Author: Unison Globus

Tax Brackets 2022

The Internal Revenue Service (IRS) annually changes federal income tax rates, exemptions, and thresholds. These numbers apply to the parts of the tax law that are changed every year to account for inflation.

For the 2022 tax year, the top tax rate for individual taxpayers will still be 37%, and the standard deduction, tax bracket ranges, other deductions, and phase-outs will be changed each year to account for inflation.

Federal Tax Brackets – Overview

Most federal tax brackets are progressive, meaning the tax rate goes up as the income increases.

But this doesn’t mean that clients have to pay more in taxes because they can use these many deductions and credits to reduce the amount of tax they owe.

When federal tax brackets were made in 1913, they primarily aimed to ensure Americans were taxed relatively and to help pay for wars. But as the years went by, special interest groups pushed for more and more tax breaks. As a result, in 2019, 91 corporations, including 60 of the Fortune 500, paid no taxes in 2018.

This happened because of the Tax Cuts and Jobs Act (TCJA), which then-President Donald Trump signed in December 2017 with the support of a Republican House and Senate. The TCJA cut the corporate tax rate for good, but it only cut the rates for individuals for a short time.

This was because people were worried about how much more debt these new tax cuts would add to the U.S.’s already massive debt. When the law passed, the thought passed that the debt would grow by as much as $1.9 trillion over the next ten years.

In reality, the debt grew by almost $1 trillion every year from 2018 to 2020. With the COVID-19 pandemic coming in March 2020, the spending needed to stop it, and the bad effects it will have on the economy, the federal budget deficits are rising to levels not seen since World War II.

High-income earners had their taxes cut the most, while low-income earners also had their taxes cut, but they might have to pay more if and when the individual tax changes end in 2025, as planned. Given how unpopular it is to raise taxes—as shown by the fact that the Bush tax cuts from 2001 were extended past their expiration date in 2010—the TCJA’s rates could also stay in place after 2025.

Federal Tax Brackets – History

The federal tax bracket was made when the 16th Amendment was passed in 1913.

In 1913, the highest tax rate was 1% on incomes over $3,000, with an additional 6% tax on incomes over $500,000.

But it didn’t take long before the rate went up a lot. As the costs of World War I became clear by 1918, the highest tax rate reached 77%. During the 1920s, when times were good, rates went back down, but they went back up during the Great Depression.

During the debates about the Troubled Asset Relief Program (TARP) at the start of the Great Recession in 2008, this was often used as an example of what not to do in hard times.

At the end of World War II, the highest tax rate was 94%. The rate stayed high in the years that followed, averaging around 70%. Starting with the Reagan administration in the 1980s, rates have been decreasing. As of 2021, there are seven federal tax brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

The U.S. debt has grown a lot since the beginning of the 21st century. This is probably not a coincidence since the country has fought in several wars while lowering tax rates instead of raising them, as it did during previous wars.

How Tax Bracket Works – Recap

In the United States, we have a “progressive tax system,” which means that not all income is taxed at the same rate.

The tax rate on the first 10 percent of income is the lowest. The money your clients make above that, up to a certain amount, is taxed at the next higher rate (12%), and so on until they make so much that they don’t have to pay taxes. (I’m sorry for making fun of billionaires.)

It’s a bit of a misnomer to say someone is in the 22% tax bracket. That really means that they pay 22% of the part of their income that is taxed at the highest rate, which is only the money that falls into that tax bracket and not all of the money they make. This is called the marginal tax rate in tax terms.

Tax Bracket 2022

The tax bracket is based on how much money the customer makes and how much you as their CPA file (single, married filing jointly, married filing separately, head of household). The IRS changes tax brackets and other tax rules annually to consider inflation.

As you look at the tax brackets below, remember that the standard deduction, which is $12,550 for a single person and $25,500 for a married couple filing jointly, is not taxed. Since the amount they’re taxed on isn’t what they’re really making, this makes everyone’s tax rates a little bit lower.

Tax Rate	For Single	For Married	Head of Household
10%	less than $10,275	less than $20,550	Up to $14,650
12%	between $10,276 and $41,775	between $20,551 and $83,550	$14,651 to $55,900
22%	between $41,776 and $89,075	between $83,551 and $178,150	$55,901 to $89,050
24%	between $89,076 and $170,050	between $178,151 and $340,100	$89,051 to $170,050
32%	between $170,051 and $215,950	between $340,101 and $431,900	$170,051 to $215,950
35%	between $215,950 and  $539,900	between $431,901 and $647,850	$215,951 to $539,900
37%	more than $539,901	more than $647,851	Over $539,900

To compare, here are the tax brackets for 2021:

