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Tax Strategy for the Week (September 20th,2013)

Split Funding an Annuity
Tax Issue

Taxpayers often use interest income to supplement earned income or retirement income. Interest income generated by bank savings accounts or certificated of deposit (CD) is subject to ordinary income tax at the taxpayer’s marginal rate.

When interest rates are low, taxpayers look for ways to generate the same amount of income as when interest was higher.

Applicable Tax Law

Earnings on nonqualified annuities are taxed at ordinary income tax rates when withdrawn.
Earnings on nonqualified annuities are tax deferred until withdrawn.
Interest earned from bank savings account and CDs are taxed at the taxpayer’s marginal rate in the year earned.
Taxpayers […]

Tax Strategy for the Week (September 13th,2013)

Nonqualified Annuities – Tax Benefits
Tax Issue

Nonqualified annuities offer tax-deffered earnings. However, upon distribution, nonqualified annuity earnings are taxed as ordinary income. Nonqualified annuity withdrawals are treated an income-first, meaning that the earnings are withdrawn before removing the principal. In addition, if the taxpayer is younger than 59 ½, withdrawals of earnings are generally subject to an additional 10% tax.


Other investment income, such as stock or mutual fund dividends, is often taxed as qualified dividends at a lower rate than ordinary income. In addition, equity investments help for greater than one year are generally taxed at a lower capital gains […]

Small Business Requirements for Obamacare

The health insurance marketplaces created by the Affordable Care Act (commonly known as Obamacare) will open on October 1, 2013.  Most small-business employers—those with 50 or fewer full-time employees—are not required to offer health insurance coverage under the Affordable Care Act.  Additionally, businesses with more than 50 full-time employees have gotten a reprieve from penalties if they don’t offer insurance for at least one-year. However, all companies, regardless of size, are required to notify their employees about the Obamacare health insurance marketplace.  The state and federal insurance exchanges are websites on which individuals and small businesses can shop for […]

Tax Strategy for the Week (September 6, 2013)

Does it Make Sense to Refinance a Mortgage?
Tax Issue

The chance to refinance a mortgage and get a lower interest rate is sure to get a homeowners’s attention. Most people assume that refinancing will put them ahead economically, but that’s not always the case. Any number of situations can arise which will make the decision to refinance unwise. Refinancing a mortgage should be done with just as much care as was put into the decision to obtain the original mortgage. Sometimes a mortgage refinance makes sense. Other times, it is better to stay with the current arrangement.

Applicable Tax Law

Home […]

Tax Strategy for the Week (August 30th, 2013)

First Time Homebuyer – Deducting Points
Tax Issue


Points paid to purchase a home are fully deductible in the year paid if the loan meets certain criteria. However, first-time homebuyers who purchase a residence late in the year often find they do not have enough mortgage interest or property taxes accumulated to benefit from itemizing deductions. The deduction for points paid on the purchase of their home may be lost.


Applicable Tax Law


For points to be deductible, the loan must be secured by the taxpayer’s main home, paying points must be an established business practice in the area, the points paid most […]