A New US President: What US Expats Might Expect for Expat Taxes
With President-Elect Donald Trump’s victory in the 2024 US presidential election, American expats across the globe are wondering what changes may be coming their way, especially in regard to expat taxes. Trump’s return to the White House, following his first term from 2017 to 2021, may signal a significant shift in tax policies that could directly impact the financial lives of US citizens living abroad.
What Trump’s Win Means for US Expat Taxes
Trump’s return to the White House raises important questions for US expats, who often face complex tax obligations in multiple jurisdictions. Among his key campaign promises is a bold initiative to end double taxation for Americans living abroad, which could have a significant impact on the financial lives of many expats. During his first term, the 2017 Tax Cuts and Jobs Act (TCJA) brought sweeping changes to both corporate and personal taxes. For expats, the TCJA notably introduced and modified rules that impacted how they report foreign income, manage their tax filings, and avoid double taxation.
Below are some additional changes that expats may see in the next four years:
1. Possible Revisions to the Foreign Earned Income Exclusion (FEIE)
The Foreign Earned Income Exclusion (FEIE), which allows expats to exclude a portion of their foreign income from US taxation, may be revisited. In his first term, Trump hinted at reforming aspects of expat taxation, which might now include adjustments to the FEIE limits. Any changes could directly affect how much of an expat’s foreign earnings can be excluded from US taxes.
2. Continuation or Expansion of GILTI Tax
The TCJA also introduced the Global Intangible Low-Taxed Income (GILTI) tax, which significantly affected expats owning small businesses abroad. It effectively taxed earnings from controlled foreign corporations, increasing tax burdens for many expat entrepreneurs. Trump’s focus on bringing wealth back to the US could mean a continuation or even expansion of the GILTI tax provisions, affecting expat-owned businesses.
3. Ending Double Taxation for US Expats
Trump’s recent campaign promise to end double taxation for US expats is intended to reduce the financial burden on Americans living overseas. Currently, many US expats face double taxation, paying taxes both in their country of residence and to the US, even though certain exclusions like the Foreign Earned Income Exclusion and the Foreign Housing Exclusion exist to mitigate this burden. If implemented, this policy could simplify tax filings and reduce obligations, making it easier for Americans to reside and work abroad without facing excessive tax burdens.
How Expats Can Prepare
Given the potential changes on the horizon, US expats would be wise to take proactive steps to prepare for any upcoming tax changes:
Stay Informed
Keep abreast of tax policy updates coming from the new administration. Reliable sources like the Tax Foundation provide regular analysis of policy shifts and their impact on individuals. Additionally, subscribing to the Greenback Expat Tax Services newsletter (sign up below) can help US expats stay informed with timely updates and expert insights specifically geared towards Americans living abroad. These resources are invaluable in making sense of evolving tax laws and ensuring you are fully prepared for any changes.
Consult a Tax Professional Service like Greenback Expat Tax Services
Expat taxes are complicated, and potential new regulations could add further complexity. Consulting an experienced tax advisor who specializes in expat taxes can help US expats navigate these changes smoothly.
To learn more about our one-of-a-kind expat tax services, just contact us, and one of our customer champions will gladly help. If you need advice on your specific tax situation, you can also click below to schedule a consultation with one of our expat tax experts.
Looking Ahead
Donald Trump’s return to the White House comes with a promise of major reforms, including to economic and tax policies. For US expats, this means keeping a close watch on developments that could affect expat tax obligations. Whether it’s changes to the Foreign Earned Income Exclusion, or increased GILTI tax burdens, being prepared is key to managing any financial impact.
If you’d like to learn more, contact us, and one of our customer champions will be happy to help!
