Dec 12, 2018 Important Year-End Reminders
As the year-end approaches, we’d like to take this opportunity to remind you about a number of important tax issues that may be relevant to you:
- PFIC alert– Please carefully review your investment holdings with your investment advisor. If your portfolio includes Kranot Ne’emanut קרנות נאמנות (Israeli mutual funds) or European mutual funds, these are categorized as PFIC’s for U.S. tax purposes. We generally recommend selling these by year-end to avoid the additional tax and interest that is due if these investments are held over multiple years. If you hold teudot sal תעודות סל, these are now converting to become funds and will be taxable as PFICs as well. We recommend treating them as you would any other PFIC investment. If you are interested in an investment alternative that has a more favorable U.S. tax treatment, please consider a fund that allows an investor to make an election to be treated as a Qualified Electing Fund (QEF).
- GILTI alert– The Trump tax reform included a new tax on Global Low Taxed Intangible Income, popularly known as GILTI This is a tax on income earned in Controlled Foreign Corporations (CFCs). If you are the owner of a CFC then you need to know if this new tax impacts you. Over the course of the year, we have reached out to our clients who own CFCs to address this and protect them from this tax using various solutions that we have developed. If our conclusion with you was a recommendation to take a bonus salary at year-end to eliminate all earning from the year, then please make sure to do so.
- FBAR reminder – The FBAR is an annual filing by U.S. persons to report the highest (often year-end) balance in their non-U.S. bank accounts. The easiest way to get your year-end balance is to take a snapshot at year-end. Please remember to save your 12/31/2018 bank balances and use the following links to check on your pensions:
- It is year-end: Do you know where your children are? – The Trump tax reform has increased the maximum refund per child to $1,400 (including an additional nonrefundable amount of $600) and has significantly raised the threshold for phasing out of this credit. Therefore, even if you did not qualify in the past, you may qualify for the refund this year. In order to receive this refund, you will need to have your child’s social security number ready by the due date of your tax return (currently June 15th 2019 for citizens living outside the U.S. and April 15th for those residing in the U.S. -but can be extended). Therefore, if you have not yet applied for a social security number for a child, please do so ASAP as it takes the U.S. months to process these numbers and you will need them to receive this exciting refund.