Section 1 Short title
This Act may be cited as the “Tax Simplification for Americans Abroad Act”.
Tax Simplification for Americans Abroad Act
A BILL
To create a short form tax return to simplify the return process for certain taxpayers living abroad, and for other purposes.
Sec. 2 Short form for certain taxpayers living abroad
In general— The Secretary of the Treasury (or the Secretary's delegate) shall make available a form for use by specified individuals to file the return of tax imposed by chapter 1 of the Internal Revenue Code of 1986. Such form shall replace Internal Revenue Service Forms 1040, 2555, 1116, 8938, 5471, 3520, 3520A, 8621, 8858, 8865, 926, 708, FinCEN Form 114, and other forms for disclosing income, assets, deductions, and offsets, and shall be as similar to Form 1040–EZ as it existed in 2017, except that the form shall be sufficient to allow an individual to, with respect to a taxable year—
demonstrate that such individual is a qualified individual under section 911(d)(1) of the Internal Revenue Code of 1986,
declare foreign income described in section 911 of such Code,
characterize income based on source, including—
wages,
self-employment income or business income,
contract income,
foreign government benefits,
pension and other retirement income,
scholarships and fellowship grants,
interest,
dividends, and
capital gains,
claim the standard deduction and, if applicable, the child tax credit,
declare foreign taxes paid or accrued, and
declare United States source income from retirement, pension and Social Security benefits to be treated as sourced from treaty income where tax has been paid upon distribution.
Specified individual—
In general— For purposes of this section, the term specified individual means, with respect to a taxable year, an individual—
who is a qualified individual under section 911(d)(1) of the Internal Revenue Code of 1986, and
who declares—
a gross income of not more than $400,000, and
a tax liability of $0.
Inflation adjustment— In the case of any taxable year beginning after 2024, the $400,000 amount in paragraph (1)(B)(i) shall be increased by an amount equal to—
such dollar amount, multiplied by
the cost-of-living adjustment determined under section 1(f)(3) of the Internal Revenue Code of 1986 for the calendar year in which the taxable year begins, determined by substituting “2023” for “2016” in subparagraph (A)(ii) thereof.
Effective date— The form required by subsection (a) shall be made available for taxable years beginning one year after the date of the enactment of this Act.
Sec. 3 Expansion of income allowed as Foreign Earned Income
in subsection (b)(1)(B), by striking clause (i) and by redesignating clauses (ii) through (iv) as clause (i) through (iii), respectively,
in subsection (b)(1)(A), by striking “attributable to services performed by such individual” and inserting “attributable to services performed by such individual or benefits received by such individual”,
in subsection (d)(2), by striking “wages, salaries, or professional fees” and inserting “wages, salaries, professional fees, pensions, scholarships, fellowship grants, distributions from retirement funds, or payments received by the taxpayer with respect to disability, unemployment, family medical leave, or childcare”, and
in subsection (e)(2), by striking “Except with the consent of the Secretary, any taxpayer who makes such a revocation for any taxable year may not make another election under this section for any subsequent taxable year before the 6th taxable year after the taxable year for which such revocation was made.”
Effective date— The amendments made by subsection (a) shall apply to taxable years beginning after the date of the enactment of this Act.
Sec. 4 Information relating to specified foreign financial assets
by redesignating subsections (b) and (c) as subsections (d) and (e), respectively; and
by inserting after subsection (a) the following:
“(b) Specified foreign financial assets
“(1) In general—If a person makes a transaction that would require reporting under subsection (a), and such transaction involves a specified foreign financial asset, the reporting requirements described in subsection (a) shall—
“(A) only apply if the transaction involves an amount that exceeds the aggregate value threshold set forth in section 6038D of the Internal Revenue Code of 1986; and
“(B) be satisfied by attaching to such person’s return of tax for such taxable year the information required under section 6038D of the Internal Revenue Code of 1986.
“(2) Specified foreign financial asset—For purposes of this section, the term “specified foreign financial asset” has the meaning given the term in section 6038D(b) of the 2211 Internal Revenue Code of 1986.”
Information with respect to specified foreign financial assets— Section 6038D of the Internal Revenue Code of 1986 is amended—
in subsection (b)—
by striking “For purposes of this section,” and inserting “Except as provided in paragraph (2), for purposes of this section,”,
in paragraph (2), by redesignating subparagraphs (A), (B), and (C) as clauses (i), (ii), and (iii), respectively,
by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively,
by striking “For purposes” and inserting:
“(1) In general—For purposes”
by adding at the end the following new paragraph:
“(2) Certain accounts exempt from financial reporting—An account is exempt from the reporting requirement under subsection (a) if it is an account—
“(A) the maximum balance of which does not exceed $600 for the entire duration of the taxable year,
“(B) the usage of which is limited to a single merchant, or
“(C) the type of which is listed as an exempt account in Annex II of the Foreign Account Tax Compliance Act Intergovernmental Agreement in effect between the United States and the country in which such account is held.”
by redesignating subsections (f), (g), and (h) as subsections (g), (h), and (i), respectively, and
by inserting after subsection (e) the following new subsection:
“(f) Inflation adjustment
“(1) In general—In the case of any taxable year after 2024, the $50,000 amounts in subsection (a) and subsection (e) shall be increased by an amount equal to—
“(A) such dollar amount, multiplied by
“(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “calendar year 2023” for “calendar year 2016” in subparagraph (A)(ii) thereof.
“(2) Rounding—If any dollar amount increased under paragraph (1) is not a multiple of $100, such dollar amount shall be rounded to the nearest multiple of $100.”
Furnishment of information by foreign financial institutions to owners of specified foreign financial assets— Section 1471(c) of such Code is amended by adding at the end the following new paragraph:
“(4) Requirement to provide information to account holders—If a foreign financial institution submits a report under this section, such institution shall provide account holders with a copy of such report within 15 days of such submission.”
Disclosure of specified foreign financial assets to the financial crimes enforcement network— Section 6103(l) of such Code is amended by adding at the end the following new paragraph:
“(23) Disclosure of specified foreign financial assets to the financial crimes enforcement network—The Secretary may, upon written request, furnish to the proper officers and employees of the Financial Crimes Enforcement Network such return information with respect to specified foreign financial assets as is attached to tax returns pursuant to section 6038D, but only to the extent necessary in investigating suspected money laundering or the financing of terrorism.”
Effective date—
The amendments made by subsection (a) shall apply to reports filed with respect to calendar years beginning after the date of the enactment of this Act.
The amendments made by subsections (b), (c), and (d) shall apply to returns filed with respect to taxable years beginning after the date of the enactment of this Act.