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White Paper

Tax Planning for US Investors - Doubling Net Return on Investment

Tax Planning for US Investors - Doubling Net Return on Investment

US investors (incl. US resident citizens, Green Card holders or income tax residents under the substantial presence test and any US citizen located abroad) face significant US Income, Estate and Gift tax issues on their investment portfolios namely:

1) Imposition of Federal and State (e.g. CA) “blended income tax” rates up to 55%;

2) 2017 US Estate & Gift Tax of 40% (after personal exemption of $5.49m or, combined $11.26m for husband and wife).

3) Risk of creditor attachments (>1 million lawsuits filed yearly in California; plaintiff’s attorneys look for “deep pocket defendants” who hold assets titled in individual names or closely held entities).

4) US world wide information reporting requirements for undisclosed foreign bank accounts (FBAR filings/FinCen Form 114 for foreign (offshore) bank accounts over $10k; failure to file is an annual 50% penalty, which can be up to 300% if non-tax compliant for 6 years. Willful FBAR violations failure can also result in a 10-year felony for each year FBAR not filed.

5) Foreign Account Tax Compliance Act (FATCA) is reporting by foreign banks on US account holders (adopted 3/10, effective for tax years thereafter). Form 8938 is a separate tax filing due (attached to Form 1040) for foreign financial assets over $50k. Thus taxpayers with foreign bank accounts over $50k have to file both the FBAR and the FATCA filing (Form 8938) or risk multiple civil and criminal tax penalties.

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David E. Richardson began his professional career in the investment business over 20 years ago, working for one of Canada’s preeminent investment houses; Walwyn, Stodgell, Cochrane and Murray (now Merrill Lynch Canada).

Gary S. Wolfe has over 34 years of experience, specializing in IRS tax audits and international tax matters including international tax planning/tax compliance, and international asset protection.

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