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Crossing the border – to save taxes?
Recent headlines have highlighted the names of wealthy individuals who have given up their U.S. citizenship, ostensibly to save taxes.
Remember Eduardo Saverin, the Facebook founder who renounced his U.S. citizenship on the eve of Facebook’s now legendary IPO? More recently, it is Denise Rich, socialite, songwriter and ex-wife of a pardoned billionaire, whose name has appeared on a list of those who have given up their U.S. citizenship.
Does this door swing both ways? Does anyone ever come to the United States to save taxes? And if they did, would the story make the headlines?
Consider the case of Steve Nash.
Yes, sports fans, that’s point guard Steve Nash, lately of the Phoenix Suns, with annual income reportedly in excess of $10 million. Nash is a Canadian citizen, born in South Africa and living in the United States.
Recently Nash rejected an offer from the Toronto Raptors, electing instead to sign with the Los Angeles Lakers. Was Nash’s decision based on a desire to play with Kobe Bryant or a preference for paying income taxes to the United States?
According to Robert Raiola, known on Twitter as Sports Tax Man, Nash may have made his decision to reject the Raptor’s offer in favor of Los Angeles largely for tax reasons. According to Raiola, who does not work for Nash, the top marginal tax rate in Ontario, where the Raptors play their home games, is 48 percent in 2012 and will rise to 49.5 percent in 2013.
Compared to the top U.S. tax rate of 35 percent in 2012 and perhaps 40.5 percent in 2013, Raiola surmises that Nash would have needed a much greater financial incentive to entice him back to his Canadian roots – eh.
“It’s an unstable government that raises taxes and destroys the image we’re building for Canada as a strong place to invest.” – Stephen Harper, Canadian politician
The technical information here is necessarily brief. No final conclusion on these topics should be drawn without further review and consultation. Please be advised that, based on current IRS rules and standards, the information contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty assessed by the IRS.
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