Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Clients who are retired can maximize their tax savings by making the most of a tax break that allows them to donate some of their IRA assets directly to a qualified charity, according to The Wall Street Journal. A law passed by Congress last year made the tax break permanent and retroactive to January 2015. The provision counts the donation as part of their required minimum distribution and exempts it from taxes. IRA investors need to make sure they are 70 1/2 at the time of transferring the funds to qualify for the tax break. -- The Wall Street Journal
The taxation of annuities is based on whether these investments are held in a traditional IRA or a taxable account, according to Kiplinger. Withdrawals from an annuity held in a traditional IRA will be subject to income tax and a 10% penalty if the investor is below the age of 59 1/2. For first annuity withdrawals, investors will face a tax liability for the portion considered to be the annuity's earnings, while the remaining amount will be treated as a return of principal, which will be tax-free. -- Kiplinger
Elderly clients with long-term care expenses may be able to use these strategies for big tax savings. Deductions for long-term care and assisted living expenses can maximize savings, according to Money. In some cases, family caregivers can claim similar expenses as tax deductions on their returns. To claim these tax breaks, clients approaching 65 need to itemize their deductions and deduct medical costs that exceed 10%. The cut-off for clients over 65 is or 7.5%. -- Money
Clients may not know that they could face capital gains taxes on their securities, even if there was no yield from the investments, according to Florida Today. Clients can avoid the loss with good tax planning and portfolio management. -- Florida Today