High Net Worth Tax Planning

Thorough tax planning, whether for yourself or your business, is the most effective way to limit the negative impact of taxes in your life. If something has been properly accounted for in advance, it is unlikely to pose much of a problem or become a burden when the time comes.The taxes of each individual will vary greatly depending on many personal, occupational, and financial factors so there is no universal solution for tax planning.

Today, high net worth individuals are investing in many alternative types of investments in addition to traditional stocks and bonds. Some examples of alternative investments are private equity funds, oil and gas investments and foreign investments. Alternative investments can result in complicated tax issues. Proper tax treatment of these complex investments is essential.

Sometimes it’s a good idea for an individual to create a separate business entity for certain investments. All aspects need to be considered before deciding how to invest. There are many issues to consider including:

Liability exposure

• Additional tax compliance reporting
• Type of income that will be generated whether passive versus non-passive or self-employment versus investment
• Estate planning implications

There have been a lot of recent changes in the tax laws that affect the amount of taxes you pay on investment income. The taxation of income from traditional stocks and bonds has even changed. Good tax planning and reporting is necessary to minimize your annual tax bill and eliminate surprises. You may be involved in an investment that requires additional reporting of foreign assets. The rules are stringent and failure to disclose foreign investments can result in high penalties.

At Braj Aggarwal, CPA, P.C., we are here to help navigate the complexities of tax preparation and assist our clients with building comprehensive tax plans.