US Expat Tax News for 2024

Jan 4, 2024

As the year 2024 approaches, individuals and businesses need to be aware of the upcoming tax changes that will impact their financial planning. From adjustments in tax rates to updates in deductions and credits, understanding these changes can help taxpayers prepare and make informed decisions.

In this overview, we will discuss the key tax changes that will take effect in 2024, providing insights into how these revisions may affect your tax liability and overall financial situation. Stay informed and stay ahead of the game by keeping up with the latest developments in tax laws and regulations.

Key Takeaways: 2024 US Expat Tax Updates

  • Tax Deadlines: The standard filing deadline for US residents is April 15, 2024, but expats get an automatic extension to June 17, 2024. 
  • FBAR and FATCA Reporting: International taxpayers with foreign accounts get an automatic extension to October 15, 2024, to file their FBARs. FATCA reporting is tied to your individual tax return deadline.
  • Foreign Earned Income Exclusion: The FEIE for 2024 is increased to $126,500, aiding American citizens in managing their worldwide income more effectively.
  • Standard Deduction Increases: The standard deduction for various filing statuses has increased for 2024, impacting both passive and unearned income reporting.
  • Stimulus Checks and Compliance: US expats who haven’t claimed their stimulus payments for tax years 2020-2022 can still do so. Additionally, those who are behind on their tax filings can use the IRS amnesty program to become compliant without facing penalties.

When Does the 2024 US Tax Filing Season Start?

The tax year in the United States aligns with the calendar year, spanning from January 1 to December 31. The term “tax season” refers to the period when the IRS starts accepting income tax returns. For the 2023 tax year, it is anticipated that the IRS will begin processing returns around the end of January 2024.

What are the US Expat Tax Deadlines in 2024?

  1. April 15, 2024 – Primary Tax Payment Deadline. Final date to pay any taxes owed.
  2. June 15, 2024 – Automatic Extension for Expats. Deadline for filing annual returns for U.S. expatriates.
    • Note: Taxes owed should still be paid by April 15 to avoid interest.
  3. October 15, 2024 – Extended Filing Deadline. Deadline for those who requested an extension.
    • Contact us to facilitate this extension free of charge.
  4. December 15, 2024Final Extension Deadline
    • Available with a submitted extension letter to the IRS.
  5. October 15, 2024 – FBAR Deadline. Remember to file your Foreign Bank Account Report (FBAR) if applicable. The FBAR deadline is April 15, but U.S. expats automatically receive a 6-month extension, making the final FBAR deadline October 15.

These deadlines are key for U.S. expatriates to manage their tax obligations effectively. Staying informed and proactive about these dates ensures compliance and minimizes the risk of penalties.

Standard Deductions and Filing Requirements for Expats

In most cases, if your annual earnings are below the standard deduction’s minimum threshold, you’re not required to file a federal income tax return. Yet, there’s an important exception to this rule.

Individuals who are married but opt for separate filing need to file a federal income tax return if their income is $5 or more.

The standard deduction is essentially the part of your income exempt from taxation. The IRS adjusts this figure yearly to reflect inflationary changes.

The exact amount of the standard deduction you’re eligible for depends on various factors, including your marital status, your age, and whether you file your taxes jointly or separately.

Filing StatusStandard Deduction 2023Standard Deduction 2024Additional Deduction if Over 65 or Blind (2023)Additional Deduction if Over 65 or Blind (2024)
Single$13,850$14,600$1,750$1,850
Married Filing Jointly$27,700$29,200$1,400 per spouse$1,500 per spouse
Married Filing Separately$13,850$14,600$1,400$1,500
Head of Household$20,800$21,900$1,750$1,850
Qualifying Widow(er)$27,700$29,200$1,400$1,500

Adjusted Income Brackets for Tax Year 2024

For 2024, the federal income tax brackets have undergone adjustments to reflect changes in inflation, a practice that ensures the tax system adapts to economic shifts. The income tax rates remained the same (22%, 24%, 32%, 35%, and 37%).

Each year, the IRS revises these brackets to align with inflationary trends, ensuring taxpayers are not unfairly moved into higher tax brackets due to inflation. This adjustment is a key aspect of maintaining fairness in the tax system and can often lead to financial benefits for taxpayers.

Interestingly, many of our clients find that they don’t need to worry about which tax bracket they fall into. With the expertise of our team, a significant number of our clients end up not owing any taxes at all. Our professionals are adept at navigating the complexities of tax laws to maximize benefits for our clients.

For an in-depth look at all the tax brackets for various filing statuses and their respective tax rates for 2024, we encourage you to read our comprehensive article on 2024 federal income tax brackets.

Estimated Taxes: Expats, especially those self-employed or with significant investment income, should consider estimated quarterly tax payments to manage their tax burden effectively.

