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3 ways to help clients maximize their tax readiness: Tax Strategy Scan

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

3 ways to help maximize your portfolio’s tax readiness
As the end of the year approaches, clients should limit their capital gains distributions to minimize their tax bill, according to this article on Nasdaq. They should also transfer tax-efficient investments to taxable accounts and less tax-efficient ones to tax-advantaged accounts. One tax-efficient investment option to consider is municipal bonds, which offer tax-free yields. “The interest from municipal bonds is generally free from federal taxes and often state taxes as well, depending on your state or where you file-savings that may potentially translate into higher returns,” writes Hollie Fagan, head of BlackRock’s RIA consultant team.

90% of workers could botch their benefits picks
An Aflac survey found that 92% of employees decided not to make any changes to their retirement and other workplace benefits, CNBC reports. It is important that they review their benefits and make updates every year, if necessary, according to experts. For example, clients should get a high deductible health plan, including a health savings account, which offers triple the tax advantages and makes for a good retirement vehicle.

The hidden costs of variable annuities and how to avoid them
Retirement investors who consider buying annuity products are advised to check the fees before making a decision, as these costs could reduce the investment earnings, according to this article on Kiplinger. These fees include surrender charges, mortality, expense and administrative fees, as well as earnings caps. These investment management and other charges are not treated as tax deductible expenses.

How do capital gains affect AMT?
Long-term capital gains are taxed at a lower rate than short-term gains and do not directly lead to a change in the investor's alternative minimum tax, according to this article on Motley Fool. However, capital gains are taxable income, and investors will lose a certain portion of their AMT exemption once the capital gains boosts taxable income above a certain threshold.

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

5 IRS tax benefit adjustments your clients should know in 2018
The IRS announced changes for deductions and exemptions on 2018 income, which will be reported on tax returns in 2019, according to USA Today article. One of these changes concerns standard deduction, which has been increased by $150 for single taxpayers and couples filing separately, and $300 for joint filers. Personal exemption for the 2018 tax year also increased to $4,150.

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