Our weekly round-up of tax investment strategies and news your clients may be thinking about.
Can my customers deduct life insurance premiums from maintenance?
Divorced persons are not allowed to deduct life insurance premiums from their alimony if, according to this MarketWatch report, they are required by law to maintain coverage with their ex-spouse as the beneficiary. However, you can deduct the premiums if you make the payments on behalf of your ex-spouse. “If the former spouse is required by the divorce decree or divorce settlement to own and maintain a policy as security for post-death payments, installment premiums of the proceeds are generally taxable as alimony for the recipient’s spouse,” says one expert. “Payments from an insurance company established to meet post-death obligations are also fully taxable on the recipient’s spouse.”
The cost of health care could consume your customers’ retirement
According to a report by Fidelity Investments, a 65-year-old couple who are due to retire this year should have at least $ 275,000 in savings on their health care expenses during their golden years, according to Bloomberg. This year’s estimate rose 6% over the previous year. Although the couple qualify for Medicare, Part B and Part D premiums account for 35% of that cost, while purchasing an additional medigap doesn’t change the estimate. Advisors should encourage clients to put money in a health savings account that is funded with pre-tax funds and offers tax-free growth in savings and tax-free withdrawals for qualified medical expenses.
Your customers’ financial life is complicated. their portfolios shouldn’t be
Index funds and ETFs are not only inexpensive, but also popular with investors for the sake of simplicity. Investors choose these investments to make diversifying their portfolios less complicated, writes Morningstar’s Christine Benz. The type of investment option clients choose is determined by idiosyncratic risk factors. For example, workers have tax ramifications for holding too much equity from their employer and should diversify the rest of their portfolios by downplaying the sector their company belongs to and increasing their exposure to other industries. For retirees, the goal is to maintain their equity exposure in order to contain longevity and inflation risks and avoid large allocations in certain stocks or sectors.
Nobody knows how much to pay taxes in Bitcoin Cash
Although the IRS has not yet commented on Bitcoin Cash, experts say investors may owe taxes on the windfall, according to this Wall Street Journal article. A specialist says the tax liability on Bitcoin cash receipts could be due to technical reasons, and this could mean that the accident would be treated as decent income. Therefore, the tax rates on the income could be up to 39.5%.
Robert Shiller: Changes to this trigger would not have much of an impact on the real estate market
Nobel Prize-winning economist Robert Shiller said the real estate market would have “little effect” if the government decides to lower the limit on mortgage interest deductions, according to CNBC. The tax break “is limited to a small percentage of taxpayers. It’s just not that big of an effect compared to the big things,” Shiller said. “What really drives the real estate market is our sense of where we are going and the uncertainty of the time with the new administration in Washington and all of this talking.”
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