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High-Net-Worth-Clients Seek
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BY JOHN SAVIGNANO, CPA
Affluent Clients are wondering how
President Trump’s yet unrealized plans
for individual and corporate tax cuts will
affect their finances.
As always, uncertainty is what rattles
people, rattles the markets and rattles business.
If you don’t know what is happening
with tax law, tax reform and estate taxes,
it makes it difficult to plan-and it makes it
difficult to strategize what you want to do
with your wealth, such as transfer wealth
and make new investments.
Most accountants are advising clients to
make decisions based on the tax laws that
are in place at the moment, while keeping
an eye on the latest developments. We
can only go by what we know is for certain;
the law as it exists right now.
Here are some of the top concerns of
high-net-worth New Yorkers and a look
at how accountants are advising clients
to address them.
The Alternative Minimum Tax: This
hard to avoid tax, designed to prevent
high earners from maneuvering their
way out of paying taxes, is the bane of
many affluent New Yorkers. These taxpayers
must calculate their taxes twice,
once with certain deductions removed,
and pay the higher amount. Many such
tax payers thought some relief was in
sight when Trump’s tax plan proposed
elimination of this tax. Repealing the
Alternative Minimum Tax would be
exciting news for many high-net-worth
individuals. However, with no clarity on
whether the Alternative Minimum Tax
will actually be repealed yet, accountants
have continued advising clients on how
to reduce or avoid it, using strategies
such as accelerated deductions.
The Property Tax Deduction:
According to recent analysis by real
estate site Trulia, the biggest impact
would be on homeowners with home
loan balances of $358,000 and $676,000
and who take out a mortgage between
$322,200 and $608,400. The New York
City metro area was one where the
advantage of buying a home over renting
would erode the most.
Trump’s plan would also eliminate the
ability of filers to deduct property taxes
and other state and local taxes. Many
New York City home owners or potential
home buyers are paying attention,
because losing the property tax deduction
could mean there is less upside to buying
certain properties. But accountants
are advising them to operate as if nothing
has changed for the moment. Right now,
mortgage interest is still deductible.
Residency Audits: Many high net worth
individuals who claim a change of residency,
often to low-tax or no-tax states,
shortly before a large income recognition
event, such as a large capital gain on
the sale of a business. New York State and
City have very aggressive residency audit
programs. This is a perennial issue, and
one for which many seek advice from
their accountants. The issue of residency
may not be a black and white one.
Tax Risks: Many affluent New Yorkers
worry about getting tripped up in the
complexities of doing business overseas.
John Savignano is a partner with
Savignano Accountants & Advisors
located at 47-46 Vernon Blvd., Second
Floor, in Long Island City. If you have
any questions or require additional
information, please call John at 718-
707-0955.
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