Taxation of U.S. Citizens Abroad

Taxation of U.S. Citizens Abroad

Did you know that there are over 9 million citizens living outside the United States in over 160 countries throughout the world?  And did you also know that these U.S. citizens are required to file U.S.  income tax returns every year?  But only a small portion of these Americans abroad are filing returns.  Many of these citizens choose not to file because they owe no taxes, but this decision may result in serious consequences.

One common myth is that many of these taxpayers believe that if their income is under the Foreign Earned Income Exclusion threshold they are not required to file. In reality, a taxpayer must file a return to ELECT the Foreign Earned Income Exclusion.  If you have not filed a return, you have not made an election and you cannot exclude the income. Another misinterpretation about this exclusion is that it applies to ALL foreign income. This is not the case. The exclusion applies only to “earned” income such as wages or business income. The exclusion does not apply to investment income. Finally, the taxpayer must meet either the bonafide residence or physical presence test to be able to claim the exclusion.

But more importantly, in addition to filing US tax returns, there are a numerous additional forms that may be required to be filed. These annual foreign reporting requirements carry very onerous penalties if they are not timely filed.  It is important to note that U.S. persons living within the United States are also required to file these forms.



The Internal Revenue Service today announced an increase in the optional standard mileage rate. Taxpayers use the optional standard mileage rates to calculate the deductible costs of operating an automobile for business and certain other purposes. In recognition of recent gasoline price increases, the IRS made a special adjustment to the standard mileage rate for the final months of 2022.

The IRS normally updates the mileage rates once a year in the fall for the next calendar year, however, the IRS became aware of a number of unusual factors that came into play particularly involving fuel costs. As a result, they decided to take this special step to help taxpayers, businesses and others who use the standard mileage rate.

The new rates will become effective July 1, 2022. For the final 6 months of 2022, the standard mileage rate for business travel will be 62.5 cents per mile, up 4 cents from the rate effective at the start of the year. The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents for the remainder of 2022, up 4 cents from the rate effective at the start of 2022. The 14 cents per mile rate for charitable organizations remains unchanged as it is set by statute.

While fuel costs are a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs. 

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.  Clients will be required to provide two separate amounts to their tax professionals in 2023. Total mileage before July 1 and total mileage after June 30.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

In summary, for the 2022 taxation year, the following standard mileage rates are in effect.

PTIN Courses International is an IRS-approved CE Provider.

We offer a quality continuing education experience for a reasonable price of $10.00 per credit hour!! Please take a look at the courses we currently have to offer by visiting our “All Courses” page. We are so excited to become a part of your professional journey.

Introducing Schedules K-2 and K-3

Introducing Schedules K-2 and K-3

Partnerships, S corporations, and U.S. persons with interests in foreign partnerships may be required to file Schedules K-2 and K-3 with the returns they file in 2022 for tax years beginning in 2021.  Partners and shareholders of these pass-through entities will use this information to complete their respective tax returns.

The IRS recently released new requirements for enhanced reporting of international tax matters by pass-through entities.  Many international tax rules were altered and expanded by The Tax Cuts and Jobs Act. That act requires that partnerships provide additional information to certain partners with regard to international tax attributes such as GILTI, BEAT, and FDII.

Don’t forget to File Form 7202 for Self employed clients

If you have self-employed clients who were affected by Covid-19, they may be eligible for tax credits.  This article discusses when you may File Form 7202 to claim the sick and family leave equivalent tax credit with respect to self employed individuals.

Initially,  Families First Coronavirus Response Act (“FFCRA”) and the COVID-related Tax Relief Act (the “Relief Act”) included a sick and family leave equivalent tax credit that was effective from April 1, 2020 to March 31, 2021.  However, American Rescue Plan Act of 2021 (the “ARP”) amended and extended the tax credit for individuals that were affected by COVID from April 1 to September 30, 2021.

Self-employed individuals may qualify for a REFUNDABLE sick leave tax credit of up to $5,011 or a family leave credit of up to $12,000.

Tips for the 2022 Tax Filing Season

Tips for the 2022 Tax Filing Season

The Internal Revenue Service announced that the nation’s 2022 tax filing season will start on Monday, Jan. 24, 2022, when the tax agency will begin accepting and processing 2021 tax year returns.  The IRS encourages everyone to have all the information they need in hand to make sure they file a complete and accurate return. Having an accurate tax return can avoid processing delays, refund delays and later IRS notices. 

As the individual tax filing season approaches, we have compiled some tips that may help the preparer get ready for the upcoming season.  t’s never too early to get ready for the 2022 tax filing season ahead

Special Charitable Donations Tax Deduction

Special Charitable Donations Tax Deduction

As the end of 2021 approaches, the IRS is reminding taxpayers to take advantage of the ability to take a deduction for special charitable donations. Many of our clients may not realize that if they make a cash donation to a qualifying charity before the end of 2021, they can get a deduction of up to $300. Or $600 if the taxpayers are married filing joint.

The best part is that taxpayers do not have to itemize deductions on their tax returns to take advantage of this special charitable donations income tax deduction.

Time to Renew your PTIN

Time to Renew your PTIN

Don’t forget to renew your PTIN before December 31!

Anyone who is paid to prepare or assist in preparing federal tax returns or claims for refund must have a PTIN. All enrolled agents must also have a PTIN. Attorneys and Certified Public Accountants do not need a PTIN unless they are compensated for preparing or assisting in preparing federal tax returns or claims for refund.

IRS Announces 2022 Inflation Adjustments

IRS Announces 2022 Inflation Adjustments

UPDATE DECEMBER 17 – IRS released the Standard Mileage Rates (See Below)

Earlier this week the Internal Revenue Service issued Revenue Procedure 2021-45 which outlines the 2022 IRS Tax Inflation Adjustments. This Revenue Procedure adjusts more than 60 tax provisions, including the tax rate schedules and other tax changes.

These adjustments apply to the 2022 taxation year and will affect returns filed in 2023. The following are a few of the important changes.

Tax Changes for Students and Teachers

As the school year begins, students are considering what classes they need to take and how much the classes will cost. Whether it’s community college, a trade school, a four-year university or an advanced degree, higher education is expensive. The good news is tax deductions and credits can help offset these costs.

These deductions and credits reduce the amount of tax someone owes. If the credit reduces tax to less than zero, the taxpayer could even receive a refund.

Taxpayers who pay for higher education in 2021 can see these tax savings when they file their tax return next year. If taxpayers, their spouses or their dependents take post-high school coursework, they may be eligible for a tax benefit.

In addition, teachers are offered a deduction for out-of-pocket expenses that they incur for books and supplies they use in the classroom.