The Best US Tax Software for Expats in 2023 (2024)

FAQs

The Best US Tax Software for Expats in 2023? ›

TurboTax 2023 officially launches in December. You can start working on your taxes early, but the IRS doesn't accept returns until January 23.

TurboTax 2023 officially launches in December. You can start working on your taxes early, but the IRS doesn't accept returns until January 23.

TurboTax. TurboTax is designed specifically for US taxpayers living and working in America. This means that their support for US Expats is limited because they are “Tax Prep USA Support.” So questions like “how to pay us taxes from abroad” may be tricky for TurboTax to answer.

How much does H&R Block's tax service cost? H&R Block offers a free online tax-filing program that includes simple federal and state tax returns. If you need to upgrade based on your tax situation, you'll pay $55 to $110 to complete a federal return, and $37 for each state tax return.

Changes for 2023

When you file your taxes this year, you may have a lower refund amount, since some tax credits that were expanded and increased in 2021 will return to 2019 levels. The 2023 changes include amounts for the Child Tax Credit (CTC), Earned Income Tax Credit (EITC), and Child and Dependent Care Credit.

Standard deduction increase: The standard deduction for 2023 (which'll be useful when you file in 2024) increases to $13,850 for single filers and $27,700 for married couples filing jointly. Tax brackets increase: The income tax brackets will also increase in 2023.

Prices vary: $219 to $409, plus $64 for each state return

Full Service allows you to upload your documents and have a tax expert from TurboTax prepare and file your taxes for you.

As of Apr. 21, the IRS reported the average refund amount (aka money taxpayers overpaid the government) in 2023 as $2,753. This is almost a 9% drop from what the average refund amount was last year, which clocked in at $3,012.

How do expats file taxes? ›

US Expat Taxation of Foreign Income

The US tax laws for citizens living abroad are essentially the same for those living in America. Expats file the same Form 1040 and are subject to the same US federal income tax rates.

You Can Reduce or Eliminate US Taxes for Expats with the Foreign Earned Income Exclusion. For the 2022 tax year, you may be able to exclude up to $112,000 of foreign-earned income from US taxation with the Foreign Earned Income Exclusion! This is the most common way expats reduce or eliminate their US tax liability.

If you're a U.S. citizen or resident alien, you can use the FreeTaxUSA software to file Form 1040. If you're a nonresident alien, you'll need to file your return using different software.

You might choose H&R Block if you want a premium experience for a lower price. H&R Block's DIY filing options are less expensive than TurboTax's across, and the company edged out TurboTax in our overall ratings.

How other tax provisions changed for 2023. The standard deduction also increased by nearly 7% for 2023, rising to $27,700 for married couples filing jointly, up from $25,900 in 2022. Single filers may claim $13,850, an increase from $12,950.

According to early IRS data, the average tax refund will be about 11% smaller in 2023 versus 2022, largely due to the end of pandemic-related tax credits and deductions.

Single filers who are younger than 65 years old must file taxes if they earn more than 12,950 dollars per year, while those who are 65 or older need to do so if they make more than 14,700 dollars.

Although the average may change as more returns are processed, taxpayers are likely to see a lower refund due to a number of key tax credits returning to pre-pandemic amounts. The IRS expects more than 168 million individual tax returns for this tax season.

(updated May 16, 2023) All or part of your refund may be offset to pay off past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or other federal nontax debts, such as student loans.

What are the tax brackets for 2023? The U.S. taxes income at progressively higher rates as you earn more. Those rates—ranging from 10% to 37%—will remain the same in 2023. What's changing is the amount of income that gets taxed at each rate.

Should I use TurboTax free or deluxe? ›

The Strengths of TurboTax Deluxe

The Deluxe edition of TurboTax is designed to calculate line-item tax credits and deductions. With the Free Edition, you can only take the standard deduction and any above-the-line deductions and credits. TurboTax Deluxe lets you take itemized deductions and below-the-line credits.

TurboTax Live Assisted Basic is $0 through March 31, 2023 for simple tax returns only.

Tax Return Access: Included with all TurboTax Free Edition, Deluxe, Premier, Self-Employed, Premium, TurboTax Live, TurboTax Live Full Service customers and access to up to the prior seven years of tax returns we have on file for you is available through 12/31/2024.

