That was a long, grueling 2-year presidential race for the American people. The results of last Tuesday’s election for the new President of the United States of America were surprising for many. For American expats living abroad, the question now focuses on what implications will the Trump Administration have for expatriates.
In a recent article on the CNBC.com website, Saheli Roy Choudhury writes that President-Elect Donald Trump could cut the tax bills of U.S citizens abroad. The new President, who will be inaugurated on January 20, has big plans to overhaul the U.S. tax system. This significant change would benefit American expats abroad by lowering their overall tax bill. Kurt Rademacher, a wealth planning expert told CNBC’s “Squawk Box” that Trump’s tax plans could reduce the headline tax rate and also eliminate the estate tax that currently applied to worldwide assets.
The top federal rate of the estate tax currently sits at 40 percent, with estates worth less than $5.45 million exempt for the tax, according to the Internal Revenue Service (IRS). “The tax bill for expats residing abroad would be reduced just as it would be if they remained in the United States,” said Rademacher, adding that Trump had not yet said if he planned to amend existing tax rules on individual foreign earnings.
U.S. citizens are taxed in the U.S. on their worldwide income no matter where they are based, although, according to the IRS website, expats could exclude a certain amount of their foreign earnings, adjusted annually for inflation, from their worldwide taxable income; for 2015, that amount was $100,800. They could also exclude or deduct certain sums related to foreign housing. “Trump’s theory, of course, is that these tax cuts that benefit mostly the wealthy individuals, and in some cases large corporations, would generate additional jobs and growth that would fund the economy and fuel changes for people who feel left out,” Rademacher explained of changes that appeared to be weighted in favor of the wealthy.
No one knows for certain how President-Elect Trump with a Republican Congress will alter current expat tax law and that’s why there remains much uncertainty for U.S. Expatriates. The expat tax experts at Expatriate Tax Returns are here to guide you through your expat tax preparation regardless of how the transition in the White House affects your tax returns. Our experience in expatriate taxes dates back several administrations and we will continue to adapt for the next White House as well. Call us today at 877-382-9123 to remove the stress and hassle from your expat tax preparation.