Sometimes, filing your US expatriate tax requires more than just completing Form 1040. Depending on your particular situation, there are a number of forms and schedules that may need to be included when submitting your US tax for expats. It’s so important to be aware of your individual requirements when it comes to filing your taxes, so read below for a breakdown of the different schedules that you may need to utilize.
Schedule A – Itemized Deductions
As a US taxpayer, you always have the option to itemize your deductions on your US Tax Return. In some cases, if you have significant deductible expenses, it can benefit you to choose to itemize rather than take the standard deduction (which varies depending on your filing status). If you do choose to itemize on your US tax for expats, you will need to use Schedule A, which has seven categories of deductible expenses: medical/dental expenses, taxes, interest, charitable gifts, casualty and theft loss, job expenses and other miscellaneous items. If you utilize Schedule A, it’s critical that you keep accurate records of your expenses throughout the year.
Schedule B – Interest and Dividend Income
Did you receive more than $1,500 in interest or dividend income in 2016? If so, you’ll likely need to file Schedule B with your US tax for expats. Generally speaking, most types of interest are subject to US income tax, and usually the bank or other entity paying out will report the taxable interest on Form 1099-INT. You can find more information about Schedule B requirements on the IRS website.
If you receive dividends from stock you own, the income will be taxable. If the dividend amount exceeds the reporting threshold, you should receive a Form 1099-DIV from the corporation that paid you.
An important part of Schedule B, especially relevant for US expats, is that you must disclose any foreign bank or investment accounts and whether you receive distributions from certain foreign trusts. Note that an affirmative answer for any of these means you must file a Foreign Bank Account Report (FBAR).
Schedule C – Income and Expenses from Self-Employment
It’s not uncommon for US expats to be self-employed, as it can provide greater flexibility to live abroad. However, as a self-employed expat, you will likely need to file Schedule C with your US tax for expats to report income earned and lost from a sole proprietorship. Most often, you’ll also need to file Schedule SE to calculate self-employment taxes that must be paid during the year. Get more self-employment tax details in this article.
Schedule D – Capital Gains or Losses
If you made – or lost – money due to selling stocks, investments or other assets, you’ll need to report this information via Schedule D, Capital Gains and Losses. You’ll need to show the initial purchase price, purchase date, sale price and sale date via documentation. Depending on length of ownership, assets will be classified as either ‘short-term’ and reported on Part I or ‘long-term’ and reported on Part II of Schedule D. Short-term assets are subject to ordinary income tax rates, while long-term assets are eligible for reduced ‘capital gains’ tax rates.
Schedule E – Supplemental Income and Loss
One of the most common reasons you’d file Schedule E is due to owning real estate in the US and renting it out while living abroad as an expat. There are a number of deductible expenses that you’d qualify for, such as mortgage interest, HOA dues, maintenance, taxes – and one that is often overlooked, depreciation of the rental property. Because of the numerous deductions available, it’s so important to keep accurate records of all expenses and transactions with a rental property so you can ensure you’ve taken advantage of every deduction possible. You can learn more specifics about Schedule E in this article.
When it’s time to think about your US tax for expats, consider consulting with an expat tax professional, who can help you understand your obligations and ensure you don’t miss out on any tax savings available to you. For more tax advice and money-saving tips, be sure to also download a US expat tax guide.
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