Foreign Earned Income Exclusion in 2024: Increased to $126,000

In 2024, American expats will witness a significant enhancement in their tax benefits with the Foreign Earned Income Exclusion (FEIE) increasing to $126,000. This adjustment, a response to the evolving economic landscape, offers a substantial boost from previous years. The FEIE is a vital tool for U.S. citizens working abroad, allowing them to exclude a considerable portion of their foreign-earned income from U.S. taxation. This increase to $126,000 means that expats can now enjoy a greater degree of financial flexibility and tax relief. It underscores the U.S. government’s recognition of the unique financial challenges faced by its citizens living overseas and its commitment to supporting their economic well-being.

Your 2023 Tax Filing Tip

Overseas filers should be aware that for the 2023 tax year, the filing deadline is June 15th, 2024. The Foreign Earned Income Exclusion (FEIE) for this period is set at $120,000.

2024 Annual Gift Tax Exclusion Update

In 2024, the annual gift tax exclusion is set to rise to $18,000. This adjustment allows individuals to give a tax-free gift of up to $18,000 to any person within the year 2024, providing more flexibility and opportunities for tax-efficient gifting.

Additionally, in 2024, there’s a notable update for those gifting to a non-US citizen spouse. The limit for such gifts will be elevated to $185,000. This significant rise from previous years provides an increased opportunity for cross-border families to manage their finances more effectively, acknowledging the unique circumstances of international marriages.

Your 2023 Tax Filing Tip

For your 2023 personal tax return, remember that you can claim a gift tax exclusion of up to $17,000. This is an important consideration for managing your tax liabilities effectively.

Additional Child Tax Credit Update for 2024

In 2024, the Additional Child Tax Credit (ACTC), which is available to U.S. citizens living abroad, will be adjusted. The credit will increase to $1,700 per child, up from $1,600 in 2023. This enhancement in the ACTC provides extra financial support for families, particularly benefiting U.S. expatriates with children, by acknowledging their unique financial situations and the importance of child welfare in a global context.

Final Opportunity to Claim Your Stimulus Payments

The IRS issued a series of stimulus payments during the COVID-19 pandemic, and for US expatriates, there’s an important deadline approaching. June 15th, 2024, marks the final chance to claim any unclaimed stimulus payments from 2020 and 2021. Missing this deadline means losing these funds permanently, making it a critical opportunity, especially for those facing financial challenges that have hindered their tax compliance.

US taxpayers were eligible for three stimulus payments, with eligibility tied to the filing of 2020 and 2021 tax returns. If you haven’t filed for these years, you may still be in time to claim these payments. This opportunity is particularly significant for expats who haven’t updated their tax filings, offering a chance to retroactively claim the stimulus payments and potentially other credits.

The total amount available from these stimulus payments is substantial – you can receive up to $3,200 in a tax refund. This sum can be a significant aid, whether you’re working towards tax compliance or considering renouncing your U.S. citizenship. For many, this amount could cover several years’ worth of compliance costs, providing a strong incentive to take action before the deadline.

This is a pivotal moment for U.S. expatriates. Ensuring you claim these payments before the June 2024 deadline is not just about receiving what you’re entitled to; it’s also about taking a step towards resolving any outstanding tax issues and securing your financial future.

US Expat Taxes 2024 Visual Guide

2024 Retirement Plan Contribution Limits for Expats

For expatriates, understanding the nuances of retirement planning, especially in relation to Social Security is crucial. In 2024, the maximum contribution limits to various retirement plans have seen an increase, an essential factor to consider in your expat tax return planning.

Here’s a breakdown of the 2024 contribution limits for different investment vehicles, applicable to U.S. taxpayers under 50. For those aged 50 and above, the total contribution limit across these vehicles, except IRAs, is raised to $30,500.

Investment VehicleTax Year 2024Tax Year 2023
401(k)$23,000$22,500
IRA$7,000$6,500
403(b)$23,000$22,500
Most 457 Plans$23,000$22,500

Note: Changes are also expected for Roth 401(k)s following the Secure 2.0 Act. It’s advisable to consult with an accountant who understands your specific situation.

Catch-Up Contributions in 2024

Catch-up contributions, a vital aspect for those over 50 using IRS retirement vehicles, have also been updated. In 2023, the IRS raised the maximum catch-up amount for 401(k), 403(b), and most 457 plans to $7,500. This means that last year, individuals 50 or older could save up to $30,000, combining regular and catch-up contributions. These limits remain the same for the 2024 tax year. However, the IRA catch-up contribution limit continues to be $1,000.

Understanding these updated limits is key for expats in effectively planning their retirement savings, ensuring they maximize their contributions while remaining compliant with IRS regulations.

If you have questions or need personalized advice on your tax situation, 1040 Abroad is here to help. We offer free tax advice to US expats to ensure you’re fully informed and compliant with your tax obligations. Contact us for expert guidance tailored to your unique needs as a US expat.

 

 

Written by

Kasia Strzelczyk, EA

A certified accountant and IRS enrolled agent with over 8 years of experience working with US expats. With a deep understanding of the unique financial challenges faced by expats, Kasia is dedicated to helping clients navigate complex tax laws and regulations.

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