As we approach the end of the year, you should turn to the expert guidance of your Tanager Financial Advisor to discuss your tax planning opportunities. These are some considerations to help navigate your year-end tax planning.
- If you are able to do so, use your $17,000 US gift allowance ($34,000 for a married couple). You can make a gift to anyone. Make sure that the gifts are recorded as they may qualify for the Potentially Exempt Transfer in the UK where a gift is not part of the estate if the donor outlives the gift by seven years.
- Complete your annual charitable donations which can be a tax deduction of up to 50% of Adjusted Gross Income in the US. If the gifts are made through a dual US-UK qualified charity, the gift will benefit from Gift Aid Reclaim and the donor may be eligible for a tax credit on their UK tax return.
- Ensure Required Minimum Distributions are completed by year-end.
- Those in a position to make gifts using their US inheritance and gift tax allowances beyond the $17,000 per person highlighted above should consider doing so as these limits may be lowered sooner than the ‘2026 Sunset’.
- Use all or part of your $175,000 annual gift allowance to make a gift to your non-US citizen spouse. If structured correctly, this allowance could be used to transfer a portion of a jointly owned residential property.
- Make gifts to charity using non-reporting funds since selling them is taxed punitively in the UK at one’s marginal income tax rate.
- Make sure that you pay any UK tax due before December 31st even though the UK deadline is the 31st of January to ensure that you get the right tax credit on your US 2023 tax return.
- If your income has been lower in 2023 than in previous years and you have US retirement accounts that have been funded all or in part since you became a UK resident, a ROTH conversion could make sense, replacing taxable retirement income by tax free retirement income in both countries.
- Tax Loss Harvesting: review if you have any realized losses from previous years and if any current year gains can be offset as a result.
This is not advice or a recommendation. You should consult with your tax attorney and accountant to determine whether any of these actions are appropriate in your personal circumstances.
Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors. Past performance is not a reliable indicator of future results. The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your initial investment.