Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
- How your client can avoid capital gains tax on stocks: Long-term capital gains tax rates vary depending on the tax bracket, with taxpayers in the 10-15% tax bracket paying no tax at all, according to Motley Fool. Those who are in the 15% tax bracket have a taxable income of $36,900 for singles, $73,800 for joint filers, and $49,400 for heads of households. To avoid paying long-term capital gains tax, taxpayers need to have a taxable income that won't exceed these figures, and may keep their income low by taking tax deductions, such as the standard deduction, personal exemptions, and the Child Tax Credit. -- Motley Fool
- How to lower your client's tax bill: Clients are likely to face big capital gains tax as stocks soared this year, but they may reduce their tax by deferring their income and accelerate deductions, says Robert Willens, a CPA and president of Robert Willens. They may also consider donating the securities instead of selling them and donating the money, so they won't pay capital gains and still take a deduction amounting to the security's fair value, Willens says. Harvesting losses by disposing of assets with dwindling value is also another way for investors to lower the tax bill. -- Barron's
- Year-end charitable tax tips: Clients can donate tangible properties or cash to charities to reduce their tax bills, according to Forbes. To get tax deductions, donations in the form of household items should be in good used condition or accompanied by a qualified appraisal; cash donations need to be proven by a written receipt from the charity or a bank record. Tax deductions for charitable gifts may be obtained by itemizing these donations on Schedule A of Form 1040 by taking the standard deduction. -- Forbes
- 15 surprising tax deductions: Some losses and expenses that taxpayers incurred are allowed by the Tax Court to be deducted from their tax bill, according to Kiplinger. Read 15 of these surprising deductions and why some people were allowed to deduct these losses and expenses from their taxes. -- Kiplinger
- How hedge fund managers lower their tax bills: Hedge fund managers face hefty income taxes, which are usually at 55% income rate, but can reduce their tax bills using bright-line strategies, according to Forbes. "There are a number of different methods for hedge fund managers to, in strict accordance with the law, pay less taxes. What's important for hedge fund managers is to carefully consider the specialized strategies and determine which ones make sense for them," says Alan Kufeld, a partner of Flynn Family Office. -- Forbes
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