Tax Rate	For Single	For Married	Head of Household
10%	less than $9,950	less than $19,900	Up to $14,200
12%	between $9,950 and $40,525	between $19,900 and $81,050	$14,201 to $54,200
22%	between $40,525 and $86,375	between $81,050 and $172,750	$54,201 to $86,350
24%	between $86,375 and $164,925	between $172,750 and $329,850	$86,351 to $164,900
32%	between $164,925 and $209,425	between $329,850 and $418,850	$164,901 to $209,400
35%	between $209,425 and  $523,600	between $418,850 and $628,300	$209,401 to $523,600
37%	more than $523,600	more than $628,300	Over $523,600

Tax Bracket 2022 – Example

Let’s start with a married couple with $190,000 in taxable income and filing a joint tax return. Keep in mind that these numbers are made before any deductions are made! They’ll have to:

10% federal income tax on the first $20,550 of income (which comes to $2,055 in taxes)
12% on dollars $20,551 up to $83,550 ($7,559.88 in taxes)
22% on $81,050 up to $172,750 ($20,174 in taxes)
24% on $172,750 up to $190,00 ($4,140 in taxes)

Before any deductions, this couple will pay a total of $33,928.88 in federal income taxes. This is about 18% of their income on average.

In 2022, a single person who earns $60,000 will pay:

On the first $10,275 of income, the federal government takes 10%, or $1,027.50.
12% of money between $10,276 and $41,775 (taxes of $3,779.88)
22% of $41,776 to $60,000 (taxes of $4,009.28)

Before deductions, a single American pays $8,816.66 in federal income tax, which is 15% of their income. For small talk at a cocktail party, this person can say that they are “in the 22% tax bracket” if the rate of tax they pay on their next dollar of income is 22%.

What’s the Big Deal?

Even though tax brackets are helpful, one should always try to make as much money as possible. Barrett says that for every dollar you make, you get more money. The only thing that changes is how much of that extra dollar you get to keep.

The most important thing about knowing the tax bracket is that the customer can use it to keep as much money as possible in the lower brackets. You do this by lowering their income that is taxed.

This can be done most effectively by Putting money into tax-deferred retirement accounts like a traditional IRA, 401(k), or 403(b). Your customers won’t have to pay taxes on those dollars in the year you give them. They’ll have to pay income taxes when they start taking money out. But they should be in a lower tax bracket by then, right?

Using flexible spending accounts (FSAs), including FSAs for the care of dependents and health savings accounts (HSAs). The taxable income for the year will also go down by the amount your customers save in these ways. Plus, if they use the money to pay for certain costs, they don’t have to pay taxes on it.

Take advantage of as many tax breaks as you can. When you take a tax deduction, the amount is taken off of the taxable income of the customer. Most people take the standard deduction, an amount you can automatically deduct from the customers’ income taxes without itemizing.

For 2022, the IRS has also raised the standard deduction:

• In 2022, the standard deduction for single taxpayers and married people who file separately will be $12,950. This is $400 more than it was in 2021.
• The standard deduction for married couples filing jointly is now $25,900, an increase of $800 from 2021.
• Heads of households can now deduct $19,400, which is $600 more than in 2021.

Even though there is no limit on itemized deductions, the general rule is that you should take the standard deduction if the total of the itemized deductions is less than the standard deduction.

How to Calculate Taxable Income

Here are the three steps you need to take to figure out how much of the income is taxed:

• Add up all of the earnings to figure out the gross income.
• Subtract tax adjustments from the adjusted gross income to get the adjusted gross income.
• Subtract the deductions from the income to get the taxable income.

First, add all the money your customer expected to make in 2021. This includes money from full-time jobs, part-time jobs, freelance work, rental properties, and other sources. Then, to figure out the gross income, take out any income the tax code says they don’t have to pay taxes on, like money from a life insurance policy.

Then, take any changes away from their total income. Adjustments could include money put into a traditional IRA, interest paid on a student loan, or money put into a health savings account. This number is the gross income after adjustments.

The last step is to take the adjusted gross income and subtract any deductions to get the taxable income. You can take the standard deduction, which is $12,550 for single filers and $18,800 for heads of household and married couples filing jointly, or itemize their deductions. This is the taxable income, which you can use to determine which tax bracket they fall into. However, remember that investment income is taxed differently than other income.

Take the gross income and subtract things like alimony, half of the self-employment taxes, the teacher’s education deduction, and the student loan interest deduction if they are teachers. These costs will lower the gross income, giving them their adjusted gross income and the amount of money that is taxed.

