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Expat tax burden might be lighter



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Published on Monday, October 14, 2024






By James Brodell


U.S. citizens living in Costa Rica and elsewhere overseas might gain
some tax benefits in 2025. The degree depends on how the presidency and Congress shape up after the Nov. 5 general elections.



Donald Trump, the ex-president and current Republican presidential candidate, just promised to eliminate what he called double taxation of U.S. taxpayers abroad.



"You've been wanting this for years, and nobody has listened to you, and you deserve it, and I'm going to do it," said Trump in making his double taxation announcement. "It's the right thing to do, and no American leader has ever been willing to stand up and commit to you the way that I have on many things, but this is a very important element for your safety, security, and, frankly, for your wallet."



U.S. citizens and permanent residents now must pay U.S. taxes on some foreign income as well as taxes levied by whatever country in which they live under current law.



Trump made his announcement, in part via social media Friday, but he was not clear as to exactly what was being pledged.



Earlier, both Trump and Kamala Harris, the current vice president and Democratic candidate for president, both pledged to end taxes on tip income for U.S. taxpayers. Trump also promised to eliminate taxes on overtime pay. Harris said she would increase Social Security coverage and target high-wage earners with higher rates.



The double taxes U.S. residents overseas pay has long been a target of expat criticism. Many politicians, including Trump, have said the tax code provides a penalty for U.S. workers overseas. Some Democratic lawmakers agree.








Not all U.S. citizens are taxed twice. Overseas residents benefit from an annual foreign income tax exclusion, which for tax year 2023 is $120,000, according to the Internal Revenue Service.


Of course, many U.S. expats in Costa Rica receive Social Security payments, and they would benefit if a Trump administration manages to get his tax pledge through Congress.


Trump's brief announcement left many questions unanswered. Among these:


1. Does the promise involve just earned income or does Trump also plan to waive taxes on capital gains, estates, gifts and digital transactions? U.S. expats now are supposed to pay these taxes, just like individuals in the States, just as when they sell an overseas property for a profit.


2. Does the promise cover U.S. government employees who now pay taxes even if overseas?


3. Would Trump also waive taxes on private and public pensions and 401K annuity payments as well as Social Security?



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James Brodell, A.M. Costa Rica editor emeritus, is a retired journalism professor and a New York Metro area newspaper editor. He has studied U.S. open records and open meeting laws extensively. He can be reached at JBrodell@jamesbrodell.com or Jay@amcostarica.com.


Check out Brodell literary offerings here at
5440north.com or JamesBrodell.com  -Copyright James J. Brodell 2024 -

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