Tax Strategy Scan: Favorable Yields for Risk-Takers

June 17, 2016, 4:43 p.m. EDT 1 Min Read

Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.

How to mine for yield with MLPs: Investors with a high tolerance for risk may want to consider master limited partnership, which offer favorable yields and tax benefits, according to U.S. News & World Report. While MLPs can be set up in various industries, the vast majority of the nearly 150 in business today specialize in oil and gas. MLPs are appropriate for long-term investors interested in attractive total returns, including a high level of current income. -- U.S. News and World Report

8 age-related tax milestones your client should know about: There are eight age-specific tax milestones clients should be aware for tax and financial planning, according to MarketWatch. Under the Kiddie Tax rules, for example, part of a young person’s investment income can be taxed at the parent’s federal rate (which can be as high as 39.6%) rather than at the young person’s lower rate (usually only 0%, 10%, or 15% depending on the type of income). – MarketWatch

A bright idea among municipal bond ETFs: With the Federal Reserve holding off on an interest rate hike up to this point in 2016, clients have been flocking to longer-dated fixed income exchange-traded funds, including municipal bond funds, according to ETF Trends. Municipal bonds and their corresponding ETFs are popular among conservative, income investors for added yield, tax advantages and as an avenue for diversification in portfolios with U.S. government bonds. -- ETF Trends

How retirees can avoid a big spring tax bill: Retirees may want to use withholding, quarterly payments and required minimum distributions to determine when the IRS taxes their retirement income, according to Kiplinger. For example, a retiree who's still working may consider amending their W-4. Boosting the number of allowances they claim will cut withholding and reduce next year's refund; reducing the number will do the opposite and reduce what you'll owe next spring. -- Kiplinger