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5 tips for US tax year end planning

As a US tax player living in the UK you have two tax deadlines to consider. For your US taxes, the year end is 31stDecember, and potentially you may need to take action before that date.

Here is our top five tips which you should consider:

1. Should you pay your UK tax before or after 31st December?

Although you need to pay your UK tax bill before 31st January, you may want to consider bringing the payment forward if you want to utilise it as a foreign tax credit. Alternatively, if you have unused US tax credits, you may wish to ensure that it is paid only after 31st December so that it is credited the following year.

2. Can you realise or defer income or gains to optimise your tax bands?

Spreading income or gains efficiently across tax years can provide a benefit by not having spikes that are taxed at higher rates. Where possible, use your allowances and lower rate tax bands or defer realisations that would attract higher rate tax.

3. Do you have unrealised capital losses that could offset taxable gains?

No-one likes to make a loss, but harvesting unrealised capital losses can be offset against your realised gains, and so reduce the tax potentially payable on those gains. Pay attention to short and long-term gain/loss and the offsetting priorities.

4. Have you made the most out of your retirement plans?

Pension contributions can be a highly tax efficient savings vehicle and you should look to optimise your contributions by considering annual allowances and the potential tax savings. Alternatively, managing the timing of your pension payments could help you optimise your income tax rate.

4. Complete gifts or charitable donations

If you are considering whether to make gifts, review your allowances and whether a pre or post 31st December transfer is optimal or perhaps consider a combination of both. The timing of your charitable gift should be considered to optimise benefit in both the UK and US, but also the source of funds to be donated (such as offshore income/gains).

Seeking expert advice is essential to maximise tax efficiency and ensure you are not inadvertently missing opportunities, or incorrectly reporting your circumstances. We are on-hand with the knowledge and experience to help with a range of international and multi-jurisdictional needs.

Nathan Prior
Partner, Head of International
020 7444 4053



The contents of the article have been prepared solely for information purposes. The article contains information on financial products and services and such information is designed for and addressed solely to individuals seeking generic industry information.