What are Your Tax Goals for 2023

What are Your Tax Goals for 2023

What are Your Tax Goals for 2023  

As we enter into a new tax year, many US taxpayers have a list of different tax goals they hope to accomplish when it comes to getting into tax compliance — or better effectively managing their tax planning for future years. In general, burying your head in the sand with tax-related matters can come back to bite you in later years. The Internal Revenue Service has amnesty various programs available to assist taxpayers with getting into compliance if they have not properly filed in prior years. Likewise, taxpayers who are considering big tax changes such as expatriating or becoming a US person have other challenges for the new tax year. Let’s look at five common tax goes to consider in 2023 —

Have You Missed Prior Year Tax Return Filings?

It is not uncommon for taxpayers to have missed prior year tax filings. Usually, there are good reasons why taxpayers may have missed prior year tax filings. For example, a person may have been living overseas as an Expat and are (blissfully) unaware that they had a continuing filing requirement. Alternatively, a taxpayer may have fallen ill, and filing a tax return was not at the forefront of their mind when they were fighting a serious illness.

Unreported Foreign Income or Accounts?

If you are a US person who has foreign accounts, assets, or investments, you may be required to disclose this information on one or several international information reporting forms such as the FBAR or Form 8938 (FATCA). If you have not properly reported foreign income or assets in prior years, the IRS has developed various international tax amnesty programs to assist you with getting into compliance. Two of the more common programs include the IRS Voluntary Disclosure Program and the Streamlined Filing Compliance Procedures.

Planning to Exit the United States?

When a Long-Term Lawful Permanent Resident (LTR) or US citizen wants to exit the United States formally and no longer be recognized as a US person, there are various hurdles they may have to overcome at that time. They may be considered a covered expatriate, and if so they may have a potential exit tax implication at the time they exit. Thus, taxpayers who are considering exiting the United States should carefully plan beforehand. Even if a person is not formally expatriating if they are giving up their green card or US person status but maintaining US investments they may want to revisit the cross-section of the US assets to try to avoid or minimize taxation.

Planning to Enter the United States?

With a non-US person decides they want to become a US person by relocating to the United States, there are other hurdles that they may have to face as well. Planning should start early especially on matters involving foreign corporations that will be considered a Controlled Foreign Corporation — as well as pre-immigration foreign trusts that may result in a foreign grantor trust reporting and tax scenario when the person becomes a US person.

Retirement Income Planning

When a person is considering retirement, it is important that they carefully evaluate their sources of income to determine the best way to set up minimal tax implications. Depending on whether they are receiving long-term capital gains versus short-term capital gains or qualified dividends versus ordinary dividends will have a significant tax implication depending on what their tax bracket is at retirement. For those considering retirement in the coming years creating an effective plan should be a clear tax goal for 2023 and beyond.

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure

Contact our firm today for assistance.