Marginal Tax Rate vs. Effective Tax Rate

On the federal income tax bracket, you see the marginal tax rate at the top. So, for example, a person with a taxable income of $55,000 will pay 22% in taxes. But not all of the taxable income is taxed at this rate.

Instead, in this example, the marginal tax rate applies only to taxable income beyond $40,525 in 2021, and your effective tax rate is as follows:

10% x $9,950 = $995

12% x ($40,525 – $9,950) = $3,669

22% x ($55,000 – $40,525) = $3,184.50

In this case, a person with $55,000 in taxable income owes $7,848.50 in taxes, which means their effective tax rate is about 14%.

Lower the Tax Rate – Steady Approach

You can legally cut the tax bill if you know the tax bracket. If the taxable income is right on the line between two tax brackets, there are a few ways to keep your client in the lower bracket and lower their tax bill.

Getting paid later and putting money into accounts like health savings accounts or retirement funds are two common ways to stay in a lower tax bracket. These strategies can help taxpayers lower their taxable income, which could help them keep a lower rate.

If a taxpayer has the option of recognizing or not recognizing some income in a particular year, such as with year-end bonuses payable out the week of Christmas or in early January, knowing where they are in their tax bracket and how much room there is before they hit that tax bracket could help them make a decision.

But to add, “Don’t worry too much about your tax bracket.”

FAQs – Tax Brackets

What is a head of household?

There is a special tax filing status called “head of household.” The IRS says taxpayers can’t be married or live with their spouse most of the year if they want to be the head of the household. Taxpayers also have to pay at least half the costs of caring for someone who qualifies, like a child or parent.

Did the tax rates go up or down?

Tax laws are often changed. Each tax bracket’s income bands are changed annually to account for inflation. This usually means that the income bands move up. In 2020, a single person who filed taxes paid 10% of their income up to $9,875; in 2021, they paid 10% of their income up to $9,950. The government sometimes changes the number of tax brackets or the amount of tax in each bracket. In 2017, the highest tax bracket was 39.7%, but in 2018, it dropped to 37%.

What were the tax rates for 2021?

The Internal Revenue Service (IRS) set the seven federal tax brackets for 2021 as 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The U.S. has a progressive federal tax system, which means that the lowest earners pay 20% of their income in taxes, while the highest earners pay 37%.

What are the tax rates for 2022?

The federal tax brackets for 2022 will be the same as in 2021. There are still a total of seven brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 37% as the highest. In 2022, though, the income limits for all tax brackets increased to keep up with rising prices. So, how much tax you pay depends on how much money you make and how you file your taxes, like as a single filer or a married couple filing jointly.

What changed about the standard deductions for the 2022 tax year?
In 2022, the standard deduction went up. The IRS has set the following amounts for standard deductions:

$12,950 for single filers
$12,950 for married people who file separate tax returns
$19,400 for people in charge of a family
$25,900 if both people are married and file together
$25,900 for spouses who died.

In conclusion – Tax Brackets 2022

Every year, usually in November, the IRS changes tax brackets, standard deductions, tax credits, IRA rules, and other things that affect federal taxes for the next tax year. It’s important to know about any changes the IRS makes so that taxpayers can file their taxes with the help of a qualified CPA right and avoid paying too much or too little. If you are a CPA and want to do tax preparation outsourcing, then contact Unison Globus to assist you.

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The Ultimate Tax Preparation Checklist 2022

If you’re seeking best Expat tax services outsourcing firm with international knowledge and experience that helps American expats with taxes – from virtually anywhere in the world than you are at the right place.

Understanding the U.S. tax system can be a challenging process. Moreover, as an American living abroad, the data is much more confusing and opaque. The reason is that regardless of where they live or work, nearly every American citizen is required by law to submit a Federal Income Tax Return.

Nearly all overseas Americans must also file a foreign tax return in their home country. Most expats must file additional U.S. tax forms, such as the FBAR and FATCA.

If you are a U.S. resident living abroad, you are likely aware of the little-known fact that you must file and/or pay taxes annually to the IRS. Yes, guys, the IRS does impose expat taxes.

Possibly, you send your tax forms to experts for processing, or you physically do them yourself. The likelihood is, however, that you are or will migrate to the “new age” of expat tax preparation using internet software. Yet, among the numerous options, which is the best U.S. tax software for expats?

In this recent age of fake news and too much information, it can be hard to sort through all the online options for the best expat tax software tools.

Today, we will tell you not to worry.

In 2022, it will become clear how to submit taxes while residing abroad and which online program to use. We will review the best expat tax service software options, to determine who and what is truly superior.

