Tax Planning Advisors in Houston

Tax Planning Strategies

As the end of the year approaches, how well do you know your personal “tributary landscape”?

From changes in income to changes in family size; from the growth of capital gains to the potential impact of the alternative minimum tax; from the annual search for additional tax deductions and the proverbial “shoebox” of unorganized receipts, how well prepared you can have a direct impact on how you can participate in smart year-end fiscal planning.

A recent article in Forbes referred to charitable contributions as a way to participate in smarter fiscal planning. Donor-advised funds (DAF) are a tool that can meet your tax reduction needs in the following ways:

You can receive an immediate deduction of the income tax in the year in which you contribute to the fund advised by your donor. Since a DAF is administer by a public charity, contributions qualify immediately for maximum income tax benefits. The IRS does impose some limitations, depending on the adjusted gross income (AGI) of the donor:

• Deduction for cash: up to 60% of AGI.
• Deduction for securities and other appreciated assets: up to 30% of AGI.
• There is a five-year remainder for unused deductions.
• It will not incur any tax on capital gains on gifts of appreciated assets that are more than one year old (ie, securities, real estate, and other illiquid assets).
• A fund advised by a donor will not be subject to property taxes.

Investments in a DAF can be assessed free of taxes.

If you are subject to an alternative minimum tax (AMT), your contribution to a DAF will reduce your AMT impact.

Certain assets, such as shares and closely held real estate, may allow a donor to enjoy the total value of the assets as a deduction (subject to the limitations of AGI mentioned above).

I am not sure what to do with the massive tax review? Do not worry; you have time to solve it.

While most of the changes will take effect next month and you may see a difference in your paycheck in February, you will not file your tax return for the 2018 fiscal year until 2019.

Some people began fighting before the end of the year to increase their donations, prepay property taxes and get last-minute business expenses to take advantage of deductions that are being reduce.

Under the current tax law, there is a $ 10,000 deduction limit on all your state and local taxes, including property taxes. Meanwhile, the standard deduction has increased. It goes to $ 12,000 for people, $ 18,000 for heads of families and $ 24,000 for married couples who file a joint return. Because more people will likely take the standard deduction, they will not itemize things such as donations and property taxes.

“Fiscal decisions should not be made in a vacuum,” said Cari Weston, director of tax practices and ethics at the American Institute of CPA; s. “Tax planning movements should be part of a larger financial plan.” It may make sense to make payments now to accelerate a tax deduction, but if the family has difficulty paying, the basic expenses or anticipates a need for those funds in the short term. , I would suggest that you do not. “

For example, there are seven new tranches of income tax: 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent.

“The changes in the tax brackets could mean that you must file a new W-4 to adjust the withholdings [of the payroll],” said Brooke A. Salvini, CPA and CFP based in Avila Beach, California.

If your tax rate is decreasing, consider changing your withholdings so you can get more of your money throughout the year. Then, if you have a debt, use the additional funds in your paycheck to pay it and save on interest payments.

You will no longer be able to deduct moving expenses related to a job change. (There is an exclusion for active members of the armed forces). Therefore, you may have to increase your negotiation skills to see if you can get your employer to collect all or some of those costs.

If you have postponed an expensive medical procedure, you may want to schedule some appointments next year. For fiscal year 2017 and 2018, you can deduct out-of-pocket medical expenses that exceed 7.5 percent of your adjusted gross income, which is less than the current 10 percent. The lowest threshold is return to 10 percent for fiscal year 2019.

The Section 529, college savings vehicle with tax advantages, whose profits do not have federal and often state taxes, also suffered a change. The money in these accounts according to the old tax rules can only be use for qualified higher education expenses.

Beginning next year, account holders can use 529 funds, up to $ 10,000 per year, to pay tuition for primary, secondary, public or private schools.

However, you should not simply look at the tax benefits of using this money. Consider the consequences of withdrawing money from a 529 account for K-12 education expenses. Will this decision drastically reduce the account, leaving the student substantially without the cash needed for college?

