US Expat Taxes - What’s New in 2015
1. The IRS will begin accepting tax returns filed electronically on January 20, 2015. Paper tax returns will begin processing at the same time.
2. The Foreign Earned Income Exclusion was increased to $99,200, up from $97,600 for 2013.
3. For the first time ever, taxpayers will have to report on their tax returns whether they have health insurance - and pay a penalty if they did not have it.
- Importantly, U.S. expats who meet the Physical Presence or the Bona Fide Residence Test are exempt from the requirement to report health insurance coverage.
4. Congress renewed a number of “extender” provisions of the tax law that had expired at the end of 2013. These provisions were renewed by Congress through the end of 2014. The Congress has recently passed a tax bill extending more than 50 temporary tax breaks that had expired at the end of 2014. One of the happy extender provisions:Capital gains taxes in 2015 are unchanged from 2014. If you sell investments that are held for less than a year, you'll pay your income tax rate on your gains, which ranges between 10% and 39.6%. Long-term capital gains are taxed at a rate of 0%, 15%, or 20%, depending on which marginal tax bracket you fall into. The bulk of the population will pay a 15% long-term capital gains tax in 2015. The 20% tax rate only applies to taxpayers that fall into the highest marginal tax bracket of 39.6%.
5. Rumors about the delay of federal tax refunds through October 15, 2015 as a result of budget cuts proved unfounded. Congress indeed cut the IRS budget by $346 million for the budget year. As a result of the cut, there was a lag in refund processing. “Everybody’s return will get processed,” said the IRS Commissioner John Koskinen. “But this year we may not have the resources, the people to provide refunds as quickly as we have in the past.”
6. New Refundable Credit: (“the premium tax credit”) for eligible individuals and families who purchase health insurance through a Health Insurance Marketplace. Taxpayers who meet certain criteria may have some or all of their estimated premium tax credit paid in advance directly to the insurance company to assist with the cost of monthly premiums.
What we can expect in 2016 - Tax Planning Tips
1. Tax Responsibilities of Expatriation. For taxable years beginning in 2015, the amount that would be includible in the gross income of a covered expatriate allows $690,000 exclusion. This means that gross income subject to “exit tax” by reason of the deemed sale rule is reduced (but not to below zero) by $690,000 compared to the 2014 exclusion amount of $680,000.
2. Foreign Earned Income Exclusion. For taxable years beginning in 2015, the foreign earned income exclusion amount will rise to $100,800.
3. For calendar year 2015, the first $147,000 of gifts to a spouse who is not a citizen of the United States are not included in the total amount of taxable gifts made during that year.
Important 2015 Tax Deadlines
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January 15
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Last 2014 estimated tax payment due
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January 20
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IRS Filing Season Starts - First day to e-file
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February 15
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End of 2015 open enrollment at the Health Insurance Marketplace. Applies to uninsured taxpayers residing in the U.S. to avoid penalties on the 2015 tax returns filed in 2016.
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April 15
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Due date to file calendar year 2014 tax returns (if you live in the US) or request a 6-month extension. Pay any tax that is due, even if as an expat you don’t have to file until June.
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April 15
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First 2015 estimated tax payment due
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June 15
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Last day to file calendar year 2014 tax returns or submit request for extension of time to file for overseas taxpayers
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June 15
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Second 2015 estimated tax payment due
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June 30
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Due date to file the Foreign Bank Accounts Reports (FBAR) for 2014
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September 15
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Third 2015 estimated tax payment due
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October 15
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Final due date to timely file calendar year 2014 tax returns for expatriate taxpayers who requested a 6 month extension.
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