Avoid Annuity Tax Problems

Home Business Tax Savings About Home Business Tax Savings Tax Reduction Products Home Based Business Contact Home Business Tax Savings  
Home Based Business
Tax Reduction

If you are self-employed and live in the United States or Canada, you can probably reduce your taxes with a small business run with an honest expectation of profit and where your expenses are ordinary, necessary, and reasonable for that business. It's that simple.
Tax Links Tax Savings

Avoid Annuity Tax Problems

Millions of investors own retirement annuity accounts but few are aware of the tax implications when the annuity is passed to an heir or beneficiary.

A little known tax fact is that income tax on an individually owned annuity can be postponed only if the account owner's spouse is named as the sole beneficiary. If the annuitant is not married, the same treatment may be obtained through the use of a trust account.

Any other designation of the account beneficiary will cause the proceeds to be immediately taxable in the year of the account owner's death. The results can be financially devastating, triggering huge current tax liabilities that would have otherwise been avoided.

Most beneficiary designations are made at the time that the annuity account is opened, often without the advise of a professional tax adviser. The investment representatives who typically open these annuity accounts give the blanket recommendation to investors to "seek advise from your own tax adviser" but few investors ever bother to seek separate tax advice.

Investors often assume that the financial planner opening the annuity account is incorporating tax advice into the service provided, but usually this is not the case. By the time the tax problem is discovered by the executor or the estate, it is too late to make any correction.

Written by Tony Novak
Tony Novak is an independent writer and financial adviser in Narberth PA who provides OnlineAdviser services through MedSave.com and FreedomBenefits.org

More Articles
  • Estate Tax: What It Is And How It Is Filed
    According to the Internal Revenue Service (IRS), an Estate Tax is a tax that is imposed on your right to transfer your property and belongings after your death. The individual who is in charge of handing...
  • How to minimize your taxes on wealth
    Taxes on wealth or simply wealth tax is the tax levied on the value of wealth owned by a person. As the term 'wealth' carries with it a broader meaning, generally capital transfer taxes (which include...
  • Fraudulent Tax Shelters - KMPG Goes Down Hard
    In the largest criminal tax case ever filed, KMPG has copped a plea to using fraudulent tax shelters to bilk the government out of 2.5 billion dollars. KMPG has agreed to pay a fine of $456 million dollars,...

Tax Reduction Strategies
"It's How Much You Keep That Counts! Not How Much You Make."

Read More
THE ULTIMATE Tax-Reduction System For Small and Home Based Businesses!

This easy-to-use System was developed by an MBA and a CPA, and contains SPECIAL ENDORSEMENTS by a Certified Financial Planner and a Registered Investment Advisor, each with more than 20 years experience in their fields.

Get the Biggest Refund you deserve
Maximize your Tax Deductions
with TurboTax

Copyright ® 2008 TaxSaverOnline.com
Home     About Us     Home Business    Tax Savings     Newsletter    Articles