“Taxpayers should start by reviewing their recent statements to see what deductions they made and how they would change their taxes under the new legislation,” said David Oransky, a member of the Executive Committee on Personal Financial Planning at the American Institute of CPA. “With detailed deductions now limited, many taxpayers who have detailed in the past will find themselves better off with the standard deduction in the future.” While this may simplify your tax return, it could also have an impact on decisions about where you live, what so expensive is the home they own, if they must pay their mortgage and the time of charitable gifts. “

Despite claims of simplicity, the Law on tax and employment reduction is anything but simple. With all the changes, you will need the help of a tax professional or tax preparation software to make sure you make the right decisions.

Book a free consultation with our team; they will be glad to assist you.

International Taxation.

Multinational corporations generally operate abroad through foreign subsidiaries that are mostly tax as independent corporate entities. This system of separate entities gives incentives to multinationals to change reported profits to their affiliates in low tax jurisdictions by underestimating sales to them and excessive price purchases.

For tax purposes, most governments require that firms use a “mutual independence” standard, setting prices for transactions within the corporate group (“transfer prices”) equal to the prices that would prevail if the transactions were between independent entities. However, there is ample scope for companies to manipulate transfer prices, especially for intangible assets, such as the company’s exclusive patents and for which there is no easily established market price.

Major multinationals often shift ownership of their intangible assets, which generate a large part of their global profits, to affiliates in very low tax jurisdictions, such as Ireland and Singapore. In general, multinationals generate very little real economic activity, measured by product, sales or investments in plants and equipment, in these jurisdictions.

The multinationals can further reduce their taxable income through debt-equity swaps that eliminate the profits of the countries with higher taxes where the production facilities are located. The laws of the USA UU They make it easier for US companies UU Withdraw earnings from countries with high foreign taxes than from the United States, which creates an incentive for companies to locate production facilities abroad.

US multinationals account for a disproportionate share of profits in low-tax locations. In 2013, US multinationals reported more than a quarter of their profits abroad in three low-tax countries: the Netherlands, Ireland and Bermuda (figure 1). The top ten foreign locations of its earnings, including other low-tax countries such as Switzerland, Singapore, the United Kingdom, the Caribbean islands and the United Kingdom itself accounted for just over 60 percent of its non-US profits.

Most advanced industrialized countries have reduced their corporate tax rates in recent years, at least in part, to attract multinational companies, while US rates have changed little. The growing discrepancy between rates in the United States and abroad has strengthened the incentives to change income and has reduced US tax revenues.

Despite the evidence, that companies change the location of real investment in response to differences in tax rates between countries, a substantial part of the real activity of US multinationals remains in countries with high taxes. These tend to be large economies with close economic ties to the United States. Although their legal rates have declined over time, while the US corporate rate has remained unchanged, some of them allow less generous rules for capital recovery than the United States. As a result, for most of these countries, their effective corporate tax rates on new investments are only slightly lower than the US rate.

The combination of deferral and higher income reporting of US multinationals in low-tax jurisdictions has led to a large accumulation of assets abroad, as many firms no longer have sufficient foreign tax credits to offset US taxes when repatriating foreign earnings. Recent research suggests that this “blockage” of foreign earnings equates to an implicit tax of between 5 and 7 percent on income from a foreign source.

The current system in the United States treats multinational companies whose parent companies are incorporate in the United States (multinationals residing in the United States) differently from those that reside elsewhere. The United States taxes it is multinationals with the dividends they receive from their foreign subsidiaries, while our main trading partners have the so-called territorial systems that exempt these dividends. In addition, the anti-abuse rules of the US. UU They limit the ability of multinationals based in the United States to use debt capital swaps to transfer declared income outside the United States, but they do not apply similar limits to multinationals residing abroad. The Treasury Department (2016), however, has recently issued new regulations to discourage this form of dispossession of income.

The United States bases its definition of corporate residence on the place of incorporation. This definition does not have to be consistent with where the production of a company is located, where its sales are make, where its shareholders reside or even where its main managers live.

The benefits of residence abroad, combined with the lack of economic substance according to the definition of residence, have led some multinationals based in the USA. UU to change the formal incorporation of their parent companies abroad. This type of transaction (“investment”) can often be achieve without changing the location of actual business activities.

