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US AND UK YEAR END PLANNING 2018: Impact of US Tax Reforms

Private Clients - 29 Nov 2018

As you will likely be aware this year has seen the implementation of the Tax Cuts and Jobs Act, which, as well as reducing the top rate of income tax from 39.6% to 37%, gave rise to significant tax changes in the US.

  • If you have had profits subjected to the repatriation tax (AKA Transition Tax) in 2017, you may want to consider taking dividends and pay foreign tax on this before the end of the calendar year to effectively “frank” the repatriation tax suffered in 2017.  This links in with the accelerating payment of foreign taxes (discussed above). New IRS regulations have just been released and you may wish to discuss the impact of these with your Frank Hirth advisor.
  • If you are a US shareholder of a complex foreign structure you may want to review the structure before the end of 2018 to ensure you understand the make-up of all the underlying entities and determine whether or not the GILTI provisions apply to any of the entities. As above consideration should be made to paying a dividend and advancing a foreign tax on this prior to 31 December so to provide foreign tax credits which can be used to ‘frank’ the GILTI tax liability. New IRS regulations have just been released and you may wish to discuss the impact of these with your Frank Hirth advisor.
  • Numerous itemised deductions have been removed or limited for 2018 onwards following the US tax reforms, removing a lot of potential deduction planning; for example, if you are used to paying your 4th quarter estimated state tax liability before the tax year end this is likely no longer necessary as there is a limit of $10,000 ($5,000 if married filing separately) applied to the state, local and property taxes for the 2018 tax year.    

Read the full report here

Frank Hirth's offices will close for the holidays at the close of business on Monday 24 December 2018 and will re-open on Wednesday 2 January 2019.

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Lucy Townsend

Lucy Townsend

Private Client Associate Director

T: +44 (0) 20 7833 3500
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Office: London