01 Mar CPA CLIENT BULLETIN SELECT March 2019
The new math of municipal bonds
Handling qualified charitable distributions
Deducting qualified business income
With 44 million borrowers owing a total of $1.5 trillion, student loan debt now exceeds credit card debt.
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Minnesota ranks as the least tax-friendly state for retirees. State income tax rates range from 5.35% to 9.85%. Taxes often are imposed on pensions, retirement plan distributions, and some Social Security benefits. Connecticut, Kansas, and Vermont are next on this high tax list.
Article: The new math of municipal bonds
Stock market volatility has some investors thinking about putting some money into bonds, which historically have offered relatively stable prices. One key decision facing bond market investors is whether to choose regular, taxable bonds or tax-exempt municipal bonds. (This discussion concerns investments in taxable accounts because tax-exempt municipals and muni funds typically don’t belong in a tax-favored retirement account.)
Taxable bonds generally offer higher yields than tax-exempt bonds. On the other hand, the after-tax return from munis may be higher after investors pay tax on taxable bond interest. Thus, the appeal of municipal bonds increases as investors’ tax rates move up.
Lower rates, tougher calls
The Tax Cuts and Jobs Act of 2017 (TCJA) reduced tax rates for many taxpayers, which could make municipal bonds less attractive.
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