For the 2023 tax year, there are seven tax rates: 10%, 12%, 22%, 24%, 32%, 35% and 37%, the same as in tax year 2022. Tax returns for 2023 are due in April 2024, or October 2024 with an extension.

We call this annual limit the contribution and benefit base. This amount is also commonly referred to as the taxable maximum. For earnings in 2023, this base is $160,200.

Most expats were only eligible for $1,400. Meaning for tax year 2022, the $1,500 maximum is actually an increase in benefits. There can be even more US tax credits and refunds available to US citizens living abroad, depending on your situation.

While yes, U.S. citizens file a yearly tax return even if they live abroad, U.S. expats don't usually end up owing anything. While there is no overarching tax exemption for U.S. citizens living abroad, there are a variety of mechanisms in place to prevent Americans from being double taxed on foreign-earned income.

If you're an expat and you qualify for a Foreign Earned Income Exclusion from your U.S. taxes, you can exclude up to $108,700 or even more if you incurred housing costs in 2021. (Exclusion is adjusted annually for inflation). For your 2022 tax filing, the maximum exclusion is $112,000 of foreign earned income.

Further, expatriated individuals will be subject to U.S. tax on their worldwide income for any of the 10 years following expatriation in which they are present in the U.S. for more than 30 days, or 60 days in the case of individuals working in the U.S. for an unrelated employer.

The penalty for not filing your tax return is 5% of the amount of tax shown on the return for each month you have not filed, up to 25% of your tax owing. If you fail to pay, the IRS imposes a ½ percent penalty for each month that the amount remains unpaid, up to 25% of your total tax owing.

Do expats pay taxes on Social Security? ›

Key Takeaways. Most expats are able to receive US Social Security payments while living abroad (if otherwise eligible). Social Security payments are considered taxable income and must be reported on a US income tax return. Totalization Agreements can help expats avoid double taxation and reduce their US tax burden.

Some American expats who work abroad may also need to pay US social security and Medicare taxes on their earned income, especially if they are self-employed or work for a US-based employer. For the 2022 tax year, the rate for expat employees is 7.65%. For self-employed expats, however, the total is double, at 15.3%.

Do US Expats Pay State Taxes? The answer is yes— If you're living abroad, you might not realize that you're still considered a resident of your home state and are subject to paying state taxes. This includes income tax, property tax, and sales tax.

FreeTaxUSA isn't as approachable as tax software like H&R Block or TurboTax, our top pick for best tax software in 2023, nor does it have the same level of professional help and support. It's also not completely free like Cash App Taxes, but FreeTaxUSA is a thorough, efficient and robust low-cost option.

For tax years beginning after December 31, 2023, the proposal generally would impose a 25% minimum tax on the total income, including unrealized capital gains, of any taxpayer with wealth (assets minus liabilities) exceeding $100 million.

Those rates—ranging from 10% to 37%—will remain the same in 2023. What's changing is the amount of income that gets taxed at each rate. For example, in 2023, an unmarried filer with taxable income of $95,000 will have a top rate of 22%, down from 24% in 2022.

For single taxpayers and married individuals filing separately, the standard deduction rises to $13,850 for 2023, up $900, and for heads of households, the standard deduction will be $20,800 for tax year 2023, up $1,400 from the amount for tax year 2022.

Why are tax refunds lower for 2023? ›

The IRS previously forecast that refund checks were likely to be lower in 2023 due to the expiration of pandemic-era federal payment programs, including stimulus checks and child-related tax and credit programs.

If you are at least 65 years old or blind, you can claim an additional 2023 standard deduction of $1,850 (also $1,850 if using the single or head of household filing status). If you're both 65 and blind, the additional deduction amount is doubled.

Inflation last year reached its highest level in the United States since 1981. As a result, the IRS announced the largest inflation adjustment for individual taxes in decades: 7.1 percent for tax year 2023.

The inflation-adjusted increases to certain tax credits, deductions, and tax brackets for next year could translate into larger tax refunds when folks file their taxes in 2024. The tax bracket ranges are increasing by 6.9% on average for the 2023 tax year, according to the National Association of Tax Professionals.

Single filers who are younger than 65 years old must file taxes if they earn more than 12,950 dollars per year, while those who are 65 or older need to do so if they make more than 14,700 dollars.