Do you know about recent US Expat Tax Updates for 2023? No, Don’t worry! In this article, we will discuss all the inside information that you must know. Stay tuned with USTAXFiling.in and get all the US Expat Tax Updates 2023!
For 2023, the keyword for US Expat Taxes is nothing but inflation. There is no doubt that inflation has several bad parameters, but good ones include higher 401(k) contributions, foreign earned income exclusion, and higher IRA contributions. In this post, we will discuss everything about Internal Revenue Services changes and how they might affect your US Expat Tax Updates for 2023!
What are the Foreign Earned Income Exclusion Changes for 2023?
The major change for US Expats is the foreign-earned income exclusion change. For the 2022 financial year, foreign earned income exclusion is indexed to inflation that gets filed in 2023, and you may exclude up to $112,000. The limit for financial year 2023, which is filed in 2024, is $120,000. There is an increase for those expats who are earning more than $112,000. The limit may continue to increase every year as inflation increases.
Updates to IRA Thresholds and 401 (k) in 2023
Retiring overseas is a complicated thing, but keeping up with the updates and changes will make income tax filing much more simple. Eligibility on 401ks has increased, and the maximum you will contribute if you are under 50 years old is $22500, up from $20,500 for individuals under 50 years old.
Above 50 years US Expat Tax Changes
If you are above 50 years and you are not retired, it is best to consider taking benefit of the catch-up contribution. This helps those people who are above 50 years to make 401k contributions, an additional amount of $7500 for the 2022 income taxable year. It went up from $6500 in the 2021 income taxable year. If an individual is eligible for both the catch-up contribution and the standard limit of $19000, then in 2023, they may contribute to $26,500.
In 2022, the Individual retirement account was $6000 and has increased to $6500. You may add an additional $1000 if you are above 50 years to that as your catch-up contribution.
IRS Updates: Foreign Capital Gains and Standard Deductions!
For married couples who are filing income tax jointly, the standard deductions have increased to $27,700 in 2023. It was $25900 in 2022. Single individuals have to pay $13,850 straight from $12,950 in 2022. The household head standard deduction is $19,400 currently. In 2022, it was $18,800.
It means that some expats may itemize the deductions compared to previous years as they will get benefits from claiming the standard deduction instead of things such as charitable donations and mortgage interest payments on Schedule A of the 1040EZ/A form
US Expat Tax Update for Married Couples and Single Filers
The current threshold for a single person for capital gains has increased. There is no need to pay capital gains if your taxable income is below $89,250 for married couples or $44,625. If a married couple’s taxable income is between $89250 and $553,850, and if a single filer’s income is between $44625-$492300, then you have to pay 15 percent on capital gains. If you are above the income level, then the capital income tax gains rate is almost 20 percent.
Self-Employment US Expat Tax Updates in 2023
If you have the capability to increase your salary or if you are self-employed, you wish to do so. If you are married and filing your income taxes jointly, you both can use the foreign earned income exclusion, and it increases to $312,700 before you owe to pay any income tax. You have to pay self-employment income tax on the income before the foreign earned income exclusion applies, and if you are self-employed, then it is 15.3 percent.
A single individual filer may earn up to $156,350 without any need to pay income tax. It means that you are using the foreign earned income exclusion for the full $120k, an additional amount of $22.5k for your 401k contribution, as the standard deduction is $13.85k before you have to pay any income tax returns.
Do You Have Questions on How 2023 Changes May Impact Your US Expat Taxes?
This article, USTAXFiling.in has given you a clear picture of US Expat Tax Updates for 2023. There are many tax laws out there, and USTAXFiling wants you to know them so that you don’t get caught off guard come this income tax season. Our USTAXFiling experts are highly skilled and qualified to help you with the income tax filing process. Also, they ensure to discuss your tax-related problems and resolve them at the earliest. They also keep an eye on details about the recent tax updates, so you don’t have to worry about anything. You can continue to do your work while USTAXFiling.in experts take care of your income tax filing. Schedule a call with USTAXFiling right away!