Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Donating to charity, from a tax perspective, may not be a viable option for many clients, as the higher standard deduction under the new law makes itemizing deductions less valuable, according to this article on CNBC. However, those who still want to make the most of the charitable tax break can use the "bunching" strategy, which will allow them to make years' worth of donations within a single year to exceed the standard deduction amount. "Under the new tax law, charitable giving is a relative bright spot for donors who itemize," an expert says.
As clients race to file their taxes, one expert advises they know some of the exceptions under the new tax law, according to this article on The Wall Street Journal. For example, while the tax filing deadline is April 15, taxpayers in Maine and Massachusetts have until April 17 to file. Those in federal disaster areas may even have an extended deadline. Moreover, while the new tax law scrapped personal casualty and theft-loss deductions, taxpayers who suffered heft disaster losses are allowed to deduct net personal casualty losses “to the extent they’re attributable to a federally declared disaster,” according to the IRS.
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These property tax deferral programs are available to older homeowners who want to postpone real estate taxes provided they remain living in their home.
August 28 -
Homeowners from both parties worry that rising property taxes could force them to sell.
November 14 -
The holidays are fast approaching, which means it is time to start doing some year-end tax planning.
December 3
Retirees who turned 70 1/2 but failed to take the first required minimum distribution from their traditional retirement plans have until April 15 to make the withdrawal, according to this article on Money. Those clients who fail to meet the deadline will face a tax penalty equivalent to 50% of the RMD amount. Roth 401(k)s are also subject to RMD rules, however the distributions are non-taxable. Roth IRAs, however, are not subject to the same rules and federal taxation.
Clients should avoid the mistake of shortchanging their standard deduction when preparing their tax returns, according to this article on Motley Fool. For example, seniors 65 and older can add $1,600 to their standard deduction amount if they are single or $1,300 if they are married. Taxpayers should also ensure they use the right filing status and use the tax tables correctly to determine their tax liability.
What some clients tried to claim on their tax returns shows they often don't know much about accounting.
Taxpayers have the option of contributing to their traditional IRAs until April 15 as a last-minute strategy to reduce their taxes before filing their 2018 returns, according to this article on Yahoo Finance. “The IRA is probably the most common [deduction] that you can make post-calendar year,” an expert says, adding that they should ensure they tag the contributions to 2018. “You do have to make sure that when you are making a donation to an IRA that you tell the IRS which year you are doing it for.”
