Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Rich taxpayers can expect a substantial tax deduction if they donate appreciated stock to charity, according to The Motley Fool. Affluent people can also cut their tax bill substantially by claiming a mortgage interest deduction. Another strategy to get a considerable tax deduction is to max out the limits of tax-advantaged retirement saving accounts. -- The Motley Fool
Clients can expect their Social Security retirement benefits to be subject to taxes if they take withdrawals from their IRAs, annuities and other retirement accounts, according to USA Today. Deferring these withdrawals could mean bigger tax liability in the future, so retirees are advised to take withdrawals as early as possible to minimize the tax burden. If you want to make sure you're maximizing your after-tax income, take some of that 401(k) and IRA money and spend that down first. -- USA Today
Clients who are considering the sale of real estate property need to understand important terms and compute certain numbers, such as capital gains taxes and the principal residence exclusion, according to Fox News. They should also take time to study a 1031 Exchange, which allows them defer income tax on the sale of an investment property being swapped with another property. Those who may want to do this kind of swap will need professional help and should know about passive liability and the rules that apply to an exchange involving vacation homes. -- Fox News
Clients may lose their ability to claim up to $2,500 in the American Opportunity Tax Credit per offspring if the child gets substantial scholarship in college, according to Forbes. To continue getting the tax break, they are advised to report up to $4,000 worth of scholarship on their children's tax return. That way, clients will free an equal amount in qualified expenses to the tax credit every year. -- Forbes
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