Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
What triggers extra taxes on Baby Boomers? Retirees should expect that their Social Security retirement benefits could be subject to income tax, and are advised to consider voluntary withholding if the benefits will be taxed, according to The Detroit Free Press. They are also advised to watch out for the Net Investment Income Tax when selling stocks or property, and to consider donating to charity directly from their IRA when they turn 70-1/2, as the donation will be counted towards their required minimum distribution. Medical and dental expenses are tax deductible if they reach 65 and the costs are more than 10% of their adjusted gross income, while 401(k) withdrawals before the age of 59-1/2 can trigger a 10% penalty. -- The Detroit Free Press
Complications that arise for family members co-investing in real estate: Tax complexities arise when parents co-own real estate investments with their children, according to The Washington Post. Parents should ask crucial questions before deciding to sell the property. There are tax advantages the investor should know before making any changes. -- The Washington Post
4 investment strategies that make paying taxes optional: Clients who invest in real estate can avoid taxes on capital gains of up to $250,000 for singles or $500,000 for couples if they make the property their primary home for two of the five last years before selling it, according to USA Today. Investing in individual stocks is another good option, since they don't pay capital gains tax until they sell these investments. Income from muni bonds is also non-taxable, while Roth IRA offers tax-free withdrawals in retirement. -- USA Today
5 tax breaks for hiring new employees: Hiring new employees enables employers to claim tax breaks and reduce their tax liability, according to Small Business Trends. The Work Opportunity Credit is given to business owners who employ food stamp recipients and other groups of workers, while employers who hire workers in distressed and Indian reservation areas are eligible for the Empowerment Zone Credit and Indian Employment Credit. Employers also can claim the research credit for up to $250,000 in payroll taxes while several states also offer income tax credits for employers hiring new workers. – Small Business Trends
Alternative Minimum Tax: 3 things every client must know: Here's three things many clients don't know about the Alternative Minimum Tax, according to The Motley Fool. For one, the AMT in its current form dates back to 1982, and was originally set up to ensure that high-income taxpayers paid at least a minimum rate of tax. -- The Motley Fool
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