Depending on how much income you got during 2022, you might or might not have to file Form 1040, the U.S. federal income tax. Remember that if you are an expat in Spain, you will probably end paying taxes only in Spain, but that does not exempt you to file the U.S. individual Tax Return.
Filing a tax return is always good for you. It’s your way of telling the government how much you earned, determining whether you’ve paid your dues and figuring out if you owed any money back. Any taxpayer might even benefit from filing a tax return when s/he is not required to, thanks to refundable tax credits, the stimulus check in 2020 and 2021, etc.
2022 Federal Tax Return income requirements
Your income, age and filing status will affect whether you’re required to file a federal tax return. Older Americans, married couples and heads of household have higher income thresholds than single filers and notice that if you file as MFS, because you are married to a NRA (Non-Resident Alien) the threshold is only $5.
This is the basic table of thresholds based on the filling status and the age at the end of 2022 of the taxpayers, for year 2022 taxes.
|FILLING STATUS||UNDER 65||65 OR OLDER||65 OR OLDER (BOTH SPOUSES)|
|Single S||$ 12, 950||$ 14,700|
|Married filing jointly MFJ||$ 25,900||$ 27,300||$ 28,700|
|Married filing separately MFS||$ 5||$ 5|
|Head of the household HOH||$ 19,400||$ 21,150|
|Qualifying surviving spouse||$ 25,900||$ 27,300|
2022 Federal Tax Return income requirements for dependents
If you’re a dependent, your income requirements may be slightly different. If you can be claimed as a dependent by another taxpayer, you must file as a dependent. College students and other young adults may want to check with their parents or guardians to verify whether they’re being claimed.
The key difference for dependents is the source of the income received during 2022. The IRS sets standards for unearned and earned income that can affect which dependents must file.
Earned income is salaries, wages, tips, professional fees, taxable scholarships or grants and in general, all income related to work.
Unearned income includes taxable interest, capital gains distributions, unemployment benefits, pensions, annuities and more.
Gross income is the sum of the earned income and the unearned income.
Dependents are required to file a tax return if they meet these income thresholds:
|FILLING STATUS||UNEARNED INCOME||EARNED INCOME||GROSS INCOME|
|Single and either 65 or over or blind||was more than $2,900|
($4,650 if 65 or older and blind)
|was more than $14,700|
($16,450 if 65 or older and blind)
|was more than the larger of $2,900 ($4,650 if 65 or older and blind) or your earned income (up to $12,550) plus $2,150 ($3,900 if 65 or older and blind)|
|Single and under 65 and not blind||was over $1,150||was over $12,950||was more than the larger of $1,150 or your earned income (up to $12,550) plus $400|
|Married and either 65 or over or blind.||was over $2,550|
($3,950 if 65 or older and blind)
|was over $14,350|
($15,750 if 65 or older and blind)
|was more than the larger of $2,550 ($3,950 if 65 or older and blind) or your earned income (up to $12,550) plus $1,800 ($3,200 if 65 or older and blind).||was at least $5 and your spouse files a separate return.|
|Married and under 65 and not blind.||was over $1,150||was over $12,950||was more than the larger of $1,150 or your earned income (up to $12,550) plus $400|
Why you should file even if you are not required.
US Tax Consultants recommends that taxpayers who aren’t required to file a return still consider filing. This is because you might be owed a refund from your withholdings or through tax credits. Tax Credits will reduce your tax liability until is completely eliminated, some time the Credits are refundable so you can still get a refund check for the excess.
Foreign Tax Credit (FTC)
The foreign tax credit is intended to relieve you of the double tax burden when your foreign source income is taxed by both the United States and the foreign country. The foreign tax credit can only reduce U.S. taxes on foreign source income; it cannot reduce U.S. taxes on U.S. source income.
Foreign Earned Income Exclusion (FEIE)
You may qualify for the foreign earned income exclusion, the foreign housing exclusion, and/or the foreign housing deduction. To claim these benefits, you must have foreign earned income and be fiscal resident of another country.
For tax year 2022, the maximum exclusion is $112,000 per person ($120,000 for the year 2023) If two individuals are married, and both work abroad and meet either the bona fide residence test or the physical presence test, each one can choose the foreign earned income exclusion. Together, they can exclude as much as $224,000 for the 2022 tax year.
Earned Income Tax credit (EITC)
Aimed at helping low to moderate-income families, the earned income tax credit is a fully refundable credit worth up to nearly $7,000. The maximum credit you can receive depends on how many qualifying children you claim:
- No qualifying children: $560
- 1 qualifying child: $3,733
- 2 qualifying children: $6,164
- 3 or more qualifying children: $6,935
The basic qualifications state that you must have worked and earned less than $59,187 in 2022. You can qualify without a child, but only if you’re between 25 and 65 and cannot be claimed as a qualifying child on someone else’s return. Note that only those who are permanently disabled may be claimed as a qualifying child over age 24.
Child Tax Credit (CTC)
Designed to give parents and caregivers a tax break, the child tax credit is nonrefundable, but taxpayers can apply for the additional child tax credit (ACTC) to earn a refundable credit worth up to $1,500.
In 2022, the CTC is worth up to $2,000 per qualifying child for filers earning less than $200,000 annually or $400,000 for those filing jointly.
American opportunity tax credit (AOTC)
Families sending children to college should see if they qualify for the American opportunity tax credit. The partially refundable credit is worth up to $2,500 per eligible student. If the credit reduces your tax liability to zero, you can have 40% of the remaining credit (up to $1,000) refunded to you.
Filers with a modified adjusted gross income (MAGI) of $80,000 or less ($160,000 for married couples filing jointly) may claim the full credit, while those with MAGI between $80,000 and $90,000 (or $160,000 and $180,000 for married couples filing jointly) can receive a partial credit. You cannot claim the credit with a MAGI above $90,000 ($180,000 for joint filers).
The credit amount is 100% of the first $2,000 of qualifying educational expenses and 25% of the next $2,000. The student must be pursuing a degree or other credential and be enrolled at least half-time for at least one academic period beginning in the tax year, and you may only claim the AOTC for four tax years per student, among other requirements.
Lifetime learning credit (LLC)
Unlike the AOTC, the lifetime learning credit doesn’t have a limit on the number of years you can claim it. However, it’s smaller than the AOTC, with a maximum credit of $2,000, and isn’t refundable. Another key difference is that the LLC applies per family, not per individual student.
Taxpayers may claim the credit to help pay for tuition and fees to attend undergraduate and graduate school, as well as courses or programs that don’t grant certificates.
The LLC has the same income limits as the AOTC, phasing out for taxpayers whose MAGI is above $80,000 ($160,000 for joint filers) and unavailable for MAGIs above $90,000 ($180,000 for joint filers).
You can claim both the AOTC and the LLC, but not for the same student or qualifying expenses. Use the IRS’ comparison table to figure out which is better for your situation
Please, if you have any doubt, do not hesitate to call us +34 915 194 392 or book a free consultation appointment HERE.