NTUF - What to Know about Residence-Based Taxation

A recent proposal from the group Tax Fairness for Americans Abroad includes several features to transition the U.S. to a residence-based system. This plan would allow citizens abroad to elect to terminate U.S. tax residency while maintaining citizenship, provide relief from burdensome filing requirements, and preserve taxation of U.S.-sourced income. It would also prevent changes of residency from facilitating tax avoidance and would allow for revenue neutrality.

In addition, there are currently several pieces of legislation that have been introduced to deal with tax issues for Americans abroad. These bills would establish a commission to study the issue, exempt individuals from FATCA reporting if they reside in the same country as their foreign financial institution, and create a way for citizens abroad to avoid burdensome filing requirements if they owe no U.S. income tax.

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