Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Clients should make sure they take the right tax break for college expenses, pay the right amount of tax on investments they sold, and claim the excess amount withheld for Social Security taxes when filing their tax returns this year, according to Time Money. Taxpayers also need to take tax deductions for their traditional IRA contributions and use of home premises for work-related purposes, and to avoid overpaying taxes on retirement distributions. They should remember that their charitable donations as well as their investing and tax expenses merit tax breaks. -- Time Money
Long-term capital gains are taxed by several rates depending on what kind of stock and an investor's federal income tax bracket, according to MarketWatch. This article discusses details on the following: investment securities' 0%, 15% and 20% rate; investment real estate's 25% rate; collectibles and small-business stock's 28% and 3.8% Medicare surtax rate and the 0% for homes and small-business stock. -- MarketWatch
Taxpayers are advised to spend their tax refund wisely, such as paying down their bad debt, according to The Motley Fool. They may also put up an emergency fund using the tax refund, or save the money for their retirement. Investing the tax refund in stocks and funds is also a very viable option, as the money can grow because of compounding. -- The Motley Fool
Clients can use investment losses to offset capital gains they will have any time in the future, according to Time Money. They can also use up to $3,000 in losses against their ordinary income for a given year, provided they use the losses to offset their capital gains that year. Their spouses will also inherit their losses when they die, and the spouses can use these losses to offset their capital gains or ordinary income. -- TimeMoney
Taxpayers are entitled to tax breaks for loans they made within the year, according to MarketWatch. These tax benefits include tax deductions for interests on home-mortgage debt, home-equity loans, and vacation homes. Taxpayers can also apply for tax breaks for interests on investment expenses, college loans, 401(k) loans, car loans, other consumer debt and small business loans. -- MarketWatch
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