Shutdown’s potential tax impact: Tax Strategy Scan
Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Shutdown's potential impact on taxes and more
The release of tax refunds this year could be delayed if the government shutdown extends into the filing season, according to this article on Consumer Reports. Taxpayers who intend to file as soon as they receive their W-2s should start gathering all the necessary documents, says a tax attorney. "If the shutdown continues, the IRS is not going to be answering taxpayer questions, but tax information for filers will still be available."
Time for clients to check their 2019 withholdings
Clients are advised to review their tax withholding this year so they can adjust the figure when necessary, according to CNBC. The IRS and the Treasury updated the withholding tables based on the new tax law. Taxpayers may owe more taxes or receive a smaller tax refund because of the changes to the withholding tables. "Any time there is a change in the tax bill is an automatic reason to check your withholding and make sure that's current," a CFP says.
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You’ll probably find administrators blocking the backdoor Roth IRA strategy more than anyone else, says Kimberly Foss, planner, author and Financial Planning contributor. That’s when you’ll have to adopt the role of educator, she says.October 18
Some clients already pay their taxes in bitcoin
Business and individual taxpayers in certain states have the option of paying their tax bills this year using cryptocurrency, according to this article on MarketWatch. “This would be good idea for a business that already has a lot of bitcoin as it saves them the step of converting their bitcoin to dollars before paying taxes,” an expert says. “Now they will just be converted right at the moment of payment.”
Tax hacks every entrepreneur needs to know
Entrepreneurs who want to maximize their savings at tax time should consider negotiating their fee arrangement with their tax preparer, a CPA writes at the Reno Gazette Journal. They should also factor in their business structure when paying themselves and others, and should also consider lowering the fees paid to their consultants, as they have to cover 50% of the consultants' FICA and Medicare taxes, the expert writes. Moreover, "[d]on’t get tricked into thinking the 21% corporate tax rate is lower than the 29.6% rate on flow-through income."
18 ways for clients to reduce their taxes
Want to minimize the tax burden this year? Creating a year-round strategy is a great way to save more at tax time, according to this article on Motley Fool. Some tips include making the most of all available tax credits and deductions, donating to charity, using the right filing status and contributing to a retirement and other savings accounts to reduce the tax liability. Clients are advised to consider holding on to their investments longer before selling them, harvesting tax losses and timing mutual fund investments to minimize the tax bite.