Top 5 US Tax Tips for Your Next Beach Reading

Summer is upon us, and so are some tax-related puns. This is the second post in a series called Everything you didn’t learn about taxes at school.

1. Do not let penalties and interest get you down. You must file your U.S. tax extension form 4868 (or 2350 for those who moved abroad in 2021) before June 15, 2022. Your automatic two-month extension expires if you are not in the US as of April 18, 2022. To avoid a late filing penalty, make sure you file Form 4868. To avoid late filing penalties and interest, you might want to pay the tax extension if you believe you owe it.

2. Start making your estimated 2022 U.S. tax beach reading payments to make sure everything is in order. Estimated payments are due on April 18, June 15, September 15th and January 17th 2022. Estimated payments are recommended if you expect to owe more than $1,000 in tax in 2022. The estimate can be calculated using a variety of methods.

3. It is a good time to file your 2021 FARA. You have an automatic extension of time to file until October 17th 2022. However, it is better to file your 2021 FBAR now than to wait. You must file an FBAR if the total foreign financial account's highest balance for the year exceeds $10,000. This applies to accounts that you own, jointly or under your signature. This is an informational form. However, severe penalties may be imposed if the form is not filed on time or if it isn't received by the deadline.

4. Consider contributing to a 592 savings account for your children, as college costs in the US are rising. This is a great opportunity. These plans offer tax-free growth and do not form part of your estate. There is no limit to how much you can contribute. However, contributions are treated as gifts and you might need to file a tax return if you give more than $16,000 to one person in any given year. You can contribute more by using future gift limits. This can be done up to five years worth of gift limitations, which is the equivalent of $80,000 under current gift tax limit rules.

5. My friend, what are you doing? Are you approaching retirement? Are you eligible for US pensions? Are you taking distributions yet? You may need to take out the Required Minimum Distribution (RMD) depending on your retirement plan. You will be penalized if you fail to take out the RMB.

With tax preparation services starting at $50, we are amongst the lowest priced CPA Tax Preparation and Filing Service Providers and are here to assist you to keep more money in your wallet!⠀


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