- Increase the standard deduction (if you do not itemize) to $24,000
- Deletion of dependent exemption which is currently $4,050 for your self and your dependents
- Eliminate the possibility to deduct state income taxes
- Eliminates the deduction for casualty losses (such as those incurred from hurricanes and floods)
- Decreases the deduction for home mortgage interest to that incurred on a $500,000 loan (previously $1.100,000 loan interest)
- Require that you live in your primary residence for 5 out of past 8 years to get the $500,000 gain exclusion.
November 5, 2017
- by Don D. Nelson, Attorney at Law.
All US expatriates are concerned what effect the pending Republican Tax Plan might have on their taxes while abroad. The good news is that the foreign earned income exclusion which is $102,100 for 2017 so far has not been mentioned in the bill and therefore if currently likely to remain the same for 2017 and perhaps beyond. This means if you are living and working abroad, you can earn (either as self employed or as an employee) up to this amount and not be liable for any US tax on that income. Remember that the exclusion is not automatic. You must file a timely tax return to claim it. If you file your return 18 months after its due date the IRS can disallow the exclusion.
Some items that if passed (in the bill as of 11/5/17) will affect your US return are:
Many more deductions which primarily benefit the middle class are scheduled to be eliminated. The entire pending bill if taken as a whole significantly benefits the wealth and large corporations and in most situations give no or only a small benefit to the middle class taxpayer. Those politicians who claim it will benefit the middle class are using smoke and mirrors.
Note that everything mentioned above is subject to change as the tax bill moves through the legislative process and until the fina tax bill is passed and signed by the President.