Contact us and we will gladly answer all your questions

Advice on compliance with tax obligations.

Over time, as societies evolve, so do their systems of laws, this in order to regulate behaviors and behaviors that societies adopt through their interaction with the advances and resources that are at their disposal.

Tax laws are not an exception to this behavior. Over time, they have evolved and adapted to the new business forms and trade mechanisms that people and entities have experienced in their development process.

Each time they become more complex to interpret and understand the logical meaning pursued by the application of new legal regulations. It is important to resort the help of qualified professionals, who have the level of understanding in the interpretation and application of the new tax laws.

While it is true that the diversity of standards related to tax obligations in the United States is endless, it is no less true that ignorance of these does not exempt it from compliance.

Hence the importance of having a professional team to advise on the fulfillment of all those obligations that are framed within the legal framework of each jurisdiction in which an entity or individual decides to carry out commercial or work activities.

Our team of professionals is willing to assist you in understanding these issues, structuring a review and study of the tax obligations to which your economic activity in the United States would be subject, translating into the minimization of legal as well as economic risks to which your business could be subject.

Contact us and we will be pleased to answer your questions and assist you in fulfilling your tax duties.

Sampling, Forecasting and Business Modeling

We offer solutions and professional advice for:

• More modeling for your business
• Monte Carlo simulations results
• Oil drilling decisions
• Determination of amount of oil or gas in a field
• Simulating risk events that either occur or do not occur
• Financial / economic forecasting
• NPV of an investment
• Portfolio analysis
• Real Options Pricing
• Financial modeling
• Credit approval / disapproval
• Budget Optimization
• Simulation of infection diseases
• Competitor entry
• New Product Entry
• Claims for an insurance company

Transfer Pricing

Our services range from conducting basic searches for comparable companies (“comp searches”) for benchmarking purposes too complex transfer pricing issues (e.g., ip migration, dispute resolution, restructuring, start-ups, etc.)

U.S. transfer pricing

Our services include the preparation of U.S. transfer pricing documentation as provisioned in §§ 482 and 1.6662-6 of the U.S. Treasury Regulations:

“Principal Documents” as stated in § 1.6662-6(d) intercompany transfer of tangible property (e.g., distribution, retail) intercompany services (e.g., management, procurement, financial, engineering, etc.) intercompany transfer of intangible property (e.g. royalty payments, cost sharing agreements)

Global documentation (OECD guidelines)

We prepare global documentation for North America, Latin America, Europe, Middle East and Africa, and Asia Pacific:

• Global documentation- OECD “global” report
• Local documentation, departing from a global report, based on the OECD transfer pricing guidelines
• Local documentation focused on specific local requirements (i.e., not departing from an OECD global report)

Ip migration issues

Whether your company’s intangible assets consist of software, know-how, pharmaceuticals, or a non-routine intangible, we can help:

• Advice on Ip migration mechanisms (e.g., Ip purchasing, licensing, cost sharing)
• Financial modelling (e.g., application of the income method, residual profit splits, etc.)
• Consulting regarding cost sharing agreements

Transfer Pricing now days is not just a matter of compliance. In the world of BEPS, tax authorities are seeking for transparency, substance, and coherence. Our solutions will provide you a value-add according to your company’s situation.

Planning / Consulting

All of our services take into consideration the fast-evolving world of BEPS and transfer pricing. we provide transfer pricing advice in connection with:

Business restructurings, including advice on supply chain

Special circumstances (e.g., start-ups, loss positions, mergers, acquisitions)

Transfer Pricing policies, intercompany entries, intercompany agreements

Benchmarking analysis

BEPS

Tax authorities have agreed to share information about the taxpayer. we can provide you with Tax transparent documentation through:

• A global “big picture” of the country-by-country reporting, risk identification and advice
• The preparation and consulting regarding country-by-country reporting, master file, and local file
• Updates regarding the evolution of beps and its implementation in your company’s jurisdictions

Dispute Resolution

Is the tax authority questioning your company’s transfer pricing issues? you are not alone!

• Advance Pricing Agreements
• Transfer pricing support for audits performed by tax authorities