Tax Fairness for Americans Abroad Act of 2018

To amend the Internal Revenue Code of 1986 to provide an alternative exclusion for nonresident citizens of the United States living abroad. 1. Short title This Act may be cited as the Tax Fairness for Americans Abroad Act of 2018 2. Taxation of nonresident citizens (a) In general The Internal Revenue Code of 1986 is amended by inserting after section 911 the following new section: 911A. Alternative for nonresident citizens of the United States living abroad (a) Exclusion of foreign income from gross income In the case of a qualified nonresident citizen, there shall be excluded from the gross income of such individual, and exempt from taxation under this subtitle, for any taxable year— (1) the foreign earned income of such individual, and (2) the foreign unearned income of such individual. (b) Definitions For purposes of this section— (1) In general Unless otherwise provided, terms used in this section have the same meaning given such terms in section 911. (2) Qualified nonresident citizen The term qualified nonresident citizen (A) has not made the election described in section 911 for such taxable year, and (B) makes an election under this paragraph. (3) Foreign earned income The term foreign earned income (A) without regard to paragraph (2) thereof, and (B) if during the taxable year during the period described in subparagraph (A) or (B) of subsection (d)(1), whichever is applicable (4) Foreign unearned income (A) In general The term foreign unearned income (B) Exception The term foreign unearned income (c) Exclusion of gain during time as qualified nonresident citizen There shall be excluded from gross income of an individual any foreign unearned income from the sale of personal property to the extent such income is attributable to periods during which the individual was a qualified nonresident citizen. (d) Other rules Rules similar to the rules of paragraphs (4), (5), (6), (7), and (8) of section 911(d) shall apply for purposes of this subsection. . (b) Conforming amendment The table of sections for subpart B of part III of subchapter N of chapter 1 of such Code is amended by inserting after the item related to section 911 the following new item: Sec. 911A. Alternative for nonresident citizens of the United States living abroad . (c) Nonresident citizen defined (1) In general Section 7701(b) (C) Nonresident citizen The term nonresident citizen (i) is a citizen of the United States, (ii) has a tax home in a foreign country, (iii) is in full compliance with United States income tax laws for the 3 previous taxable years, and (iv) either— (I) establishes to the satisfaction of the Secretary that such individual has been a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year, or (II) is present in a foreign country or countries during at least 330 full days during such taxable year. (D) Limitation on nonresident citizens The term nonresident citizen . (2) Conforming amendment The heading of section 7701(b) of such Code is amended by striking and nonresident alien , and nonresident citizen (d) Effective date The amendments made by this section shall apply with respect to taxable years beginning after the date of the enactment of this Act.

Summary: Tax Fairness for Americans Abroad Act of 2018 This bill allows certain U.S. citizens who are residents of foreign countries to elect to use an alternative tax exclusion for foreign source earned and unearned income.