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Trim tax tabs with these year-end moves: Tax Strategy Scan

Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.

Year-end moves to trim client tax tabs
With the year coming to a close, Kiplinger offers last-minute tips for retirees to enhance their tax savings this year. Clients nearing retirement will need to revise their tax-saving strategies, as some tax breaks are no longer available and replaced by new ones, thanks to the new tax law, according to Kiplinger. For example, these clients should consider running the numbers based on standard deduction and itemized deduction and choose the option that will generate the bigger savings.

Harvesting opportunities with bond ETFs
Some fixed income investors shifted away from largest bond ETFs, as a result of increases in interest rates last year, according to this article on ETF Trends. However, data show investing in fixed income ETFs can still be a good strategy as it creates opportunities for tax-loss harvesting. “From investment grade to Treasurys to mortgages, every index we tracked had losses—further illustrating that investors are very likely to be sitting on long-term fixed income losses,” according to State Street Global Advisors.

Costly tax mistakes clients must avoid
Clients should watch out for common tax mistakes that could prove costly and harm their financial security, according to this Motley Fool article. These missteps include not keeping track of their expenses and records, not making the most of their tax-advantaged retirement accounts and not holding their shares for more than a year before selling them to get the lower long-term capital gains tax rates. Clients also frequently fail to use losses to offset taxable gains, take advantage of tax credits available to them and contribute to a flexible spending account or a health savings account.

Tax credit that lets clients double-dip on retirement savings
The Retirement Savings Contribution Credit is a valuable tax break for low- to moderate-income taxpayers who are contributing to their retirement accounts, such as 401(k) plans, 403(b)s and IRAs, according to this article on The Keene Sentinel. "This valuable tax credit can be claimed in addition to the tax deduction you get for saving in your traditional retirement accounts,” an expert writes.

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.
April 19

7 tax planning strategies for small business owners
Business owners still have time to make last-minute financial moves that will enable them to enhance their tax savings this year, according to MarketWatch. Before the year ends, clients should claim bonus depreciation for asset additions and heavy SUV, pickup or van, as well as make the most of the Section 179 deduction rules. They should time their business income and tax deduction for bigger savings, use strategies to defer taxable income, and set up a tax-advantaged retirement plan. Pass-through entities should make the most of the new 20% tax deduction for qualified business income created under the new tax law.

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