Updated Saturday, August 1, 2015 as of 6:18 PM ET

Ask Ed Slott: Reducing Taxes for Self-Employed

We are looking to convert an IRA to a Roth IRA.  I took a loss on a variable life policy that was converted to an annuity.  Can we use that loss to offset the tax due on a Roth conversion?

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Comments (4)
If non-qualified variable life insurance policy is converted to a deferred annuity, the cost basis of the life policy will carry over to the annuity and will provide tax free growth of capital until the annuity value equals the cost basis. The annuity can then be liquidated (subject to any penalty fees) without paying any income tax. Selecting an annuity with a short penalty period would be best.
Posted by Len C | Sunday, May 12 2013 at 7:01PM ET
And once again you are covering some very interesting topics here. I have some friends who always turn to financial adviser for a proper assistance. But looks like it is just a waste of money, especially when you live from paycheck to paycheck. Was also really curious about taxes as I am currently self-employed and would like to know what I can count on. Seems like converting fund to Roth IRA is exactly what I need to do in the nearest future. Thank you so much Ed for you valuable advices.
Den from cashadvance in Saskatchewan Province store
Posted by Alicia S | Thursday, June 06 2013 at 5:59AM ET
Calculate the business expenses you need to cover. Many business owners start their business from a spare room and for some the business is able to grow without needing to relocate to separate offices. If you do work from home you should definitely make a claim for the use of your home as an office.
Posted by KIMMY B | Monday, October 21 2013 at 3:17PM ET
The self-employed do not suffer deduction of tax at source. As with all planning it is necessary to commit all the figures to paper to completely understand the financial implications and result.
Posted by STEVE B | Thursday, November 28 2013 at 11:00AM ET
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