2022 Best Expat Tax Services

KPMG

KPMG has mastered comprehensive tax management, which includes all types of taxation, including those that are direct, indirect, and individual. Their strategy for minimizing taxes takes into account multiple jurisdictions—the group and other offices in the firm’s global network offer top-notch national and international tax guidance.

The experts in this field come from many walks of life. They have the expertise to engage with our clients and serve as their advisors across various business processes because of their deep knowledge of various industries and service lines and their exposure to other cultures and advanced training.

PWC

PwC’s Tax and Legal Services help businesses filter out irrelevant information and anticipate potential policy shifts. With the reach of a seamlessly integrated worldwide network, they can be present wherever you need them to be, offering deep tax technical understanding and the crucial context you need to make compliant and well-informed decisions that will help you advance your operations.

PwC creates world-class integrated tax and legal strategy and is there for you every step of the way, everywhere you go. With these methods, you can bypass lengthy planning and jump straight into the action.

Deloitte – Cross-border taxation service provider

Deloitte uses its resources of an international network to provide comprehensive and actionable tax solutions to foreign clients facing international tax challenges arising from outbound and inbound investment transactions.

Consultations on international tax matters involving deals conducted in other countries of Deloitte aids companies by assisting with –

• Tax advice and consultation
• Foreign direct investment strategy advice 
• Advice on the tax consequences of introducing new or altering existing group funding arrangements.
• Analyzing how different laws may affect global corporations (in Japan and elsewhere).

EY

To help you succeed in this era of fast change, the tax experts at EY offer services across all tax disciplines. To help you prosper in this time of fast change, the tax experts at EY have consolidated their efforts around the world to provide you with cohesive services across all tax specializations.

Regarding your tax needs, EY is the perfect partner because of its combination of great expertise and experience with the necessary people and technology platforms. EY is an expert in all things tax. They provide clients with a secure interface and a set charge for basic expat tax returns. Use EY’s expertise, understanding, and commercial acumen for your benefit.

H&R Block

Whether you do your taxes on your own or with a professional, H&R Block can ensure that they are done correctly. A U.S. citizen or Green Card holder is expected to file U.S. expat taxes annually, regardless of whether or not they owe money.

From the convenience of your own home, you can do your taxes online at H&R Block, either independently or with the assistance of tax professionals specializing in international taxation. H&R Block ensures that you receive all of the credits and deductions to which you are entitled, no matter where you are in the world. Block is a convenient online service for filing U.S. tax returns.

You may file your own taxes with their straightforward program, which is made to help you save both time and money by locating tax breaks that apply just to foreign nationals.

Turbo Tax

TurboTax is developed for American taxpayers. Their support for US Expats is limited because they are “Tax Prep USA Support.” Form 2555, Foreign Earned Income Exclusion (FEIE), lets you an exempt foreign income from US tax.

Turbotax US doesn’t supply Form 8833 for Treaty Based Disclosures, which expats need. TurboTax tells you to download Form 8833 and attach it to your tax return. Then, mail the papers and pay postage. TurboTax lacks Form 8621 for reporting passive investment companies.

If you own passive overseas investment business, you must do this. US expats with overseas mutual funds or passive investments must use Form 8621 to record distributions. Turbotax s best for many US expats. A new moving abroad tax return online software is required to fit the needs of US Americans abroad.

FreeTaxUSA

TaxHawk, Inc. operates the popular tax filing platform FreeTaxUSA. One of the most popular tax preparation websites, FreeTaxUSA, was founded in 2001 by a certified public accountant and a group of software engineers.

FreeTaxUSA is an official IRS e-file provider and an early contributor to the IRS Free File Alliance. Securely submitting millions of federal tax forms to the IRS is nothing new for them. The FreeTaxUSA program is updated annually to comply with changes in tax law at the federal and state levels.

Changes to the tax code and the availability of new credits and deductions are reflected in FreeTaxUSA. After an update to the program, it is submitted to the Internal Revenue Service (IRS) and each state for approval. By doing so, FreeTaxUSA is prepared for the upcoming tax season.

Boldr Impact

Boldr is an outsourcing partner that builds custom solutions for snowballing companies. It has solutions for data management, customer experience, and sales enablement.

Boldr is also trying to change the rules of outsourcing and lead its industry toward focusing on making an impact. Why? Because they exist to help people grow and develop by having a positive and measurable effect on their clients, companies, and communities.

They’re not like most BPOs. Boldr is the world’s largest B-Corp-certified BPO, and a purpose drives PEO. It has offices in South Africa, the United States, the Philippines, and Canada. Boldr gives back to the communities where they live and work with their time and some of the money they make. Boldr also works on making the world a better place this way.

Elabram

Elabram Group is in charge of the global business of Elabram HR Solution, Elabram Telco, and Axdif. It has been around for more than 20 years and specializes in human resources and telecommunications consulting.

