Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Clients are advised to watch out for phantom income or gains that have not been incurred through a sale or cash distribution, according to this article on U.S. News & World Report. That's because they will owe taxes even though it is income they have not received, according to an expert. "For example, a partnership investment that generated a gain of $1 million on a land swap, but it is a paper gain and there is no distribution of cash," the expert explains. "If you own 10% you now have to pay real tax on your $100,000 paper gain."
One of the IRA mistakes that retired couples make is that they aggregate their required minimum distributions, according to this article on Kiplinger. Spouses should take RMD from their own IRAs as these accounts handled individually and cannot be merged. By aggregating the RMDs, one of the spouses could face up to 50% in penalty for an RMD shortfall or owe more taxes as a result of a bigger distribution.
Option-writing strategies can allow clients to generate income or curb losses amid volatile markets, according to this article on CNBC. These strategies are also tax-efficient ways to reduce exposure to a concentrated stock position. “I can dial down beta [market risk] for a client by 50% using options without triggering a big tax bill,” an expert says.
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Competition for the wealthiest clients is intensifying. Here’s one of the best strategies for finding them, according to Cerulli research.
August 18 -
A couple in their 60s had vastly different plans for retirement: One spouse envisioned Florida, the other Chicago.
February 12 -
Sometimes, crunching the numbers shows surprising results. Here’s how advisors can evaluate the tradeoffs of relocating to regions with lower taxes.
March 27
Couples who are planning to get a divorce should act this year as deferring the plan until next year can be costly, according to this article on Fortune. That's because the tax deduction for alimony payments will no longer be available next year thanks to the new tax law. Also known as a spousal support or maintenance, the alimony payment is usually made by the spouse with a higher income.
A majority of affluent Americans are likely to adjust their financial plans under the new law, according to the AICPA. Here's how advisors can help.
Homebuyers are advised to weigh their options before getting a 15-year fixed mortgage, according to this article on Bankrate. While a 15-year fixed mortgage will enable clients to save on interest, force them to save and reduce housing costs in retirement, this option limits their ability to save and the new tax law reduces the tax break for mortgage interest deduction.
