End of Year Expat Tax Planning Checklist

End of Year Expat Tax Planning Checklist
Updated on December 13, 2021

2021 is nearing its end, and a little bit of expat tax planning can help you have a smooth transition into the new year. Use our five-step checklist to ensure you are fully prepared for 2022.

#1: Gather Your US Travel Documents

First things first: find your documents that demonstrate how much time you spent in the US during 2021. This will help simplify your expat tax process in 2022 because you won’t have to wonder if you should use the Physical Presence Test or the Bona Fide Residence Test in order to qualify for the money-saving Foreign Earned Income Exclusion (FEIE).

The Foreign Earned Income Exclusion allows you to exclude $108,700 for your 2021 taxes, and $112,000 for 2022, so it’s worth the advance legwork for the money this expat tax planning will save you.

#2 Reduce Your Tax Liability

Take steps to ensure you don’t pay extra on your expat taxes for 2021. You can reduce your tax liability by donating to charities, but a word of caution: make sure that the charities are recognized by the IRS, as not all international charities are. Once you’re sure you’ve selected an eligible charity, include the donation on your Form 1040 Schedule A.

And remember: even if you pledged to donate a certain amount of money to a charity, you can only claim the deduction the year that the organization receives your donation.

Also, don’t forget to maximize your IRA contributions, which are tax deductible. So, the more you are able to contribute, the less income you’ll have for the US to tax.

#3 Take Inventory of Your Stock Market Losses

If you had a particularly good year for investments, perhaps you didn’t see any losses. If so, good for you! However, if you did experience some losses, make sure you take advantage of tax loss harvesting.

What does that mean? It means you sell some of your winners to recognize the gain, and you sell some of your losers to offset that gain and lower your taxes. This can be a great way to rebalance your portfolio without taking major capital gain tax hits.

#4 Know the Changes Coming in 2022 to Help with the Expat Tax Planning Process

There are a number of tax changes that President Biden has proposed that could impact expats, such as:

  • A global minimum tax rate of 15% for corporations
  • A Surtax on very high earners
  • An expanded Medicare tax that would apply to pass through entities
  • More IRS enforcement
  • An increase to the State and Local Tax (“SALT”) limits

None of these proposed laws have been passed yet, but keep an eye on our blog for the latest updates. We’ll be sure to let you know as soon as anything changes.

#5 Make Plans with Your Greenback Accountant

Keep your accountant in the loop of any major financial changes you’ve undergone and make plans to get your taxes done ASAP in 2021! There’s no feeling quite like not having to think about your taxes for the rest of the year.

Do You Need Expat Tax Planning Expertise?

Well, that’s what we do best. Sign up for a consultation, and find out why expats all over the world choose Greenback as their expat tax provider.

Editor’s Note: This article was previously published on November 26, 2018 and updated on December 10, 2021.

Confused about when you need to file? We can help.

When you live in the US, tax day is simple: April 15th! When you move abroad, it’s not so straightforward! Learn about all the expat deadlines and extensions you need to know to file.

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