Elabram Group offers HR solutions in Southeast Asia. They focus on human resources solution outsourcing, executive search, and Axdif. At Elabram, the hiring process is taken very seriously.

It chooses “crème de la crème” talent by hand to match the skills that clients and associates need. More importantly, they look at the skills of both parties to make sure they are compatible and that the talent can meet the job requirements. Elabram Group’s four business divisions are constantly improving and developing new ways to meet customer needs.

Unison Globus

Unison Globus provides financial and tax services globally. It is a leader in expatriate taxation services, excels in Tax on Expats, Non-Resident Alien (NRI) Taxation/Tax Services, Tax Services for Expats in the U.S., U.K., Australia, and Other Countries, and Expat Tax Preparation.

We follow procedures that help expats and their Indian employers. Unison Globus, a CPA firm with international experience, can help American expats almost anywhere.

Unison Globus’s knowledge, straightforward approach, and dedication to reducing tax liabilities have won us praise. In addition to federal, state, and business tax returns, they provide tax planning for Americans living and working abroad and a streamlined system for those who are behind.

Since the early 2000s, Unison Globus has become an online-only firm, targeting the U.S. expatriate market. We offer tax advising, planning, and compliance services to individuals, partnerships, corporations, trusts, and estates subject to the United States tax system, regardless of where they reside or conduct business.

In addition, we have created a list of the top 25 things that U.S. expats must remember while paying their taxes.

Do Americans living abroad have to pay U.S. taxes?

Yes, practically all U.S. citizens must submit a U.S. federal tax return, regardless of where they reside. As long as your international income exceeds the reporting level, this applies.

This global revenue may include:

• Interest
• Wages
• Dividends
• Salary
• Rental Income

No matter how you file, if you are self-employed, the filing threshold is approximately $400. Even if your income is below the limit for your filing status, you may still have to file.

For example, if you get certain tax credits or refunds, you will have to file even if you don’t meet the other requirements.

Resigning your citizenship may not allow you to avoid paying U.S. taxes
Before expats can renounce their citizenship to avoid the burden of submitting U.S. taxes, they must demonstrate that they have met their tax obligations for at least five years before the date of renunciation.

Please remember that if you give up your citizenship, you may have to pay an exit tax based on your income and net worth. It’s the IRS’s way of ensuring you don’t give up your citizenship to avoid paying taxes.

The vast majority of Americans living abroad do not have any tax liabilities in the United States

While almost all expats are required to submit a U.S. tax return, most American expats owe no U.S. taxes. To ensure that Americans living overseas are not taxed twice on the same income, the U.S. has enacted several essential deductions, exclusions, and credits. Many foreigners can eliminate their U.S. tax liability using these tax benefits.

The majority of expats can offset or eliminate their foreign-earned income with the following:

1. Foreign Earned Income Exclusion

2. Foreign Housing Exclusion

3. Foreign Tax Credit

Do not pay tax twice on your money! U.S. taxpayers may claim the Foreign Tax Credit against foreign-taxed income.

To qualify for the exclusions, you must be an official expat with foreign-earned income and file a tax return to demonstrate your eligibility.

You must file a U.S. tax return even if you have no tax liability.

The foreign earned income exclusion is conditional on meeting a residency test

The Physical Presence Test necessitates that you be physically present in a foreign nation for 330/365 days.

So, under the Bona Fide Residence Test, it is mandatory for you to live abroad for at least 1 year or so with no plans to return to the United States in the near future. This means that temporary foreign contractors and people on assignment do not qualify.

Due to the foreign earned income exclusion, nonresidents living outside the United States may be able to avoid paying U.S. federal income tax altogether

The Foreign Earned Income Exclusion may allow you to avoid up to $109,000 of foreign earned income from U.S. taxation. This is the most prevalent method by which expats decrease or eliminate their U.S. tax liability.

The Foreign Housing Exclusion may also allow you to eliminate certain housing expenses, such as utilities and rent.

The automatic exclusion of earned income from abroad does not apply

To qualify for the Foreign Earned Income Exclusion, you must meet the eligibility criteria and file Form 2555 or 2555-EZ.

Once you choose to utilise the Foreign Earned Income Exclusion, it stays in effect and you must report it on your annual tax return. However, if you decide you no longer wish to use the exception, you cannot claim it for the next five tax years without IRS approval.

To be considered an expat, you must keep detailed travel logs

If you want to pass the Physical Presence Test, keep careful track of the days you are away. You have to live in a foreign nation for 330 days. Therefore any time spent flying or sailing to the United States will not qualify. Keep track of the exact travel dates.

