The Tax Cuts and Jobs Act (TCJA) brought about some major changes to the US tax code, including a reduction in the corporate tax rate from 35% to 21%. These changes will have a significant impact on US expatriates and their tax obligations.
The due date for filing US tax returns is April 15th. However, for US expats who live and work abroad, the deadline is June 15th. This gives them an extra two months to file their taxes.
If you are a US expatriate, it is important to be aware of the changes to the tax code and how they will affect you. In this article, we will provide an overview of the most important changes and deadlines that you need to know about for 2023.
The New US Tax Deadline for 2023
The new tax deadline for US expats in 2023 will be June 15th, like it is every year. This deadline applies to anyone who files an extension. The IRS has extended this filing deadline for US expats in order to give them more time to file their taxes. The June 15th deadline applies to all US citizens who reside outside of the US, regardless of where they live or work. This means that US expats who live and work in the UK, Canada, Australia, or any other foreign country must file their US taxes by June 15th.
Why This Change is Happening
The US tax system is based on the “citizenship-based taxation” (or “CBTC”) principle, which requires all US citizens to file US taxes regardless of where they live or work. The IRS has determined that extra time is needed for US expatriates to file their taxes, so they have changed the deadline for US expats from April 15th to June 15th. This will give them an extra two months to file their taxes. This change is important because it gives US expats extra time to take advantage of all the tax credits and deductions available to them as expats. All US expatriates are eligible for certain tax credits and deductions, such as the Foreign Earned Income Exclusion (FEIE) and the foreign tax credit. These tax credits and deductions can help US expats to reduce the amount of US tax they owe.
What It Means for Expats
The new tax deadline of June 15th means that all US citizens residing abroad must file their taxes on that date, regardless of their country of residence or their employment situation. This is an important change because it gives US expats an extra two months to take advantage of all the tax credits and deductions available to them. For example, if a US expat is eligible for the Foreign Earned Income Exclusion (FEIE), they have an extra two months to make sure they claim it. The FEIE allows US expats to exclude up to $105,900 of their income from US taxation in 2021. The FEIE is just one of many tax deductions and credits that US expats should take advantage of.
How to Prepare for the New Deadline
The best way for US expats to prepare for the new tax deadline of June 15th is to start planning and preparing in advance. US expats should start gathering all the necessary paperwork and documents they will need to file their taxes. They should also familiarize themselves with their tax liability and any deductions and credits they may be eligible for. US expats should also look into filing an extension if they anticipate needing extra time to file their taxes. An extension will give them an extra 6 months to file their taxes, and it will also help them avoid any potential penalties and interest charges.
Tips for Staying Organized and Avoiding Penalties
US expats should take advantage of the extra two months to prepare for the June 15th deadline. They should make sure that they are organized and stay organized throughout the filing process, as this will help them to avoid mistakes or missed deadlines. A filing checklist can be very helpful in this regard, and expats should also track their expenses throughout the year to ensure they are taking advantage of all the deductions and credits they are eligible for. Finally, expats should pay close attention to the various deadlines and make sure that they are meeting all of them. If they fail to meet a deadline, they may face penalties or interest charges. It is important to be aware of all the deadlines and plan ahead so that they can avoid any potential issues.
Taxes are important for everyone and we want you to be in the best shape considering your taxes. If you are an expat or even a domestic taxpayer, visit www.expatriatetaxreturns.com to connect with a tax specialist and file with us. We always look forward to meeting your needs and helping you get the best returns.