Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Clients are expected to pay tax for selling stocks they received as payment for a settlement or services rendered. The value of the stock when they received it will be the basis for determining the income tax they owe. Clients will also pay a capital gains tax when selling the stock for a profit, and such tax will be computed based on the stock value's growth after including dividends, stock splits or capital distributions. -- Time Money
Taxpayers are advised to act to reduce their income taxes as 2015 draws closer and need to remember background information, according to MarketWatch. They need to remember that income-tax rates as well as capital gains and dividend tax rates remain unchanged for all except those in the higher-income group, who also face Medicare surtaxes. Read the three strategies that are recommended for taxpayers to lower their income tax bill. -- MarketWatch
Investors could harvest tax losses by selling the losing stocks of clothing brand Aeropstale, coal producer Alpha Natural Resources and start-up Demand Media before year-end, according to Kiplinger. Stocks of education chain Education Management and debit card company Higher One Holdings, which have slumped due to government scrutiny, should also be sold by investors. They should also dispose stocks of trade school operator ITT Educational Services, clothing company Quiksilver and coal producer Walter Energy due to continued losses. -- Kiplinger
As Americans look for ways to curb their 2014 taxes, they are advised to review their 2013 returns as some of them might have overpaid the 3.8% surtax on net investment income, according to experts. The Internal Revenue Service failed to issue final regulations early when the tax was implemented last year, while some issues concerning the tax were not addressed. Consequently, software that professionals used in preparing the 2013 returns might not have incorporated the changes, says Jeffrey Schragg of accounting firm BDO. -- The Wall Street Journal
Upon advice from a financial advisor, a client transferred $187,000 in post-tax 401(k) contributions into a traditional IRA and subsequently converted to a Roth. However, the client had another advisor who told him to transfer the remaining asset of his 401(k) plan to a traditional IRA, a move that lead to an unnecessary tax burden on the client. Read how the financial advisor who gave the first advice rectified the error made by the client. -- The Wall Street Journal
Retirees at least 70 1/2 years of age have until Dec. 31 to take required minimum distributions from their deductible IRA and retirement accounts, or they will face big penalties, according to the IRS. As of Oct. 24, almost 68% of Fidelity's IRA customers who are expected to comply with the requirement this year have yet to make full withdrawals, the firm says. Read the strategies that these retirees may adopt so they can avoid any penalty. -- CBS Moneywatch
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access