Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Clients should consider taking advantage of the American Opportunity Tax Credit and the Lifetime Learning Credit to reduce the burden of college tuition and other related costs, according to this Consumer Affairs article. The American Opportunity Tax Credit could be worth as much as $2,500 in tax savings, while Americans can claim up to $2,000 in the Lifetime Learning Credit. “Not every student will be eligible,” an expert writes. “To claim the LLC, a taxpayer's modified adjusted gross income must be $65,000 or less, or $131,000 for married taxpayers who are filing jointly.”
A separately managed account is one option for investors who prefer a more personalized approach with professional management to mutual funds and ETFs; however they can have drawbacks, such as transparency and tax inefficiency, according to this article from CNBC. "Mutual funds are great, but you could say the same about penicillin," an advisor says. “It's a miracle drug, but some people are allergic.”
Clients have to pay taxes on Social Security benefits if they file federal tax return as an individual and their combined income is more than $25,000, according to NJ.com. People who are married and file a separate return will likely need to pay taxes on benefits. Social Security benefits are reduced if one claims before his or her full retirement age and if they exceed the annual earnings limit.
Tax columnists George Jones and Mark Luscombe of Wolters Kluwer put together a list of important changes from this year that will carry over into the next.
Investors looking to diversify their fixed-income portfolios should consider investing in municipal bonds and related ETFs, according to ETF Trends. Municipal bonds provide several benefits, including the rarity of bankruptcies and defaults, high rating and tax advantages. Municipal bonds, which have low default rates than the larger bond market, had 103 defaults since 1970, 72.8% of which were accounted for by competitive enterprises, 20.4% by general governments and 6.8% by muni utilities. Bond investors may consider options such as the VanEck Vectors AMT-Free Intermediate Municipal Index ETF (ITM) if they want attractive and stable yields through investment-grade municipal bond exposure in a diversified fixed income portfolio with a tax-exempt offering.
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Far from signaling industry hardship, increasing liquidations reflect the ETF industry’s ebullient growth.
August 24 -
Mutual funds are falling out of favor as planners embrace passive investing, according to a survey.
June 12 -
Advisers may want to point out to clients that protection against exchange rate fluctuations can have major consequences.
June 9
As the Trump administration is pushing for a major tax rewrite, most American households are not clamoring for tax cuts because they are not paying very much in federal income tax, according to this opinion article from MarketWatch. Based on a survey, distrust in the government, racism, immigration, health care, and tensions with North Korea are among the most pressing issues for most Americ
