Are Annuities a Good Investment

Are Annuities a Good Investment

There are two different types of annuities: deferred annuities and immediate annuities. The type of annuity you choose depends on how soon you expect to receive payments. If you are looking for a long term investment where you plan on making withdrawals once you reach retirement then you might choose a deferred annuity. If you are looking to make withdrawals sooner than you may want to choose an immediate annuity.

English: Types of Annuities
English: Types of Annuities (Photo credit: Wikipedia)

Either type of annuity can be fixed or variable. A fixed annuity acts like a CD from a bank but in this case it is an investment with an insurance company. You have a fixed interest rate that you receive for the annuity and it is usually a higher percentage than a normal CD would bring at a bank.

The guaranteed interest payment from these fixed annuities as well as the minimum amounts that you have to invest makes the fixed annuities appealing for those who are not confident in the ways of the stock market.

Another nice thing is that you do not have to pay taxes on the interest gained until you decide to start withdrawing the money from the annuity. A disadvantage with fixed annuities is that the interest rates might be high to begin with but can drop after the first year of having the annuity. This unknown factor can be a turn off for some who are hoping that they can maintain the rates that they first received when they started their annuity.

If you do not like the new rates and want to withdraw your annuity before it matures then you might be stuck paying surrender charges that will cut into your profits. With a variable annuity you can choose from a variety of investments to put your money into and the rate of payment you receive depends on how well the investments performed. With variable annuities you invest in several different stock or bond like accounts that will help your investment grow over a long period of time. Just like with the fixed annuities you pay no taxes on your gains until you begin withdrawing from your account.

Although with variable annuities you may have an opportunity to have greater growth potential with your investment there are some drawbacks as well. The investments you chose may take a turn for the worse causing your potential growth to plummet. There are drawbacks with the tax rates when you decide to withdraw you money,as well as fees if you decide to withdraw early and there can be high sales commission fees. It is good to do your research before you decide which annuity is best for you or even if an annuity is a good investment.

Tax Carnival Ecstasy – July 18, 2013

Little Book of Common Sense Investing
Little Book of Common Sense Investing (Photo credit: Wikipedia)

Welcome to the July 18, 2013 edition of Tax Carnival Ecstasy. In this edition we have 5 great articles starting with Daniel’s letter to the IRS disputing an insufficient funds charge. Bill Smith looks at reasons to adjust your w-4 withholding at work this year. And John Schmoll has investment advice for your retirement investing. Hope you like all the articles, bookmark, share, tweet and come back real soon.

Bill Smith presents Why Investors Should Be Interested In Bank Of America – FastSwings.com posted at FastSwings, saying, “There are several reasons that investors are starting to look into Bank of America stocks: the first being that for now, they are still fairly cheap because the bank is still paying off debts and has yet to reach its potential for profits.”

Daniel presents My Letter To The IRS Disputing Their Insufficient Funds Charge posted at Sweating The Big Stuff.

filing

Bill Smith presents Top Five Reasons To Adjust Your Withholding In 2013 posted at 2013 Taxes, saying, “Your withholding is the amount of money you have taken out of each paycheck to apply toward income taxes.”

retirement

John Schmoll presents Finding Strength in Our Lack of Investment Control posted at Frugal Rules, saying, “Investing in the stock market can be rife with emotion as stocks go up and down. While there is a lot we can’t control, there is much we can. By focusing on what we can control you can set yourself up for effective investing and start you down the road of investing for long term needs like retirement.”

John Schmoll presents What Makes a Company Worth Investing In posted at Frugal Rules, saying, “There are many things that you can look at if you’re interested in investing in stocks. By following some of the basics you can start to build a stock portfolio that will serve you well and help set you up for long term needs like retirement.”

That concludes this edition. Submit your blog article to the next edition of tax carnival ecstasy using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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Filing Your Taxes Online

Filing Your 2011 Taxes Online

Every year, many people race to tax preparation offices to have their annual taxes prepared, making sure to beat the April 15 deadline. Long waits and high fees are common, and many people find getting their taxes done a chore. Preparing your own taxes can save you time, money and hassle.

Tax preparation help at the library
Tax preparation help at the library (Photo credit: Newton Free Library)

Even if you have never prepared your own taxes, you will find filing your 2011 taxes online simple and easy. Online tax prep programs provide you with step by step instructions and guide you through the process of getting your taxes done. Simply gather your income information and basic documents and let the software do the rest.

Most people dread trying to figure out tax items like deductions, tax credits and multi-state taxes. When you complete your 2011 taxes online, the program will search for any applicable deductions and credits for you. The program will also help you to easily input information if you work in one state and live in another.

Don’t stress out about preparing your own taxes. With easy to use online programs that do all of the work, you can prepare your taxes without worry or hassle. With live phone support available, you can consult tax experts that can provide you with advice and guidance.

Waiting in long lines at the tax office is a thing of the past. File your 2011 taxes for free online and take the hassle out of tax filing. Gather your paper work and file your 2011 taxes online today.

Implications Of Passing A Senate Bill Enacting An Online Sales Tax

The Senate Bill Enacting An Online Sales Tax

Congress is currently moving forward with a Senate bill that could place sales taxes on buyers who place orders for items housed out of state. This proposed law applies to e-commerce sites, and the main goal of this online sales tax is to generate revenue for cash-strapped state governments in jurisdictions where online retailers are headquartered. The bill has its opponents among online retail giants such as eBay, and it also has supporters among the President and a number of state government officials.

