Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Clients who intend to set up a bank account or mutual fund account as a holiday gift for their child are required to comply with the provisions of the Uniform Gift to Minors Act and the Uniform Transfer to Minors Act, according to this article on MarketWatch. They should account for the tax impact of giving away a hefty amount to their child on their estate plan, according to the article. "Depending on the rules in your state, the total amount of financial gifts to your child may be very important in determining the eventual taxes on your estate," the article says.
Although the tax law has reduced the individual tax rates, some taxpayers could face a tax bill instead of receiving a refund, the IRS says. "People really need understand their overall tax picture, and not assume they are going to have more money when they go to file," a CPA says in this article on CBS Moneywatch. "Don't assume you will get a refund because you heard about the tax law changes — you could have already seen it in your paycheck."
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Clients are willing to pay more for tax advice, but they’re still not getting it.
October 24 -
Recent tax laws added complexitynot to mention sticker shockto clients tax obligations. But with smart planning, you can alleviate some of the pain.
November 3 -
You’ll probably find administrators blocking the backdoor Roth IRA strategy more than anyone else, says Kimberly Foss, planner, author and Financial Planning contributor. That’s when you’ll have to adopt the role of educator, she says.
October 18
Retirees who need to take the required minimum distributions from their traditional IRAs can comply with this requirement by donating the money directly to a charity through a qualified charitable distribution, according to Yahoo Finance. The QCD will be counted towards the RMD but excluded from their taxable income, thereby allowing them to avoid taxation on the withdrawal. Retirees should not take the QCD simply because they want to avoid the tax bite, an expert says, adding that if clients are “big giver anyway, do it that way and it will lower your IRA balance and it will lower the tax you pay on your RMDs."
Clients may be better off rolling over old 401(k) assets into a new IRA once they change jobs, if the move will enable them to get more investment options and lower fees, according to this article on Kiplinger. Such an option will also help clients consolidate their accounts, receive professional advice and do a Roth conversion to boost their aftertax income in retirement. By moving the funds to an IRA, they can take a QCD to donate the mandatory withdrawal when they are 70 1/2 and older, allowing them to avoid taxes on the distribution.
Advisors share the individual presents they send investors for the holidays.
Dependent exemptions and deductions for unreimbursed employee expenses and moving costs are among the tax breaks clients can no longer claim as a result of tax overhaul, according to this article on Fox Business. Clients who pay an alimony as part of a divorce settlement can no longer deduct the payment on their tax return.
