Obamacare Impacting Expats?

By: Pete
Date posted: 05.18.2013 (1:14 am) | Write a Comment  (0 Comments)

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Today I stumbled upon an article from the Globe and Mail that discussed the impact of the new health care laws on US citizens abroad. It is a tax increase for all US citizens which is not a surprise. The more worrying part is that according to this article, foreign tax credits cannot be used to offset those taxes which in theory would mean that all of us would owe a lot of money in taxes going forward. Needless to say that if I end up having to owe between 3-4% of my income to the US government (instead of the current $0), I would not be happy.

Is This A Matter Of Opinion?

I’m not sure if the author misunderstood this but after receiving my taxes from my accountant, I still do not owe any money. I have not had the chance to ask about it but I do assume that at least for 2012, it was possible to offset those taxes. Another possibility is that the G&M seems to say that this goes against investment income. I personally have almost all of my investments in non-taxable accounts so it’s possible that is the reason.

It Is A Worrying Trend Though

I’d be curious to know how many expats have decided to give up their US citizenship. It’s not something I’ve considered but the idea certainly seems less crazy than it did just a few months ago. I do wonder about this tendency though. If the US government is gradually more desperate for cash it tries to fight back deficits and pay back its debt, it’s certainly possible that they will eventually try to make more money off of expats. It doesn’t seem fair and I doubt it would be a winning long term strategy but I’m not sure that most Americans even know about this issue. It doesn’t affect them so it’s not something that would get a lot of coverage.

What are your thoughts on this? Can you imagine giving up your US citizenship if this keeps up?

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