A minor calculation error might cost you tens of thousands of dollars on your U.S. expat tax return!

A request for a time extension may be submitted if additional time is required for eligibility determination

Many expats who go abroad at the end of the year worry that they won’t be able to use the Foreign Earned Income Exclusion and will miss out on big tax savings. If you think you will be eligible soon, you can ask for more time until October 15th or file Form 2350 to get even more time.

You cannot use the Foreign Tax Credit to offset excluded Income

If you opt to exclude a portion of your income under the Foreign Earned Income Exclusion, you cannot claim it on that income.

For example, if you exclude $108,700 from your income, you are left with $30,800. Only the taxes paid on the remaining income are deducted. This prohibits double-dipping in the eyes of the Internal Revenue Service!

If you couldn’t deduct the total foreign income taxes you paid or owed, you can carry them forward for up to 10 years or back to the year before.

Foreigners’ the U.S. sourced income is not automatically exempt from taxation

Therefore, income produced on U.S. soil cannot be deducted from U.S. taxes under the Foreign Earned Income Exclusion since it is not foreign-earned income.

If you have to pay taxes to another country on that income, you may be able to use it to reduce the U.S. taxes you owe.

Long-term consequences of not reporting your children as dependents on your U.S. expat tax return

Children born overseas to non-US parents may be eligible to be claimed as dependents on your federal tax return.

Even though the Child Tax Credit(s) you’ll get can help you financially, remember that your children are now U.S. citizens and will always have to pay U.S. taxes unless they give up their citizenship as adults.

Foreign nationals are granted an automatic tax-filing extension through June 15th

U.S. taxpayers living abroad on the tax filing deadline of April 18th, 2022, have until June 15th to submit their returns. Pay taxes to the United States before April 18th to avoid fines and interest.

If you relocate back to the United States, you may still be eligible for some U.S. expat deductions and exclusions for that year, but you must file your taxes by April 18th because you are a U.S. resident.

An expat’s taxes in the United States could be decreased if they have a child claimed as a dependent

Citizens and permanent residents with dependent U.S. children can benefit greatly from the Child Tax Credit, which can sometimes even result in a return! All dependent children must possess a Social Security number to qualify for the credit.

The Child and Dependent Care Credit may also allow you to deduct child care expenses. To use this credit, you must have earned revenue. If you excluded all of your earned income through the Foreign Earned Income Exclusion, you would not be eligible for the Child Care Credit.

Filing a state tax return while abroad may be necessary for residents of certain states

Whether or not you need to file a state tax return as an expat depends on whether or not you plan to return. Each state has different rules surrounding domicile and permanent place of abode, which determine whether you are a resident and must submit taxes.

For instance, Massachusetts prohibits changing one’s domicile through temporary or longer-than-expected absences. You cannot plan to return.”

Even if you have no plans to return, many states in the United States continue to tax former residents until they “sever ties” with the state. Depending on the state, this process can be easy or hard. Some states make it difficult to leave their tax jurisdiction.

Even if you reside in another country, for instance, a state may levy taxes if:

• Your spouse or child resides there.
• They issued your current license or identification card.
• There your vehicle is registered
• You maintain a bank account there.
• There, you are enrolled to vote.
• There you own property.

The following states are renowned for taxing former residents:

• California
• New Mexico
• South Carolina
• Virginia

To know the specifics of the tax laws in your state, you should talk to a tax expert.

To avoid paying taxes twice, Americans living abroad might use tax treaties

By decreasing or eliminating U.S. taxes on certain forms of income for expatriates, income tax treaties prevent double taxation of Americans residing abroad. The U.S. now has tax treaties with 69 nations.

Since tax benefits differ per nation, expats should check the treaties with their host nation to see how they will be taxed. As with any legal instrument, tax treaties can be challenging to comprehend. If you don’t know which rules apply to you, you should talk to a tax expert.

If the value of your foreign financial assets exceeds the FBAR filing threshold, you must submit an FBAR

FinCEN Form 114, also called the FBAR, is a way for the U.S. to stop tax frauds from hiding money abroad. If your international bank accounts have a total balance exceeding $10,000, you must file. When evaluating your international bank accounts, consider pensions, investments, and accounts for which you have signatory authority but no control.

The FBAR is electronically submitted via the BSA e-filing system. Even if the account(s) exceeded $10,000 for just one day (or one minute! ), you must file an FBAR. The FBAR is filed independently of your U.S. expatriate tax return.

Another way U.S. citizens living abroad might reduce their tax liability is through the foreign tax credit

If you live in a country with a high tax rate or your income is higher than Foreign Tax Credit. Then, the Foreign Earned Income Exclusion may help you lower or eliminate your U.S. tax bill.

