All U.S. Citizen are required to file a U.S. Individual Tax Return every year, wherever in the world you live, reporting your worldwide income, even if you pay taxes in Spain. You must file the Form 1040 (Federal Income Tax), if your gross income is at least $5 (married filing separately) or $12,400 (single). You must file your 2021 tax returns by October 15th with the request for an automatic extension that we ask for all our clients for free.
You must also file the FBAR (Foreign Bank Account Report) with the Financial Crimes Enforcement Network, FINCEN 114 with in the same date, if the aggregate amount of all the maximum balances of your financial accounts outside the US, reach the amount of $10,000 at any point during the year 2021.
Update for this year on Form 1040 2021
Here are the main things you need to know right off the bat for the 2022 tax season:
- The last Tax Day is October 17, 2022. You must file your 2021 tax returns by this date!
- The standard deductionfor 2020 increased to $12,400 for single filers and $24,800 for married couples filing jointly.
- Income tax brackets increased in 2021 to account for inflation.
| 2021 Marginal Income Tax Rates and Brackets | ||||
| 2021 Marginal Tax Rates | Single | Married Filing Jointly | Head of Household | Married Filing Separately |
| 10% | $0–9,950 | $0–19,900 | $0–14,200 | $0–9,950 |
| 12% | $9,951–40,525 | $19,901–81,050 | $14,200–54,200 | $9,951–40,525 |
| 22% | $40,526–86,375 | $81,051–172,750 | $54,201–86,350 | $40,526–86,375 |
| 24% | $86,376–164,925 | $172,752–329,850 | $86,351-164,900 | $86,376–164,925 |
| 32% | $164,926–209,425 | $329,851–418,850 | $164,901–209,400 | $164,926–209,425 |
| 35% | $209,426–523,600 | $418,851-628,300 | $209,401–523,600 | $209,426–314,151 |
| 37% | Over $523,600 | Over $628,300 | Over $523,600 | Over $314,151 |
For 2022 Tax season we will have the same seven tax brackets. The brackets are adjusted each year for inflation.
Interest on refunds taxable.
Taxpayers who received a federal tax refund in 2021 may have been paid interest. Refund interest payments are taxable and must be reported on federal income tax returns. In January 2023, the IRS will send Form 1099-INT to anyone who received interest totaling $10 or more.
Strong recommendation for 2022
Contact you tax preparer to check what other forms you must attach to your 1040, especially those connected with the automatic exchange of information between both Tax Agencies in the U.S.A. and Spain.
The Form 8938 report of the financial accounts abroad, Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign Corporations or Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company (PFICs) Penalties for not filing these forms are $10,000 per year not filed.
Remember that you can always access your Clients Area at the top menu of our webbsite – http://www.ustaxconxultants.net – where we have the updated information on any tax issue that might concern you as well as information on how to contact us.
What we need to prepare your Form 1040 and FBAR
For us to prepare your Tax Return this year you should upload as soon as possible all important tax records that you will find in the following lists: Form 1040: Information Q&A and List of required documents, FinCEN 114: Information Q&A and List of rerquiered documents, and Streamline procedure: Information Q&A and List of required documents.
If you have any further questions, please do not hesitate to call us. US Tax Consultants Tel +34 915194392.
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