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https://www.americansabroad.org/education/issues-facing-americans-abroad/

Issues Facing US Citizens Abroad

The United States has no official count of how many US citizens live and work overseas. ACA's independant reserach by ACA Global Foundation and the Federal Voting Assistanc Program (FVAP) counts the community (military included) at between 5 to 6 million Americans. ACA's recent research estimates the non-military size of the community to be 4 million, with military and government employees making up an additional 1.2 million (5.2 million total). 

US citizens living outside of the United States are sometimes referred to as Americans abroad, Americans overseas or "expatriates." Although US citizens live outside of the United States they are still US citizens; they can still vote in federal (and some state) elections, they still pay taxes and they still form part of the United States population.

Despite this, US citizens living and working abroad face a range of difficulties and challenges that are unique to them, and many of these problems are exacerbated by tax legislation and regulations.

Below is a brief overview of the problems facing Americans abroad. It is intended for US policymakers and those who are interested in learning about the issues and concerns facing US citizens living and working abroad.

To learn more about ACA's advocacy in Washington, DC visit the Advocacy section. To read ACA's submission to Congress and the Administration see here

Taxation

The United States taxes citizens on the basis of citizenship (Citizenship-based taxation CBT), rather than on where the income is earned, often referred to as Residence-based taxation (RBT). This makes the United Statesone of only two countries in the world to do so. This means that Americans are taxed on their worldwide income regardless of where it was earned, where they live and whether they have already been taxed on it.

Find out more here.

General Compliance and FATCA and FBAR

US citizens are required to file an annual tax return regardless of where they live if they meet certain thresholds.  They are also required to report all foreign financial assets over a certain value threshold along with their annual tax filings (as a result of the Financial Account Tax Compliance Act (FATCA), passed in 2010), in addition to filing an additional bank report form, a Foriegn Bank Account Report (FBAR).

Find out more here.

Investments

Americans abroad often run into difficulties with their financial investments.  This most often happens when investing in foriegn mutual funds or foriegn pensions that are taxed as PFICs or Passive Foriegn Investment Companies.  Currency flucuations also present an issue for US citizens who may need, such as state-mandated pensions, and want to invest in products offered in their country of residence. 

Find out more here.

Voting & Representation

Not all US citizens living overseas are able to vote, in particular those who were born overseas and never lived in the United States. Although a majority of Americans overseas are able to register and vote, their voice within any one Congressional district or State is limited due to the size of the constituency.  US citizens abroad lack "direct" representation, unlike many other countries which have a representative in government that directly represents the interest of its citizens living abroad.

Find out more here.

Social Security 

Americans abroad should not be penalized simply because they spent part of their careers abroad, or because they retire abroad and/or have a foreign spouse or adopted children. ACA supports legislation which would eliminate the Windfall Elimination Provision (WEP). Americans abroad should also have dedicated support from the Social Security Administration for accessing their benefits.

 

Find out more here.

Healthcare & Medicare

Medicare benefits are not dispensed to citizens outside the United States. US citizens who are eligible for Medicare benefits and live overseas can only access these benefits if they return to the United States for medical care. The Coronavirus pandemic demonstrated that emergency medical services, paid for through taxpayer dollars, are not provided to US citizens living overseas,

Find out more here.

Citizenship

Every year about 60,000 children are born overseas to a US citizen parent. Of these, 90% acquire US citizenship at birth while 10% do not. These are children born abroad who are not able to claim citizenship because their parent or parents have not met the “residence” and/or “presence” requirements. The right to a nationality at birth is one of the most fundamental of human rights, as it opens the door to membership in our society and all other related rights. It is obvious that 6,000 children each year deserve better treatment.

Find out more here.

Access to Government Services Abroad

Many US Government services are not set up to be used by US citizens living overseas. This includes the IRS and the Social Security Adminstration.

Find out more here.