Each week we search the World Wide Web to bring you the expat tax news that you want to know! The Affordable Care Act headlines the top news–will you be impacted this year? Read on to learn more!
Affordable Care Act (ACA)
For the first time, Americans near and far will need to report their health insurance status to the IRS. And any time there is a new reporting requirement, there are bound to be questions and perhaps even a little confusion. The ACA requires that all Americans hold the minimum essential healthcare coverage or incur a penalty on their Federal Tax Return. Whether or not you are impacted as an expat depends on your official expat status- if you qualify as an expat (meaning you pass one of the residency tests and are eligible for the Foreign Earned Income Exclusion), you are exempt. If not, you must report that and pay the appropriate penalty.
The IRS says it has to trust tax filers to answer truthfully whether they had health insurance or need to pay a penalty.
Robert Woods, popular tax contributor on forbes.com warns that this year may be quite a challenge, especially for US expats. To learn more about the ACA and how it may impact your tax filing this year, read on!
China Mirroring the US Tax System?
Very few countries follow the US tax code when it comes to determining taxation. Almost every country taxes its citizens based on residency- meaning you are only taxed on income earned in your home country. But the US employs a citizen-based taxation, whereby all US citizens must report their worldwide income, regardless of where the live. Beginning this year, China is now requiring its citizens to report their worldwide income, just like US citizens. Whether it’s China’s need to increase tax revenue to support its current spending or the belief that this is a fair and just taxation, its citizens will now need to adapt to the same taxation system that has become so controversial in the US.
While the merits of the policy can be endlessly debated, everyone agrees that our citizenship-based tax model is a rarity in international terms. Almost no other countries impose income tax on this basis, with one glaring exception: China.
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