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A Deferred Annuity Can Reduce Income Taxes on Social Security Benefits PDF Print E-mail
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Wednesday, 07 July 2004
PRWEB) January 10, 2008 -- AnnuityAdvantage.com announced today that it has acquired software that can analyze an individual's financial position and offer tax-savings recommendations. This new software pinpoints the tax-savings strategy of buying a deferred annuity (http://www.annuityadvantage.com) for those receiving Social Security benefits.

 

Those receiving Social Security know that, depending on their earnings, they are responsible for paying income taxes on a portion of their benefits. The IRS adds half of an individual's Social Security benefits plus all other income (such as pensions, CD/bond interest or capital gains) to calculate the income taxes owed. For 2007, the nontaxable threshold for total adjusted income was $25,000 for a single person and $32,000 for those who are married, filing jointly. Those who exceed this threshold will be required to pay income tax on 50-85% of the amount of their Social Security benefits that goes over the threshold.

 

For a single individual, 50% of Social Security benefits are taxed when adjusted income is between $25,000 and $34,000. Amounts above $34,000 are 85% taxable.

 

For joint filers, 50% of Social Security benefits are taxed when adjusted incomes are between $32,000 and $44,000. Amounts above $44,000 are 85% taxable.

 

"Income tax on Social Security benefits can reduce an already-small amount of monthly benefits," says Ken Nuss, CEO of AnnuityAdvantage.com, an annuity shopping and comparison service. "By moving liquid investment funds into a deferred annuity (http://www.annuityadvantage.com/in/deferred-annuity.htm), retirees may be able reduce or eliminate taxes on Social Security income. An added bonus is that deferred fixed annuities are a safe, stable way to reap tax-deferred growth on savings."

 

A deferred fixed annuity (http://www.annuityadvantage.com), which is a contract between an insurance company and an individual, offers a favorable interest rate for a set term. For example, a premium deposit of $100,000 moved into a 10-year annuity, with a guaranteed interest rate of 5.10%, will result in $164,447 at the end of the annuity's 10-year guarantee period. Deferred fixed annuities (http://www.annuityadvantage.com) are backed by the full faith and credit of the issuing insurance company.

 

Savings products such as bank CDs, savings accounts and money market accounts are safe and earn interest; however, a consumer has to pay taxes on his or her interest earnings yearly. Annuity interest earnings, however, are tax-deferred until withdrawn. By moving fully-liquid savings accounts, CDs or money market accounts into annuities (http://www.annuityadvantage.com), a person can take a portion of their portfolio that produces taxable interest earnings and turn it into tax-deferred savings. With that usually-taxable portion of money locked away in an annuity, an individual's adjusted income is lowered, which leads to the possible reduction or elimination of the taxation of Social Security benefits.

 

"These days, retirees and near-retirees should first be vigilantly looking for ways to maximize their income. They also have to be sure that there is little risk of losing their savings," explains Nuss. "Buying a fixed deferred annuity can help seniors achieve these two goals."

 

AnnuityAdvantage.com's new Social Security tax analysis software assesses Social Security income, other sources of income and liquid savings to determine whether or not purchasing an annuity will save an individual from paying undue taxes on his or her Social Security income.

 

Those interested in learning more about how deferred annuities may help reduce personal federal income taxes should call 1-800-239-0356 or visit http://www.annuityadvantage.com AnnuityAvantage.com also offers a free personalized Social Security tax analysis to aid consumers in determining the suitability of a deferred annuity for their individual financial situation.
Last Updated ( Thursday, 06 March 2008 )
 
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Newsflash

San Mateo, CA (PRWEB) January 16, 2008 -- With the New Year underway, Andrew Housser, co-CEO of free online consumer finance portal Bills.com, has seven steps Americans can take to make the most of their 2008 tax planning.

 

"As you start to see how your tax picture fared in 2007, it is a great time to make 2008 an even smarter year when it comes to your personal finances," Housser said.

 

These seven steps can get individuals started:

 

1. Take a baseline measure. Review tax changes for 2008 and make plans accordingly. For instance, the deduction for mortgage-insurance premiums on mortgages taken out after 2006 that was due to expire at the end of 2007 was actually renewed by Congress at the end of December. Other tax credits and deductions also come and go. Understand the current situation before making plans.

 

2. Make good on past tax debt. "Some Americans avoid looking at their tax bills -- or in some cases, paying them -- for years on end," Housser said. "If you are liable for back taxes, the time to remedy the situation is NOW. The Internal Revenue Service is becoming more and more diligent about following up on back taxes." A tax advisor and/or or debt resolution expert (try www.freedomfinancialnetwork.com) can help. Those who are unable to pay may be eligible for various solutions, such as offers in compromise or other negotiations with the IRS.

 

3. Correct withholding. A big refund means taxpayers succeeded in not owing the IRS -- but it also means they're giving the IRS an interest-free loan by having too much withheld in taxes. Those who owe a bundle should rework withholding forms or make quarterly estimated tax payments -- now.

 

4. Plan for flex spending. Early in the year -- if not sooner -- employers ask employees to update their information for flexible spending accounts. "Review last year's health costs if you have a flexible spending account for health expenses, and anticipate anything that will change this year," suggested Housser. "If you budgeted for LASIK surgery last year, for instance, do not have the same amount withheld this year." Do the same for child care. If Junior is headed to first grade in the fall, child-care expenses will tumble. Do not lose cash by having too much withheld -- and do not miss out on benefits by withholding too little.

 

5. Plan to save for retirement. Each year, retirement plan funding limits rise. With inflation, the deductions apply to slightly higher income levels. "Know where you stand, and if at all possible, maximize your investments for your later years," Housser said.

 

6. Plan a giving strategy. It can feel like part of the holiday spirit to dash off checks to every organization that asks in December, hoping to add to deductions. But a mad dash at the most expensive time of the year isn't in anyone's best interest. Make charitable donations part of a monthly budget. Set an annual target, divide it by 12, and give each month. Don't neglect to get a receipt, required for taking a tax deduction for contributions to qualified organizations.

 

7. Personalize. If a certain tax issue tends to surprise you every year, make a note of it this year and resolve to correct the problem before next year.

 

"Nothing feels better than starting a fresh, new year with your financial life in place, and taxes are an important part of that scenario," Housser concluded. "By taking some time to plan for 2008 while the year is young, you'll give yourself a New Year's gift of peace of mind -- at least until the next tax season rolls around."

 

Based in San Mateo, Calif., Bills.com is a free one-stop online portal where consumers can educate themselves about complex personal finance issues and comparison shop for products and services including credit cards, debt relief assistance, insurance, mortgages and other loans. The company blogs about consumer finance issues at http://www.bills.com/blog Since 2002, Bills.com has served more than 30,000 customers nationwide while managing more than $500 million in consumer debt. Bills.com is a division of Freedom Financial Network, LLC, whose co-founders and CEOs, Andrew Housser and Brad Stroh, have been named Northern California finalists in Ernst & Young's Entrepreneur of the Year Awards.