Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Clients who sell their home owe no capital gains taxes if the sale proceeds do not exceed $250,000, or $500,000 for couples, according to this article from the Los Angeles Times.
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When a tax-deferred account is part of an estate, failure to follow the tax rules correctly can result in a financial disaster.
February 17 -
It's not too late to help clients improve their tax situation for 2016 and beyond.
December 28 -
There's no point in waiting on new policy to initiate preparation that is protective and vital, no matter what the ultimate law may be.
March 2
To qualify for this exemption, sellers should have lived for at least two of the last five years prior to sale, according to an expert. They were also forced to sell the property for unforeseen circumstance, such as change in employment and health issues. Whether or not the client has a mortgage does not affect the capital gains calculation, a CFP writes.
Taxes are a major concern for wealthy Americans particularly those who are paying hefty capital gains taxes which add burden to their heavily-taxed incomes, a CFP writes at the Huffington Post. These clients opt for tax-exempt municipal bonds to enhance their after tax returns. Others consult a professional on how to use charitable giving as a tax-saving strategy. “By and large, the financial concerns of families who are considered upper middle class or even filthy rich are much different than the concerns of those whose incomes put them in the middle,” the advisor writes.
Retirees who have to take RMDs from their tax-deferred accounts may consider donating directly to a charity through a qualified charitable distribution to avoid the tax bite, according to this article from Kiplinger. Clients may also use a portion of the assets within the plan to purchase a qualified longevity annuity contracts. Another option is to buy life insurance using their RMDs instead of reinvesting the withdrawals.
Clients who have access to a 401(k) and IRA should understand the different tax treatments of these retirement accounts, according to this article from Fox Business. Contributions to a 401(k) and traditional IRA are tax-deferred, but withdrawals from these accounts are subject to income tax. A Roth IRA offers no upfront deduction but distributions in retirement are tax free. They are advised to consider the contribution levels, uses, withdrawal rules and investment options and fees when contributing to these retirement accounts.
Fifteen tax planning tips from analysts and industry experts advisers may consider in 2017.
Taxpayers should make donations to a qualified charity to ensure they receive a federal tax break, according to this article on Motley Fool. Clients also need to itemize their tax deductions to claim the charitable tax break. These clients can still claim a tax break even if they made non-cash donations and received a valuable item from the charity.
