Tax Tips for U.S. Americans Abroad
Just because we are heading into 2020 doesn’t mean we file the 2020 US tax forms just yet! In fact, we always need to file for the year before (a.k.a. filing for 2019 taxes in the year 2020) since our worldwide income of that year can only be measured and determined by the end of the year. Therefore, without further ado, here’s what to expect in the calendar year 2020 for tax season 2019 as an American Abroad:
US Tax Deadlines Still the Same
Tax deadlines 2020 for the 2019 tax season will remain as the years before:
- April 15th remains to be the tax filing deadline for Americans within the United States.
- June 15th is the automatic extension deadline for Americans abroad. Expats also have the opportunity to request an extension to October 15th by filling out a form (you can file through our app or read this post for more info).
- December 15th is the very last day to file for your US expat taxes before the new year. You can use the Streamlined Procedure to catch up on your taxes before the new tax season begins.
New Tax Filing Thresholds for 2019
As you can see from the chart below, much of the numbers have changed compared to the 2018 tax season. For example, the single filing status jumped up an additional $200 ($12,00 to $12,200).
The married filing separately category remains the same as last year with $5 or more is needed to be eligible to file. So for example, if you are an American living abroad, married to a foreigner and nannying on the side, you will definitely need to file since you will be earning more than $5 a year.
This chart places a large percentage of adult Americans abroad in the position to file their tax returns each year. It is for sure a tax obligation that must be honored if one reaches the gross income.
Standard Deduction Amount Increased
Standard tax deductions make sure that all taxpayers have some income that is not subject to federal income tax. It reduces one’s overall tax bill because it allows individuals (like single filers) and companies to subtract certain expenses from their taxable income.
For 2019, the standard deduction amount has been increased for all filers. The amounts are:
- Single or Married filing separately—$12,200
- Married filing jointly or Qualifying widow(er)—$24,400
- Head of the household—$18,350
Readjusted US Tax Rates for 2019
Due to inflation this year, the IRS has readjusted the tax rates and thresholds for filing 2019 taxes in the year 2020:
Tax Benefit FEIE Increased
As we shared in this recent post, the Foreign Earned Income Exclusion (known as the FEIE) is a money-saving deduction. It can also be a breath of fresh air for expats by lowering and completely eliminating your tax liability.
The FEIE is a tax benefit that allows you to exclude a certain amount of foreign earned income from being taxed from the IRS. This is an awesome thing Americans abroad can take advantage of if you qualify.
For the 2019 tax season, you can exclude up to $105,900 of foreign income instead of last year’s $103,900. So if you have earned $112,800 working overseas for the year 2019, you can subtract the new FEIE exclusion from your yearly salary. Then you’ll just get a small percentage taxed by the IRS.
No More Health Care Coverage Shared Responsibility Payment.
Also for tax season 2019 as an American Abroad, there are some new changes with health care coverage. According to the IRS, you will no longer need to either make a shared responsibility payment or file Form 8965 if you do not have the minimum essential health care coverage for part (or all) of 2019.
The IRS also states that the “Full-year health care coverage or exempt” box has been removed from Form 1040.
New Form 1040-SR
Through our research, we’ve uncovered that Form 1040-SR for US Seniors has been re-designed, because Form 1040 has been redesigned. Form 1040-SR is essentially mirroring the original Form 1040 for individuals born before January 2, 1955 (seniors).
The new form 1040 SR has larger print and simplified boxes and is only for taxpayers who turn 65 or older in the taxable year. Also, there are no limits on the amount of income that can be reported on the form. Plus, no limits on the types of income (though some income could require the taxpayer to attach schedules). Additionally, senior citizens living abroad must take the standard deduction when filing 1040-SR.
Or better yet, forget manually filing and doing the paperwork. Senior citizens can utilize our user-friendly software and gain our assistance as they walk through it.
New Features in MyExpatTaxes Software for Tax Season 2019
MyExpatTaxes is excited to announce the following new features in our 2019 Tax Season release:
- Full Streamlined Filing Capability: File for 4 Years (3 Back Years + Current Year) & 7 Years of FBARs (6 Back Years + Current Year) all in the app. Info about the eligibility for the Streamlined Procedure can be found here.
- Form 8621: Passive Foreign Investment Company (PFIC) reporting abilities will be supported through our higher support model
- Professional Support Models: As requested, we will offer more support models in addition to our speedy online app abilities
Early Bird Special for Americans Abroad
Our loyal newsletter subscribers will get the chance for an early bird special discount for the 2019 tax year. If you haven’t signed up yet, make sure to do so through our app. You will receive exclusive deals and American expat tax benefits you can only get through us!
Posted in Expat Taxes Support, Featured, Tax Forms. Tags: american expat | americans abroad | early bird special | feie | form 1040-sr | health care coverage | myexpattaxes | new features | standard deduction | tax benefit | tax filing thresholds 2019 | tax season 2019 | us tax deadlines | us tax rates | what to expect | what to know | year 2020