IRS and Structured Settlement Annuities

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Annuities and Paying Taxes

You have a settlement and while the payments coming in nice, you would like to get cash for settlements that you have instead of the payments. So you start to look around and see what options are available. You find a company and start to work on getting the transaction started. But there is one factor that most people forget to think about and that is the IRS.

How Does the IRS Get Involved?

When a structured settlement annuity is setup, there are strict guidelines that must be followed. If cash for settlement is done, then they get involved. Some of the reasons they do this are:

For Your Protection

The IRS is only involved with structured settlements because they want to make sure that the person receiving the settlement gets all of the money. The Payment Settlement Tax Act of 1982 prevents anyone from taking money out for taxable purposes. However when getting cash for settlement options, these will be taxable. You must make a decision regarding if selling is the best choice or not.

All companies that handle these types of cases will require payment of some form, and will be the insurer of the settlement once it’s sold. Most companies will sell these, but their pricing may vary and research must be done. The research will help to decide which company will work best for you and give you the most money for your settlement. When the case comes before a judge, they will look at everything to include the price that your company will be charging. If they feel this is not a fair deal for all parties, they will then deny the case.

Getting cash for a settlement happens often, and with this in mind, proceed but do so with caution. Make the right choices and decisions, and the money will be yours.

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