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Start adjusting clients' 2019 tax plans now: Tax Strategy Scan

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

Start trimming your 2019 tax tab now
Clients are advised to modify their tax plan for 2019 as soon as they determined their liability for 2018 and the impact of the new law on their returns, according to this article on Kiplinger. The tax landscape is expected to settle this year following the flurry of major tax reforms in 2018. In terms of tax rules, “2019 will look very similar” to 2018, says Kyle Stuckey, a CPA with JFS Wealth Advisors.

A portion of a client’s Social Security benefits may be subject to federal income tax depending on their income levels.
U.S. Department of the Treasury Internal Revenue Service (IRS) 1040 Individual Income Tax forms for the 2016 tax year are arranged for a photograph in Tiskilwa, Illinois, U.S., on Tuesday, March 28, 2017. Due to the Emancipation day holiday, this year's income taxes will need to be filed by April 18 instead of April 15. Photographer: Daniel Acker/Bloomberg

For clients who failed to withhold enough in ‘18, the IRS has a nasty surprise
Many clients may be surprised to find that they will owe federal taxes or receive a lower refund this year because of changes to the tax code, according to this article on CNBC. Some of the valuable tax breaks are no longer available under the new tax law and the IRS has revised the withholding tables to reflect the new law, resulting in many taxpayers not having sufficient withholdings. “The people who are most likely to be surprised this year are the ones who lost some deductions they had last year and who didn't make changes to their withholding," says an analyst with the Tax Institute at H&R Block.

Taxpayers confused by the new law may be tempted to file extensions — here’s why they shouldn’t
Some tax preparers advise their clients to file for an extension, as they will need more time to better understand the changes under the new tax law and avoid unnecessary mistakes on their returns, according to this article on MarketWatch. However, clients will still need to pay their tax bill by April 15. “Filing an extension sounds like a great way to push off the work until later in the year, but you do need to pay your bill, and that means basically doing your taxes. It’s not an easy out,” says a tax specialist with NerdWallet.

Should your client itemize or take the standard deduction for 2019?
Although clients are more likely to opt for the standard deduction, which has increased under the new law, they should still check whether itemizing deductions could bring greater savings at tax time, according to this article on Yahoo Finance. Those who consider the standard deduction should check whether they qualify to take that route, as some are not allowed to take the standard deduction. Taxpayers can still claim above-the-line deductions even if they opt for the standard deduction and should prefer tax credits that reduce their tax bill on dollar-to-dollar basis.

What some clients tried to claim on their tax returns shows they often don't know much about accounting.
February 5

Don't miss these 9 tax write-offs
Although the standard deduction increased under the new tax law, some taxpayers can still save more if they itemize deductions on their tax returns, according to this article on Fox Business. Some of the deductible expenses that can bring greater savings at tax time are the charitable donations, retirement plan and health savings account contributions, mortgage interest and student loan interest payments. Self-employment expenses and medical costs are also tax deductible. Taxpayers can also deduct property and other state and local taxes, although the amount is capped to $10,000 under the new law.

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