How tax reform could impact retirement savings: Tax Strategy Scan
Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Reform could change the way clients save for retirement
Clients could expect changes to their retirement as lawmakers are looking at scrapping individual tax deductions, including the tax break for retirement plan contributions, as part of the overall tax reform, according to this article on CNBC. "You get the sugar high if you tax retirement plans right now for tax reform," an expert says. "But it's going to have a drain on the federal Treasury in the out years because you won't be getting that revenue back in."
A mid-year tax tune-up
Summer is the season for clients to make adjustments to help improve their tax situation, according to this article on the Street. For example, taxpayers who filed for an extension may want to prepare their return now instead of waiting until October. They may also check with their human resources department to report recent life events, such as marriage, divorce, or birth of a child, which could have implications. Midyear is also a good time for newly self-employed clients to organize their records and ensure they have paid their quarterly tax payments.
Will a corporate tax cut benefit the middle class?
Treasury Secretary Steven Mnuchin says that proposed corporate tax cuts would make U.S. businesses more competitive and benefit the middle class, according to this CNNMoney article. A chief economist at Tax Analysts shares the same opinion, yet is uncertain as to the extent of this benefit. As other countries reduce their corporate tax rates to increase their competitiveness, "it's more important than ever that the United States lowers its rates to remain competitive and not lose investment and jobs to foreign competition," the expert says.
4 retirement strategies to guarantee monthly income
Retiree investors should consider buying municipal bonds to ensure that their portfolio generates the needed monthly income, according to the Motley Fool. Compared with corporate bonds, municipal bonds provide interest yields that are exempt from federal and possible state taxes. Muni bonds are also an excellent choice for investors who need to reduce their tax burden without affecting their overall returns.
Eligible taxpayers can now qualify for a waiver of the 60-day time limit and avoid possible taxes and penalties on early distributions, if they meet certain requirements.August 25
Either a Clinton or Trump presidency could potentially bring changes in estate tax laws, so start preparing now.August 29
6 little-known tax deductions for clients that run a small business
Small business owners qualify for many tax deductions, but many of them miss out on these breaks that could enhance their savings come tax time, according to this article on CBS Boston. These overlooked tax breaks are the home office deduction and self-employment tax deduction. Small business owners should also know that magazine subscriptions, advertising costs, furniture and office supplies are tax deductible business expenses.