Today, high-net-worth individuals are investing in many alternative investments in addition to traditional stocks and bonds. Examples of alternative investments are private equity funds, oil and gas, and foreign investments. Alternative investments can result in complicated tax issues. Proper high-net-worth tax planning for these complex investments is essential.
Why High-Net-Worth Tax Planning 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 when high-net-worth tax planning, 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
Changes in High-Net-Worth Tax Planning
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 high-net-worth tax planning and reporting is necessary to minimize your annual tax bill and eliminate surprises. You may be involved in an investment requiring additional foreign asset reporting. The rules are stringent and failure to disclose foreign investments can result in high penalties.
At KatzAbosch, we are here to help navigate the complexities of high-net-worth tax planning and assist our clients with building comprehensive tax plans.
