Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
What student loan borrowers need to know this tax season: Single clients with student loans qualify for up to $2,500 in interest deduction, while married couples may also claim the same amount if they file joint returns, according to Fox Business. The deduction disappears if married couples opt to file separately, but joint filers can expect income-driven repayment plans to be too costly. Student loan borrowers will also be eligible to claim a credit of up to $2,500 for qualified education expenses if these expenses exceed $4,000. — Fox Business
4 tips for expat clients filing taxes in 2016: Clients who are living abroad are advised to take one of the amnesty programs offered by the IRS to settle their back taxes and avoid hefty penalties, according to Money. Expats also need to know that the government has adjusted tax provisions based on inflation while clients who are parents living abroad are advised to claim the foreign tax credit if they qualify. Expats also have until June 15 to file their returns. — Money
What your clients need to know about deducting state and local taxes: Taxpayers who itemize deductions are allowed to deduct state and local income and property taxes or state and local general sales taxes if income taxes are too small, according to MarketWatch. However, all itemized deductions may be reduced by up to 80 percent for high-income individuals because of the phaseout rule. Also, deductions for state and local taxes will not apply for taxpayers under the alternative minimum tax rules, while clients are better off claiming a standard deduction if their itemized deductions are too small. — MarketWatch
4 tax benefits for college costs: Clients are eligible to claim certain tax credits and deductions for college tuition and other qualified expenses, according to Huffington Post. Clients who incurred these expenses can claim either the American Opportunity Tax Credit or the Lifetime Learning Credit. They may also claim tax deductions for tuition and fees and student loan interest deduction if they meet the requirements. Those who have received assistance from their employer for their education expenses may pay no taxes on financial aid for tuition, fees and books, but additional aid will be subject to tax. — Huffington Post
Understanding tax forms 2016: 1099-DIV, dividends and distributions: Clients can expect to receive a Form 1099-DIV to reflect the dividends they receive from their investments, according to Forbes. The dividends that are reported in the form include capital gains dividends and exempt-interest dividends, as well as other distributions on stock worth at least $10. Form 1099-DIV will also account for the foreign tax paid on dividends and other distributions on stock, the federal income tax withheld on dividends under the backup withholding rules, and payments not lower than $600 as part of a liquidation. — Forbes
