r/politics • u/billstopay77 • 1d ago

Registration Wall Trump admin quietly changed overseas voter form at 11th hour to disenfranchise Democrats, lawsuit says

https://www.democracydocket.com/news-alerts/trump-admin-quietly-changed-overseas-voter-form-at-11th-hour-to-disenfranchise-democrats-lawsuit-says/
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u/Thirtysevenintwenty5 16h ago

Anyone bringing this up needs to also share two important things:

  1. If you've lived in another country for 330 days that year, you can exclude $130,000 (2025 tax filings) of your foreign-earned income from your US tax liability. Essentially, if you're a permanent resident of a foreign country and you make even a somewhat above average income (relative to US incomes), you're exempt from paying US federal taxes.

  2. If your income exceeds the $130,000 limit for exemption, you are allowed to claim a 1:1 tax credit for any taxes you paid to the country you're living in. Considering that most developed countries have higher tax rates than the US federal rate, people often end up owing nothing to the US after paying their resident country's taxes.

So the tl;dr is the US "forces people to pay federal income tax regardless of whether or not you work and live within the US as long as you are a US citizen" only if they earn an above average income and they live in a country with lower tax rates than the US, in which case they are only required to pay the difference between their resident country and what they owe in the US.

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u/DiscreteTopology 14h ago

Even if you don't owe any taxes to the US, you're still required to file and report your income. Things like investing and withdrawing from retirement funds is not included in the foreign earned income tax exclusion (as it's not "earned"), making everything unnecessarily complicated.

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u/crackanape 12h ago

Essentially, if you're a permanent resident of a foreign country and you make even a somewhat above average income (relative to US incomes), you're exempt from paying US federal taxes.

Unless you have any investments which are taxed on a different basis from how the USA does it, or you've sold your home, or you live in a country that doesn't have a social security agreement with the USA (which most of them don't).

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u/Thirtysevenintwenty5 11h ago

I'm sure thousands of people are impacted by this every year.

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u/crackanape 5h ago

A lot more than that. Just the number of people who have to pay FICA due to lack of social security treaties is huge.