November 2016 caused a big shift in U.S. ideology and it also is responsible for a flurry of tax changes. With his Tax Cuts and Jobs Act of 2017, Donald Trump made changes to tax rules for Americans living at home and abroad. A big change for those living abroad are the repatriation tax rules. These changes may affect huge multinational corporations and small time Americans living abroad. This article goes into the basics of the repatriation tax rules and how they affect those holding cash abroad.
A major provision of the Tax Cuts and Jobs Act of 2017 are the repatriation Tax Rules. These tax rules tax U.S. corporations on the profits of their foreign counterparts (called CFCs, controlled foreign corporations) on profits earned from 1986 to December 2017. These tax rules tax profits held in cash at 15.5% and non-cash assets at an 8% rate. While the new tax rules may affect CFCs, they will help Uncle Sam. Congress itself expects this one time charge to bring in $339 million over the next 10 years. Although these new tax laws could help the U.S. government, they may hurt U.S. citizens living abroad. This U.S. reform treats individuals the same way it treats corporations. If an American expat owns 10% of foreign corporation and the foreign corporation is at least 50% American owned, then this expat is subject to the same tax rules as multinational corporations.