Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Clients can maximize the tax benefit of charitable contributions under the new tax law by bunching multiple years’ worth of donations in a single year and direct the money to a donor-advised fund, an expert writes at The Wall Street Journal. Another option is to donate securities that have appreciated in value, as this will enable them to avoid the tax liability on the capital gains, writes the expert. Retirees who are 70 1/2 and older may also donate the required minimum distribution directly from their retirement accounts to charity and owe no taxes on the mandatory distribution.
Working clients have until the last day of the tax-filing season to make 2018 contributions to their traditional IRAs, according to this article on Morningstar. Although more taxpayers are expected to opt for the standard deduction, which increased under the new law, they can still claim the tax deduction for IRA contributions. That’s because the tax break for these contributions, including the funds socked away in health savings accounts are considered “above-the-line” deductions, meaning clients can claim the tax break regardless whether they take the standard route of itemize their tax deductions on their returns.
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These property tax deferral programs are available to older homeowners who want to postpone real estate taxes provided they remain living in their home.
August 28 -
Homeowners from both parties worry that rising property taxes could force them to sell.
November 14 -
The holidays are fast approaching, which means it is time to start doing some year-end tax planning.
December 3
Small businesses should brace for a decline in spending in the coming months as taxpayers are likely to get a small tax refund this year because of changes to the tax code, according to this article on Motley Fool. Fewer taxpayers are also likely to get a refund at all. Running promotions and launching a more aggressive online marketing campaign are some of the strategies small businesses can use to minimize the impact of consumer spending decline on their business.
An HSA is a tax-advantaged savings vehicle that clients can use to turbocharge their retirement savings, according to this article on USA Today. That’s because an HSA offers triple tax benefits- tax deferral on contributions, tax-exempt growth on investments and tax-free distributions for qualified medical expenses. “Longer-term advantages, after the age of 65, may include the payment of Medicare premiums and other long-term care expenses,” an expert says. “The HSA becomes an important aspect of both solving near-term medical expenses, but also for larger expenses well into retirement with those accumulated earnings.”
The uncertain tax and legislative environment means that year-end tax planning is more important than usual. To help clients and businesses prepare for filing season, here are helpful tips.
One frequent question tax professionals received from their clients this season has to do with their disappointment over their 2018 tax bill, which they expected to decline under the new law, according to this article on The New York Times. Experts explained that despite the lower individual tax rates, clients — especially those in high-tax states — are more likely to take the standard deduction instead of itemizing deductions on their returns, as they have seen a decrease in their deductible expenses thanks to the new caps to the state and local tax deductions. “But even if you can still itemize, your total deductions will be limited regardless, which may likely result in higher taxes,” an expert says.
