For taxpayers with a year-end balance date, the last two months of the year provide a valuable opportunity to plan for tax liabilities. We can help you to avoid falling into many different tax traps.
Effective tax planning will identify tax exposures that, without being addressed, lead to more tax being paid than would otherwise be due, should some advance planning have been done.
A tax presence in two or more countries warrants attention at a time during the year:
a) when the taxable income of an individual of one country is close to certain, due to the imminent close of the tax year; in the case of the United States, for most taxpayers, the calendar year, and;
b) when the planning is done near to, but not right at the end of the year, to provide a window of opportunity for the taxpayer to execute transactions before the end of that year that will assist with minimization of taxation. Conversely, it may be advantageous from a tax perspective to consider delaying a transaction that was scheduled to occur, before the end of that year, in order to minimize taxation, for example the sale of an asset, and;
c) when the planning is done towards the end of the tax year of the country in which the taxpayer also has a tax presence; in the case of New Zealand, for most taxpayers, 31 March each year.
We can assist you with effective tax planning as follows (the following list is not exhaustive):
- By minimizing exposure to US taxation, NZ taxation including interest and penalties through matching as much as possible, taxation liabilities in both countries. Includes a review of the marginal income tax rates in both countries, exposure to taxation of one country that is not imposed in another country, relief under the double tax agreement, availability of foreign tax credits, state taxation liabilities, timing of derivation of income, taxes withheld.
- How to maximize deductions, review of available deductions, documentation requirements.
- Discussion around the timing of return preparation and extension of time for filing requirements. This is frequently affected by the availability of New Zealand documentation.
- Quantification of the amount of estimated tax and/or provisional tax that should be paid for 2014, advising on the due dates and amounts.
- Review of any entities formed, the US and NZ tax consequences and treaty provisions. Includes attribution of income and/or additional reporting requirements. For example; formation of a trust or a company, setting up in business through a company, whether there is income attributable to you directly that you may not know about, how the income earned by the trust or company will be taxed.
- Review of disposal of property, planned or actual, and any ensuing capital gains tax liability, for example on real estate transactions, review of eligibility for the exemption of gain on sale of qualified residence.
- Review of earned income and unearned income, including exposure to self-employment taxes, payroll taxes and the 3.8% Net Investment Income Tax.
There will always be something we can pick up and provide valuable advice on, no matter what your situation.