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Tax day is around the corner for expatriates and those living and working overseas, with an American filing deadline of June 17. If you’ve ever filed dual-country tax returns you know the struggle is real. You’re also not alone. The State Department estimates nine million Americans are currently living abroad. Even the Duchess of Sussex Meghan Markle has to file an American tax return and so will baby Archie when he comes of age.
While most Americans living and working abroad rarely owe taxes to the IRS, the paperwork alone to be compliant in home and in the host country is a complicated process and one you don’t want to make a mistake on. Finding accountants both versed in American tax laws and local tax laws are rare finds, there’s usually a wait list and it will end up costing you several hundred, if not thousands of dollars.
Relief could be on the way that could save expats thousands of dollars and a reprieve from the overwhelming tax conundrum. House Bill 7358, or the Tax Fairness for Americans Abroad Act, was introduced in the tail end of 2018 legislative session. U.S. Rep. George Holding, a North Carolina Republican, proposed allowing Americans to claim “non-residential taxpayer” that would exempt them from having to file a return.
The bill is a step in the right direction for expats but it still has a very long way to go. The bill was entered into last year’s session in its final hours, meaning it’s already expired. Rep. Holding would have to re-introduce the bill and it would need a Democratic co-sponsor from the Ways and Means Committee. While some Democrats have shown an interest in supporting H.R. 7358, nobody has signed on the dotted line.
Lack of political support for the expat community is another roadblock for this bill. Voter turnout is extremely low for those living overseas at only seven percent. While there are expat lobbying groups, this isn’t the audience funneling money into political campaigns. Those reasons alone make it hard for lawmakers to pay attention and the bill to get any ground.
Rep. Holding is still committed to his efforts to make life easier for Americans living abroad. He’s pushing expats to write the senators and representatives from their home state and push for the bill to get traction. If and when the bill is introduced again, it will get a new number and goes in front of the ways and means committee. In the meantime, Americans overseas (aside from active duty military) will need to hire an accountant to sort out your taxes for both home and abroad.
