Tax Updates and U.S. Tax Deadlines for Expats in 2022

Jan 26, 2022

Learn about new tax law updated the IRS issued and tax deadlines U.S. expats should be aware of in 2022. Americans together with Green Card Holders living abroad will have to file their taxes just like Americans living in the United States. They must file their federal tax returns each year their income exceed the filing threhold regardless their physical tax residence.

Americans living abroad must submit their Federal Income Tax Return and report their worldwide income, foreign bank accounts, foreign assets, and foreign businesses regardless of where they reside. This year there was hope that President Biden’s tax reform might be accompanied by some kind of exemption for Americans living abroad, but that has not materialized.

What is US tax deadline in 2022?

The U.S. tax deadline is April 15th, 2022. U.S. Expats get to enjoy an automatic 2-month extension to file their Federal Income Tax Returns to June 15th, 2022. The extension of time is automatic, which means you don’t need to file any additional forms.

Note: The Automatic Extension applies only to tax filing deadline. You must still pay your US tax libility by April 15th, 2022. The IRS might assess late payment penalties if you fail to pay your taxes by the April 15th deadline.

If you still need extra time to gather all your tax documents, you can request an additional extension to October 15th, 2022. Contact us today and we’ll file the extension to October for you free of charge! 

What’s new in 2022?

Tax brackets and tax rates have been adjusted for inflation, while the standard deduction has been increased to $12,550 for individual taxpayers filing under the Single filing status.

The $3,000/$3,600 Additional Child Tax Credit for each dependent child in the 2021 tax year is now only available if you were physically present in the U.S. for half of 2021. For many U.S. parents who live abroad but do not meet this residency criterion, the child tax credit is worth $2,000 per child, or, if you have offset your U.S. tax liability by using a foreign tax credit, for a refundable $1,400 tax credit per child.

Americans living abroad should also be aware that the IRS will receive a substantial increase in investment in the Build Back Better Act, one of the stated goals is to improve its enforcement of U.S. tax laws on taxpayers who live outside the U.S., as such it is more important than ever to be in compliance, and don’t forget to file your Foreign Bank Account Report (FBAR) and form 8938.

Do I have to pay U.S. taxes if I live abroad?

You most likely won’t have any tax liability as U.S. Expats are eligible for special tax exclusions and credits such as foreign earned income exclusion or foreign tax credit.

Important: You must file the return in order to claim these tax benefits.

The Foreign Tax Credit allows you to offset your U.S. tax liability with the amount of foreign tax paid to your current country of residence, while the Foreign Earned Income Exclusion allows you to exclude up to $108,700 of your foreign earned income from your taxable income in 2022.

Do I have to file U.S. Tax Return if I live abroad?

Yes, U.S. expats have tax filing obligation even if they don’t owe any taxes to Uncle Sam. They must file a return once their annual income exceeds the filing threshold.

Filing thresholds

  • Self-employed Individuals – You must file the Individual Tax Return if your elf-employment income exceeds $400 in the tax year.
  • Single Filers – Earned income exceeds $12,550
  • Married Filing Jointly – Earned income exceeds $25,100
  • Married Filing Separetely – Earned income exceeds $5. Yes, $5. It’s not a typo.

What is the FBAR filing deadline in 2022?

U.S. citizens living in the U.S. must file their Foreign Bank Account Report (FBAR) by April 15th, 2022. U.S. Exapts get an automatic 6-month extension to October 15th, 2022.

You must file an FBAR if the total value of your financial foreign assests exceeded $10,000 at any point during the year. The FBAR is filed with the Department of Treasury via BSA E-filing System.

We highly recommend filing your FBAR timely as the potential penalties might be heafty.

Related: What documents do I need to file an FBAR?

What are the 2022 tax brakets for U.S. Expats?

The tax brackets for the tax year 2021 and tax rates for 2022 filings are as follows:

  • 37% on income over $523,600 ($628,300 for married couples filing jointly).
  • 35% on income over $209,425 ($418,850 for married couples filing jointly).
  • 32% on income over $164,925 ($329,850 for married couples filing jointly).
  • 24% on income over $86,375 ($172,750 for married couples filing jointly).
  • 22% on income over $40,525 ($81,050 for married couples filing jointly).
  • 12% on income over $9,950 ($19,900 for married couples filing jointly).
  • The minimum tax rate is 10% for singles earning $9,950 or less ($19,900 for married couples filing jointly).

What happens if you did not file your tax return in 2021?

If you have been living abroad for a while and have not kept up with your US tax returns, there is an amnesty program called the Streamlined Foreign Offshore procedure that allows you to get up to date without facing penalties.

Olivier Wagner is a CPA and IRS Enrolled Agent. Olivier has over 12 years of experience working with U.S. Expats and he founded 1040Abroad in 2012.
U.S. Taxes For American Expats E-book

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1. Foreign Tax Credit vs. Foreign Earned Income Exclusion

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