Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
After filing the tax returns, clients are advised to review their withholding and possibly adjust it to reduce the tax refunds in the next tax season, according to DailyFinance. They also need to keep records and other documents that they can use to qualify for possible tax credits and deductions that they could have claimed this year. Investors also need to consider the tax implications of their investing decisions and develop a strategy that will lessen their tax burden. -- DailyFinance
There are many tax efficient investment strategies that may help to minimize investment taxes for this coming tax year. As taxpayers wrap up their returns for 2014, many have been faced with paying higher taxes on their investments, often due to the run-up in the markets over the last few years. With tax rates on capital gains and qualified dividends as high as 20% in non-retirement investment accounts (even more for high-income earners), it is critical to have a plan to address this tax liability. Remember, by the time 1099s arrive in the mail, it is too late to do anything about the past year. -- NJ.com
Increasing contributions to a 401(k) or a traditional Individual Retirement Account is the simplest way to reduce taxable income over the coming year, according to Motley Fool. Considering state and local municipal bonds or investing on exchange-traded funds can also bring substantial tax savings if not zero tax at the federal level. It also helps making charitable gifts before the year ends to get valuable tax breaks. -- Motley Fool
Clients will be better off maxing out their IRA contributions to boost their long-term gains than keeping their money in a taxable account, according to Forbes. An investment portfolio in an IRA could generate an internal rate of return of 8.94%, compared with 7.52% IRR that the same portfolio could produce in a taxable account, according to an analysis. Selling out the taxable account to fund an IRA could also mean getting a bigger return of investment in the long term. -- Forbes
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