Prepare for the looming tax extension deadline: Tax Strategy Scan
Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
How to prepare for the looming tax-extension deadline
Taxpayers who applied for a tax return-filing extension in April have until Oct. 16 to file their returns, according to Yahoo Finance. These clients have the option to e-file, while those who will miss the extended deadline will have to file a paper return. Clients that file more than 60 days past the extended due date could face a penalty of 100% of taxes owed or $135, if they amount to less than that amount. The IRS has extended the filing deadlines for taxpayers in hurricane-hit areas to Jan. 31.
For women, a pay gap could lead to a retirement gap
Women receive lower wage income than men, and this could lead to a shortfall in retirement for women, an expert writes at the Des Moines Register. Women who are in this situation are advised to have a retirement plan, save consistently, delay retirement and invest aggressively, the expert writes. "When planning for your retirement, consider investment risk, inflation, taxes and health-related expenses — factors that can affect your income and savings."
States are targeting art collectors who don’t pay taxes
States are stepping up efforts to collect taxes on art purchases by collectors, according to MarketWatch. Art collectors may not have intended to evade taxes, as tax laws can be complicated, according to some financial professionals. “The rules aren’t clear, and there is a huge matrix of complexity people get trapped in,” according to one tax accountant.
The tax benefits of home ownership
Buying a home could help minimize taxpayers' tax burden, as homeowners qualify for certain tax breaks, according to the Austin American-Statesman. These tax breaks include the mortgage interest deduction, the Energy Efficient Property Credit program and other tax write-offs for energy efficiency home upgrades and interest paid on a home equity line of credit.
How to truly max out your retirement savings
Clients can max out their retirement savings by making the most of tax-advantaged accounts, such as IRAs and 401(k)s, according to this Motley Fool article. They should also contribute enough to their 401(k) to get their employer's match, and take advantage of catch-up contributions if they are 50 or older. Other non-retirement savings vehicles that clients use to turbocharge their savings are the health savings accounts and the 529 college savings plans.