The International Tax Credit is a dollar-for-dollar credit against the foreign taxes you pay. To elect, you must file Form 1116.

Numerous persons are qualified for the international tax credit and the foreign earned income exclusion; however, if taxpayers are also eligible for the child tax credit, selecting the foreign tax credit over the exclusion will typically result in greater tax savings.

The FBAR Deadline is April 15th, the same day as taxes are due

Its deadline is April 18th, with an automatic extension to October 17th. The FBAR is filed in addition to the standard tax return.

U.S. expats can file their taxes and FBARs late without being penalized

Years after moving abroad, many expats realized they were always required to file in the United States. They may fear severe penalties and be hesitant to file late tax returns.

The IRS offers an amnesty program to assist foreigners in becoming compliant without incurring penalties. The Streamlined Filing Compliance Procedures is its name.

To use this application, you only need to:

• File Foreign Bank Account Reports for the previous 6 years
• Self-certify that your failure to file was not a deliberate act of defiance.
• Submit the three most recent delinquent income tax returns and pay any delinquent taxes owed during that period.

This will bring you into conformity with IRS laws in the majority of circumstances. It is ideal for expats who were previously uninformed of their U.S. tax filing responsibilities.

The Foreign Account Tax Compliance Act (FATCA) form 8938 may Require your attention

FATCA is similar to FBAR because it aims to prohibit U.S. taxpayers from hiding money and assets in offshore accounts. Form 8938 must be filed if the amount of certain financial assets exceeds the filing threshold (which varies by filing status and residency).

FATCA and FBAR reporting requirements are distinct yet comparable. You may be obliged to file either FBAR or FATCA, or neither!

Your social security benefits will not be affected if you decide to retire outside the country

If you are contemplating an overseas retirement, rest assured that you can collect your Social Security payments in virtually any nation. There are only a few countries where Social Security payments are frequently unavailable, namely:

• Azerbaijan
• Belarus
• Cuba
• Kazakhstan
• North Korea
• Moldova
• Uzbekistan
• Turkmenistan
• Kyrgyzstan
• Tajikistan

However, even if you reside in one of these nations, you can still recover any arrears owed to you if you transfer to a different nation.

For example, suppose you relocated to Cuba. You would not be eligible to receive U.S. Social Security payments while residing in Cuba.

However, if you relocated to Costa Rica a few years later, you would be able to receive any Social Security benefits you were denied while living in Cuba.

Agreements on totals of the country you choose to pay your social security taxes to will impact your finances

The United States has agreements with 28 nations outlining which country should receive Social Security payments.

The agreements generally permit the use of earned credits in the computation of benefits in the other country. Without such an arrangement, you may be required to pay into two systems yet obtain only one benefit.

One’s U.S. tax return must include information on rental income

Report foreign and domestic rental income to the IRS. However, many property-related charges might mitigate an expatriate’s tax liability.

Immediate deductibility exists for home repairs, but improvements require more time. How do you determine the distinction? Repairs get the property back to the way it was when it was first bought, while improvements make the property worth more or make it last longer.

Despite their differences, you must keep track of the costs associated with repairs and renovations to your rental property. After selling your property, you can deduct the cost of repairs and upgrades when calculating capital gains or losses on your expat taxes.

Mistakes on prior U.S. tax returns are correctable

Mistakes happen. Using form 1040-X, you must file an amended return for the tax year in question if you discover you did not report all of your income or if you did not claim all of your allowable deductions.

The best action is to file an adjustment before the IRS discovers the error, as penalties are typically less severe. Once the initial return has been submitted, the clock starts ticking, and updated returns must typically be filed by a specific date to be eligible for a credit or refund.

The United States government may tax your social security payments

You must include your Social Security benefits as an expatriate income on your U.S. tax return. Some individuals’ benefits will be taxed, while others will not. If you have another income source, your benefits will often be taxed. However, the United States may not tax your Social Security benefits if you reside in specified countries. This consists of:

• Canada
• Egypt
• Israel
• Germany
• UK
• Ireland
• Romania

The regulations in each country are different. Consult an expert with specialization in taxation for expats for more information.

Remember that even if your Social Security benefits are taxed, only 85% of the total amount is a taxable income.

Before committing, know your expat tax service

We hope this list of questions and factors will assist you in locating an expat tax accountant or firm to prepare your U.S. tax returns. Enjoy the peace of mind from knowing professionals will handle everything with care.

Please book a consultation with us to know more about us at hello@ud.web-stage.in.

