The quarterly ACA Voice focuses on in-depth analysis of core issues relevant to Americans abroad. For frequent news updates and information on ACA developments, be sure to visit our website, Facebook page, and Twitter feed.
Donate today and keep the momentum going for
Residency-based Taxation (RBT)!
Why a name makes a difference.
Taxing Americans abroad as US citizens, that is, taxing them on their worldwide income because they are US citizens, is citizenship-based taxation. Changing this to not tax them on their foreign income because, while US citizens, they reside outside the US, is RBT. The toggle switch determining whether an individual is taxable on worldwide income or taxable only on US income – and not on foreign income – is residency.
Corporations can be resident in more than one country. It is also relatively straightforward for them to have a taxable presence in one country or another. Under the new tax legislation passed in 2017, skipping over many details, foreign income, whether earned by US corporation or by its non-US subsidiary, can now go untaxed or lightly taxed. The determinant here is geography or, some would call it, territoriality. This is not the same for individuals who, with rare exceptions, can only be official resident in one country.
What’s been happening since ACA presented RBT.
On December 6, 2017, ACA was the first overseas organization to publicly present a detailed approach to RBT. The approach is straight forward, taking the existing tax code and adapting it to no longer tax the foreign earned income in the country where a US citizen resides. In November of 2017, ACA presented revenue estimates for its approach to RBT. The revenue estimates were prepared by District Economics Group (DEG) under contract with ACA. ACA has successfully developed the best, most comprehensive baseline set of data for detailing the taxation of Americans abroad and is using this data to educate Congress and the tax-writing committees on RBT. Our side-by-side analysis, along with baseline data and revenue estimates has been presented and made available to the offices considering and developing legislation.
Is there legislation?
There is lots of chatter about legislation for RBT, and Congressional offices and tax writing committees are known to be working on this. What does this legislation look like? No one knows for sure as currently there is no finalized RBT legislative language and no legislation has been introduced. There is Congressional support for tax reform for Americans overseas and ACA is continuing to cultivate support. ACA believes that Members, including Chairman Brady, Chairman Hatch, Representative Holding, and others, want to change the tax rules for Americans abroad. ACA members will recall that during the passage of HR1, Congressman Holding spoke on the House floor for Congress’ need to turn its attention to Residency-based taxation for individuals and received Congressman Brady’s acknowledgement of this, see: https://www.c-span.org/video/?c4692161/congressman-holdings-comment-rbt.
ACA continues to: produce data and information, attend meetings with stakeholders and Congress, dialogue with other advocacy groups, share our knowledge on the subject and, educate the media, the public, the Congress, the Administration and the tax writing committees on the need to enact legislation. ACA is working 24/7 on tax reform and our presence in Washington, DC continues to be vital to this process. ACA is confident that RBT legislation will be introduced in this Congress. Your support is critical to making this happen. Keep the momentum for RBT and donate today!
Two new Social Security Totalization Agreements coming into effect this fall
The US Government has put into force a Social Security Totalization Agreement with Brazil. More details on the agreement, which came into effect on October 1, 2018, can be found here: https://www.ssa.gov/international/Agreement_Texts/brazil.html. An agreement with Uruguay has also been drafted and it will come into force on November 1, 2018. See: https://www.ssa.gov/international/Agreement_Texts/uruguay.html. [More Info]
New Law on Foreign Earned Income Exclusion (FEIE)
The IRS recently announced (August 24th) a new law that allows US citizens and resident aliens, notably contractors or employees supporting the US Armed Forces in designated combat zones, to qualify for the Foreign Earned Income Exclusion (FEIE). In February of this year, the Bipartisan Budget Act of 2018, changed the tax home requirement for eligible taxpayers, allowing them to ... [More Info]
American Expat Financial News Journal (October 9, 2018)
Call for U.S. Treasury to fix 'Transition Tax' problems with 'de minimis rule'
By: Helen Burggraf
"The American Citizens Abroad, the main non-partisan Washington lobbying group representing American expats around the world, today urged the U.S. Treasury Department to introduce a so-called de minimis rule to its latest draft of new tax regulations, in order to address what it said were problems inherent in the legislation that, if not changed, would cause major problems for many U.S. citizens living abroad."
National Review (August 15, 2018)
It's Time to Free American Expats from Our Ludicrous Extraterritorial Tax System.
By: Kurt Couchman
"About 9 million Americans live abroad. Many have annual earnings below the $102,100 threshold. FATCA does far more harm than good, and legislation has been offered to repeal it. Even if more Americans were to seek their livelihoods abroad, the increased economic activity would more than offset any lost revenue. In fact, American Citizens Abroad’s “residency-based tax” concept can be revenue neutral even without these additional considerations. Of course, the main idea is to remove foolish barriers to flourishing, not to fixate on filling government coffers."
Read more... National Taxpayers Union Foundation (August 2018)
Relief Needed from Unaccountable Foreign Accounts Tax Law
By: Demian Brady, Jacob Plott
The advocacy group American Citizens Abroad has advocated for the adoption of a “same-country exemption.” This remedy will remove the FATCA burden from citizens living full-time in the country in which their FFI exists, freeing their day-to-day use account from FATCA scrutiny, and minimizing the lockout Americans abroad have faced from neighborhood banks.
