Latest update on provisions in the One Big Beautiful Bill (OBBB) that affect U.S. citizens overseas.

ACA's advocacy pays off. ACA wrote to the tax committees and the Senate about our concerns over these provisions and are pleased to see that some revisions addressing our concerns have been made.

Child Tax Credit - The Senate version now eliminates the need for both parents to have a Social Security number (SSN) to qualify.  Only one parent needs to provide an SSN.  ACA is pleased to see this correction as our organization advocated strongly for this. 

Remittance Tax - The Senate version was an improvement over the House version as it would not impose the tax on remittance transfers made by banks or bank cards.  The final Senate version imposes the tax at 1%, down from 3.5%, a further improvement.  The tax will still impact Americans abroad who will not use bank accounts, Credit cards or Debit cards to move money abroad. Although the tax has been lowered is it now not creditable. ACA advocacy has paid off as the Remittance Tax was of deep concern to our organization.  ACA will continue to advocate on this issue as this taxes individuals simply for accessing their own money. 

Trump account - House and original Senate version required both parents to have a Social Security Number (SSN).  The final Senate provision - In married-parent households, while some descriptions say “both parents” need SSNs, others specify that only the parent or guardian opening the account must be SSN‑qualified.  So it's still not 100% clear. 

If the parents are married filing jointly, then the non-citizen parent would likely not have a qualifying SSN.  So the child of dual-national parents who file jointly will likely not be eligible.  The child of dual-national parents whose U.S. citizen parent (has a SSN) files as Head of Household would be eligible.  Some alleviation but ACA still has serious concerns.  ACA is bringing this to the attention of the National Taxpayer Advocate and will continue to advocate on the issue.

Revenge Tax - Included in both the House version and the Senate version.  Eliminated in the final Senate reconciliation bill.  The threat of punitive tax treatment on foreign jurisdictions is gone.  ACA advocacy has paid off as the Revenge Tax and its implication for U.S. citizens overseas was a serious concern for ACA.

GILTI Tax - In the final Senate reconciliation bill there is no relief for business owners abroad from GILTI unless they claim the Section 962 election to be taxed like a corporation.  For business owners abroad claiming the Section 962 election, the final bill locks in the 49.2% GILTI deduction, for an effective U.S. tax rate of 10.67% for Controlled Foreign Corporation (CFC) income.  The Foreign Tax Credit system is unchanged.  Of course, claiming the Section 962 election greatly complicates tax filing, escalating the taxpayers’ U.S. tax compliance costs.  Although there is additional relief for those using Section 962, ACA's concerns overall with GILTI for small business owners overseas remains.  ACA raised our concerns with GILTI with the National Taxpayer Advocate when it was originally passed into law and ACA continues to advocate on this issue.

ACA's advocacy is more important than ever.  No other organization is doing the advocacy and educational work like ACA.  Support ACA today!