U.S. Presidential Candidates Bring Attention to the Tax Plight of American Expats

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Nov 02, 2024, 08:57 ET

NEW YORK, Nov. 2, 2024 /PRNewswire/ -- In light of recent discussions surrounding citizenship-based taxation on the campaign trail, MyExpatTaxes acknowledges the significant attention generated by Former President Trump's comments on potentially eliminating this system.

Vice President Kamala Harris has also written a letter to Americans living abroad, recognizing the "unique challenges faced by Americans overseas" and highlighting her focus on the serious concerns regarding "the complex challenges... with banking, taxation, and financial services."

This recognition underscores the ongoing efforts by groups advocating for American expats. As a result of this advocacy, American expat issues are now part of the broader legislative agenda.

"In MyExpatTaxes' largest U.S. expat survey of 2024, a 59% of surveyed Americans abroad indicated they would be willing to forfeit their right to vote in exchange for not having to file a U.S. tax return, underscoring the urgent need for tax reforms." said MyExpatTaxes CEO Nathalie Goldstein.

As leaders in the U.S. Expat Tax Industry, MyExpatTaxes notes that it would be very difficult to eliminate "citizen-based" taxation. It is unlikely any one presidential candidate can tackle this system.

Under the current citizen-based tax system, the IRS does continue to allow tax deductions and refunds, such as the standard deduction, lower tax rates and even refunds from the Additional Child Tax Credit or Stimulus Payments to fellow Americans living abroad. These deductions and refunds are not available to non-residents, who will typically pay an average 15% of tax on U.S. dividend income and 30% on U.S. rental income.

Many taxpayers who exit the U.S. tax system by renouncing their U.S. citizenship are shocked when they realize that filing as a non-U.S. Citizen results in more income tax than it did previously. As of now, the majority of American taxpayers living abroad generally don't owe U.S. tax due to specific expat tax benefits, however can still get significant tax refunds.

"While the idea of eliminating citizenship-based taxation seems appealing upfront, it's important to understand that such a change would face significant legal and logistical challenges." said Goldstein who is also a U.S. Citizen living abroad. "It's not a simple matter of policy but one that involves international agreements and domestic law, therefore would need some time to be achieved."

Even if so, the U.S. does not only tax its citizens; it also taxes nonresidents who have U.S.-sourced income. This means that even if there were no citizen-based taxation system, those who continue to have U.S.-sourced income would still be required to file a U.S. tax return.

MyExpatTaxes recognizes that the U.S. tax filing system for those living abroad is broken, expensive, and more complex, which is why we created the leading Do-It-Yourself Tax Software for U.S. Expats.

It's not too late to vote from abroad in certain states for this year's election, but act quickly! If you registered but haven't received your ballot, send in a backup ballot https://www.fvap.gov/fwab-privacy-notice. Check votefromabroad.org for deadlines and the fastest method to return your ballot.

"At MyExpatTaxes, we urge all Americans abroad to vote in this upcoming election," Goldstein remarked. "Regardless of which candidate wins, the more Americans from abroad vote, the more the candidate will realize that our community is worth listening to."

SOURCE MyExpatTaxes