Time to prepare clients for this retirement tax deadline: Tax Strategy Scan

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

What clients need to know about this fast-approacing retirement tax deadline
Retirees who turned 70 1/2 last year but failed to take the first required minimum distribution from their traditional retirement plans have until April 15 to make the withdrawal, according to this article on Money. Those who fail to meet the deadline will face a tax penalty equivalent to 50% of the RMD amount. Roth 401(k)s are also subject to RMD rules but the distributions are non-taxable, while Roth IRAs are not subject to the same rules and federal taxation.


Clients with an IRA? Forget taking this break on your 2018 return
Clients can no longer deduct their investment fees, custodial fees and other costs they pay in their IRAs on returns thanks to changes under the new tax law, according to this article on CNBC. “Before this year, my advice was always, ‘With IRA fees, pay them from the taxable account so that you get the deduction and the money keeps growing.’ No more,” says retirement expert Ed Slott.

Avoiding this oversight can save clients from costly and painful legal battles after a loved one has passed away.
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Clients need more advice — and advisors must do better analysis before making recommendations.
September 10
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Clients can boost IRA retirement savings with this strategy, but shhh! Avoid certain terms.
August 6
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3 common tax return errors you can easily avoid
Clients should avoid the mistake of shortchanging their standard deduction when preparing their returns, according to this article on Motley Fool. For example, seniors aged 65 and older can add $1,600 to their standard deduction amount if they are single, or $1,300 if they are married. Taxpayers should also ensure they use the right filing status and use the tax tables correctly to determine their tax liability.

These seniors can still get a break for charitable contributions
Retirees aged 70 1/2 and older who want to donate to charity have the option of making charitable donation directly from their traditional IRAs through a qualified charitable distribution, according to this article on Washington Post. The QCD will be counted towards their RMD but excluded from their taxable income. This means that they can opt for the standard deduction and reduce their taxable income without itemizing tax deductions on their returns.

10 smart year-end tax moves
The following tips may help clients minimize their liability.

Clients could be paying less in taxes with these 7 strategies
Taxpayers who want to reduce their tax liability are advised to reduce their taxable income and make deductible contributions to their IRAs, according to this article on AOL. They should also consider contributing to a health savings account, 529 plan and making charitable donations. Another strategy to reduce their tax burden is to make the most of all tax credits and deductions available to them.

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RMDs HSAs Retirement planning Trump tax plan 529 plans IRAs Tax liabilities Roth 401(k) Ed Slott
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