Title: Tax Fairness for Americans Abroad Act of 2018
Policy area: Taxation

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.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7358 Introduced in House (IH)]

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115th CONGRESS
  2d Session
                                H. R. 7358

 To amend the Internal Revenue Code of 1986 to provide an alternative 
 exclusion for nonresident citizens of the United States living abroad.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           December 20, 2018

 Mr. Holding introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide an alternative 
 exclusion for nonresident citizens of the United States living abroad.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Tax Fairness for Americans Abroad 
Act of 2018''.

SEC. 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:

``SEC. 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' means, with respect to a taxable year, a 
        nonresident citizen who--
                    ``(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' has, with respect to a taxable year, the meaning given 
        such term in section 911(b)--
                    ``(A) without regard to paragraph (2) thereof, and
                    ``(B) if `during the taxable year' were substituted 
                in paragraph (1)(A) for `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' means income other than foreign earned income 
                that is sourced outside the United States.
                    ``(B) Exception.--The term `foreign unearned 
                income' shall only include 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.
    ``(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) of the Internal Revenue 
        Code of 1986 is amended by adding the following new 
        subparagraph:
                    ``(C) Nonresident citizen.--The term `nonresident 
                citizen' means, with respect to a taxable year, an 
                individual who--
                            ``(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' shall not include any Federal 
                employee.''.
            (2) Conforming amendment.--The heading of section 7701(b) 
        of such Code is amended by striking ``and'' and inserting a 
        comma and by inserting after ``nonresident alien'' the 
        following: ``, 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.
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