Tax Planning Tips


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Windfalls and Taxes

Insurance proceeds, inherited IRAs, lawsuit settlements — a financial windfall can come at any time from a variety of different sources. If you receive a substantial inheritance, one of the most important things to ascertain is if those funds are subject to taxes and, if so, to determine the net after-tax value. This will help you decide if you will need to use a portion of the money to pay the taxes, which may include income, gift and/or estate taxes — at both the federal and state levels.

For example, life insurance proceeds are not subject to taxes. However, if you win the lottery or are successful at the gambling tables, you will have to pay taxes on your winnings. Visit the IRS website for more information and consult a tax advisor about your particular situation.

Tax Preparer Tips

If you’re seeking a tax pro to complete your return this year, be sure to check out your candidate’s history. You can do so by contacting the relevant state insurance department and/or FINRA’s BrokerCheck site, which provide information regarding any disciplinary actions as well as credentials and licenses. Check out the following sources for additional information, depending on the type of preparer you’re considering:

  • CPA — the State Board of Accountancy
  • Tax attorney — State Bar Association
  • Enrolled Agent (EA) — visit IRS.gov and search for “verify enrolled agent status”

Be sure to ask how your tax preparer is paid. Ensure your refund is sent directly to you or deposited to your bank account, and pay your preparer separately. Consider using a preparer who does not offer to receive your refund directly and then send you the balance after he or she deducts a fee so you are aware exactly how much your preparer is charging in fees.*

Our firm assists retirees and pre-retirees in the creation of retirement strategies utilizing investment and insurance products. Advisory services offered through B.O.S.S. Retirement Advisors, a Registered Investment Advisory firm, and offered through Global Financial Private Capital, LLC, an SEC Registered Investment Advisor. Insurance products and services offered through B.O.S.S. Retirement Solutions. To see a list of services please visit us at bossretirement.com/services.

This content is provided for informational purposes only. It is provided by third parties and has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.

* IRS; Jan. 10, 2015; “Ten Tips to Help You Choose a Tax Preparer”; http://www.irs.gov/uac/Ten-Tips-to-Help-You-Choose-a-Tax-Preparer; accessed Jan. 28, 2015.

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