Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.

One way ETFs are more tax-friendly than mutual funds

Exchange-traded funds are more popular than mutual funds among clients because they offer a big tax advantage, according to MarketWatch. Clients that bail out of ETF investments do not create unintended tax bills when they sell their shares unlike with mutual fund investments. For garden-variety ETFs, clients who unload assets even earn a tax-saving capital loss when shares are down. -- MarketWatch

Entrepreneurs: Stop overpaying on taxes

Entrepreneurs can reduce their tax bills by deferring taxes and spending more money for their businesses, according to Forbes. Connecting some personal expenses to businesses and moving income to capital gains can also help in lowering their taxes. -- Forbes

AMT doesn’t have to stand for “assume more tax”

Taxpayers who are subject to minimum tax may consider purchasing muni bond funds, which are exempt from the Alternative Minimum Tax and will help save more of their income, according to Morningstar. Mitigating risks with AMT also requires consultation with tax advisors before making any pertinent decisions. -- Morningstar

The tax mistake that could hurt clients now or next year

Taxpayers should now begin adjusting their withholdings in order to avoid the risk of incurring another penalty on their next tax bill or simply to boost the monthly cash flow, according to Motley Fool. A W-2 employee can submit a filled-out W-4 form to his employer to guide his company on how much to withhold from his paycheck that will eventually be reported to the Internal Revenue Service. The estimated amount to withhold should be as close as possible to projected amount that will actually be owed next year. -- Motley Fool

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