Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
The new tax law is a bane for large corporations especially for those that are structured as C corporations, but not for small businesses that are not organized as such, according to a Motley Fool expert. While the law offers a hefty tax deduction for pass-through income, an expert says that the rules can be complicated. "The tax cut for small business pass-through income is a hard-to-understand, convoluted mess that CPAs will be trying to figure out for their clients for months, maybe even years, to come,” the expert writes. “Instead of a large, straight reduction of tax rates on income, the law offers a meager tax cut via a complex formula."
Clients who consider a mortgage or home equity loan are advised to understand the rules for mortgage interest deductions on home loans, which have become "trickier" under the new law, according to CBS Moneywatch. While the law doesn't apply to existing mortgage and home equity loans, it will affect future loans, according to an expert.
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The Minnesota Society of CPAs recently conducted its annual CPA member survey about the most strange and unusual tax deductions proposed by clients. The responses included everything from pets and wedding rings to gifts not given.
February 17 -
The weird, the oddball and the most far fetched tax deductions clients have tried to take on their returns.
February 9 -
Just in case clients are looking to cut few corners, here are some of the most common tax frauds that the agency is ready to pounce upon.
February 23
Clients who consider an annuity are advised to know the tax consequences of their decision, according to CNNMoney. Annuities can be qualified or non-qualified and are subject to different tax treatments. There are also estate tax consequences as well as tax penalties to consider, so consulting an advisor is necessary. "It is also important to discuss the overall financial and investment implications of the annuity with someone other than the person selling the annuity," an expert says.
For many entrepreneurs, retirement planning takes the back burner, putting their future security at risk, according to U.S. News & World Report. Planning for retirement includes setting up a retirement account which offers various benefits, such as tax breaks and compounded growth. "In addition to helping to recruit, retain and motivate employees, a well-designed business retirement plan could offer a significant wealth-building opportunity for the owner and employees, not just for their future retirement, but while they are working towards retirement as well," an advisor says.
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.
New graduates will have a peace of mind if they start paying off their student loan debt and saving for retirement, Morningstar's Christine Benz writes. "With a new grad's long time horizon, however, assets invested in stocks within a tax-sheltered vehicle like an IRA or 401(k) plan have one of the highest potential long-term returns of any possible capital allocation," Benz writes. "Return on investment can be a valuable compass for multitaskers throughout their financial lives, helping them identify the best uses of their capital at any given point in time."
