AFSA NEWS 48 JANUARY-FEBRUARY 2024 | THE FOREIGN SERVICE JOURNAL the IRS to have the interest or late penalties removed. For returns extended beyond June 17, however, the extension granted to the taxpayer is an extension to file but not an extension to pay. As such, the IRS will charge late payment penalties and interest for payments made after the April 15 deadline. Most states will likewise charge late payment penalties and interest for tax payments made after the state’s initial tax filing deadline. Form 1040 Has Been Revised for 2023 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 Oct. 30, 2023; the form may change before the final 2023 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: There are no significant changes to the 2023 draft Form 1040. Schedule 1: Report additional income and adjustments, such as tax refunds or credits; alimony received for certain divorces (discussed on page 54); 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 alternative 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). Taxpayers should file Schedule A only if their itemized deductions are higher than the standard deduction for the tax year. (B) Interest, dividends, and foreign accounts and trusts. (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, 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 corresponding 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. 2023 Individual Income Tax Rates and Brackets
RkJQdWJsaXNoZXIy ODIyMDU=