Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
How to sort out the taxes when your client sells their home
Clients who sell their home owe no capital gains taxes if the sale proceeds do not exceed $250,000, or $500,000 for couples, according to this article from the Los Angeles Times.
To qualify for this exemption, sellers should have lived for at least two of the last five years prior to sale, according to an expert. They were also forced to sell the property for unforeseen circumstance, such as change in employment and health issues. Whether or not the client has a mortgage does not affect the capital gains calculation, a CFP writes.
7 questions the rich always ask
Taxes are a major concern for wealthy Americans particularly those who are paying hefty capital gains taxes which add burden to their heavily-taxed incomes, a CFP writes at the Huffington Post. These clients opt for tax-exempt municipal bonds to enhance their after tax returns. Others consult a professional on how to use charitable giving as a tax-saving strategy. “By and large, the financial concerns of families who are considered upper middle class or even filthy rich are much different than the concerns of those whose incomes put them in the middle,” the advisor writes.
3 tax planning ideas to help take the bite out of RMDs
Retirees who have to take RMDs from their tax-deferred accounts may consider donating directly to a charity through a qualified charitable distribution to avoid the tax bite, according to this article from Kiplinger. Clients may also use a portion of the assets within the plan to purchase a qualified longevity annuity contracts. Another option is to buy life insurance using their RMDs instead of reinvesting the withdrawals.
Retirement savings tips: 401(k) vs. IRA
Clients who have access to a 401(k) and IRA should understand the different tax treatments of these retirement accounts, according to this article from Fox Business. Contributions to a 401(k) and traditional IRA are tax-deferred, but withdrawals from these accounts are subject to income tax. A Roth IRA offers no upfront deduction but distributions in retirement are tax free. They are advised to consider the contribution levels, uses, withdrawal rules and investment options and fees when contributing to these retirement accounts.
4 things clients should know about charitable donations
Taxpayers should make donations to a qualified charity to ensure they receive a federal tax break, according to this article on Motley Fool. Clients also need to itemize their tax deductions to claim the charitable tax break. These clients can still claim a tax break even if they made non-cash donations and received a valuable item from the charity.
Register or login for access to this item and much more
All Bank Investment Consultant content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access