The Foreign Service Journal, January-February 2023

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2023 59 royalties, partnerships, S corporations, estates, and trusts. Many other lettered schedules and incentive-specific forms (e.g., Form 8283 Noncash Charitable Contributions, Form 8889 Health Savings Accounts, Form 8938 Specified Foreign Financial Assets) and corresponding worksheets may be necessary. All are available from the IRS, most with cor- responding product pages and instructions. AFSA recommends that members review the IRS Form 1040 information webpage, “About Form 1040, U.S. Individual Income Tax Return;” the Form 1040 Instructions; Publication 17, “Your Federal Income Tax;” and this year’s IRS Nationwide Income Tax Forums Online. 2022 Individual Income Tax Rates and Brackets deadline. Most states will likewise charge late payment pen- alties and interest for tax payments made after the state’s initial tax filing deadline. Form 1040 Has Been Revised for 2022 As has been the case for decades, U.S. taxpayers must report “all income from whatever source derived” on IRS Form 1040, which has been revised again this year. Note that this article discusses the most recent draft as of Sept. 1, 2022; the form may change before the final 2022 Form 1040 and accompanying schedules are approved. Adjustments, deductions, and credits remain matters of “legislative grace,” so it is important to understand those statutes, regulations, forms, and instructions when you claim a credit or deduction. Form 1040 Line 1: The 2022 draft Form 1040 has been revised to itemize the types of wage income a taxpayer may receive rather than including all wage income on one line as on prior versions of Form 1040. Note in particular that house- hold employee wages are itemized for household workers who have not received a W2, since household workers not working for a company that provides these services are generally con- sidered employees and not self-employed contractors. Schedule 1: Report additional income and adjustments, such as tax refunds or credits; alimony received for certain divorces (discussed on page 65); unincorporated or single- member LLC business income or loss (see Schedule C); rental real estate, royalties, or other pass-through business income (see Schedule E); unemployment compensation; FEIE income, student loan interest deduction, one-half deduction for self- employment taxes, and educator expenses. Schedule 2: Report additional taxes such as the alter- native minimum tax, self-employment tax, and household employment taxes. Schedule 3: Claim credits such as the foreign tax credit, credit for child and dependent care, and education credits. The lettered schedules, commonly A through E, remain as follows: (A) Itemized deductions, e.g., medical and dental expenses, deductible taxes and interest paid, gifts to charity, casualty losses from a federally declared disaster, and others. Taxpayers should file Schedule A only if their itemized deduc- tions are higher than the standard deduction for the tax year. (B) Interest, dividends, and foreign trusts and accounts. (C) Profit or loss from business (sole proprietors and single-member LLCs). (D) Capital gains and losses, e.g., investment sales and certain capital gains from the sale of certain realty and virtual currency investments. (E) Supplemental income and loss from rental real estate,