With the US tax deadline looming, this next quarter represents a very important time for US taxpayers. There are some easy ways to save on tax bills and for people who need to pay both UK and US taxes, not checking when it would be most advantageous to pay could prove to be costly.
Firstly, for US citizens living outside the US, the absolute final deadline for filing US tax returns for the 2016 calendar year is 15 December 2017. However, this is only possible if a request for a further extension of time to file is made by 15 October. So, if you cannot complete your return by the previous deadline extension of 15 October, it is essential to make the request for the further extension and to ensure it is done in time.
You should then consider your timings for the payment of UK taxes in order to ensure that you maximise your ability to claim foreign tax credits. These are frequently only available in connection with taxes paid during the calendar year, so make sure the foreign tax credits line up and consider paying your UK tax bill one month early and before the end of December. Should you have a particularly large transaction that takes place in a calendar year, you can also pay any UK tax which would be due then, rather than 13 months later. This will then avoid having to alter your US returns at a later date when the UK tax is finally paid.
Finally, look at the timings of any specific transactions you may be considering and any other steps you may want to take before the end of the calendar year. It’s worth seeking advice to check if there is any tax benefit from making the intended transaction in the current tax year, or delaying to a later point. And you may have unused allowances such as pension contributions and gift allowances, or you may want to realise any capital losses you have to offset capital gains that have already been made.
So, as you can see, by carefully considering specific circumstances before the end of the year, you can identify easy ways of saving tax. We at Everfair Tax are always happy to help with information or advice, so please feel free to give us a call or visit our website www.everfairtax.co.uk