# Overseas taxpayers - stats and numbers



## maz57 (Apr 17, 2012)

BBCWatcher said:


> About 94% of Americans living overseas don't owe any tax, and the majority of them are obliged to file U.S. tax returns. Those tax returns are chock full of zeroes and blanks. That, too, is information.


Only from the returns that actually get filed. Even though most Americans overseas are obliged to file US tax returns, the numbers show that most don't. They either don't even know about the obligation or choose to ignore it. Congress has sent the IRS on a fool's errand.


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## BBCWatcher (Dec 28, 2012)

maz57 said:


> Even though most Americans overseas are obliged to file US tax returns, the numbers show that most don't.


Which numbers would those be?


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## maz57 (Apr 17, 2012)

BBCWatcher said:


> Which numbers would those be?


For starters, go here: https://tax-expatriation.com/2015/0...-tax-returns-are-just-a-few-hundred-thousand/

"The IRS tracks and keep information on U.S. income tax returns filed by U.S. individual taxpayers overseas. The information is not only the number of tax returns (head count), but also the amount of income reported. For instance, TAS reported about 700,000 returns were filed in 2010 by U.S. taxpayers abroad, while estimating about 6.32 million U.S. citizens reside abroad."

Doing the math shows that only about 11% of Americans overseas filed returns in 2010. Do you think the other 89% (5,620,000) were all under the filing threshold?


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## BBCWatcher (Dec 28, 2012)

maz57 said:


> For starters, go here: https://tax-expatriation.com/2015/0...-tax-returns-are-just-a-few-hundred-thousand/....


I did. It's a blog post with an assertion about some statistics. The blog post has broken links, but I did manage to find the 2012 Taxpayer Advocate's report that the blog post claims contains those statistics. I looked for the numbers the blog post purports are there. They aren't there, at least not that I can find -- and I looked rather carefully.

Got anything better and more direct?

One advance caution: how would the IRS know a filer lives overseas? One way would be to look at the mailing address the filer providers on page one of IRS Form 1040. One wee problem: that doesn't actually work, statistically. For many years when I lived abroad the mailing address on my tax returns was a U.S. mailing address. This is rather common and would tend to bias that particular statistic downward.


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## Bevdeforges (Nov 16, 2007)

maz57 said:


> For starters, go here: https://tax-expatriation.com/2015/0...-tax-returns-are-just-a-few-hundred-thousand/
> 
> "The IRS tracks and keep information on U.S. income tax returns filed by U.S. individual taxpayers overseas. The information is not only the number of tax returns (head count), but also the amount of income reported. For instance, TAS reported about 700,000 returns were filed in 2010 by U.S. taxpayers abroad, while estimating about 6.32 million U.S. citizens reside abroad."
> 
> Doing the math shows that only about 11% of Americans overseas filed returns in 2010. Do you think the other 89% (5,620,000) were all under the filing threshold?


That smacks of another statistic being bandied about on the Internet lately. You can get all sorts of flame wars started with the "news" that more than 50% of the American population pays no income tax. However, you have to factor in the percentage of the population that is under age 18, or over age 70 or so and probably has no tax liability because they draw their resources from savings, or Mom and Dad. Or the "accidental Americans" overseas who have no clue that they are even supposed to file. Or the resistors with no traceable (by the IRS anyhow) income. Heck, I haven't filed for the past two years because I'm under the threshold, quite legitimately. 

How many US citizens are married to NRAs and basically supported by their spouses, so have no income in their own names? (And yes, there are those who contend that the US spouse should have to declare half of hubby's income - but let's get serious here. Another one of those "interpretation" issues in tax law and practice.)
Cheers,
Bev


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## maz57 (Apr 17, 2012)

BBCWatcher said:


> Got anything better and more direct?
> 
> One advance caution: how would the IRS know a filer lives overseas? One way would be to look at the mailing address the filer providers on page one of IRS Form 1040. One wee problem: that doesn't actually work, statistically. For many years when I lived abroad the mailing address on my tax returns was a U.S. mailing address. This is rather common and would tend to bias that particular statistic downward.


Here's another, straight from a horse's (GAO) mouth. U.S. GAO - Tax Policy: Economic Benefits of Income Exclusion for U.S. Citizens Working Abroad Are Uncertain According to the IRS, approximately 445,000 returns were filed for t.y. 2011 claiming the FEIE.

This link is just for the synopsis of a GAO report on the FEIE, but further links for the entire document are on the page if you are so inclined. Filing a Form 2555 with the return certainly indicates the taxpayer is overseas, as does filing from a foreign address. But as you point out, a US address doesn't mean the filer isn't overseas. Who knows how accurate all of these numbers are, except to say they are all from the US government (IRS, the GAO, and the TAS).

One interesting statistic the GAO cited is that those 445,000 returns represent .3% of all individual tax returns filed for 2011. (Or about 145,000,000 returns, total.) So less than half (about 46.5%) of the total US population filed a tax return in 2011, not particularly surprising when you consider many were babies, low income, spouses, etc, etc. If you assume a similar distribution of non-filers for the overseas US population, you would expect 2,938,800 ( 46.5% of 6.32 million) 2011 returns filed from overseas versus the 700,000 that were actually filed. That's a pretty big discrepancy.

