income of $7,272 in 2023, with $1,273 in “commissions and fees” deducted from a single transaction. By comparison, her 2021 book income was $452,664, with the same deduction of $65,951.
“If I were giving her advice, I would say, ‘Let’s keep it as simple as possible so there’s no topic,'” House said. “She does a really good job at it.”
‘A little too conservative’ on cash
Another potential missed opportunity, experts say, is Harris’ cash distribution, with bank account interest reported at $50,603 in 2023, up from $6,054 in 2022.
Bank account yields have been trending higher following a series of interest rate hikes by the Federal Reserve. But Harris’ surge in interest could mean they have a large cash allocation, which could be “a little too conservative,” House said.
“They missed out on the growth of the stock market,” he added.
However, Valega said a cash distribution may be a good option depending on their short-term financial goals and other investments.
Once the Fed starts acting, yields will fall Cut interest rates again. Meanwhile, earning $50,000 in FDIC-protected cash is “a pretty good deal,” she said.
McClanahan said Harris and Emhoff may not get the best returns on their cash, depending on whether the money is locked up in certificates of deposit or held in lower-yielding savings accounts.
McClanahan said having a lot of cash on hand could give them the financial flexibility they need, especially if Emhoff takes a significant pay cut to become a second gentleman.
“When you’re a politician, it’s good to have a lot of cash so you can avoid spending headaches,” McClanahan said.
More money for retirement
Harris can also put more of her earnings into a tax-deferred retirement account to increase tax savings.
“Although she could have put money into a retirement plan, she didn’t need to,” McClanahan said.
McClanahan said the hope is that Harris will be able to maximize her use of the Thrift Savings Plan, a retirement savings and investment plan for federal employees.
Additionally, she can contribute to a Simplified Employee Pension Plan (SEP), a variation of an IRA, to further boost her retirement savings, she said.
McClanahan noted that while the donations may help Harris save taxes, she already has retirement security through pensions from her time as California’s vice president, senator and attorney general. In addition, she will receive Social Security benefits based on her payroll tax contributions to the plan.
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