If you are a US citizen or resident alien living outside the United States, even though you may not owe any US tax, you generally are required to file US income tax returns, estate tax returns, and gift tax returns. If you have an interest in, or signature or other authority over, non-US financial accounts whose aggregate value exceeded $10,000 at any time during the year, you generally must file an FBAR, regardless of whether you have to file other returns.
News for Americans Abroad
ACA is pleased to see that its messaging requesting that the House Ways & Means Committee hold hearings on the tax and tax compliance issues for Americans overseas is getting heard in Congress. In visits to offices earlier in October ACA heard from Representatives that they had received numerous messages from the “Tax Fairness for Americans Abroad: An Idea Worth Fighting For!” campaign. ACA has also heard from members who received communications from their own Representatives after writing in with the campaign platform.
ACA will continue to push the campaign and will be producing podcasts to support the write-in campaign and working to get the word out to a wider audience.
You can help with their goal to hold hearings by participating in the campaign and making others you know aware of the campaign. Tell your friends and get the work out to media outlets in your country/region by writing/blogging and posting the campaign.
Make it your New Year's resolution to register to vote in 2019
Federal law requires overseas voters to (re)register in every year in which they mean to vote. The next national election is in 2020, so make sure that you're registered for the Presidential/Congressional and Primary elections by using FAWCO's dedicated website (https://www.usvotefoundation.org/) to register as soon as you can after January 1.
ACA Submitted by Dale Finlayson
UpDate on Postal Service for Americans Abroad
Last month we reported on "the threatened withdrawal of the United States from the Universal Postal Union, a 145-year-old international organization which now includes 192 member countries. The United States had long complained about the way rates were determined to reimburse destination countries who complete the delivery of international post. It was costing the US more to deliver the last leg of international post than they were being reimbursed. Threatening to withdraw from the union was a pretty dramatic action, but it did get everyone’s attention. The other members of the UPU ... called an extraordinary session to resolve the issue, less than one month before the US was scheduled to withdraw. ...FAWCO was keeping a close eye on the UPU Congress and thankfully, the countries were in fact committed to finding a resolution.
A compromise solution was accepted by acclamation, the US remains in the union, and crisis was averted. No doubt international postal rates, particularly with respect to small parcels, will go up as a result of the new agreed regulations, but the level of commitment to international postal cooperation has been renewed. How wonderful to see 192 countries work together!" Thanks to Emily van Eerten, FAWCO president, for her update to this situation.
Register to vote:
If you aren’t registered to vote yet and will vote in any of these states, register to vote as an overseas voter NOW -- before the UPU withdrawal.Go to www.votefromabroad.org and click “start” to fill out your voter registration form and overseas absentee ballot request. Then mail it in ASAP.
1 Alabama
2 Arkansas
3 Connecticut
4 Florida
5 Idaho
6 New Jersey
7 New York
8 Oregon
9 Rhode Island
10 South Dakota
11 West Virginia
12 Wisconsin
13 Wyoming
Thank you for your attention - and for your action!
U.S. Taxation Issues
Submitted by Dale Finlayson September 10, 2019
IRS Newswire recently issued a bulletin advising U.S. taxpayers filing from overseas of various deadlines and reporting requirements. To read more, go to:
https://content.govdelivery.com/accounts/USIRS/bulletins/2496363?reqfrom=share&mc_cid=2c9e572a4f&mc_eid=9bcd865074Tax Fairness for Americans Abroad Act (TFAA)
The bill (H.R. 7358), introduced on 20 December 2018 by Representative Holding (R-NC), would change the approach to taxing US citizens living and working overseas to a residency-based – some call it territorial – taxation approach. Americans overseas would no longer be taxed on income that is not earned in the United States, bringing the U.S. in line with the global norm for taxation and alleviating problems of double taxation and compliancy costs for millions of Americans overseas. The proposed legislation would work off the Foreign Earned Income Exclusion (FEIE) and would create an exclusion for income earned outside of the United States by qualified non-resident U.S. citizens. Some of the “trickier issues” include how to define personal property and how to tax gains related to foreign property before the taxpayer qualifies as a foreign-based resident. The next steps will be to re-introduce the bill in the 116th Congress and assign a new bill number and to request the Chairman of the House Ways & Means Committee to hold hearings on the bill. The hearings will help to define issues such as whether failing to file a foreign bank and financial account report would disqualify someone from receiving the exclusion for not being fully compliant with the requirements.
Two ACA webcasts to update the community on Rep. Holding’s bill were broadcast on 13 and 14 March, featuring Matt Stross, Tax Counsel for Representative Holding; ACA Legal Counsel Charles Bruce; and several tax professionals. For full audio of both webcasts, go to https://www.americansabroad.org/?mc_cid=c45ae4a41f&mc_eid=9bcd865074#TFAAWebcasts.
Tax and Banking
Child Tax Credit and Expatriates
By Olga Kocybik (AIWC Düsseldorf) FAWCO
The Child Tax Credit (CTC) is up to $2,000 per child per year with $1,400 refundable portion. That being said, provided no tax is owed to the IRS, the parent(s) would be able to receive a payment of $1,400 per child. The new income thresholds are:
- $200,000 for single, head of household, and married filing separately; and,
- $400,000 for married filing jointly.
In addition, the refundable portion of the NEW credit cannot be greater than 15% of your earned income which exceeds $2,500. For example, if you earned $11,000, your refundable portion is limited to $1,275 ($11,000 less $2,500 times 15%). Other limitations and reductions of the credit exists but they are unlikely to apply to those living abroad.