You cannot prevent anxiety attacks, spontaneous sweating, and a general sense of AAGHH! When a stack of tax returns or too many last-minute clients come on your desk, arrive before the tax deadline. With the appropriate action plan, you can control everything and return your vitals to normal in no time.

It would be advantageous to handle tax season properly, so you do not face overwhelming odds. Tax season should not dictate your lifestyle.

As a CPA, you must know how to reduce tax season stress to increase your efficiency and profitability during tax season 2022.

Yes, the relationship between stress and tax season productivity is negatively proportional.💀

The lower your stress level, the more efficient your work. 😺

Simply stated!

Here are 5 strategies to cope with the tax-time stress

Striking the perfect professional and personal balance

During the intensely busy season, CPAs put in unimaginable hours to guarantee that tax returns are completed by the deadline. Working more than ten hours a day is not good for your health.

Therefore, maintaining a work-life balance is crucial. It will improve your health, performance, and productivity at work.

Bonus: Determine the amount of work you and your team can do. To recruit more tax preparers, you should do tax preparation outsourcing and collaborate with an accounting outsourcing service to scale your team quickly and efficiently.

Outsourcing is nothing but recruiting a Skilled Remote Team; needless to say, Cost and Value Benefits, and Time Differences play a huge favorable role during crises.

Keep active (enjoy your evening walk)

Sitting straight for 8-10 hours in front of a computer screen is bad for your neck and back.

Therefore, movement is required during the average workday. Ensure you take regular coffee or food breaks if you work from home. Uninterrupted concentration on a task can sometimes increase stress and diminish productivity.

Therefore, ensure that you take breaks every hour or two. Stand up, take a few steps, and try to refocus and lessen your stress throughout tax season, even if it’s difficult.

Bonus: Delegating work to a team of tax preparers who do not require close supervision is the best option. Tax outsourcing enables you to accomplish precisely this. Employ a tax preparer with the required experience to free up your crucial time to maintain a healthy routine.

Talk about it with your team or partners

CPAs experience stress and anxiety due to the tax season’s stress. And frequently, this stress becomes uncontrollable. Here, straightforward communication is advantageous.

Discuss difficulties with your partners and team; devise strategies for resolving challenges. Ensure that all choices are made on a majority basis – so that the burden of decision-making rests not only on your shoulders but is shared by all stakeholders. Stress is reduced if you and your team communicate effectively and clearly.

Bonus: Discuss the viability of outsourcing tax return preparation. You can save money using an outsourced tax preparer as a Full-time Equivalent FTE.

Take proper 8 hours of sleep

A CPA’s greatest wish is to get sufficient rest during tax season. However, it is a distant dream, and they are fortunate if they can sleep.

During tax season, they typically work through the night to fulfill the rigorous tax deadline. This practice must be discontinued. You must guarantee that you are obtaining a restful night’s sleep to rejuvenate, reenergize, and prepare to face any problems.

Bonus: Before the tax season begins, expand your workforce and increase capacity. If you intend to engage seasonal personnel for the season, do so as soon as possible. To avoid having to scurry and have sleepless nights during the tax season, many accounting companies begin seeking suppliers to whom they may outsource tax preparation.

Stay Calm and Outsource

Tax season should be busy because tax preparation is a commodity activity that generates substantial money. However, this should not come at the expense of one’s mental health or peace of mind.

In addition, this should not come at the price of your clients, who may require additional services like bookkeeping or payroll.

You must prepare for potential obstacles, such as staff shortage, team burnout, and extended work hours that impair team members’ work-life balance. In this circumstance, tax outsourcing can help you achieve a competitive advantage. With an expert in offshore tax preparation, you have the option to delegate your workload.

They are an extension of your team. While they handle operational chores, you can concentrate on customer service and managing client expectations.

Tax Outsourcing Allows a Stress-free Life, but How?

As the owner of an accounting firm, you desire to make your workers’ life happier and less stressful. During the peak season, however, it is tough for your internal team to manage the stress and workload.

You will have access to additional workers with a tax outsourcing team on your side, preventing the internal team from getting overworked. In addition to relieving your teammates, this will help you save up to 50% on expenses.

Your team members will no longer be required to undertake basic compliance activities, allowing them to devote more time to their specific areas of interest.

Cheers Towards a Stress-free Tax Season, 2022

As a CPA, you must fight the harmful perception that tax season is synonymous with excessive work hours. It would be beneficial if you prioritize your physical and emotional wellness and that of your staff. Take measures to control your workload and reduce your stress levels.

We hope that the advice in this blog will help you better manage yourself and your team. Don’t hesitate to contact us at hello@ud.web-stage.in or +1 407 807 0100 if you are interested in outsourcing your tax returns.