The Tax Fairness for Americans Abroad Act of 2018 (H.R. 7358) was introduced last December. This legislation applies to anyone with a non-resident citizen status. Ending citizenship-based taxation would require rewriting almost all the current tax code. Instead, steps are being taken to help address issues for expats who live overseas.
What Does the Tax Fairness for Americans Abroad Act of 2018 Change?
If you qualify as a non-resident citizen, you are still expected to pay based on the core tax code. The Tax Fairness for Americans Abroad Act of 2018 changes the way your financial responsibility is calculated.
The Act adds Sec. 911A which amends the code to allow non-resident citizens to be taxed based on their United States-sourced income only. That means any income coming from foreign countries can be excluded.
Do I Qualify for Non-Resident Citizen Status?
You may qualify as a non-resident citizen if you meet the following requirements:
- You are a citizen of the United States
- You live in a foreign country which is your “tax home”
- You are fully compliant through the previous three tax years
- You are not a U.S. federal employee
You must also meet all requirements outlined by the bona fide residence or physical presence tests. If you meet the criteria, you can elect to receive non-resident citizen status. It’s important to remember that you must be in a non-resident citizen status to exclude the sale of personal property.
If you have questions about your status, let us know. Expatriate Tax Returns can help you learn more about your financial responsibility and U.S. taxes.