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Non-profit group wants to change the way American citizens are taxed abroad

Non-profit group wants to change the way American citizens are taxed abroad

The American Citizens Abroad Global Foundation is actively raising funds to help lobby Congress to make changes to the US tax code in the way expats are taxed abroad. The group is focused on residence-based taxation. At present, American expats are taxed in the US because of their citizenship.

Under resident-based taxation, Americans living abroad could elect to be taxed as a non-resident alien and only pay taxes to the US on US-sourced income. The National Taxpayer Advocate has previously stated "about 82 percent of all Americans abroad owe no US taxes.”

“Residency-based taxation for individuals is a relatively straightforward exercise and does not risk ‘muddying the water’ for changes regarding corporate international taxation. There are no obvious roadblocks to undertaking this step,” said ACAGF Chairman Charles Bruce.

The American Citizens Abroad Global Foundation believes that this change will make it easier for expats to comply with the US tax code.  They also believe this will be a revenue neutral change.  The foundation states that these IRS changes would “stimulate the U.S. economy and create better employment opportunities for Americans, both domestically and internationally, through enhanced competitiveness and increased exports. 

Tax reform is on the agenda for the house Republicans.  The GOP blueprint includes a statement that it "will consider the appropriate treatment of individuals living and working abroad in today’s globally integrated economy."

Time will tell if this significant change will be included in the tax reform legislation. American Citizens Abroad Global Foundation Executive Director Marylouise Serrato stated that residency based taxation is “eminently doable.”

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Bret Willoughby

Bret Willoughby

Bret Willoughby is a practicing tax preparer for expats throughout the world. He created Providence Payroll to meet the needs of Churches, not-for-profit organizations and businesses with remote workers. His web-based payroll processing service benefits both employers and remote workers with an easy way to access payroll information. Clergy have unique payroll and tax-related issues, one that Providence Payroll is qualified to manage.

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