Tax Season is Over – or is it?
April 18 marked the end of the 2021 tax filing season. For most, tax season represents filing our return with an eye towards getting the maximum refund possible. However, it is ultimately a reactionary process in that we are looking at the prior year’s tax obligations when it is too late to change the outcome. But that does not mean we cannot learn things from this year’s tax season that could impact our taxes for 2022 and beyond. That is where the life insurance industry comes in, as we may be uniquely situated to help. Life insurance provides an income tax-free death benefit and — in permanent products — the potential for tax-free cash accumulation and tax-deferred distributions. That means we may be able to not only help clients find the insurance protection they need, but also provide an important opportunity to mitigate and potentially minimize the impact of taxes in their future. After all, many clients realize that when it comes to taxes, it is not how much you make, but what you are able to keep that matters. Here is a roundup of some of the popular tools that are available to help with your tax-diversification conversations.
Using a 1040 as a catalyst for planning
Form 1040 (the most common standardized tax form) can be a treasure trove of information that can help steer important conversations about protection and future planning.
- Hancock Talks Podcast: Listen to Carly Brooks and Karin Egan as they explore how to use the 1040 for these important discussions.
- 1040 Guide: Our updated guide takes a deep dive into the 1040 and several other commonly filed Schedules, highlighting the information that can be gleaned to help you analyze changes in your clients’ tax liability and identify areas of opportunity for future tax planning.
Know the Law: Don’t get caught unaware — stay current with state tax changes too
State laws vary and to help you navigate the maze of state income taxes, state estate taxes and even creditor protection laws, we’ve compiled several resources designed to help keep this information at your fingertips. Advanced Markets has updated the following tools to reflect new changes to state laws:
- “Know the Law” microsite: For quick and easy access to relevant state laws, make sure to bookmark this site. It can provide the answers you need when clients 1) are moving to another state, 2) hold assets in other states, or 3) need a quick overview of their current state’s laws.
- Because You Asked (BYA): We have updated several BYAs to reflect 2022 changes and to provide a state-by-state breakdown on how state laws address creditor protection of life insurance as well as income and estate taxes. These are great reference pieces and can be shared with clients’ centers of influence.