Americans Abroad- 2022 Guide to US Tax Updates
2022 Tax Law Updates for Americans Abroad
Each year the IRS provides updated information related to the new tax year. Use this guide, as a quick reference to the most common dates and tax provisions for American Expats.
As a reminder, every American who meets the following worldwide income thresholds MUST file a US tax return
· Single: $12,950
· Head of Household: $19,400
· Married Filing Jointly: $25,900
· Married Filing Separately: $5
· Self-Employed: $400
You must file a Foreign Bank Account Report (FinCEN Report 114)if you hold the equivalent of $10,000 at any time, across foreign accounts.
2022 Filing Deadlines (for US tax year 2021)
· April 18th:
o US Tax Return deadline for US tax residents
o FBAR Deadline-> automatic extension available
· June 15th:
o US Tax Return deadline for Americans Abroad
· October 17th:
o US Tax Return- extended deadline
o FBAR- extended deadline
· December 15th:
o Additional Expat Extension
Foreign Earned Income Exclusion (FEIE): a tax benefit allowing expats to exclude some or all of their foreign income
· 2021: $108,700
· 2022: $112,000
Foreign Housing Exclusion: combined with the FEIE (above) and is based on your foreign location:
· 2021: See Section 3 for housing limitations
· 2022: updated housing costs expected to be released around March 2022
Foreign Tax Credit: A nonrefundable tax credit for income taxes paid to a foreign government. You can optimize between using the Foreign Earned Income Exclusion and/or the Foreign Tax Credit to help reduce your US tax liability.
Annual Gift Tax Exclusion:
· 2021: $15,000 per person
· 2022: $16,000 per person
Annual Gift Tax Exclusion for gifts to non-US citizen spouses:
· 2021: $159,000
· 2022: $164,000
*Gifts made between US citizen spouses are not taxable in any amount
Estate Tax Thresholds:
· 2021: $11,700,000 exclusion
· 2022: $12,060,000 exclusion
Retirement Contributions:
Contribution limit for employees who participate in 401(k), 403(b), and most 457 plans:
· 2021: $19,500 (or $26,500 if you are over 50)
· 2022: $20,500 (or $27,000 if you are over 50)
Traditional IRA, deductions available for employees/spouses who do not have access to a qualified US plan, regardless of income:
· 2021*: $6,000 (or $7,000 if you are over age 50)
· 2022: $6,000 (or $7,000 if you are over age 50)
*2021 contributions can be made through April 15, 2022
General Updates:
· Married filing jointly:
o 2021: $25,100
o 2022: $25,900
· Single OR Married Filing Separately:
o 2021: $12,550
o 2022: $12,950
· Head of Household:
o 2021: $18,800
o 2022: $19,400
2022: Tax brackets have remained the same since 2018, the brackets are indexed annually to adjust for inflation. The top US bracket remains 37%.
Source: Kiplinger.com
Use this guide as a quick source for US figure changes, but please speak with your tax advisor and/or financial planner to discuss planning around your unique situation. Some of my favorite planning opportunities for Americans Abroad include:
1. Deductible Traditional IRA contribution- available regardless of income, when your employer does not offer a US qualified retirement plan
2. Spousal gifting from a US citizen spouse to a non-US citizen spouse
3. Head of Household filing status for US citizens who are married to a non-US citizen spouse and have a qualifying dependent child
4. Treaty recognition of US qualified retirement accounts
5. Potential withdrawal of foreign pensions at depature
If you have any questions on tax changes for 2022 or some of the planning opportunities mentioned above please do not hesitate to connect with me, Arielle Tucker, CFP® & IRS Enrolled Agent. I work at White Lighthouse Investment Management, a fee-only Financial Planning firm that specializes in working with Americans living in Switzerland.
Other helpful resources:
- IRS Publication 54: Tax Guide for U.S. Citizens and Resident Aliens Abroad
- IRS FBAR Reference Guide