Tax deadlines may change. Here’s what clients should know: Tax Strategy Scan
Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Tax deadlines are likely to change. Here’s what you need to know
Clients may have more time to file their taxes this year as the federal government considers delaying the April 15 deadline, according to this article in CNBC. However, the Trump administration has yet to issue formal guidance, prompting many accountants to put their S-Corp and partnership clients on automatic extension. “They thought they’d get an extension from the IRS. The tax preparer community is like, ‘There isn’t anything official until the IRS tells us the plan,'" according to a CPA.
This taxpayer trap is back and worse than ever
While a refund anticipation loan is available for taxpayers who want to claim their tax refund as soon as possible, clients may be better off avoiding this option, according to this Motley Fool article. That's because these loans come with hefty interest rates and other fees, according to the article. Those who want to claim their refund as soon as possible should file their returns electronically and arrange for direct deposit, the article says.
Saving on taxes when married, but filing separately
Most married couples will be better off filing joint tax returns, as this could lower their rate and allow them to qualify for valuable tax breaks, according to this article in TheStreet. However, filing a separate return makes more sense for married couples if both spouses earn hefty income or one spouse is self-employed. “There are tax deductions that you may not get even though you're married. For example, if you or your spouse is attending college, you can't get the tax credit for education expenses, because you have to be filing separately to get that deduction,” an expert says.
Squash these 4 common tax season stresses
The fear of being audited is one of the most common worries clients must overcome as tax season approaches, according to this article in Nasdaq. “A lot of people are very nervous about it because there’s the horror stories of people who’ve been audited. And the IRS has extraordinary enforcement powers,” according to an expert. “The reality is that for most people, the odds of being audited by the IRS are relatively small.”
If they own rental property, see if your clients qualify for this extra tax break
Aside from tax deductions for operating expenses, depreciation and repair costs, rental property owners can also boost their tax savings by claiming the qualified business income deduction, according to this article in MarketWatch. This tax break allows these clients to deduct 20% of their rental income, according to the article. “If I qualify and I have $100,000 of net rental income on a Schedule E, then I’m going to simply pay tax on the $80,000. It’s that simple,” according to a CPA.