Americans Living Abroad Can Plan For Easier Tax Filing

American taxes can be difficult to understand, especially for those who are living abroad. But a little preparation now can make the upcoming tax season much less stressful overall.

Read the full press release, originally published on PR Web, below:

Each January, US employers are obligated to send tax statements to employees and contractors who worked for them in the previous year. The same is true in several other countries that use calendar years (January 1 through December 31) for their tax years. US citizens living abroad will benefit from keeping these W-2s, 1099s, and other forms related to their foreign income organized, as well as from planning ahead to ensure that their taxes are submitted to the IRS on time.

Tax returns are due on Monday, April 15, 2013 for most US citizens. However, Americans living abroad automatically qualify for an extension until June 15, 2013, in part to allow expats the time they need to track down relevant documentation on foreign income earned in the 2012 tax year. If necessary, Americans living abroad can file an extension to delay their tax return until October 15.

“It’s important to remember that the extension is for tax return itself and not the actual taxes due,” says Greenback President David McKeegan. “In other words, if expats owe taxes to the US, they are expected to estimate what they owe and make payment by April 15. Anyone who waits until the date of their tax extension to submit a payment may also be responsible for interest and penalty charges.”

The IRS recently announced their annual inflation adjustments for various tax provisions, some of which may greatly reduce or eliminate American taxes owed on foreign income. For taxable years beginning in 2013, the Foreign Earned Income Exclusion amount is $97,600 (up from $95,100 for 2012), which also impacts other exclusions and credits on foreign income earned by taxpayers living abroad. In particular, this impacts the Foreign Housing Credit, which allows expats to deduct up to 30% of the amount they claim for the Foreign Earned Income Exclusion for specific housing related expenses.

“This is a good time for expats to evaluate the taxes that they paid in 2012 and make decisions about whether they need to increase the amount their employers withhold from their taxes or to set aside additional funds to cover what they may owe in 2013,” explains Mr. McKeegan. “A slight adjustment on a W-4 form now or putting a small amount of money aside every month this year can make a huge difference when it is time to pay your 2013 taxes.”