Additional rules for expatriates
And as with everything else out there, there are some exceptions and special guidelines as to how the tax rules apply to expatriates:
- A taxpayer MUST have earned income in order to claim CTC. Those who currently use the Foreign Earned Income Exclusion and exclude all their income will not be eligible. A solution would be to revoke the Foreign Earned Income Exclusion election and start filing using the Foreign Tax Credit method instead. The change of methods should be analysed in detail as other factors may contribute to increasing your U.S. tax liability; and
- For those with foreign spouses, the definition of the “Support Test” requirement mentioned earlier extends to the child’s financial support provided by the other spouse. In essence, the filer of the U.S. tax return should be able to provide at least half of the financial support for the child in question.
What if you were eligible for the CTC all these years but have not filed your returns?
You may still make up for the lost opportunity. But keep in mind that the IRS has the three- and two-year statutes of limitations. If you have already filed but wish to change your return, such amended must be filed within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later. If NO return was filed, the statute of limitations is 2 years from the time the return was due including extensions. To illustrate, if you have not filed but was eligible to receive the CTC refund for 2016, you have until April 15, 2019 (2 years from the due date of the 2016 return or April 15, 2017) to file the 2016 return and obtain the CTC.
In applying the provisions of this and any other tax article, it is important to understand the impact of applicable tax laws will vary between individual taxpayers.
Please consult your tax adviser to determine how the tax laws discussed may affect your particular US tax situation.
Citizenship
Is It Time for Medicare?
Dates often slip by for those who live outside the US. However, if you are approaching your 65th birthday, it’s the time to consider signing up for Medicare. Although Medicare does not typically cover medical costs incurred while living abroad, there are several things to consider: whether you plan to return to the US, whether you (or your spouse) are working outside of the US and provided health insurance by an employer, and the potential costs of premium penalties for late enrollment.
The sign-up period is no sooner than three months prior to your 65th birthday and the three months after your 65th birthday; in other words you have about a six-month window. For example, if your birthday is May 20, the original enrollment period would be February 20 through August 19. It takes 4 to 6 weeks to process the enrollment application.
If you miss the enrollment period, then you would need to enroll in the General Enrollment Period (GEP) of January 1 - March 31, with coverage becoming effective on July 1 of that year. Some people will be able to enroll at the end of their previous insurance coverage right away, but they need to check with Medicare. Always remember that it will take several weeks minimum to process an application once it is received by Medicare. There may be exceptions in individual cases, but again, check with Medicare directly, so there are no lapses in insurance coverage.
Normally, you can sign up online through the Social Security Administration website, www.ssa.gov, but if you reside overseas, you should phone your closest overseas SSA office and you can be enrolled over the phone. Not all Consular posts have SSA offices. For example, I live in the United Arab Emirates and was registered by phone from a representative in Rome.
For those who have already registered for Social Security benefits, you may have been registered for Medicare Part A benefits. There is no charge for Part A, if you have paid into social security a minimum of 40 quarters.
Part B and other sections of Medicare will likely charge a fee; currently the minimum fee for Part B is $135/month. You may want to have Part B if you ever plan to move back to the US or frequently visit. If you fail to register on time for Part B, you may incur premium penalties and gaps in coverage when you move back to the U.S and apply at a later date.
Please refer to www.ssa.gov, www.ssa.gov/foreign/foreign.htm and www.medicare.gov for information and instructions.
20 May 2019 https://www.fawco.org/us-issues/102-us-issues/citizenship/4113-medicare-is-it-time
US Liaison: Johanna Dishongh usliaison@fawco.org
American Citizens Abroad 
April 2019 submitted by Dale Finlayson
Taxes
Expat filers got an automatic extension to June 15th – but if you owe any tax, you must pay by the April deadline or face a late-payment penalty. And under the new tax legislation (I learned at the FAWCO conference), anyone earning more than $5 – yes, you read that right, FIVE DOLLARS! – during the tax year must file a return. And “earnings” includes bank interest. So in effect, every expat must file. A further extension to October 15th must be submitted by June 15th by filing IRS Form 4868. Once filed, you’ll automatically be granted an extension to October 15th. The deadline for filing the FBAR (Form FinCEN 114 via the BSA e-filing system) is automatically extended to October 15th and no extra forms need to be filed. But keep in mind that interest will continue to accrue on any money you owe the IRS.
Voting
ACA advises US citizens living overseas that voter suppression (including purges of the voter rolls) in about half of the states makes registering to vote each year more important than ever before. Preserve your right to vote! State primaries will be starting soon and you can vote from overseas for national office-bearers. Don’t miss out – 2020 will be an important election year!
As the AWCCS is a member of FAWCO, we ask our members to register to vote through their website. The US (formerly Overseas) Vote Foundation is withdrawing support for the link to the FAWCO website (an alternative is being sought), because so few members linked to it register to vote. For the moment, it is still available on the FAWCO website and the more FAWCO members who register via the website, the greater FAWCO’s credibility when lobbying in Washington during the annual Washington Week.
ACA and Tax reform
American Citizens Abroad was asked to contribute to the US Government Accountability Office’s (GAO) report on the implementation of the Foreign Account Tax Compliance Act (FATCA) and its effects on US persons living overseas. Important summary conclusions were that close to 75% of taxpayers reporting foreign assets to the IRS also reported them separately to the Treasury – indicating potential unnecessary duplication; and that some Americans living abroad can’t get services from foreign banks that find the law too burdensome.