High income taxpayers face tax issues that others don’t face. From additional filing requirements to restricted access to certain deductions, it’s vitally important to the health of your estate that you and your accountant keep a finger on the pulse of the IRS’ most current laws.
Charitable Donations and Philanthropy
Many high income taxpayers are able to engage in philanthropic pursuits and charitable donations. The IRS has a particular set of rules, though, for these pursuits to qualify for a tax break. For example, the donation of property that is worth at least $5,000 requires an appraisal from a qualified source. Without one, the IRS may deny it’s status as tax deductible. Reporting requirements regarding foundations are another issue that charitable, high income taxpayers face- you should be aware that you may be asked to provide information about how the money is spent, as well as access to other information relevant to the foundation.
Providing for your family in the future is subject to the 40% estate tax after a certain amount of money. As of 2017, the exemption is set at $5.49 million, but for those passing on more than that amount, steps should be taken to assure that valuable assets and properties are not liquidated to pay the tax. There is relief for estates passed on to spouses and charities. Also, depending on your state of residency and location of your property, state estate taxes can apply at amounts much lower than the Federal exemptions
Foreign Held Assets
Failure to report foreign assets is one of the most serious issues that high income individuals can face. While this practice is by no means illegal, it does have some particular requirements. For example, taxes must be paid on the income these assets generate, though some deductions are available is taxes were paid to the country in which the assets are held. Other stipulations exist for assets over a certain amount and for an additional filing for foreign assets exceeding $10,000.
If you’re one of the high-income taxpayers, you need a team of experienced CPAs to assure that you steer clear of issues with the IRS. Froehling Anderson has decades of experience working with taxpayers and has been designated as one of the top 25 CPA firms for the last 10 years. We are ready to assist you.