Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Interest on municipal bonds is typically exempted from income taxes, but munis must still be factored into the calculations on modified adjusted gross income to determine deductions on other investments, according to Money. These include IRA contributions, student loan interest, self-employment tax and rental losses. Muni interest also factors into the new Medicare surtax and impacts how much a client pays in Medicare Part B monthly premiums. — Money
Highly appreciated company stock in a client's retirement account opens the door for a financial planning strategy that could potentially save them thousands, according to Kiplinger. Clients should move the securities into a taxable account rather than an IRA rollover to pay the tax and penalties based on the stock's cost basis and not on its full market value, and to defer income taxes on net unrealized appreciation until the stock is sold. — Kiplinger
Startup costs such as expenses on experimentation, advertisements and legal services may be deductible for newly formed businesses, according Business News Daily. Other examples include a maximum $25,000 deduction on the cost of a vehicle, office supplies and even snacks. — Business News Daily
The tax-sheltered 403(b) plan is often used by churches, hospitals, school systems and similar 501(c)(3) organizations with employers withholdings determined by salary-reduction agreements, according to the Motley Fool. This plan typically relies on an annuity contract offered by an insurance company, but may also be structured as a custodial account that invests in mutual funds. — Motley Fool
