Clients should be smarter about giving money this holiday season
Clients should be smart about giving money this holiday season
When giving cash gifts to grandchildren this holiday season, clients have options that can also help minimize their estate taxes in the future, according to this article on Morningstar. They may opt to contribute to the child's 529 college savings plan and owe no gift tax. They may also set up a custodial account under the Uniform Gifts to Minors Act or Uniform Transfer to Minors Act to owe a lower tax bill on the assets. Another option is contributing to a Roth IRA in the child's name, as the child's current tax rate will be lower than when he or she retires.
Year-end strategies to save money on taxes
Contributing to a tax-deferred retirement account is a year-end strategy for clients to enhance their tax savings, as these contributions are deductible, according to this article on Kiplinger. Clients who are sitting on losing investments may do tax-loss harvesting, or they may donate their winning holdings to a charity to avoid the capital gains tax they would incur from selling the shares. They may also defer collecting more income and prepay tax deductible expenses.
GOP tax plan makes these states a lot better for retirees
Residents of New York, New Jersey and California should consider relocating to other states as the final version of the tax plan would limit deductions for state and local income, sales and property taxes to $10,000, according to this article on CNBC. "Many people in these high-tax states who are on the cusp of considering retirement will reconsider where they're living – and that changes everything, including your estate planning and retirement planning," says a tax and estate planning attorney.
Tax bill could spur more IRA gifts to charity
Charitable rollovers are an option that prompts many retirees to donate directly to a charity from their IRAs, according to this article from Forbes. That's because the donation is counted towards their required minimum distribution, but is excluded from taxable income.