Presidential Candidate Proposes Plan to Eliminate Double Taxation for U.S. Expats

Presidential Candidate Proposes Plan to Eliminate Double Taxation for U.S. Expats

Expat Tax Relief, a leading provider of tax services for Americans living abroad, welcomes the increased attention to the critical issue of double taxation faced by millions of U.S. expats worldwide. This issue has long required more focus and discussion, especially at the policy level. The U.S. is one of the few countries that taxes based on citizenship rather than residency, which can result in expats being taxed twice—once in their country of residence and again by the U.S. government. This burden, affecting over 9 million Americans living abroad, can be financially draining and involves a complex tax reporting process.

While the threat of double taxation is an unfair burden on U.S. expats, the broader issue lies in the additional rules and reporting requirements that the U.S. imposes. Forms like FinCen114, FATCA, PFICs, and the treatment of foreign retirement products as Trusts all present a more significant challenge for many expats. Tools such as the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit are available to help reduce the actual tax burden, but they do not alleviate the compliance burden, nor do they allow U.S. expats to live a normal financial life outside of the U.S. Expat Tax Relief supports the attention this issue is now receiving and advocates for any policy changes to also include a focus on simplifying the reporting requirements for Americans abroad.

While the nominee’s promise to end double taxation is encouraging, it is important to consider the legislative and international complexities involved in implementing such a policy. Any changes would likely require amendments to the Internal Revenue Code and adjustments to existing tax treaties. Additionally, the proposal could benefit higher-income earners more, as the FEIE currently allows qualifying American expats to exclude the first $126,500 of foreign-earned income (for the 2024 tax year). If successful, however, the proposal could offer significant financial relief to many expats, saving them thousands of dollars each year.

Expat Tax Relief has specialized in helping U.S. expats file taxes for more than 15 years and has filed over 60,000 expat returns. We would be happy to provide further insights on the impact of double taxation or discuss the nominee’s proposal in more detail.