Tax savvy ways clients can make a charitable impact: Tax Strategy Scan

Muni bonds are a good alternative to annuities and other fixed-income vehicles for generating tax-free income, an expert says.
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Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.

The path to making a charitable impact
There are a few strategies that clients can use to optimize the impact of their charitable contributions, according to this article in Kiplinger. For example, they may opt for a charitable trust to split the benefits of the gift between multiple charitable and non-charitable beneficiaries while realizing tax savings, according to the article. Another option is to use a donor-advised fund, which will allow clients to avoid capital gains taxes on the appreciated equities they donate as well as estate and income taxes on investment growth while receiving tax deductions for the donations.

6 smart moves if your clients get laid off before retirement
Older workers who lost their jobs before their retirement date because of the pandemic need to make a few moves to keep financially afloat, according to this article in Money. They should apply for unemployment benefits, cut back on spending and consider tapping their home equity through a reverse mortgage, the article says. Those who are looking for a job should consider other types of work and delay Social Security if possible. Clients whose annual income drop below $40,000 this year may opt to sell their long-term investments, as it will trigger no taxes on capital gains and they can use the losses to offset taxable gains.

Eliminate these costly tax mistakes before 2021
There are some mistakes that clients should get rid of by the end of the year to save on taxes and make the most of whatever money they have during the economic meltdown, according to this article in Motley Fool. For example, clients are advised to adjust the amount withheld from their paychecks to avoid overpaying or underpaying their tax liability, according to the article. They should also consider looking beyond the tax costs and contemplate the long-term benefits before making any investing decision. For instance, moving some assets from stocks to bonds may trigger taxes, but such a move could reduce their exposure to market volatility.

Discounts, remote work and charitable gifts: How wealth managers adapt to coronavirus
Financial advisors, broker-dealers, custodians and other firms are trying to do their part amid a public health and economic crisis.

Don’t overlook the benefits of estate planning
Seniors should engage in estate planning to prevent a contentious probate process and give their family and beneficiaries a smooth transition when they pass away, according to a Forbes contributor. For example, those who intend to leave a legacy to their loved ones should take advantage of the estate and gift tax exemption, which is $11.58 million per person ($23.16 million per married couple) for 2020, he writes. "For families with large amounts of wealth, annual gifting does not count against the exemption limit, and can be a useful estate planning tool. The annual gift limit is $15,000 per person in 2020."

What to know about tapping retirement savings if clients lose a job due to coronavirus
Workers who lost their jobs because of the coronavirus pandemic can tap their retirement savings to cover their needs under more relaxed rules, but they should look at it as a last-resort option and limit the withdrawals to the amount they actually need, according to this article in CNBC. Before dipping into these savings, they should consider a personal loan with a low interest rate. Another option is to withdraw funds from a Roth IRA, as the distribution will not be subject to taxes and penalties.

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Charitable deductions Philanthropy Tax strategies Retirement planning Coronavirus Estate planning Donor-advised funds
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