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2023 Year End International Tax Planning

December 04, 2023

Are you up to speed on what could change on the international tax front? We have some advice on how you can best prepare for 2024 here.

GILTI Update

Global businesses face complex tax rules since enactment of TCJA. The GILTI rules (Global Intangible Low-Taxed Income) require a 10% or greater U.S. shareholder of a controlled foreign corporation (CFC) to include in current income the shareholder’s pro rata share of the GILTI income of the CFC. These rules apply to C and S corporations, partnerships, and individuals.

Beneficial Ownership Information (BOI) Reporting

The Corporate Transparency Act (CTA) mandates that all domestic and foreign entities that have filed formation or registration documents with a U.S. state (or Indian tribe) report under the BOI reporting requirement unless you meet one of the 23 exceptions. New entities created/registered after December 31, 2023, must file within 30 days and existing entities created/registered prior to January 1, 2024 must file by January 1, 2025.

7 international tax questions to consider

  • Looking to utilize foreign tax credits with looming expiration dates? Optimize foreign earned and/or investment income to utilize foreign tax credits that will expire in the current year.
  • Looking to boost your foreign tax credits? Ensure all foreign taxes, not collected via payroll, are paid by the end of December to boost your foreign tax credits.
  • Planning to sell real estate outside of the U.S.? You will need to consider the potential foreign exchange rate gain on paying off the foreign mortgage.
  • Did you lower your foreign income taxes via deductions that do not offset your U.S. income taxes? You may have to pay the delta with your U.S. income tax return.
  • Have you benefited from IRA or solo 401(k)? If you qualify, it may be beneficial to open an Individual Retirement Account (IRA) and/or solo 401(k) and make the necessary contributions by year end.
  • Are you an employee of a controlled foreign corporation (CFC)? You should consider paying yourself a bonus to manage the profit and mitigate the potential taxes.
  • Does your company participate intercompany transactions? You should strongly consider a benchmarking study to help establish and support a transfer pricing policy.

These are some of the areas to consider for year-end planning to optimize credits, deductions, and minimize your U.S. income tax exposure. Furthermore, if you will have a BOI reporting obligation under the CTA keep in mind the upcoming deadlines to avoid penalty exposure.

Questions? Contact us.

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