How ABLE accounts can help clients with disabilities save: Tax Strategy Scan

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

How ABLE accounts can help clients with disabilities save
Following a law passed in 2014, people who became disabled before the age of 26 can save as much as $14,000 every year in an ABLE account without facing any tax burden, according to Consumer Reports. Just like a 529 college savings plan, ABLE accounts offer a menu of investment options and are available in various states. “This is a big step forward,” said an expert with the National Disability Institute. “Previously many people with disabilities have not been able to work even part-time because they would lose benefits.”

E-commerce business owners might owe a ton of unforeseen taxes
States are likely to step up efforts to collect sales tax on products and other offerings offered online and entrepreneurs should prepare for this possibility, according to this article in Entrepreneur. "As states across this country come under increasing funding pressure regarding their respective budgets, more and more of them are looking at sales tax revenue from e-commerce and remote sellers as a potential revenue-generating boon," an expert says. "That boon could completely blind side online businesses that aren't even aware of the growing importance surrounding this online sales tax issue."

Is EBITDA as bad as Buffett says?
Earnings before interest, taxes, depreciation and amortization — also known as EBITDA — may not be a good basis for valuing a business, however it can still be useful in other ways, according to this article on Morningstar. For example, depreciation is usually an estimated figure and may not accurately reflect economic reality, an expert says. "EBITDA lets you put companies in similar industries but with differing histories on a more level playing field. So, I can look at EBITDA and EBITDA margin along with the level of capital intensity to get a feel for the relative efficiency of two firms."

Fifteen tax planning tips from analysts and industry experts advisers may consider in 2017.
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Middle class will face higher taxes, lower house prices under Trump: Study
A study commissioned by the National Association of Realtors has found that middle class taxpayers are likely to see an increase in their tax bill and a decline in their home's value if the Trump administration's tax proposals clear Congress, according to this article on MarketWatch. That's because the Trump's tax plan calls for scrapping tax deductions that are valuable to homeowners, such as the mortgage interest deduction.

3 ways clients can avoid the financial death spiral of defaulting on student loans
Clients who have student loan debt should opt for an income-based repayment plan to avoid defaulting on their debt, according to this CNBC article. While they can expect their lender to forgive their student loan after 20 to 25 years, they would face a tax liability, as the forgiven amount is treated taxable income.

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Tax liabilities Sales tax Tax regulations Student loan debt Donald Trump Warren Buffett Morningstar