The Foreign Service Journal - January/February 2017
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Ex t en s i on fo r

Ta x paye r s Ab r oad :

Taxpayers whose tax home is

outside the United States on

April 18, 2017, are entitled to

an automatic extension until

June 15 to file their returns.

When filing the return, these

taxpayers should write

“Taxpayer Abroad” at the top

of the first page and attach

a statement of explana-

tion. There are no late-filing

or late-payment penalties

for returns filed and taxes

paid by June 15, but the IRS

does charge interest on any

amount owed from April 18

until the date it receives pay-


S t anda rd Dedu c t i on :

Taxpayers who do not itemize are entitled to take a standard

deduction in the following amounts:

2016 Standard Deduction



Married Filing Jointly


Head of Household


An additional amount is allowed for taxpayers over age 65 and

for those who are blind.

I t emi zed Dedu c t i on s :

Taxpayers who itemize cannot claim the standard deduc-

tion. However, itemizers gain the benefit of specific deduc-

tions, including the deduction for unreimbursed employee

expenses on 1040 Schedule A. These are deductible to the

extent they exceed 2 percent of adjusted gross income (AGI).

Some examples of unreimbursed employee expenses include

professional dues and subscriptions to publications; employ-

ment and continuing education expenses; home office, legal,

accounting, custodial and tax preparation fees; home leave,

representational and other employee business expenses.

In 2016, the IRS will phase out itemized deductions a

taxpayer is allowed at certain income thresholds. Unmar-

ried individuals earning more than $155,650 individually

($259,400 head of household, $311,300 married filing

jointly) should contact a tax professional to calculate the

limits on their itemized deductions.

Med i ca l and Den t a l Ex pen s es :

Taxpayers who itemize can deduct medical expenses to the

extent they exceed 10 percent of AGI (including health and

long-term care insurance, but not health insurance premiums

deducted from government salaries). If the taxpayer is over

65, the threshold at which this deduction can be claimed

remains at 7.5 percent until Jan. 1, 2017, after which, the

threshold increases to 10 percent for all taxpayers.

Un r e imbu r s ed Mov i ng Ex pen s es :

Taxpayers who itemize and those who claim the standard

deduction may claim unreimbursed moving expenses as

an adjustment to income. Unreimbursed moving expenses

include the cost of transportation, storage and travel costs

of moving the taxpayer, possessions (including pets) and the

taxpayer’s family. The cost of meals during the move does not

qualify. Other adjustments itemizers and non-itemizers may

claim include contributions to pre-tax IRAs, alimony pay-

ments, bad debt, student loan interest, tuition and fees and

educator expenses. Each may be subject to its own limits.

Dedu c t i b l e Ta xes :

There are only four kinds of deductible non-business taxes:

(1) State, local and foreign income taxes; (2) State and local

general sales taxes; (3) State, local and foreign real estate

taxes; and (4) State and local personal property taxes. The

taxpayer must itemize (using 1040 Schedule A) and must

have been charged and actually paid the taxes to be entitled

to these deductions.

* Marginal rates apply to income in excess of each of the prior tax brackets.

** Income thresholds for those married filing separately are half of those who are married filing jointly.

Same-sex couples who were married in or after tax year 2013, in a state where it is legal, must file their federal tax

return as either married filing jointly or married filing separately, not individually.

*** Refers to long-term capital gains—gains from the sale of property held for greater than 12 months.