Tax Simplification for Americans Abroad Act

To create a short form tax return to simplify the return process for certain taxpayers living abroad, and for other purposes. 1. Short title This Act may be cited as the Tax Simplification for Americans Abroad Act 2. Short form for certain taxpayers living abroad (a) In general The Secretary of the Treasury (or the Secretary's delegate) shall make available a form for use by specified individuals to file the return of tax imposed by chapter 1 (1) demonstrate that such individual is a non-resident for purposes of the substantial presence test under section 7701(b)(3) of such Code, (2) declare foreign income described in section 911, (3) characterize income based on source, including— (A) wages, (B) contract income, (C) foreign government benefits, (D) pension and other retirement income, (E) scholarships and fellowship grants, (F) interest, (G) dividends, and (H) capital gains, (4) claim the standard deduction and, if applicable, the child tax credit and earned income tax credit, (5) declare foreign taxes paid, and (6) declare United States source income from retirement, pension and social security benefits to be treated as resourced from treaty income where tax has been paid upon distribution. (b) Specified individual (1) In general For purposes of this section, the term specified individual (A) who qualifies as a non-resident citizen under the substantial presence test of section 7701(b)(3), or is the spouse of non-resident citizen, and (B) who declares— (i) an income less than $400,000, and (ii) a tax liability of $0. (2) Inflation adjustment (A) In general In the case of any taxable year beginning after 2023, the $400,000 amount in paragraph (1)(B)(i) shall be increased by an amount equal to— (i) such dollar amount, multiplied by (ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting 2022 2016 (c) Effective date The form required by subsection (a) shall be made available for taxable years beginning one year after the date of the enactment of this Act. 3. Expansion of income allowed as Foreign Earned Income (a) In general Section 911 (1) in subsection (b)(1)(B), by striking clause (i) and by redesignating clauses (ii) through (iv) as clause (i) through (iii), respectively, (2) in subsection (b)(1)(A), by striking attributable to services performed by such individual attributable to services performed by such individual or benefits received by such individual (3) in subsection (d)(2), by striking wages, salaries, or professional fees wages, salaries, professional fees, pensions, scholarships, fellowship grants, interest and dividends, capital gains, distributions from retirement funds, or payments received by the taxpayer with respect to disability, unemployment, family medical leave, or childcare (b) Effective date The amendments made by subsection (a) shall apply to taxable years beginning after the date of the enactment of this Act.

Summary: Tax Simplification for Americans Abroad Act This bill directs the Internal Revenue Service to make available a new tax form for certain individual taxpayers living abroad. The form shall allow such individuals to demonstrate nonresidence, and declare foreign income, foreign taxes paid, and U.S. source income from retirement, pension and social security benefits. The bill also expands the types of income allowed as foreign earned income for purposes of the foreign earned income tax exclusion.