Living abroad comes with many exhilarating adventures – and a few stressful experiences, too. Chief among the stresses experienced by US expats is the US tax season. In case you weren’t aware: tax season has started and it’s time to pony up and get ‘er done! We’re here to help in any way we can, so to start off, we’ve covered all the key dates you’ll want to keep on your calendar regarding the 2023 tax season.
Everything you need to know about the 2023 tax season
The phrase “tax season” refers to when the IRS accepts income tax returns. And for 2023, the IRS set January 23, 2023, as the official start of the tax season.
The tax season is an integral part of the year because all American citizens must file their tax returns regardless of where in the world they call home.
The same applies to permanent residents such as green card holders and Accidental Americans (those who never knew they were American citizens).
Here’s what you’ll need to file your tax returns in 2023
To file your taxes, you’ll need a Taxpayer Identification Number.
And the most common Taxpayer Identification Number is the Social Security Number (SSN). This is what citizens and permanent residents should use.
And since the IRS considers Accidental Americans citizens, they will need an SSN to file their tax returns.
Read more on this topic: IRS Announces Delay In TIN Requirement – Largely Implicates Accidental Americans
There are also certain cases when individuals living abroad who are not citizens or Green Card holders and therefore don’t have an SSN may still need to file a US tax return
This requirement is triggered if an individual is engaged in business in the United States. However, the IRS permits this category of taxpayers to use the ITIN instead of the SSN to file their tax returns.
US taxpayers seeking to understand their filing obligations should refer to the below chart to learn whether they qualify for filing. Note that even if you fall below the filing threshold and are not technically required to file, there are some circumstances where it may be financially beneficial to you to file and claim certain provisions from the IRS.
Minimum Filing Threshold for Taxpayers Younger Than 65
|Tax Year||Single||Married Filing Separately||Married Filing Jointly||Head of Household|
Minimum Filing Threshold for Taxpayers 65 And Older
|Tax Year||Single||Married Filing Separately||Married Filing Jointly||Head of Household|
Although the tax season’s official opening date is January 23, taxpayers can start the filing process earlier by utilizing the IRS Free File option.
For those with an adjusted gross income of $73,000 or less, the Free File option is a free (as its name implies), guided e-filing service that went live on January 13, 2023.
When is the 2023 US tax filing deadline?
The deadline for when you can file taxes in 2023 is Tuesday, April 18, 2023. Normally, Tax Day is April 15th, however, the IRS’ Washington DC offices will be closed on Friday, April 15, 2023, in observance of the locally recognized Emancipation Day. So, the IRS extended the deadline until Tuesday, April 18th.
Do Americans living abroad get an extension to the 2023 tax filing deadline?
Yes. American expats and Green Card holders receive up to three additional tax-filing deadline extensions.
June 15, 2023, is the automatic 2023 tax-filing deadline for American citizens and Green Card holders filing from abroad
This deadline extension does not need to be requested (it’s automatic, as the name implies). However, if you’re unable to meet the June 15th deadline, American expats must make a formal request through IRS Form 4868 prior to June 15th to qualify for a second deadline extension, which this year is October 16, 2023. Typically, the deadline is October 15th, however, the deadline was extended a day in 2023 to account for the fact that October 15th is a Sunday.
In some cases, Americans living abroad may require yet another extension. Those still unable to meet the October 16th deadline must still request the October extension in order to qualify to request the December extension. When correctly requested and granted, the second extension permits US expats to file their tax return penalty-free as late as December 15, 2023.
What types of taxes might expats need to file?
US taxpayers are liable for many types of taxes, including estimated taxes and business taxes. However, there is a silver lining: US expats are also eligible to claim stimulus checks as part of catching up on their tax returns for 2020 and 2021 and beneficial credits such as the Child Tax Credit.
Estimated taxes in 2023
The IRS uses a pay-as-you-go system. That means it expects you to pay your taxes as you earn money. Waiting until taxes are formally due is not a financially sound strategy because you may owe penalties and interest on the payments you missed throughout the year.
Additionally, expats need to be mindful of the fact that foreign employers are likely not withholding US income taxes on their pay.
If you own a business or have a side hustle and expect to owe at least $1,000 in tax for the 2023 calendar year, you’ll have to make quarterly tax payments to the IRS thanks to the pay-as-you-go system.
The quarterly estimated payment deadlines are as follows for the 2023 tax year.
- April 18, 2023
- June 15, 2023
- September 15, 2023
- January 16, 2024
Business taxes in 2023
Business tax deadlines depend on the business type.
