Due to the tax law changes that happened last December, as a financial advisor you’ve probably received a lot of calls and questions about the “Tax Cuts and Jobs Act of 2017” already. The whole financial services industry is still working through the implications of the legislation, and the IRS will undoubtedly be issuing clarifications since the law takes effect for this 2018 tax year. (Like this clarification in February, regarding home equity loans: https://www.irs.gov/newsroom/interest-on-home-equity-loans-often-still-deductible-under-new-law)

Tax season has always been a great time to reach out to your clients, and the new legislation makes it even more so. Here are a few tax talking points you can use for further discussion and research.


11 Tax Talking Points

  1. You are a tax planner

First of all, if you are not a CPA or tax expert, be sure to disclose this (and pair up with one). But your knowledge of tax laws can help your clients. Be sure to remind them about the difference between tax preparation versus tax planning. Your job is to help them effectively plan for their future retirement, and the definition of tax planning is looking ahead in an effort to reduce their future taxes.

  1. Speaking of future taxes, RMDs haven’t gone away

RMDs haven’t changed, even though brackets have. It’s still a surprise to many people when at age 70-1/2 they have to start pulling money out of tax-deferred accounts and pay income tax on the withdrawal, whether they need the money or not. You are already well-versed in this, and your clients still need your knowledge and retirement distribution planning help.

  1. Regarding Roth IRA conversions

The lower income-tax rates may make conversions of traditional IRAs into Roth IRA accounts less expensive now. And since the tax rates revert back to 2017 levels in 2026 per the legislation, paying taxes on conversions now may save money in retirement later.

But beware and do this carefully. There are no more Roth recharacterizations allowed. In the past, clients could reverse their decision by the tax-filing deadline.

  1. Charitable giving options

Clients can still deduct charitable donations, but they’ll have to give a lot to warrant itemizing deductions, since the standard deduction amount for couples filing jointly was raised to $24,000. They could front-load anticipated future donations into one year if it makes financial sense.

Another strategy clients over 70 can use is to make charitable donations directly from their traditional IRA. Whether they itemize deductions or not, the donation counts against their RMD but is excluded from taxable income, according to Ed Slott. “The qualified charitable distribution enables a taxpayer to claim the standard deduction and still get the charitable deduction,” said Slott of Ed Slott & Co. “If you qualify, it’s the only way you should give to charity.”

  1. Estate planning is more important than ever

The tax bill doubled the estate-tax exemption to $22.4 million per married couple and kept it indexed for inflation. (In 2026 it will revert back to 2017 levels.) For the vast majority of Americans, the increase is meaningless, but for your high-net-worth clients, you may want to take advantage of new opportunities for estate planning prior to 2026.

In addition to pairing up with a CPA, be sure to find a great estate planning attorney, because under the new tax law, “estate planning has been completely transformed,” according to Financial Planning. Their February 14 article mentions how homes or vacation homes in high-tax areas could be transferred to a new type of trust which will permit non-grantor income tax status, which may salvage most of a client’s lost property tax deduction. (Under the new law, income tax deductions for state and local taxes are now capped at $10,000 per year.)

  1. Capital gains changes

While capital gains tax rates didn’t change, the income tax brackets did, therefore when capital gains taxes kick in changed a little bit, too.

  • The 0% capital gains rate applies for those with income up to $38,600 for single filers and up to $77,200 for joint filers
  • The 15% capital gains rate applies for single filers with income between $38,601 and $425,800 and joint filers with income between $77,201 and $479,000
  • The 20% capital gains rate applies for single filers with income above $425,800 and for joint filers with income above $479,000
  1. Student loans and college expenses

The tax deductions for current students remains largely unchanged. However, the good news is that federal and private student loan debt discharged from death or disability will not be taxed from 2018 through 2025—a big help to unfortunate families. Under the old law, the student’s family or estate would owe taxes on the debt amount forgiven.

  1. Homeownership

Mortgage interest remains deductible for the most part, but is limited to the interest on a maximum of $750,000 (down from $1 million) on home loans going forward. (Current mortgages are grandfathered under the old higher $1M limit.)

While home equity loan interest was widely reported as “no longer tax deductible starting in 2018,” the IRS has issued a clarification:

“Taxpayers can often still deduct interest on a home equity loan, home equity line of credit (HELOC) or second mortgage, regardless of how the loan is labelled. The Tax Cuts and Jobs Act of 2017, enacted Dec. 22, suspends from 2018 until 2026 the deduction for interest paid on home equity loans and lines of credit, unless they are used to buy, build or substantially improve the taxpayer’s home that secures the loan.

“Under the new law, for example, interest on a home equity loan used to build an addition to an existing home is typically deductible, while interest on the same loan used to pay personal living expenses, such as credit card debts, is not. As under prior law, the loan must be secured by the taxpayer’s main home or second home (known as a qualified residence), not exceed the cost of the home and meet other requirements.”

One key homeownership benefit stayed intact: If you lived in and owned a home as your primary residence for at least two of the past five years, you may avoid tax on proceeds of a home’s sale—up to $500,000 for married couples.

  1. Standard deduction and itemized deductions

The standard deduction doubles from $12,700 to $24,000 for married/joint filers; it is projected that 94 percent of taxpayers will take the standard deduction, especially since many other deductions have been lowered or removed. (The standard deduction will revert back to 2017 levels in 2026.)

The itemized deductions that remain in place for taxpayers include charitable contributions, retirement savings contributions and student loan interest. (You have to itemize and cannot take the standard deduction in 2018 in order to deduct these expenses.)

The deductions no longer available starting 2018 include moving expenses (except for military), fees for tax and financial advice, home equity loan interest (unless used for home purchase or improvements as discussed above), and alimony payments. (People receiving alimony are now able to deduct it.)

  1. New income tax rates and brackets

The income tax rates have been lowered for almost every bracket until 2026. The bracket income levels will rise each year with inflation, because they are now tied to the chained consumer price index. (Over time, this will move more people into higher tax brackets.)

The corporate tax rate was lowered from 35 to 21 percent, the lowest it’s been since 1939. Per the legislation, this lowered rate never expires.

  1. Personal exemptions

Starting in 2018, taxpayers will no longer be able to subtract $4,150 from income for each person claimed. As a result, some bigger families may pay higher taxes.

  1. Alternative Minimum Tax

The alternative minimum tax is retained, and the exemption is increased from $84,500 to $109,400 for joint filers. (The alternative minimum tax is not available at $1 million for joint filers.) The exemption reverts to 2017 levels in 2026.


For more ideas to help you connect and communicate with your clients, please call Shurwest at 800.440.1088.


This material is not intended to be used, nor can it be used by any taxpayer, for the purpose of avoiding U.S. federal, state or local tax penalties. Please consult your personal attorney and/or advisor regarding any legal or tax matters.

Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for an investor’s portfolio. All investment strategies have the potential for profit or loss. Investors should carefully consider their objectives, risk tolerance, and time horizon before investing.


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