Ways to maximize after-tax profits for clients selling a rental property: Tax Strategy Scan
Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
How to maximize your after-tax profits on the sale of an investment property
Clients who sell a rental property will owe federal and state capital gains and depreciation recapture taxes, according to this article in The Washington Post. Property investors may also face the net investment income tax and will not qualify for capital gains exclusion, according to the article. Clients who want to boost their after-tax profit are advised to use a 1031 exchange, which will enable them to reinvest the sales proceeds to a like-kind property and defer capital gains taxes.
10 smart things to do right now — instead of panicking about the Dow’s plunge or coronavirus
Clients are advised to ignore the recent market correction or the coronavirus scare instead of panicking and making hasty decisions, according to an expert in MarketWatch. They should also review their budget, organize their finances and pay off debt, the expert suggests. Another smart financial move that clients can make at this time is boosting their 401(k) and IRA contributions to make the most of the tax benefits of these retirement accounts.
Surprise! These 4 tax breaks are back
Taxpayers are advised to amend their 2018 returns to take advantage of the expired tax breaks that were revived retroactively, according to this article in Motley Fool. These tax breaks include the deductions for tuition and fees, private mortgage insurance payments and mortgage debt forgiveness. Homeowners can also claim up to $500 in tax credit for energy-efficient improvements made to their main residence.
Financially, marriage makes a lot of sense for retirees
Getting married can be a smart move for retirees, as it will enable them to qualify for various tax benefits, an expert in Kiplinger writes. For example, seniors who are beneficiaries of their deceased spouse's IRA can roll the inherited assets to their own IRA and wait until age of 72 to start taking the RMDs, the expert writes. "If you are not married and you are the beneficiary, your best option will be to transfer your deceased partner's IRA to the less tax favorable inherited IRA, where under the new Secure Act, this will trigger a lot more in taxes in most cases."
7 common filing mistakes to avoid this year
There are several common mistakes that clients can avoid when filing their taxes this year, according to this USA Today article. For starters, they should ensure that they provide the correct information if they changed their name or moved to a new address. Taxpayers also need to declare all their earnings, use a correct filing status and claim only the tax credits and deductions available to them. Those who prefer to receive their tax refund through a direct deposit should double-check their bank account numbers on their tax returns.