Business Tax Return Filing Deadlines, 2023
|Business Type||Deadline for filing return|
|S corporations||March 15, 2023|
|Partnerships||March 15, 2023|
|Multi-member LLCs||March 15, 2023|
|Sole proprietorships||April 18, 2023|
|C corporations||April 18, 2023|
|Single-member LLCs||April 18, 2023|
Important note on when your 2023 tax payment is due
Although you may receive a tax filing extension, your tax payment is still due on the original due date.
For example, if you operate a sole proprietorship and apply for a six-month extension, you must pay any tax you owe by April 18, 2023, to avoid penalties and interest. But you’ll have until October 16, 2023, to file your business tax return.
Tax treaties between the US and your country of residence may impact how your company is taxed. Moreover, if you are a resident of a foreign country and your company is registered within that country, you may benefit from a totalization agreement. This type of agreement means that the US will not tax you on income for which you have already paid taxes to your foreign country of residence. As always, these types of agreements vary by country, so you may find that you’re able to most confidently and beneficially file your US tax return with the help of an experienced expat tax professional.
American citizens and green card holders can claim stimulus checks abroad in 2023
If you haven’t already received your three COVID-19 stimulus payments, you have until June 15, 2023, to file your 2020 and 2021 tax returns to claim them. Depending on your circumstances, you could receive up to $3,400.
Note: If you’re interested in claiming stimulus payments but also need to catch up on filing your taxes, you may be eligible for a penalty-free solution called the Streamlined Procedures, specifically created by the IRS to allow US taxpayers to catch up on their taxes without fear of financial penalties.
You can claim child tax credits in 2023
In the calendar year 2022, the Child Tax Credit provides a $2,000 partially refundable tax credit for eligible taxpayers with dependents under the age of 17 (read: cash in your pocket even if you didn’t owe taxes).
But in 2021, the American Rescue Plan increased the tax credit to $3,600 per child below six and $3,000 for children aged 6 to 17. Before getting too excited, we do need to note here that this expanded credit is only available to expats whose children spent at least half of that year in the US.
If you qualify for the expanded child tax credit, you have until June 15, 2024, to claim the $3,600 Child Tax Credit by filing an amended return.
Read more about claiming the child tax credit as an American parent abroad in our complete guide: The Child Tax Credit Guide For US Expat Parents
Key deadlines for forms commonly submitted with expat tax returns
Being an expat involves being familiar with an alphabet soup of tax obligations, such as FBAR and FATCA. Read on for a handy overview of information to have on hand when preparing for the upcoming tax season.
FBAR 2023 filing deadline
The Foreign Bank Account Report, known as the FBAR, is a tax reporting requirement for Americans who have over $10,000 in foreign financial accounts at any time during the year. This report is filed electronically and is relatively straightforward to complete.
The FBAR deadline is October 16, 2023. (Technically, it’s April 18th, but if not received by then, everyone gets an automatic extension to October 16th without having to file for it.)
2023 FATCA reporting deadline
While you may think of FATCA as the law requiring foreign financial institutions to report your accounts to the IRS, it also cuts the other way.
If you’re an expat with at least $200,000 worth of offshore financial assets, you may need to report them on Form 8938 as part of your annual federal tax return.
That means the deadline for filing your FATCA is the same as that of your individual tax return: June 15, 2023.
How a mid-year move abroad can affect your taxes
If you make a mid-year move overseas, knowing and calculating your tax obligation can get as complex as a spider web.
For instance, you’ll have to figure out the portion of income earned in the US and the portion made in the foreign country. It can get more complicated if you move in the middle of the month or your income from the two countries is not easily separable.
Those moving abroad in the middle of the year will also navigate the challenges that come with the potential risk of double taxation, especially for countries with limited tax treaties with the US, such as Singapore.
And to benefit from the Foreign Earned Income Exclusion, a crucial tax amnesty program available for expats against double taxation, you must have been in a foreign country for at least 330 days out of 365 days. That’s according to the Physical Presence Test.
Alternatively, you must have had an uninterrupted residency in a foreign country for a calendar year.
What happens if you miss the tax filing deadline for 2023 (or are generally behind)
And while filing your taxes can feel like an inordinate amount of work, filing annually and being tax-compliant will pay dividends over the course of your life. Moreover, although federal tax compliance is often phrased as “voluntary,” failure to file a tax return can result in financially significant and frustrating headaches down the road.
At Bright!Tax, our goal for you goes beyond facilitating tax-compliancy. Our expert CPAs (many of whom reside abroad themselves) have devoted their careers to serving the expat community by filing expat tax returns to every taxpayer’s maximum advantage. If you’re ready to feel confident and relaxed this tax season, let’s get started.