Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
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Congress created a juicy new tax break, yet hundreds of thousands of clients still don’t know if they can claim it.
March 13 -
Sometimes, crunching the numbers shows surprising results. Here’s how advisors can evaluate the tradeoffs of relocating to regions with lower taxes.
March 27 -
Holiday parties and team-building outings may still be deductible. What about entertaining prospects over dinner?
April 24
Clients may be better off focusing on the tax benefits of estate tax exemption, favorable capital gains tax rates and charitable contributions as they will bring greater gains than those from the new tax breaks under the new law, according to this The New York Times article. “You have to be careful making permanent decisions based on a temporary law,” an expert says. “This tax law is a temporary provision because most of the individual tax provisions sunset at the end of 2025.”
Older working clients who opt to file for Social Security before full retirement age are advised to account for the impact of their wage income on their benefits, according to this article on CNBC. That's because their benefits would be reduced temporarily and up to 85% of their benefits will be taxed if their combined income exceeds a certain threshold. Greater income may also push them to a higher tax bracket, which could mean surcharges for Medicare. "If you're a professional and you continue to work, you can be subject to the surcharges pretty easily. It's good to at least anticipate it if it's unavoidable," an expert says.
Clients who inherited a house will owe no taxes on capital gains if they opt to sell the property after the original owner's death, according to this article on Los Angeles Times. Thanks to a “step up in basis,” the house will assume a new value based on the property's market value at the time of death. "So if it’s worth $400,000 when you die and your heirs sell it for $400,000, no capital gains taxes will be owed on the sale."
Clients with high-deductible health care plan should take advantage of the opportunity of opening a health savings account, according to Morningstar. An HSA is funded with pretax dollars, offers tax-free growth on investments and provides tax-exempt withdrawals for qualified medical expenses. Those who have low-quality employer-provided HSA have the option of using the "captive" HSA to avail of automatic payroll deduction and moving the funds periodically to their chosen HSA, according to an expert.
A majority of affluent Americans are likely to adjust their financial plans under the new law, according to the AICPA. Here's how advisors can help.
Seniors who are in their first year of retirement are advised to create a budget and a backup budget to better manage their finances, according to this Motley Fool article. They should also identify all available income sources, such as Social Security and pensions, as well as explore new income streams, such as tax-free municipal bonds. Clients should also try to seek professional advice to avoid costly financial mistakes.
