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Your clients’ 2020 financial to-do list: Tax Strategy Scan

A portion of a client’s Social Security benefits may be subject to federal income tax depending on their income levels.

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

Your clients’ 2020 financial to-do list
Clients who want to get their financial life on track this year must begin prioritizing their 2020 to-do lists, according to an expert at Morningstar. Taking on these financial tasks can be daunting but can be manageable if they follow a schedule, writes Mornignstar’s Christing Benz. "While some of them are time-sensitive, such as the tax to-do's early this year, many of the others aren't,” according to Benz. “You should feel free to tackle those in any order you see fit, or to ignore those that don't apply to you or that you've already achieved."

How to file taxes for self-employed clients
Before filing a tax return, self-employed clients are advised to check first if they are required to pay taxes, according to this article in Yahoo Finance. They also have to decide whether to prepare their own return or hire a professional to do it for them. In addition, they are advised to gather all the necessary documents and find time to prepare their returns if they intend to do it by themselves. It is also wise for self-employed clients to start planning for their 2020 taxes as early as now. "Each year, a few new clients come to me with issues from self-employment. The most common is failure to pay estimated taxes," an expert says.

No, your client’s IRA was never intended to be a vehicle to pass along wealth
Although the Secure Act has scrapped the stretch IRA strategy that allowed IRA beneficiaries to minimize the tax bite on distributions, clients should understand that retirement accounts are not designed to be used as a tool to transfer wealth to their loved ones, according to this article in The Washington Post. “Only a certain class of people have that much money to give to their grandchildren and children,” an expert says. “The policy basis for why Congress made this change was that we should give a tax benefit to people who are saving for retirement.”

Tips for small business owners to avoid tax surprises in 2020
Small business owners are advised to keep their financial records organized to avoid tax surprises this year, a CPA in Forbes writes. Proper documentation of financial records will also enable them to take advantage of all tax breaks available to them and boost their savings, the expert says, adding that those who need more time to prepare their tax returns have the option of filing an extension. "You really should try to get your taxes sorted out as soon as possible. If you can, I highly recommend getting your tax burden out of the way early in the year."

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

Married couples: Is it better to file taxes jointly or separately?
Filing a joint return can be a smart move for most married couples, as it will enable them to qualify for various benefits, such as a lower tax bracket, more tax breaks and bigger capital loss deduction, according to this article in U.S. News & World Report. However, filing separately can be a better option for couples if they incur hefty medical costs, have a qualified business income and want to keep their assets separate. Filing a separate return is also recommended for married taxpayers who don't want to take responsibility for their spouse's tax liabilities, owe unpaid child support and earn the same amount of income as their spouse.

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