Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Investors can reduce their tax bill by using capital losses in the previous years to offset current investment gains, and they can strategize on how to deal with taxes if they understand capital loss carryovers, according to The Motley Fool. If they plan to buy back the losing stocks they sold, they should do so 31 days after selling the stocks or they won't be allowed to use the losses from the sale to offset the gains. Also, investors should not make any decisions that are prompted solely by concerns involving tax. -- The Motley Fool
Republicans have reason to consider President Barack Obama's proposal to increase the capital gains tax rate to 28% from 23.8%, as they want to revamp the nation's broken tax system, according to Forbes. The proposed increase in capital gains tax rate is "likely the only way the revenue-neutral, progressive tax reform this country so sorely needs can ever happen," says Forbes. -- Forbes
Retirees may expect their retirement income to be taxed if they take withdrawals from traditional IRAs and 401(k) plans or receive a private or government pension, according to Kiplinger. They will also pay tax for interest on their savings accounts and CDs but will have no tax burden for the capital gains from the sale of stocks and other investments if they are in the 10% or 15% tax bracket. Some state and local taxes may also apply to retirement income, so retirees are advised to check them out. -- Kiplinger
A "step-up" tax benefit would be hit by President Obama's proposal to subject many inherited taxes to capital-gains tax, according to The Wall Street Journal. Based on the federal code, the step up eliminates the long-term capital-gains tax on taxpayer's assets until he dies, increasing his cost basis for the assets to its full market value at the time of death. Obama's proposal would treat bequests as taxable, unless the recipients are charitable organizations, according to a White House fact sheet. -- The Wall Street Journal
Taxpayers who are in the process of getting a divorce are advised to review divorce and tax laws to reduce their tax bill, according to Forbes. Among the things that could change the tax situation for soon-to-be divorced couples are their filing status, custody arrangement, children's medical expenses, alimony, child support, 401(k) investments and capital gains on a house and mortgage interest. -- Forbes
President Barack Obamas tax proposal this year would seek to eliminate stepped up basis at death and increase capital gains and dividends rates, according to Forbes. The president also proposes the establishment of a maximum of $500 in tax credit for families with two working spouses. Tax incentives for child care would also be increased, while any employer with 100 or fewer employees that offers an auto-IRA will be provided with a $3,000 tax credit. -- Forbes