Tax Notes International (July 16, 2018)
Citizens Abroad Among Thousands Facing Passport Loss Over Tax Debt
By: William Hoffman
“The loss of a passport can be far more challenging for citizens residing abroad than for domestic citizens because it could make them unemployable if their profession requires them to cross any borders."
Don’t forget that ACA members have access to the Members-only section with exclusive ACA content.
Past issues of the ACA newsletter along with our entire member-only E-blast mailings; updates, press releases, media articles, can also be found in the Members-only section.
Visit today for exclusive content available only to ACA members. Let us know what you think!
ACA-Members/SDFCU Account - Did you know?
As an ACA member, you have access to State Department Federal Credit Union (SDFCU) U.S banking services. Visit https://www.americansabroad.org/aca/sdfcuaccounts-description-and-faqs/ to learn more.
You can get debit card ATM and ISA Fees reimbursed up to $15 or $25 a month with an Advantage or Privilege Checking Account. Learn more about SDFCU Checking accounts at www.sdfcu.org/Checking
You can avoid foreign transaction fees with an SDFCU Visa Platinum Card, plus get a low APR and earn rewards. Visit www.sdfcu.org/credit-cards to learn more.
If you need help developing a savings plan or need tips on how to avoid identity theft, you can take advantage of the free financial counseling BALANCE Program available through SDFCU . View the online tools today at https://www.balancepro.net/partners/sdfcu/index.html.
SDFCU offers both prime and premiere money market accounts which allow up to six pre-authorized transfers a month. Learn more at https://www.sdfcu.org/savings.
How To Get Involved
Contact Your Members of Congress
ACA’s website now hosts several links that can help you contact members of Congress.They include addresses, fax numbers, sample letters and general advice on contacting a member of Congress. Remember, our efforts depend on our Representatives continuously hearing from Americans abroad. Tell your Representatives in Congress to support RBT!
Send us your testimonials on how current legislation is affecting you. These testimonials are important to our advocacy work but even more important is your work in contacting your own Congressional representative. We ask you to write to your representative today and let him or her know your thoughts and personal experience, and please send a copy to ACA as well.
You can also support our work by writing directly to the Tax Committees responsible for tax reform and asking for Residency-based taxation (RBT) and submitting comments to those committees holding hearings on tax reform.
You can also write your own Representatives in Congress about Residency-based taxation (RBT) and your support for it. Tell them about yourself, so that they learn about a real-life overseas American.
If you haven’t done so already, Join ACA! Since 1978, ACA has been the “Voice of Americans Overseas,” advocating for and defending the rights of U.S. citizens living and working abroad.
ACA on the Web, Facebook, Twitter and Instragram
ACA’s website and its quarterly News Updates are its key communication channels to ACA members and to the millions of Americans all over the world. The ACA website includes a wealth of information: descriptions of the impact of U.S. laws on the various issues – citizenship, voting, Social Security, Medicare, banking and taxes – as well as ACA position papers, references to ACA in the press and a multitude of links to press articles related to ACA issues.
Many members and supporters follow ACA on Facebook, and this provides ACA with an opportunity to connect with them on a more regular basis. To get the most immediate, up-to-date information on ACA’s work and initiatives visit us on Facebook or our website, and sign up for our Twitter feed.
In addition to keeping Americans abroad up-to-date through our website, member mailings, Facebook and Twitter, we are delighted to announce that you can now find ACA onInstagram! If you aren't on Instagram already, download the app onto your smartphone, search for us with our handle, americancitizensabroad, and give us a follow. We hope to connect with you on IG!
There are many ways you can support ACA. The best way is to become a member, so we can count on your ongoing support in our efforts to make changes in Washington, D.C., on your behalf.
In addition, you can volunteer, or make a donation to support our cause. ACA has a number of volunteer positions available. As long as you have an internet connection, anywhere in the world, we could use your help!
ACA does not provide individual tax filing advice. For professional tax services please see the ACATax Preparer Directory.
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Are you looking to reach Americans overseas? Do you have a company or service targeting Americans overseas? Then consider advertising with ACA. ACA website and ACA newsletter advertising opportunities available. Click for more details.
Disclaimer: This information was provided by a volunteer board member of ACA as a service to fellow U.S. citizens. While ACA and its Board members make every effort to transmit accurate information, such information is not considered a substitute for qualified professional advice.
ACA is a non-profit organization whose mission is to educate, advocate and inform both the U.S. government and U.S. citizens living and working overseas on issues of concern to the overseas U.S. citizen community. ACA works to find practical solutions to resolve issues impacting overseas U.S. citizens and communicates results to constituents stateside and abroad. ACA is the premier thought-leader on issues affecting U.S. citizens living and working overseas.
American Citizens Abroad, Inc. (ACA, Inc.) is a section 501 (c)(4) tax-exempt, non-profit, nonpartisan, volunteer organization.
Alongside is American Citizens Abroad Global Foundation, a publicly-supported charity under section 501(c)(3).