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What the tax overhaul means for clients: Tax Strategy Scan

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

What the tax overhaul means for clients
Taxpayers are less likely to opt for an itemized deduction in their tax returns under the final version of the GOP tax bill, as it would double the standard deduction, according to this article on Kiplinger. Taxpayers would also lose their personal exemptions but households could expect higher savings from the child tax credit under the bill. “Although families have long relied on personal exemptions to reduce their taxable incomes, this move isn’t terrible for working families with dependent children,” an expert writes. “That’s because the child tax credit will be enhanced.” Clients are also more likely to see a drop in their income tax rates as the bill made some adjustments to the tax brackets and corresponding rates.

Tips for avoiding costly RMD missteps
An expert reminds retirees who are 70 1/2 and older to take required minimum distributions from their tax-deferred retirement accounts such as traditional IRAs and 401(k)s before the deadline, according to Morningstar. "[I]f you miss an RMD, you will be subject to a penalty equal to half of the amount that you should have taken, but didn't, and you will still owe ordinary income taxes on those distributions as well," an expert says. "When you first start taking RMDs, they amount to about 3.5% of your RMD-subject accounts, but by the time you are age 85, they are closer to 7%."

What HNW clients should do to prepare for upcoming tax changes
When planning for the looming tax overhaul, wealthy investors are advised to project their bill for this year, according to this article from Barron's. That's because their state and local taxes could be higher with additional income and gains from investments this year. Although investors can sell losses to offset these gains, “it’s hard to do tax-loss harvesting because there aren’t that many losses in portfolios people are seeing,” an expert says.

The 4 least tax-friendly states for Social Security recipients
Retirees on Social Security can expect a portion of their benefits to be taxable if their combined taxable income — which is their adjusted gross income and 50% of the benefits — exceeds a certain limit, according to this Motley Fool article. For example, joint filers will owe taxes on half of their retirement benefit if their combined income exceeds $32,000. Aside from federal taxes, seniors who reside in Colorado, Connecticut, Kansas and 10 other states may also pay taxes for their benefits.

Fifteen tax planning tips from analysts and industry experts advisers may consider in 2017.
December 5

Here's what clients can do with the money they may save on taxes
Clients are advised to be smart about spending the potential tax savings they would incur under the final GOP tax plan, according to this article from CNBC. They consider the windfall to create an emergency fund or boost their 401(k) contributions, an expert says. They may also set up a "dream account" where they can sock away money for future purchases.

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