Oregon - no sales tax
Oregon – no sales tax (Photo credit: Richard Masoner / Cyclelicious)

Only online retailers that gross more than $1 million per year in sales will be subject to this online sales tax. Shoppers at large online retailers such as Amazon will see slightly higher bills for each order they place, and the tax will also apply to brick-and-mortar retailers who sell items online. A few of these vendors include Best Buy, Target, Wal-Mart and many others.

Proponents of this online sales tax Senate bill argue that it will level the commerce playing field for both physical store locations and online retailers. Some believe that online vendors have had an unfair competitive advantage of being free from such sales taxation until now. According to this viewpoint, having a set of laws that taxes both types of sellers equally is considered a fair rule of doing business in the digital age. Depending on the individual taxes rates in different geographic regions, some states could have an online sales tax of 7% per purchase while others could have one as high as 9%.

TurboTax Fights Filing Reform

TurboTax Fights Filing Reform

TurboTax has come under fire recently after a report from Propublica revealed that Intuit, TurboTax’s parent company had launched a massive lobbying effort against what is known as return-free tax filing.

TurboTax Fights Filing Reform
TurboTax app (Photo credit: fixedgear)

This method, which is already used in other countries, would have the IRS prepare an estimate of the taxpayer’s liability. The recipient would have the option to accept the estimate, make corrections to it, or reject it and prepare his own return, using a tax preparation company or other option.

This process puts the onus on the IRS to use the information that employers and banks have already provided to them to prepare these files. The taxpayers who would benefit most from this process are those who file simple forms with no itemization.  Up to 40% of taxpayers could benefit from this system.

TurboTax 2013 would have suffered a clear loss of revenue by implementation of this plan.  Fewer taxpayers would actually need to file, and TurboTax, being the largest online tax preparation firm, would certainly feel the loss of preparation fees.

Other tax firms and some political figures have opposed return-free filing because they feel the plan expands government control and that receiving a “bill” from the government might intimidate taxpayers into paying the amount without question.

Free Turbo Tax 2013 preparation would not have been necessary if the return-free plan had been adopted. Considering that TurboTax 2013 garners much business by selling consumers upgrades to more expensive packages, the company’s opposition is understandable from a financial standpoint.  They cannot, however, claim an impartial interest in the matter.

Return-free filing is not a new idea and has been endorsed by two Presidents and a host of consumer advocates.  Other countries have already successfully adopted such a plan, but strong lobbying efforts by TurboTax and other tax preparation firms have so far kept it from becoming a reality in the United States.

Intuit’s PAC Lobbies Against IRS Filed Taxes

Should taxpayers determine how much are owed on their taxes or is this a job for the government? TurboTax lobbying has led to millions of dollars being spent against IRS filed taxes. The IRS could make doing taxes easier on Americans by filing the taxes of citizens instead. Intuit is the parent company behind the TurboTax software and has used its public action committee (PAC) to spend millions to oppose every effort to make tax day less painful.

Intuit, the parent company of TurboTax has lobbied extensively against the “return-free” filing, decreasing the stress of Americans who file complex taxes. This represents the continuation of having to file taxes which take up a great deal of time, despite Obama’s efforts in 2007 towards taxes being prepared by the IRS.

TurboTax and other similar companies are partly responsible for Americans not being able to go without filing their taxes for years. It’s possible that this would have previously been made a law, however, tax professionals have expressed their opposition to this. American’s being able to go without filing taxes for such long periods of time would be detrimental to the businesses that profit from this.

TurboTax’s public opposition to IRS government tax preparation is a clear indication the business knows their long term profits would be affected. Intuit’s PAC has spent over $5 million contributing to certain politicians with the biggest donation to one individual being $1 million.

Turn to a Phoenix Tax Lawyer for Advice

Taxes
Taxes (Photo credit: Tax Credits)

Filing taxes can feel like a daunting process at times. Tax laws at the federal, local, state, and foreign levels change constantly, causing potential confusion for taxpayers filling out a return. Turn to a Phoenix tax lawyer for advice; they possess the knowledge and combined expertise of tax, business and litigation to counsel and guide individuals effectively. Their understanding of how the different tax laws interplay helps clients to minimize their tax liabilities.

Tax issues can impact many areas of a person’s life, from estate planning to formation of a new business, and bankruptcy, to name just a few. Attorneys can assist with protection of assets through by setting up an entity to protect from malpractice, divorce, or any other threats to a client’s assets. In essence, proper planning avoids stress and anxiety in the event of unpleasant circumstances threatening the client’s tax situation.

A Phoenix tax lawyer can also assist with waiving IRS penalties and working out a payment plan for individuals owing money. In some situations the debt can be settled for less than the amount originally owed. Individuals behind on their filings can catch up quickly with an attorney’s assistance, thus avoiding further accrual of interest and penalties.

Individuals in need of tax assistance should seek a Phoenix tax lawyer today. Any issues or questions related to repayment of debt, filing, can be addressed knowledgeably by an attorney. They can help the client plan for the future and unpleasant events such as divorce, death, or malpractice.