Greg Orcutt


Orcutt & Company, CPA

936 State Route 28, Milford, OH 45150


Phone:  513-576-1989 



February 2019

February 2019 Q and A

Q and A

I want to sell my annuity and buy another one with the proceeds on my own, but a friend told me this would be a bad tax move. Is that true?

When you want to exchange your annuity or life insurance policy with cash value, you can make what’s known as a 1035 exchange: a direct swap to a new annuity without triggering a taxable event. Take possession of the funds and you’ll be taxed. Another caveat: Check with the provider of your current annuity for any surrender charges should you make the swap.

I recently started a new business, which I didn’t incorporate. Even if I don’t expect to make much money during the first six to 12 months, do I still have to file estimated quarterly tax returns?

Your tax professional can talk to you about your specific situation, but generally anyone who earns more than $400 in self-employed income will have to file a return and potentially pay taxes. For example, you will have to pay income and self-employment taxes, the latter including Social Security and Medicare taxes. IRS form 1040-ES gives you an overview of the subject, a worksheet to figure your liability and blank vouchers to file quarterly. Use Schedule SE (Form 1040) to file self-employment taxes annually.


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