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Why your clients may want to redo part of last year’s taxes: Tax Strategy Scan

Clients should consider new strategies to reduce their tax bill as there is no guarantee that the Trump administration’s proposal will receive approval from Congress.
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Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.

Why you might want to redo part of last year’s taxes
Taxpayers are advised to revisit their 2018 returns and consider making amendments if they want to take advantage of temporary tax provisions that Congress extended retroactively in December, according to this article in Yahoo Money. Clients may have also missed out on major changes under the Tax Cuts and Jobs Act that could further boost their tax savings, according to the article. If they plan to do so, clients can refile their 2018 returns by using IRS Form 1040-X.

3 things preventing you from saving for retirement
Retirement saving can be challenging for many clients because of their high mortgage payments, according to this article in Motley Fool. Spending too much on dining out also makes it difficult for many Americans to build their nest egg, the article states. Households that acquired expensive vehicles are facing hefty monthly car payments, which also prevents them from making substantial contributions to their 401(k) and other retirement accounts.

Is a Roth IRA right for your client?
A Roth IRA offers no upfront tax deduction on the contributions, but experts think that now is a great time for clients to contribute to a Roth or make a Roth conversion, according to this article in Fox Business. That's because individual tax rates are lower under the Trump administration tax law, allowing retirement savers to face lower taxes on the contributions or the converted amount. “I don’t think there will ever be a better planning opportunity [to convert] than exists today,” says an expert.

Top tax-planning mistakes when saving for retirement
Clients are advised to have an overall financial plan and a risk management plan to boost their tax savings in retirement, according to this article in Yahoo Finance. They should also consider contributing to other tax-advantaged retirement accounts, such as traditional or Roth IRAs even if they are already participating in an employer-sponsored 401(k) plan, according to the article. Clients should ensure that they utilize their employer's match, adopt an aggressive approach to investing while they are still young and include inflation and longevity risks in their financial plan.

To help individuals and businesses prepare for filing season, Grant Thornton has released a collection of year-end tax tips.
December 17

The stretch IRA strategy is largely gone. Here are 5 alternatives
With the stretch IRA strategy no longer an option for non-spouse beneficiaries, investors should consider converting their traditional assets into a Roth account to help their heirs minimize the tax bite on the distributions after they're gone, according to this article in Barron's. IRA investors may also designate a charitable remainder trust as beneficiary or fund an irrevocable trust to enable their heirs to mitigate projected losses from taxation. Buying life insurance is another tax-saving strategy for IRA investors who want to leave a legacy to their loved ones.

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