Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Although business owners stand to gain from the new tax law, changing their business structure may not be necessary to maximize these gains, according to this article on Crain's Detroit Business. "There's a whole laundry list of things you have to think about today, as well as what you're going to do in the next five to 10 years, to really be able to say whether or not it makes sense to change your entity structure," an expert says. "C corporations aren't necessarily going to give you a lower tax rate."
As the tax season commences this month, taxpayers will start receiving their W-2, 1099s and other tax documents that offer vital information about their financial health, writes Morningstar’s Christine Benz. "[T]hese forms can yield valuable intelligence — about your income trends, your investing habits, and whether you're taking sufficient advantage of tax-sheltered investment vehicles, among other issues.”
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Advisors should contact every client who did a Roth conversion in 2017 to discuss a key change in tax regulations, Ed Slott says.
December 4 - FP magazine
It’s the Roth’s 20th birthday. Where is everyone?
November 20 -
IRA balances are up, and so are divorces, particularly among baby boomers. These so-called gray divorces have roughly doubled over the past 25 years, according to the Pew Research Center.
August 31
Clients who expect an inheritance from their parents should educate themselves to avoid unnecessary issues and maximize the windfall, according to this article on Kiplinger. For example, they should know the impact of taxes on inheriting an IRA. Withdrawals from the account are taxable, but the beneficiaries may opt for a "stretch" IRA, which will allow them to keep the funds in the account while taking withdrawals based on their life expectancy.
The weird, the oddball and the most far fetched tax deductions clients have tried to take on their returns.
Tax deduction for retirement account contributions is one of the valuable tax breaks for high-income taxpayers, according to this article on Motley Fool. Rich taxpayers can also make the most of the tax deductions for their mortgage interest payments and charitable donations. Those who invest in equities should hold on to their investments for at least a year before selling, as capital gains from the sale will be taxed at long-term tax rate, which is lower than the short-term tax rate that applies to sale of stocks held for less than 12 months.
