Our weekly roundup of tax-related strategies and news your clients may be thinking about. Special focus this week: Year-end financial moves.
Clients may consider giving shares of appreciable stock as a gift to their children or even parents to help lower their taxes, according to MarketWatch. They may also donate to charity through a donor-advised fund or a qualified charitable distribution, especially if they receive RMDs from their IRAs. If investors intend to donate a depreciated stock, they are advised to sell it and donate the cash instead so they can claim a capital loss that can be used to offset their investment gains. -- MarketWatch
Clients who want to give shares to charities are advised to donate stocks that have appreciated since the time of purchase, according to Kiplinger. If such stock has been acquired for more than a year, donating it would result in zero capital-gains tax due and a deduction that is based on the stock's current value. On the other hand, it is advisable to sell a depreciated stock and donate the proceeds to an organization, so the donor can use the extra losses to offset other gains and benefit from a deduction based on the stock's current value. In any case, clients should transfer stock to charities before 2014 ends in order to take deductions for the year. -- Kiplinger
As the year winds down, taxpayers are advised to use this time to examine their financial situation in preparation for next year. Three things that taxpayers can do during this time are to prepare their tax documents, rebalance a portfolio if needed to cut risk and diversify, and check the background of their financial advisors. -- Forbes
The holidays are an opportune time for households to engage in tax planning to save substantially on taxes when filing their 2014 returns, according to the Los Angeles Times. Taking account of the consequences of their financial decisions and maxing out retirement plan contributions should be part of the strategy. Taxpayers also should bundle expenses when claiming deductions, use up all the money in their flexible spending plans, and sell losing stocks to offset capital gains. -- Los Angeles Times
The Wall Street Journal offers still more year-end moves for clients. Clients may want to set up self-employed 401(k) accounts by Dec. 31, and make Roth IRA conversions, as well as using up the money in their flexible spending plans, says Eleanor Blayney, consumer advocate for the Certified Financial Planner Board of Standards. Their year-end tax strategy may also include tax-loss harvesting so they can reduce taxes for the current year, Blayney adds. -- The Wall Street Journal
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