Trump’s big bad budget bill is cruel and destructive. It guts the social safety net to pay for billionaire tax breaks and deportation prisons while exploding the deficit by $3.4 trillion over 10 years. It is a truly awful bill.
Important – the Senate will announce their version of the bill this week. YOU have the power to influence whether these provisions become law or not. Call your Senators now – especially if they are Republicans, to let them know why you oppose this bill.
So, what specifically does it mean for Americans abroad? We see three main areas of harm.
1) Child Tax Credit (CTC) -- Currently, parents of U.S. citizen children are eligible for the Child Tax Credit, up to $2,000 per child. Under section 110004 of the House bill, the CTC will only be available for children if both parents have valid Social Security Numbers – meaning both are U.S. citizens. ITINs will no longer be adequate. Most U.S. citizens living abroad are married to a non-U.S. citizen spouse - these couples would lose out.
2) Remittance Tax – “Remittances” refer to money sent from the USA to abroad. This includes U.S.-based retirement and 401k plans, which are often the primary source of income for many retirees abroad, or remote workers receiving salary payments into their U.S. bank accounts. Currently, these transfers are not taxed, however under section 112105, two things could happen:
- Entities which administer these remittance transfers, be they banks or online payment processors (Wise, Revolut, etc), will be required to verify that the person (transferring or receiving) the funds is a U.S. citizen.
- If they are not, a 3.5% tax on the transferred funds is applied. U.S. citizens abroad could be falsely identified as non-citizens, and the only way to correct the error is to file for a tax credit on your next federal tax return.
- There could be further complications if financial intermediaries choose not to have U.S. citizens as clients, limiting transfer options for U.S. citizens abroad.
3) “Revenge” Tax – This is the Trump retaliation tax aimed at other countries for imposing “unfair” taxes against US corporations. It would levy an additional tax on all foreign investments into the USA. Americans abroad could be considered foreign investors and therefore be subject to the tax. This could significantly decrease all retirement accounts, savings, and investments for Americans abroad. As ~60% of all investments worldwide are currently funneled into the USA, this would greatly impact the global economy. It is expected to significantly deter investment into the USA and cause the dollar to lose value relative to other currencies.
ALL of these proposals are subject to change by the Senate RIGHT NOW. Your calls this week can make a difference, so make sure that your Senators understand this bill’s potential impact on you.
You could also make a video to share your story via your own social media channels. If you do this, make sure to tag your Senators in the post(s).