Living Abroad and Taxes

Michael Wiener, E.A.

If you are living abroad, you may be wondering how the provisions of the Tax Cuts and Jobs Act (TCJA) will impact you.

This is the most extensive tax change in more than 30 years, nothing was simplified related to U.S. citizens and resident aliens working abroad. The following is an overview of how things will playout for you beginning in 2018.

THE FOREIGN EARNED INCOME EXCLUSION is still alive and well -The inflation-adjusted maximum exclusion for 2018 is $104,100 (up from $102,100 in 2017). However, the TCIA did change the measure of inflation so that the inflation adjustments in future years will be lower. The housing exclusion was also retained, and for 2018, the maximum is $14,574 (up from $14,294 in 2017). For certain high cost areas, the IRS allows higher housing exclusions.

FOREIGN INFORMATION REPORTING remains the same – The troublesome burden of reporting foreign financial relationships continues unchanged.

FOREIGN TAX CREDIT – The foreign tax credit remains unchanged, although the TCJA does not allow it to offset the tax on accumulated post-1986 deferred income, as previously discussed.

OTHER 1040 CHANGES – It seems that the TCIA’s only attempts at simplification were eliminating personal exemptions (which were $4,050 each for taxpayer, spouse and dependent in 2017); limiting itemized deductions (or suspending some deductions through 2025); and increasing the standard deduction to $12,000 for single taxpayers, $18,000 for head-of-household filers and $24,000 for those filing married joint.

The TCIA also suspended the deduction for foreign property tax as an itemized deduction. The new tax law increased the child tax credit to $2,000, and up to $1,400 is refundable. However, if you exclude foreign earned income or the foreign housing allowance, you are prohibited from claiming the refundable part of the child tax credit.

The TCIA added a new $500 nonrefundable credit for qualifying dependents other than qualifying children. The AGI threshold at which the child tax credit begins to phase out was substantially raised: to $400,000 for those filing a married joint return and $200,000 for others.

MOVING DEDUCTION – If you are planning a move in the future, the TCIA dealt you a bad hand. The deduction for moving expenses is suspended until after 2025, and to make matters worse, any moving reimbursement provided by your employer is taxable.

There have been, of course, many other changes brought about by the TCIA. If you have questions related to taxes and living abroad, please email this office at

If you should have a topic that you would like me to
discuss or if you should have a question, please feel free to
call 239.403.4410 or e-mail me at
4280 East Tamiami Trail
Executive Suite 302-M | Naples, FL 34112
An enrolled agent, licensed by the US Department
of the Treasury to represent taxpayers before the IRS for
audits, collections and appeals. To attain the enrolled agent
designation, candidates must demonstrate expertise in
taxation, fulfill continuing education credits and adhere to
a stringent code of ethics

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