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.