In a press release issued earlier this week, Greenback Expat Tax Services President David McKeegan reflects on important 2012 expat tax developments and discusses planning considerations for 2012 expat tax returns. In the release, he highlights a new IRS program designed to help delinquent expat tax filers catch up, FATCA updates, and projected 2013 tax plans as this year’s main expat tax milestones.
The Greenback press release, which was featured prominently in Yahoo! News, also emphasizes the importance of knowing what happened throughout the year in order to need to prepare for next year’s expat tax returns. According to Mr. McKeegan:
There were quite a few developments in US expatriate taxes that took place this year. In order to make informed and important decisions about US expat taxes, Americans living abroad need to know about them.
He specifically identifies this year’s most important tax updates:
… Earlier this year, the IRS announced a new “streamlined” program designed to help low-risk expatriates become compliant. Separate from the Offshore Voluntary Disclosure Program (OVDP), the new program makes catching up on late expat tax returns and FBAR filings much easier and faster for individuals who are delinquent in filing income tax returns and reporting on foreign bank accounts. This past October, the IRS and US Department of the Treasury made a separate announcement involving the postponement of FATCA enforcement activities for financial institutions until January 2014. Under FATCA, US taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS.
Looking ahead to next year, Mr. McKeegan notes several considerations Americans living abroad should have in mind as they start to prepare for their 2012 expat tax returns:
… Expats can still take advantage of either the new “streamlined” process or the OVDP program before the IRS decides to close them. As for the FATCA delay… Individuals still need to comply with FACTA regulations by filing their FBARs, Form 8938, etc. … There is also the fiscal cliff and general tax planning that every tax payer needs to consider in order to minimize their US tax burden… [In addition], important considerations for US expat taxes involve the Foreign Earned Income Exclusion… the Foreign Tax Credit and Foreign Housing Exclusion… tax benefits that will allow US expats to avoid dual taxation and help them to save as much as possible on their expatriate tax returns.
To conclude, Mr. McKeegan provides additional tips American expats can leverage now to help increase their total deductions, including “making charitable donations to IRS-approved charities, deducting some capital losses from the total amount of capital gains, and, in certain circumstances, deducting contributions to their retirement plans.” Ultimately, the key to maximizing your tax savings is to plan ahead.
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