Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Funds built with these tax-advantaged bonds resulted in strong returns in recent years – and even no fees in a few cases.
There are ways for taxpayers to avoid taxes on cash gifts they give to their loved ones, according to this Huffington Post report. Clients may also be unaware that they qualify for a tax deduction for fostering a pet and for installing a swimming pool as recommended by a "medical practitioner" for their therapy. Homeowners can deduct their mortgage interest payments, but many of them miss out on this tax break. Some taxpayers could have enhanced their tax savings if they claimed a tax deduction for their retirement plan contributions.
Business owners can reduce their self-employment taxes by changing their business structure to an LLC or corporation and have it taxed as an S corporation, according to this article on Small Business Trends. This will enable them to avoid taxes on the distribution and owe taxes only on the salary they collect from the business. While clients can set up their business as a corporation or an LLC, they will need a CPA or a tax adviser who can help them avoid problems with the IRS by determining their salary and distribution amounts.
Begin planning now to minimize your client’s tax liability this year, Kiplinger reports. For example, advisers should recommend that clients begin contributing to their retirement plans to maximize the limits and tax breaks. Clients may also consider donating cash or appreciated investments to qualify for a hefty charitable tax deduction. They can also make pre-tax contributions to a flexible spending account to pay less on taxes for medical expenses or dependent care. Clients should also consider unloading some stocks from their portfolio to reduce risk; however they should do this over time to minimize the tax impact from the sale of these investments.
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Non-U.S. purchases of municipal bonds are up 32% from 2014. But not everyone is impressed.
April 21 -
Market valuations are generally high this year partly due to a lack of rate increases, but fourth-quarter positioning can still present opportunities.
September 27 -
Will the rally continue, or are the winning ways of this asset class nearing an end?
September 9
Although fewer companies are offering pension plans these days, having one is an option that deserves a second look from small business owners because of the benefits it provides, according to NerdWallet. For one thing, a self-funded pension allows small business owners to make bigger contributions than a 401(k) or an IRA. However, the contributions are tax-deferred and small business owners pay the tax once the money is withdrawn in retirement, at a time when they are a lower tax bracket.
A tax proposal to scrap state and local tax deductions could hurt Americans in high-tax states, but would force more investors to turn to municipal bonds, according to Barron's. Lawmakers are poised to keep the tax exemption for muni bonds' interest yields, and move that "would be a huge benefit" for the muni market, says an expert.
