2019 US tax year end planning.

As we approach the end of 2019, we look at some of this year's key US tax changes, as well as some important year-end planning points you need to know about.

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The US tax year ends on 31 December 2019. Now is therefore a good time to consider whether there is anything that you can do to minimise your US tax exposure for 2019 and to begin preparing for 2020.

We have now completed the first tax reporting cycle following the Tax Cuts and Jobs Act (TCJA) for fiscal year 2018. One of the big new changes that affected UK based Americans was the new Global Intangible Low-Taxed Income (GILTI) rules. We are now comfortable with the new forms required, as well as the reliefs and elections allowable to minimise client exposure to the new tax. 

Any tax planning opportunities should always include the US and UK tax implications for an American living in the UK, and any decisions taken in relation to buying or selling/gifting of assets should take account of both the investment as well as the tax consequences of doing so.  

Ordinary income tax rates

For 2019 and 2020, the top federal tax rate remains at 37%. This rate applies to individuals with Taxable Income (AGI) in excess of:

Filing status 2019 2020 (projected)
Married Filing Jointly (MFJ) $612,350 $622,050
Head of Household (HoH) $510,300 $518,400
Single $510,300 $518,400
Married Filing Separately (MFS) $306,175 $311,025


So what opportunities could you take advantage of in the run-up to the end of 2019? Here, we have summarised a few you might want to consider.

Year end tax planning checklist

  1. Have you considered realising income in 2019 to fully utilise lower tax rates, or spreading income into 2020 if you are already in the top rates of tax? 
  2. Have you thought about making gifts in 2019, to fully utilise your annual exemptions?
  3. Are you getting the most out of your pension? Can you restructure your US IRA/401(k)?
  4. Are you considering re-mortgaging your UK property and have you thought about the US tax consequences?
  5. Have you thought about prepaying UK tax before 31 December 2019, or deferring until January 2020? This could apply to UK corporation tax if you are affected by the GILTI rules. 
  6. Is your residence position likely to change in the near future?
  7. Do you know when the next key deadlines are?
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We recommend that individuals seek professional advice, where appropriate before taking any action so please contact your client service team if you have any questions.

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