It may have been sold as a tax cut package, but the document that President George W. Bush signed into law on May 17 will mean an extra tax bite for many Americans who live abroad. Those expected to feel the most pain are expatriate workers who earn comfortable, but not lavish, livings and semi- retired workers earning some foreign income while drawing U.S. Social Security, pensions and other income from U.S. sources. Many of these expatriates will be pushed into higher U.S. brackets, as will employees and independent professionals in no-tax and low-tax areas like much of the Middle East, some Caribbean nations and Hong Kong. As Steven Horton, a certified public accountant practicing in Paris, put it: ‘The middle class will get hammered.’ Senior employees who collect generous expat benefits, like housing allowances and reimbursement for their children’s school fees, also are expected to have bigger U.S. tax liabilities – but their companies probably will pick up the costs as part of their benefit packages, tax experts said. The new law, however, does contain some good news. The foreign earned- income exclusion, which was under threat of extinction just three […]

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