The Top Tax for Expats Changes in 2018
Every year, slight changes are made to the American Tax Code and to the rules and regulations that assess taxes. These rules mean subtle or major differences for everyone who files their taxes. Tax for expats, however, is always a little more complicated than domestic taxes, which is why it is important to keep up with the major changes every tax season. Here are some changes that are important this year, along with how they can affect you.
The most important change is not actually a change, but one of the few constants when it comes to tax for expats. That is the date to file your taxes if you are living outside of the United States, which remains June 15. Of course, there are exceptions and changes depending on your own circumstances, but in general, you need to file on or before June 15 to avoid paying fines and interest on any money that you may owe. That’s right; you get a full two months to file your taxes if you live overseas.
2. Changes to Tax Brackets
As per every year, tax brackets have been slightly changed. These changes can be noted on the IRS website. It pays to look at the brackets for your tax for expats so that you can adjust your deduction accordingly. Watch out, though. Deductions have deadlines just like your taxes, so be sure to pay into things before that date or you will be taxed at a higher bracket.
3. The Foreign Earned Income Exclusion (FEIE) Limit
The Foreign Earned Income Exclusion (FEIE) limit for this year is $102,100 USD. This is the amount of money that you can exclude from your taxes when filing, which is helpful for many people who are working regular jobs outside of the United States. Be sure to understand how the FEIE works before filing so that you remain compliant with tax for expats regulations.
4. Healthcare Insurance Coverage
The Affordable Care Act, colloquially known as “Obamacare,” made provisions about healthcare coverage for expats and made tax for expats slightly more complicated. The good news is that if you opted for the Foreign Earned Income Exclusion, either by a physical presence test or residence test, or if you are enrolled in an American expat health plan, you may be exempt. That means you won’t have to be concerned about this tax, and all it takes is filing form #8965 with your tax return. Be aware, however, that if you do not qualify, you may have to pay a penalty, which is a percentage based on your income, just like tax brackets.
Tax for expats is complicated and sometimes a little messy, which is why many people living outside of the United States turn to dedicated foreign tax professionals to help them stay compliant and pay the right amount. If you are an expat who needs some help with your taxes, be sure to contact a professional tax firm with experience in foreign taxes. They can help ensure that you pay what you owe and no more.
Esquire Group, a boutique international tax advisory firm specializing in tax consulting, tax planning and compliance and helping corporate and individual taxpayers with Offshore Voluntary Disclosure Program, asset protection, and tax consulting for US expats. To learn more about us, visit www.EsquireGroup.com/about.