Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Tax Moves That Can Save Your Client a Bundle: Many investors are taking advantage of their losses from the market downturn from 2008 to 2009 to save substantially on taxes, according to Morningstar. Another tax-saving strategy that investors used was funding their donor-advised funds, allowing them to take immediate tax deductions and avoid capital gains taxes. Other investors share their strategies to reduce their tax bill, such as paying state taxes early to avoid federal taxes and doing their own research to increase their awareness of tax rules. -- Morningstar
A Tax-Free Trick Many Ordinary Americans Don't Know About: Clients should know that there is a special 0% rate for taxpayers in the two lowest income-tax brackets for these investment income types: long-term capital gains and qualified dividends on stocks and mutual-fund distributions. Those who have long-term capital gains must have held the investment for a minimum of one year and one day, while investors with qualified dividends should hold onto the stock for over 60 days out of the four-month period when the stock becomes ex-dividend. -- DailyFinance
Best Strategies for Tax-Free Income: How to use municipal bonds and a "barbell" approach so investors can benefit if rates rise. -- The Wall Street Journal
Tax Strategies for Day Traders: Does your client trade stocks more often than most people change their socks? Then you need to help them understand how Uncle Sam views their habit. Otherwise, come April 15, They’ll be suddenly confronted with a mountain of paperwork. And those profits? Well, they’ll seem a lot smaller once the Internal Revenue Service has taken its share. There are, however, some strategies that active investors can use to reduce their tax bills — and make life much more pleasant come tax season. Here’s what you need to know about them. -- MarketWatch
Debt's Two Sides: Riches and Misery: When it's used wisely, debt becomes leverage and can increase your client's investment returns. Used badly, it can land your client in the poorhouse. -- The New York Times
Tax-Saving Strategy on Property Capital Gains Re-Emerging: Clients may want to consider investing in 1031 exchanges. Real estate professionals are seeing an increase in 1031s, which allow for an IRS-sanctioned way to defer a client's capital gains taxes (typically 15 percent) on investment property. -- Portland Press Herald
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