Tips for grandparents giving money this holiday season: Tax Strategy Scan
Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Tips for grandparents giving money this holiday season
When giving cash gifts to grandchildren this holiday season, clients have options that can also help minimize their estate taxes in the future, according to this article from Morningstar. They may opt to contribute to the child's 529 college savings plan and owe no gift tax. They may also set up a custodial account under the Uniform Gifts to Minors Act or Uniform Transfer to Minors Act to owe a lower tax bill on the assets. Another option is contributing to a Roth IRA in the child's name, as the child's current tax rate will be lower than when he or she retires.
Tax reform could be big win for clients investing in real estate
A report from Cushman & Wakefield shows that the U.S. commercial real estate stands to gain from the GOP tax reform bill, according to this article from Bloomberg. The legislation includes provisions that would reduce rates for property owners, encourage investments and boost demand for residential properties for rent. Other sectors of the real estate industry could see modest gains or losses, especially homeowners, as the bill would curb their tax benefits.
Saving too much for retirement could force clients to take loans or make withdrawals that would carry taxes and penalties.September 26
The IRS is relaxing some rules to make pulling money from retirement plans easier after hurricanes Irma and Harvey, but clients should remember the taxes and penalties associated with withdrawals are unchanged,September 14
Why clients need a Roth IRA — even if you have a 401(k)
Clients are advised to stash away funds in a Roth IRA while contributing to a 401(k), according to this article on USA Today. That's because savings in a Roth IRA grow on a tax-free basis. Distributions from a Roth IRA are also exempt from taxes, giving clients more flexibility and help them achieve tax diversification in their portfolio.
Last-minute tax moves for 2017
As the year winds down, advisors should determine whether their clients will be required to pay the alternative minimum tax, according to this article on Nasdaq. They may also push their clients to boost their retirement contributions and recommend tax-loss harvesting if their clients are sitting on losing investments. Advisers should also warn their clients about the wash-sale rule when harvesting losses for tax-saving purposes.
6 tax tips for LGBT couples
As the year winds down, same-sex couples who are filing jointly should work closely to determine the tax deductions that they can claim to boost their savings, according to this article on Huffington Post. They should also revisit their past individual returns for possible amendment and subsequent tax refund, as well as review their investment portfolio and harvest losses to write off taxable gains, a CFP writes. Gay couples may also want to contribute the maximum amount to their retirement accounts and donate to a charity for more tax savings.