From ACA:
"Congressman Holding today introduced a bill (the Tax Fairness for Americans Abroad Act of 2018, H.R. 7358) providing Americans abroad with alternative tax exclusion, offering residency-based taxation in lieu of existing citizenship-based taxation......
Placed as an alternative alongside the existing foreign earned income and housing cost exclusions (existing section 911), nonresident US citizens that elect to be taxed as qualified nonresident citizens, will be able to exclude, and thus be exempt on, foreign earned income, without limit, and specified foreign unearned related to their foreign residency (time abroad). All nonresident citizens, however, will remain subject to tax on any US source income." https://mailchi.mp/americansabroad/congressman-holding-introduces-tax-fairness-for-americans-abroad-act-of-2018-hr-7358-a-residency-based-taxation-bill?e=66a4f56738And, from ACA, what lies ahead:
https://www.americansabroad.org/tax-fairness-act-rbt/The introduced Bill:
http://www.citizenshipsolutions.ca/wp-content/uploads/2018/12/HOLDNC_030_xml-1.pdfThe Bill offers a third option for US expats - Section 911A of the US Code, Title 26.
Expats would have a choice of either filing as they do now using Section 911 (2555)
(for those with foreign earned income), file as they do now using FTCs (1116)
(for those with a majority of US sourced income such as pensions, those preferring 1116 to 2555, or those with unearned income), or electing 911A - a qualified non-resident exemption. Treaty Articles could remain in force, for example, US Social Security would still only be taxed in the UK.
Unearned income is included in 911A as well as earned income.QUALIFIED NONRESIDENT CITIZEN.—The term ‘qualified nonresident citizen’ means, with respect to a taxable year, a nonresident citizen who—
(A) has not made the election described in section 911 for such taxable year, and
(B) makes an election under this paragraph
NONRESIDENT CITIZEN.—The term ‘nonresident citizen’ means, with respect to a taxable year, an individual who—
‘‘(i) is a citizen of the United States,
‘‘(ii) has a tax home in a foreign country,
‘‘(iii) is in full compliance with United States income tax laws for the 3 previous taxable years, and
‘‘(iv) either—
‘‘(I) establishes to the satisfaction of the Secretary that such individual has been a bona fide resident of a foreign country or countries
for an uninterrupted period which includes an entire taxable year, or
‘‘(II) is present in a foreign country or countries during at least 330 full days during such taxable year.
This Bill will need the support of the expat community if it is to eventually become law. This offers, if passed into law, probably the best chance US expats will have in our lifetime to be able to live and invest as all other normal residents of the UK.
