Fixed Income Annuity Growth Tax Treatment

One of the more common difficulties that people have with their fixed annuities relates to the tax treatment. Although it may seem overwhelming the concept is usually pretty simple to grasp. A fixed annuity is a contract in which the insurance company agrees to make a fixed payment over a specific period of time. The payment is contractual and is based on the premium paid to the insurance company.

One of the more appealing features of an annuity for most people is the option to make it a life annuity. These types of annuities can provide a steady, reliable income for the duration of an annuitant’s lifetime.

On the surface, the tax treatment of fixed annuities is rather simple. In is when you dig into the details that the more complicated parts can emerge. Plainly stated, most annuities have tax-deferred growth, and are taxable upon payment distributions.

The tax-deferred growth means that any values that increase in the account during the accumulation phase are not taxable until they are pulled out of the account. This sort of deferred taxation can have very positive effects on the size of the account.

Each annuity distribution is split into two sections, a taxable section and a nontaxable section. The portion of the benefit that is taxable is dependent upon the exclusion ratio for the annuity. This ratio is calculated by dividing the amount invested in the annuity by the total amount expected to be received. This ratio is then multiplied by each anticipated distribution to calculate the taxable and non-taxable portions of the distribution.

Generally speaking, the taxable portion of the account refers to the portion of the account that has never been taxed, or the growth and payments beyond the premium payments. The nontaxable portion of the annuity is typically the sum of the premiums paid.

A life annuity contract is generally more difficult to calculate than fixed period annuities. The difficulty with a lifetime annuity is determining the expected payout. Life expectancy tables prepared by the U.S. Treasury Department are used to determine life expectancy of the annuitant.

The fixed annuity can be a good vehicle for your retirement planning needs and the future preservation of your hard-earned money. Lifetime income annuity contracts are able to provide a steady, secure, and predetermined income that you are sure to not outlive. Add in the tax-advantages that annuities provide, and the fixed annuity can be a very effective insurance planning tool.

Before you purchase a fixed annuity be sure to visit Brian Atkinson online. There are number of fixed income annuities strategies that can be combined to create the most effective financial plan for your individual circumstances.

R…D Tax Credit – Documentation is the Key

Presidential support of the R…D Tax Credit:

On March 23rd, President Obama spoke at the White House about making the R…D Tax Credit one of a few permanent tax incentives available to manufacturers:

“This is a tax credit that returns $2 to the economy for every dollar we spend. Yet over the years we’ve allowed this credit to lapse or we’ve extended it year to year — even just a few months at a time. Under my budget, this tax credit will no longer fall prey to the whims of politics and partisanship. It will be far more effective when businesses like yours can count on it, when you’ve got some stability and reliability.”

The R…D Tax Credit, created by Congress in’81, is a tax credit (tax incentive) for U.S.-based innovation. It’s designed to foster private sector research and development investment in product development, process improvements, and technology innovation. However, IRS regulations require that any manufacturer claiming the R…D Tax Credit must be able to prove: 1) that their activities meet the definition of qualified research, and 2) that the costs associated with these activities are documented appropriately. These requirements can be a significant administrative burden on the manufacturer.

IRS Audit Results Recently:

In a recent IRS audit, the Service disallowed 100% of a taxpayer’s claim for the R…D Tax Credit (and attached fees and penalties). In part, the auditor’s position included the following statements:

“It is not enough to engage in qualified research activities to be entitled to the research credit. Taxpayers claiming the credit must maintain sufficient records detailing and substantiating the expenditures claimed as eligible for the credit. . . . The Taxpayer, under its own admission, is unable to provide any records showing how many hours each employee worked on any given project during the credit year. Nor are they able to provide any records showing how many hours any employee’s work involved activities that might have constituted qualified research.”

These of Which Titan Armor will meet in the R…D Credit documentation requirements:

Titan Armor is a web-based application designed to meet or exceed the IRS’ current expectations for research and development “contemporaneous” documentation. This project was designed on management fundamentals, and Titan Armor ensures of a quick and easy solution for qualified employees to track time against projects, and mark those projects for innovations in the R…D Tax Credit, per the IRS requirments.

Titan Armor is only $295 per month*, and FREE for the first 30 days!

Our main goal is to help ALL the US Manufacturers document and capture their fair share of these federal tax credits. In doing this is why we offer Armor at $295/month, per facility and with unlimited users. At this price, Armor makes documenting and defending the R…D Tax Credit cheaper than ever before! Armor’s website also provides a no-cost, 30-day trial for all manufacturers. With no commitment to purchase, you can get access to Titan Armor right now, and see for yourself that documenting your research and development activities correctly is fast and easy!

To find out more of the services that you could be gaining from Titan Armor please visit their website and see how you can start getting the benefits you diverse. This and other unique content ” articles are available with free reprint rights.