Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Yes, commuters can still save money under the new tax law
The transportation benefits clients currently receive from their employers will be excluded from their taxable income, however companies cannot claim tax deductions for these benefits under the new tax law, according to this article from MarketWatch. Employers may also opt not to provide tax-free mass transit passes and parking allowances, but workers may have a salary-reduction arrangement option that will exclude up to $520 per month from their taxable wage income to cover these expenses.
The new tax form is small, but more complicated than ever
The Trump administration’s new tax form will be smaller than before and could save time for some clients, according to this article on The New York Times. However, this could force million other Americans to do more paperwork. The new tax form “only adds needless complexity and confusion,” says Rep. Lloyd Doggett D-Texas.
43% of baby boomers are making this big mistake
As much as 43% of baby boomers either socked away less than three months' worth of living expenses or saved nothing in a bank for emergency purposes, according to a study found in this article on Motley Fool. This can be a mistake, as these clients run the risk of not being able to cover unexpected expenses or pay bills when they lose their jobs, according to the Bankrate study. Tapping into retirement accounts can also be a wrong move, as it would trigger an early withdrawal penalty plus taxes.
U.S. expat business owners have a new tax to worry about
Americans with businesses abroad will need to comply with the new transition tax; a rule under the new law makes planning more complicated, according to CNBC. Foreign earnings in cash and cash equivalents of expat business owners will be subject to 15.5% tax rate while other earnings will be taxed at 8%. “Getting clients to understand the law is the first battle, getting them to believe you is the second battle,” an expert says.
17 tips to manage your clients' small business finances
Small business owners are better off having a separate bank account for their business, according to this Sioux City Journal article. That's because putting business and personal finances in one account could result in unexplained losses and tax problems. These clients will also have an easier time checking their business's profitability and keeping track of their expenses if they have a separate business bank account.