December 21, 2018 – Residency-Based Tax Bill vs Citizenship-Based Proposed by US Congressman

by | Dec 21, 2018 | Industry Updates

Both Republicans and Democrats are showing support for a bill introduced by a Republican congressman George Holding (R-North Carolina) to move from a citizenship-based taxation system to a residency-based one. The US is one of only a few countries administering tax on citizenship. This has made it difficult for Americans living in Canada who can be taxed in both countries as per the Foreign Account Tax Compliance Act (FACTA).

Investment Executive reported that under the new system the proposed definition of a non-resident citizen would be:

  • is a US citizen;
  • has a tax home in a foreign country,
  • is in full compliance with US income tax laws for the previous 3 years; and
  • either establishes that he/she has been a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year, or is present in a foreign country or countries during at least 330 full days during such taxable year.

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