US Insights
2023 year-end tax planning
2023 year-end tax planning
As the end of the US tax year approaches, we look at some of the tax planning opportunities available to Americans living in the UK.
With rising inflation, interest rates and a strong US dollar, 2023 has been an eventful year. With that in mind, it’s a good time to think about the planning opportunities that may be available to you before the end of the year.
Key considerations of year-end tax planning
In this vodcast, Alma Odametey, Inga Sviderskiene and Luke Smith discuss the key considerations of year-end tax planning and why they are important.
Tax 'Bites'
Foreign tax credits
Our first 2023 year-end planning tax ‘bite’ discusses who should consider year-end foreign tax credit planning and why it is important.
If you claim foreign tax credits on a paid basis, you may be required to accelerate your UK (or other foreign country) tax payment into the current calendar year. Concentrating on the UK, the tax due here on untaxed 2023 income and gains will most likely be payable after the end of the 2023 calendar year. So, by making this payment in December 2023 instead, you can ensure that this tax credit is available to offset any 2023 US tax that would otherwise be due.
The impact of deduction planning
Our second 2023 year-end planning tax ‘bite’ discusses the impact of deduction planning.
It is important to remember that the standard deduction has increased significantly in recent years. With this in mind, and depending on the amounts involved, some taxpayers who have claimed itemised deductions historically, including charitable donations, may now be better off simply claiming the standard deduction instead.
Making the choice between an itemised deduction and the standard deduction is something that you can do each year. It could be more efficient to carry out one-off larger charitable donations every few years, rather than smaller annual payments.
US gift tax allowances
Our third 2023 year-end planning tax ‘bite’ discusses the use of US gift tax allowances.
The gift tax annual exclusion for 2023 is $17,000. Beyond the annual exclusion, the lifetime gift and estate tax exemption will apply – sometimes referred to as the unified credit. For 2023, the amount is an inflation adjusted $12.92m, which may allow small additional non-taxable gifts to be made by those who have previously exceeded their lifetime limit.
From a UK tax perspective, lifetime gifts are often used to mitigate Inheritance Tax (IHT), by reducing the value of your estate. Lifetime gifts can be extremely tax efficient.
Other year-end planning
Our fourth and final 2023 year-end planning tax ‘bite’ discusses some other planning opportunities and factors to be aware of.
With major stock markets down during 2023, it is worth considering utilising any unrealised capital losses to offset capital gains. This year in particular, you also need to consider foreign exchange rates when calculating current year capital gains and realising any capital losses. With such big fluctuations, you want to avoid any nasty surprises.
Finally, as interest rates increase you may have or be considering refinancing your mortgage.
You may be interested in
2023 year-end tax planning: 8 top tips
With rising inflation, interest rates and a strong US dollar, 2023 has been an eventful year. With that in mind, it’s a good time to think about the planning opportunities that may be available to you before the end of the year. While there will be some low hanging fruit which you may already be familiar with, it’s important to also consider some of the more complex tax planning opportunities which could apply to your situation.
So, what can you be doing now to optimise your global tax position? Here are eight of our top tips for your consideration.
Confused by how US/UK tax rules might impact your business?
Many entrepreneurs find the US tax rules to be an impenetrable web of acronyms, jargon, and technical detail.
Our US UK Private Client team specialise in helping people like yourself to navigate the US and UK tax rules, cutting through the confusion, translating some of the key terms, and helping you understand how these rules affect your business.
We aim to provide practical advice and prepare your US tax return filings to ensure that you comply with the increased reporting required by the IRS for US entrepreneurs.
Our experts
US/UK Private Client
Personal tax is one of the most complex areas of wealth management and can significantly erode your wealth over time.
Blick Rothenberg is considered to be market leaders in the taxation of non-UK domiciled individuals and offshore trusts, as well as cross-border personal taxation.
We have a strong base of clients in the UK and abroad and longstanding international focus too, acting for a large number of non-UK domiciled individuals and international families. We therefore understand the complexities that US citizens face when living, working and operating businesses in the UK.
Whether you are a start-up entrepreneur, a wealthy family with complex affairs, or a business executive, our dual-qualified team of tax advisers will look after your US UK personal tax affairs as well as those of your business.
Contact the team
US Insights
US Insights – How and when to make a check-the-box election
US Insights – What do US individual’s need to consider when moving to the UK?
