Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Clients have two months left to make financial moves that will enable them to save on taxes for this year, according to this article on CNBC. Reviewing and adjusting tax withholding, "bunching multiple years' worth of charitable donations in one year and claiming business-related losses and expenses are some of the last-minute tips that can help clients enhance their tax savings," an expert says. "If the income is the same, but your withholding is considerably less this year, then you have reason to be concerned."
While many clients can expect a reduction in their tax bill this year, one expert says many others are likely to owe greater taxes as the new law has scrapped valuable tax deductions, Motley Fool reports. "There's elimination of many assorted deductions," the expert says. "Too many to list, but some of the more common ones were unreimbursed employee expenses, tax prep expenses."
Clients can save more on taxes for this year by boosting pretax contributions to their 401(k) plans, according to this article on U.S. News & World Report. They may also consider contributing to an IRA and make the most of the saver's credit to further reduce their tax bill. Retirees who want to minimize the tax bite have the option of donating their mandatory 401(k) and IRA distributions directly to a charity. "This can be advisable for people that don't need the funds to supplement their income and would prefer to keep their income tax lower for the year," an expert says. “Unlike the required minimum distribution, the entire amount taken out is 100% tax free and not counted towards income.”
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Addressing the subject of mortality can be tough — but advisors can help make the conversation less painful.
April 12 -
Top wealth planners say they’re seeing increased interest in dynasty trusts as clients look to capitalize on the new tax law.
May 17 -
Only 17 states permit these trusts, which can play an important role in planning for income taxes and estate taxes.
April 3
Tax planning is important for clients to reduce the tax bite on income in retirement, according to this article on CNNMoney. To do this, clients should determine their cash flow needs and identify their possible sources of income. They should also sock away money in investment accounts with different tax treatments and take taxable distributions during the tax window, when they are in a low tax bracket. This strategy will reduce their taxable income and subsequently their tax bill in the future.
What some clients tried to claim on their tax returns shows they often don't know much about accounting.
Children who received appreciated stock from their parents as a gift and decide to sell the share will face capital gains tax based on the original cost basis, according to this article on Kiplinger. The rate will depend on their income. Those who sell shares they inherited after their parents died will owe no capital gains taxes, as the tax basis will be stepped up to the investment's value at the time of their parents' death.
