Greenback Reflects on Important 2012 US Expat Tax Developments

This year, Americans living and working abroad witnessed many developments in US expat taxes. New opportunities to get caught up on delinquent taxes, delays with FATCA enforcement, and proposed new 2013 US taxes, highlight the main developments in US expat taxes. As American expats head into 2013, it’s important to know about these developments in order to better prepare for their 2012 US expatriate tax returns.

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

For the estimated six million Americans living abroad, 2012 brought with it many important developments in US expatriate taxes. New opportunities to limit penalties on delinquent overseas tax returns, developments in the Foreign Account Tax Compliance Act (FATCA), as well as proposed plans for new 2013 US taxes, mark some of the year’s main tax highlights.

“There were quite a few developments in US expatriate taxes that took place this year,” said Greenback Expat Tax Services President David McKeegan. “In order to make informed and important decisions about US expat taxes, Americans living abroad need to know about these tax developments,” he said.

According to Mr. McKeegan, 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 different 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.

“Knowing about these developments allow our customers to make the best decisions regarding their US expat taxes,” said Mr. McKeegan. “In fact, US 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, that only impacts financial institutions, though individuals still need to comply with FACTA regulations by filing their FBARs, Form 8938, etc,” he said. “In addition, 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. Ultimately, thinking now about how to plan for 2012 expatriate tax returns will undoubtedly help maximize these opportunities and tax savings,” he said.
One of the most important considerations for US expat taxes involves the Foreign Earned Income Exclusion. Set this year at $92,900, next year’s expat tax returns will be able to exclude up to $95,100 in foreign earned income. Additionally, the Foreign Tax Credit and Foreign Housing Exclusion are 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.

“In addition to these larger scale exclusions and credits, American expats also have numerous opportunities to increase their total deductions,” said Mr. McKeegan. “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 are all easy ways to leverage available opportunities that will maximize savings. The key is to start planning now, before the end of the tax year,” he concluded.