Year End Planning: Tax Returns? Done! Now what?

 

 

 

 

 

 

The end of the year is coming in quick. In order to avoid unpleasant surprises and unnecessary stress, it is best to consider a few things before the end of the year. These suggestions are mostly beneficial to US expat.

 

Retirement Account

US Expats with IRA, 401(k) and other retirement accounts will be permitted to claim out-of-pocket contributions on their taxes as a deduction. This very indulgent tax benefit allows making the contribution all the way to the April 15th deadline (or April 15th for 2019). This is also true if a taxpayer happens to open an IRA account in 2019 and makes the IRA contribution by April 15th of the same year.

Moreover, if you are considered to be a low to moderate income worker, there is a Retirement Savings Contribution Credit of up to $1,000 for single filers and $2,000 for married couples filing jointly.

It may be a good idea to also convert Traditional IRAs to Roth IRAs.

Obviously, the earlier you get involved in your retirement account, the more leverage you get in making decision by year end.

Think Strategically About Your Portfolio

It is imperative to compute and track losses through investment that have lost significant value. The IRS generally permits deductions of ALL of your capital losses against your capital gains, and an additional $3,000 for all other income. Any capital losses that cannot be absorbed can be held as a carry forward and be used indefinitely until exhausted.

Our recommendation is to keep a spreadsheet of your unrealized gains and losses to account on a monthly basis if not on a weekly basis. This will make it easier to use the document as a reference well before the end of the year and during the holiday season.

Non-US Bank Balances

Another recommendation is to account for all of your non-US bank accounts highest balances and the date at which the balance was at peak level. As a US expat, if your non-US bank account balance total $10,000, then they will required to be reported on US Federal Form FinCEN 114, Foreign Bank Account Report. Additionally, there may be some reporting requirement under FATCA on Form 8938, Statement of Specified Foreign Financial Assets.

 

Please make sure to contact us for any question you may have on the subject.

About Chaz Attamah

Chaz Attamah is an individual and business US Tax CPA. He plans and provides compliance services to US expatriates and local businesses with operations in the US at ClarionBridge Consulting Group. Please do not hesitate to contact him for any of your US tax question at c.attamah@clarionbridge.com.
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