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A guide to couples financial therapy: Tax Strategy Scan

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Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.

A guide to couples financial therapy
Clients who receive a windfall, such as an inheritance or the sale proceeds of a family business, are advised to discuss how they plan on using the money with their spouses, according an expert at Motley Fool. They should make themselves aware of certain tax rules if the inheritance is in a retirement plan, such as a 401(k) or an IRA. Those who receive investments outside of a retirement account may sell the assets without any tax consequences because of what’s known as a stepped-up cost basis.

Selling rental property to offspring in installments may avert tax bite
Clients who intend to sell a property to an adult child have the option to sell it on an installment basis, but they are advised to consult an accountant because the rules can be complicated, according to this Washington Post article. This strategy could minimize the tax bite and allow them to pay the tax bill over a longer period of time. Before making a decision, they need to compare their tax liability from making an outright sale and the overall tax payments if they take the installment option.

Trends and takeaways from 2017's first half
Investors who intend to evaluate their portfolio this time of the year may want to review their asset class exposure, as stocks continue to beat other investment types, writes Morningstar's Christine Benz. "If it's time to lighten up on stocks, stay attuned to potential tax consequences," according to Benz. "Selling appreciated stocks may trigger capital-gains taxes, which is why it makes sense to concentrate rebalancing efforts in tax-sheltered accounts."

Fifteen tax planning tips from analysts and industry experts advisers may consider in 2017.
December 5

How to get a jump on saving for retirement in your 20s
Clients in their 20s will be better off contributing to a Roth IRA than a traditional IRA, according to this article on CNNMoney. Although they get upfront tax deduction for contributions to a traditional IRA, they are expected to pay taxes when they start withdrawing the money in retirement, at a time when they are in a higher tax bracket. Contributions to a Roth IRA are not tax deductible, but the tax bill will be lower since they are in a lower tax bracket.

3 smart ideas to help limit taxes on your RMDs
Retirees have to start taking RMDs from their tax-deferred retirement account as soon as they reach the age of 70 1/2, and they could face a big tax bill if the withdrawal is substantial, writes an expert at the Des Moines Register. To minimize the tax bite on RMDs, clients may consider converting some traditional IRA assets into a Roth account, the expert says. They can also avoid the tax liability by donating the RMD directly to a charity, or defer the taxable distributions by continuing working past the age of 70 1/2.

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