Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Clients can reduce their taxes if they invest in traditional or Roth IRAs, which offer tax benefits, according to The Motley Fool. Investing in municipal bonds is also a good strategy as returns from these investments are not subject to taxes at the federal level. Those in the 10% and 15% tax brackets may also wait until a year or so to sell winning securities to take advantage of 0% tax on capital gains. -- The Motley Fool.
State income tax or sales tax and Lifetime Learning credit are among the tax deductions that many taxpayers commonly miss when filing their tax returns, according to U.S. News & World Report. People also forget to deduct costs incurred from job hunting as well as mortgage points that can cut the interest rate over the life of their mortgage. Many investors also fail to include their reinvested dividends when computing their capital gains, thereby missing out on considerable savings. -- U.S. News & World Report
Clients should look at possible tax savings due to life changes and see if they qualify for saver's credit to help them fund their retirement plans, according to Forbes. Investors should also carefully calculate what a contribution really costs and not be intimidated by the maximum contribution levels. Also, clients should withdraw money before retirement age because it will result in a 10% penalty and one shouldn't remove money from an old 401(k) because it would be put in a forced IRA that may deplete eventually. -- Forbes
Retirees should understand how retirement incomes are taxed to lessen their tax burden, according to Kiplinger. Withdrawals from traditional IRAs and 401(k) accounts and payments from private and government pensions are taxed as ordinary income, while profits from investment sales are taxed at capital-gains rates. Withdrawals from Roth IRAs are tax-free after the account holder reaches a certain age, while a portion of Social Security benefits could be taxed depending on one's provisional income. -- Kiplinger
2015 tax guide
Tax-related tips on everything from the Affordable Care Act to maximizing tax breaks and avoiding audits from the Internal Revenue Service. High-income earners are also advised to check the guide on taxable investments and capital gains. Lower- and middle-class earners should review the guide for ways to lessen their tax burden in inheritances and estate planning. -- Forbes
- How to Help Clients Reduce Tax Bills: Tax Strategies Scan
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- Reduce the Tax Hit on Capital Gains: Tax Strategies Scan
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