Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
If a client's recently converted Roth loses value, there's still time to undo the conversion to save money on the taxes, according to Kiplinger. Clients have until mid-October after the conversion to undo part or all of it through a technique known as recharacterization. -- Kiplinger
Clients who are retirement account beneficiaries can rely on this checklist to know if a distribution will be treated as ordinary income in the year they receive it, according to Morningstar. For example, distributions from a Roth retirement plan are not taxed. Even nonqualified distributions are tax-free to the extent the distribution represents the return of prior contributions. -- Morningstar.
Clients may be surprised when they learn the impact that getting married may have on their tax bill, according to The Street. For example, married couples who file jointly may have to pay twice the amount single filers give the IRS. Also, a new spouse's filing practices unchecked can result in higher tax bills. Clients who use the "married filing separately" status on their return may be able to shield themselves from mistakes and questionable filing practices. -- The Street
While there may be clients who have difficulties understanding annuities, most will want to reap the benefits of growing money on a tax-deferred basis, according to the Motley Fool. Used correctly, an annuity can generate steady income in retirement. However, these investments cannot be cancelled easily. Also, there are penalties for withdrawals made before clients reach the age of 59 1/2. Find out all the nuances before making the investment. -- Motley Fool
