Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Tax-free gift limits: How much money can your client give? Many clients believe that the recipients of cash gifts face no tax burden since existing tax laws provide exemptions to the giver and don't treat these gifts as income for the receiver, according to Huffington Post. However, there will be tax implications if the cash gift exceeds $14,000 per person in a year. The giver is required to deduct the amount above the gift-tax exemption limit from their lifetime exclusion, or the annual limit they are allowed to give as cash gifts during their lifetime. The lifetime exclusion limit for 2015 is $5,430,000. -- Huffington Post
Make these moves by year-end to lessen your client's tax burden: Clients may consider accelerating or deferring their income if they are looking for year-end strategies to reduce their tax bill for this year, according to NerdWallet. Clients are advised to spend away their health savings account and donate unused clothing and other personal items, as well as their required minimum distributions from their IRAs. Anther tax-saving move to consider before the year-end is realizing capital losses to offset gains and minimize the subsequent taxes. – NerdWallet
7 smart ways to lower your client's taxable income: Maxing out contributions to retirement plans and making charitable donations are strategies clients can use to reduce their taxable income, according to Kiplinger. Early payment of property taxes and realizing losses to offset capital gains can also help lower their taxable income. Clients who want to further minimize their income tax bill may also delay selling their winning investments, defer receiving additional income until next year, and take necessary medical procedures. – Kiplinger
Recognizing a loss to boost your client's yield: Clients can do tax-loss harvesting in their taxable accounts, and are advised to weigh their options before using the strategy to minimize their tax burden, according to Bankrate. Clients should not consider selling depreciated stocks to offset capital gains if they have plans of buying a substantially identical investment within 30 days, as this could trigger the wash-sale rule. Such a strategy also is not recommended if they intend to buy back the asset again and they expect to be in a higher tax bracket when selling the investment again. -- Bankrate
