Tax Deductions & Strategies

Ask the Right Questions

How much do you need to save for your child's education?
What will be the cost of your child's education in five years? In 10 years?

Quick Report

Create a personalized Education Funding Report

Education Funding Plans

Save money for education:

Custodial accounts
Coverdell education savings accounts
529 plans

Money Management Tip: The Rule of 72

The Rule of 72 is a way of determining approximately how long it will take for your money to double at a given rate of return.

Money earning a 3% annual rate of return will double in 24 years (72 divided by 3% = 24)
Money earning a 6% annual rate of return will double in 12 years (72 divided by 6% = 12)

Deductions, Credits & Strategies

Many tax advisors will suggest that you may be able to reduce your taxes by itemizing your deductions, rather than taking standard deductions. For example, your joint income might be $65,000 in 2008, but by itemizing your mortgage interest, property taxes and charitable contributions you reduce your taxable income below the $65,100 mark, which would lower your marginal federal tax bracket from 25% to 15%.

Take Advantage of Tax Deductions and Credits

Always take advantage of any deductions and tax credits that may be available to you. Deductions will reduce your taxable income. This, in turn, reduces the amount of taxes you pay depending on your tax bracket. Tax credits are taken after your taxable income is computed, and represent a dollar-for-dollar reduction of taxes you pay.

For more information on these tax savings ideas, please consult your personal tax preparer.

Tax-Advantaged Investment Strategies

Another way to save money on your taxes, is to invest using tax-advantaged strategies.

Consider municipal bonds. They are issued by a state, state agency or authority, or a political subdivision (county, city, town). Interest earned is exempt from federal income taxes, and from state income taxes within the state of issue.

Also, Individual Retirement Accounts (IRAs) grow tax deferred and may provide an initial tax break through deductible contributions. The traditional IRA is the most familiar type, but a Roth IRA (where distributions may be tax-free, if certain conditions are met) may provide an attractive option for you if your income exceeds the limits for deducting your contributions to a traditional IRA. Income taxes are payable upon withdrawal. A 10% federal tax penalty may apply to withdrawals taken before age 59½.

Important Notice about Purchasing a VALIC Annuity From Us

To help the government fight the funding of terrorism and money-laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who purchases certain annuity products. What this means for you: When you purchase certain annuity products from us, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may ask to see your driver's license or other identifying documents.

Annuities and insurance products are offered by The Variable Annuity Life Insurance Company (VALIC), AIG Annuity Insurance Company, AIG-affiliated insurance companies or other approved companies. Each underwriting company is financially responsible for its own insurance products.

Securities and investment advisory services are offered by AIG Retirement Advisors, Inc., member FINRA, SIPC and an SEC-registered investment advisor.

AIG Retirement is the marketing name for the group of companies comprising AIG Retirement Advisors, Inc.; AIG Retirement Services Company; and The Variable Annuity Life Insurance Company (VALIC); each of which is a subsidiary of American International Group, Inc.

This information is general in nature and may be subject to change. Neither VALIC nor its financial advisors or other representatives give legal or tax advice. Applicable laws and regulations are complex and subject to change. For legal or tax advice concerning your situation, consult your attorney or professional tax advisor.