The first thing to remember is that late penalties and interest can be charged for filing a late estate or income tax return, possibly resulting in thousands of dollars.
Of key importance when trying to avoid paying unnecessary taxes, both now and in the future, is to work with a professional who specializes in these matters. When looking at investments as a way to save on taxes, the person to be speaking with would be your financial advisor. Though he/she may consult with your attorney and or accountant at times to either gather relative information, or to share information with them on your behalf, the actual management of the investments will be his/her area of expertise.
Fortunately, as time has progressed, numerous products and programs have been designed to provide you with an array of tax advantaged choices. Often these are found in proper investment management and annuities.
Proper Investment Management - An experienced financial advisor specializes in seeking out the most tax advantaged strategies when managing a portfolio that may include stocks, bonds, mutual funds, real estate holdings and commodities. They each have their own unique identity, benefits and drawbacks, and they all provide various possibilities for a tax advantage. The key element here, of course, is to be sure you work with a proven, experienced financial planner.
Annuities as a Strategy - Looking at annuities and how they can benefit you from a tax savings stand point, there are many different approaches and strategies they offer. For instance, if your goal is to design a plan that will guarantee you an income for the rest of your life, there are a number of annuities that will do this for you. However, you may be comfortable with the income you have to cover your living expenses, and are more interested in passing assets down to your children and grandchildren. In fact, there is even an annuity now that will allow you to pass assets down to your heirs through multiple generations.
There is one thing that is certain about annuities however; they can be very complicated to understand, especially in deciding which one would work best for you. It is important to engage a financial advisor who specializes in all the various types of annuities, to help you find the best fit for your goals and objectives. We have worked with annuities for many years, and have helped our clients in choosing the best annuity to meet their needs. We would be happy to help you better understand more about annuities, and together see if there is an annuity that would be beneficial in meeting your overall tax saving strategy.
One very important issue you need to be aware of is, Required Minimum Distributions (RMD’s). For many IRA’s that are inherited, it will be necessary for you to take a RMD every year, including the year that your loved one passed away. When this is not done, the government may impose a 50% penalty on the amount that was supposed to have been taken. As you can imagine, this can become a very large number, depending on the size of the inherited IRA.
Tax saving strategies do exist. With the proper guidance and understanding, you may be able to take advantage of these strategies.