Just as quickly as the new year begins, so does the beginning of the 2023 US tax filing season. Fortunately, for the first time in a number of years, we are not dealing with a large amount of new tax law changes.
Some minor changes will occur for holders of cryptocurrencies, but for most taxpayers, this year should look very much like the last.
As it does each year, the federal tax brackets are adjusted for inflation, see chart below:
|Tax rate||Taxable income bracket||Tax owed|
|10%||$0 to $11,000||10% of taxable income|
|12%||$11,000 to $44,725||$1,100 plus 12% of the amount over $11,000|
|22%||$44,725 to $95,375||$5,147 plus 22% of the amount over $44,725|
|24%||$95,375 to $182,100||$16,290 plus 24% of the amount over $95,375|
|32%||$182,100 to $231,250||$37,104 plus 32% of the amount over $182,100|
|35%||$231,250 to $578,125||$52,832 plus 35% of the amount over $231,250|
|37%||$578,125 or more||$174,238.25 plus 37% of the amount over $578,125|
For most New Zealand or Australia based US citizens, the local tax rates will still exceed US tax rates, meaning foreign tax credit (a credit against US tax for local tax paid) should exceed any US tax liability from earned income. In summary, income from locally sourced wages or other earned income should not result in a US tax liability). Other sources of income however (such as interest/dividends) may indeed attract some US liability.
For our due dates, the main ones to note are:
15th March 2023 – Form 3520-A Trust filing Deadline – For filing or for filing Form 7004 (extension)
18th April 2023 – First Individual tax filing (or extension) deadline for taxpayers residing in the USA – FBAR filing deadline
15th June 2023 – First individual tax filing (or extension) deadline for taxpayers residing outside the USA
15th September 2023 – Form 3520-A extended filing deadline, for those who filed an extension before 15th March 2023
15th October 2023 – Extended deadline for individual tax filing – extended FBAR filing deadline
15th December 2023 – Discretionary filing deadline – For those who’ve requested an additional extension of time prior to 15th October 2023
For taxpayers who own or are involved with a non-US trust, it is crucially important to engage your tax professional as soon as possible. The 15th March deadline for foreign trust filings is very firm, and the IRS will impose penalties for any late filing. The penalties are punitive, and are usually a minimum of $10,000.
At US Global Tax, we file appropriate extensions for all clients who have engaged our services for the 2022 year, at no cost.
We are currently in the process of re-engaging our clients, and you should receive contact from us in the coming days.
Once again, happy new year to all, and as always, we’re here to assist with any questions.