Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Millennials need to make sure they deduct their student loan interest on their tax returns to boost the tax refund they expect to receive, according to The Washington Post. They also should check whether they qualify for the American Opportunity Tax Credit and other education-related tax breaks, as well as the earned-income tax credit. Contributions to qualifying retirement accounts as well as moving and other job-related expenses are also tax-deductible, so they should make sure they include these items in their tax deductions. -- The Washington Post
Taxpayers are entitled to deduct up to $1 million in mortgage interest on their tax returns, according to Yahoo Finance. However, not many of them are eager to take advantage of the tax break, perhaps because they want to avoid the hassle of complicating their taxes by itemizing their tax deductions, which they need to do to claim the tax break. -- Yahoo Finance
Clients can compare the advantages and disadvantages of each of these tax-saving vehicles to help plan their retirement, according to The Motley Fool. Although a Roth IRA offers no up-front tax deduction, distributions are tax-free and will add to their taxable income in retirement, unlike deferred compensation accounts. For instance, they can take a bigger withdrawal from a Roth IRA and smaller distribution from deferred-compensation arrangements if they want to reduce their annual taxable income. -- The Motley Fool
High-income couples who receive the same earnings are advised to file their taxes separately as combining their income in a joint return could push them to a higher tax bracket, according to Money. Also their tax deductions would be limited especially when their combined income is within the $200,000 range, an expert says. However, couples will not be entitled to some education-related tax breaks, the earned income tax credit, and, in some cases, a dependent child or adoption tax credit if they opt to file separately. -- Money
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