How the US Election Will Impact Expats and Taxes

November 4, 2020 | | 3 minute read
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US Election Will Impact Expat and Taxes

We are encountering what may be the most unusual election in history. A global pandemic hit the world economy, and unrest is happening in the States as we know it. From all of this, Americans living abroad may wonder how the US election results will impact expats and taxes.

In this post, we’ll look into announcements about tax plans and election info that will impact expats, both in the US and abroad.

Your Vote Matters

From our Voting Survey Results 2020 blog, we asked two questions to our MyExpatTaxes customers:

  • Have you registered to vote?
  • Are you planning to vote for the 2020 Presidential election?

We found out the following information:

  • 70% of expat tax filing customers who were surveyed are already registered to vote
  • 89% of expat tax filing customers who were surveyed plan on voting in the U.S. Federal Elections

Voting is a privilege and it looks like many US expats used it.

Tax Plans for 2021 and Beyond

Republican Party

Trump’s political party – the Republicans – state they will not increase any taxes. They also want to repeal citizenship-based taxation and FATCA. If these measures are implemented, this will provide a lot of financial tax relief for US expats. For example, there would be no need to report your foreign bank account to FinCen and, perhaps, no more double taxation.

As a note, the above measures presented by the Republicans were included in the 2016 election but were not enacted. So we cannot determine if these results will measure and be enacted if Trump wins the election.

In September, the political party Republican Overseas sent a letter to the White House Chief of Staff, Mark Meadows, asking them to issue an executive order to relieve Americans abroad from US taxation. Meadows responded that he would look into this matter after the election.

Democratic Party

As for the Democratic Party, with Joe Biden running for US President, they wish to increase income taxes for higher earners. This wish would not necessary not affect expats, since tax benefits like the Foreign Earned Income Exclusion and Foreign Tax Credit still apply when filing. Those benefits typically help Americans abroad eliminate their tax liability with the IRS.

Democrats want to double the GILTI tax rate from 10.5% to 21% if expats want to register a foreign business with a US parent company. GILTI is Global Intangible Low-Taxed Income, a concept from the Tax Cuts and Jobs Act. This makes corporate taxable income gets added from foreign income. The good news is that there are lawsuits against this GILTI tax for expats being examined.

Additionally, the Democrats want to increase overall US corporate tax. The percentage increase would be from 21% to 28%.

Furthermore, the political party does not want to repeal citizenship-based taxation or FATCA. Joe Biden reached out to Democrats Abroad that he will work with Americans overseas and address expatriate taxation issues.

All in all, we predict that whoever wins the Presidency; the majority of American expats won’t notice any big changes regarding US taxes. Yet, if the Democrats win, there could be a new rules regarding foreign registered businesses.

How Your Expat Vote Counts

If you’re curious to know how your expat vote counts in this election and how it contributes to the result, you would have needed to register from the last US state you had residence in. When you vote from that state, you’ll be counted amongst fellow residents of the state. You’ll need to check with your US state to see if they will see you as a resident if you register to vote, and thus be susceptible to filing state tax returns.

If you never lived in the US and/or were born outside the country, registering in the last state your parents lived in is possible. But please, check with the state laws! 

Generally, though, you won’t need to own a US property or residence to vote. You can thank the Uniformed and Overseas Citizens Absentee Voting Act for that!

The 2000 election between George W. Bush and Al Gore came down to the votes of Americans overseas. Bush won Florida by less than 500 votes, and many seemed to have come from Florida expats. Therefore, American expat voters can help in determining who will be the President of the United States. To read more about the 2000 election results and its connection to expats, please see this New York Times article.

Expats and Taxes

Regardless of who wins the US Presidency, taxes will still be an important factor for Americans. At MyExpatTaxes want to make sure you, a US citizen abroad, will always be safe and in good standing with the IRS, so you don’t face unnecessary complexities or problems in life. Our tax software makes it possible.

There is still time to file US expat taxes before the December 15 deadline! It’s easy, fast, and affordable. Customers typically file their taxes in 30 minutes or less.

Written by Michelle H.

November 4, 2020 | | 3 minute read

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