OK, time to take the dog for a walk!


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## BBCWatcher (Dec 28, 2012)

maz57 said:


> Filing a Form 2555 with the return certainly indicates the taxpayer is overseas, as does filing from a foreign address.


Or was, but there are LOTS of overseas Americans who don't take the FEIE or who are ineligible to take it. (In the latter category: practically every U.S. government employee, including soldiers and sailors.) Automatically that'd be an undercount. Also, it appears that number includes joint filings and dependents, so you have to adjust for household size.



> But as you point out, a US address doesn't mean the filer isn't overseas.


I'll raise my hand on that one. For several years a naive count on that basis would have classified me as a U.S. resident.

Also, those fortunate enough to be tax equalized tend to have U.S. mailing addresses on their tax returns. That way the tax accounting firm "intercepts" all tax matters to facilitate equalization.



> So less than half (about 46.5%) of the total US population filed a tax return in 2011, not particularly surprising when you consider many were babies, low income, spouses, etc, etc.


Exactly. Household size matters. That doesn't mean nonfilers aren't paying, or even overpaying, taxes. Paychecks are normally subject to withholding.



> If you assume a similar distribution of non-filers for the overseas US population, you would expect 2,938,800 ( 46.5% of 6.32 million) 2011 returns filed from overseas versus the 700,000 that were actually filed.


Nobody has found for me yet that 700,000 number much less how it was determined. That blog post referenced a 2012 report, but I can't find that number in that report.

By the way we really have no idea how many Americans live overseas. Unlike some countries, the U.S. does not routinely require its citizens to report their whereabouts, to update a registry database for example. So we've got serious measurement problems here with both the numerator and denominator, and they may never be solveable.


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## maz57 (Apr 17, 2012)

Well, I'll keep looking for that 700,000 as time allows but I'm not making any promises! Its got to be out there somewhere and it would be nice if it came directly from the IRS. The 2011 445,000 FEIE number from the IRS should be reliable so 700,000 total overseas returns for 2011 at least seems plausible.


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## BBCWatcher (Dec 28, 2012)

Just to give you some other numbers, over 300,000 Americans studied abroad in the 2013-2014 academic year according to the data I can find. They count as overseas residents (by most counts) but wouldn't in any reasonable IRS-related measurements. (And quite a few, even most, wouldn't meet filing thresholds.) There are over 150,000 Americans in the U.S. military stationed overseas, plus their families. Assuming an average household size of 2 Americans, that's another 300,000 or so. That doesn't include other government employees, defense contractors, etc. They all live abroad but aren't eligible for the FEIE. They also tend to have APO or FPO addresses with U.S. zip codes.

I agree with Bev that there are some big cohorts of individuals that wouldn't show up at all in IRS "overseas" counts, that don't meet filing thresholds, or both. It's at least going to be tough to extract meaningful data in terms of relative compliance rates, and that's even assuming you can count Americans overseas. That task alone is very, very difficult. I must say I was not impressed with the most recent Taxpayer Advocate's report that used the State Department's year-to-year estimates -- literally, that State's Web site said X last year and Y this year. That's hardly scientific, and it's not hard to imagine that the State Department would have ample incentive to inflate those numbers.


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## Bevdeforges (Nov 16, 2007)

If you want corroboration for that 700,000 figure, try here:
https://www.irs.gov/uac/SOI-Tax-Stats-Historic-Table-2

Click on the "Other Areas" link for whatever year you choose. For 2013, the number of returns filed is 695,230 - close enough for government work to 700,000.

And the explanation given is:


> Includes, for example, returns filed from Army Post Office and
> Fleet Post Office addresses by members of the armed forces
> stationed overseas; returns filed by other U.S. citizens abroad; and
> returns filed by residents of Puerto Rico with income from sources
> ...


Furthermore, of the returns filed, 232,000 showed AGI of $10,000 or less, which means basically no tax due. (At least no income tax due.)

Anyhow, it looks like the 700,000 is a good number.
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

However, that number doesn't appear to include those with non-APO/FPO U.S. mailing addresses on their tax returns. (Yours truly raises his hand, at least for several years in the past. But also most American students studying abroad fit that profile, if they file.) We must also adjust for household size since a great many of those returns will be joint (as noted in the table) and/or have U.S. citizen dependents. It's not one return = one American.

And then we've got to figure out how many Americans are living overseas. That's not easy. Probably that should be the number of documented Americans for these purposes.


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## Bevdeforges (Nov 16, 2007)

BBCWatcher said:


> And then we've got to figure out how many Americans are living overseas. That's not easy. Probably that should be the number of documented Americans for these purposes.


The only figures for that number are the estimates from the various Embassies and Consulates around the world. The Consulates do their best to get US citizens living in their area to register with the Consulate, but in practice very few do. The consolidated numbers probably double count folks "just passing through" and who knows on what basis each Consulate makes their estimate - though no doubt it includes passport renewals, consulate reports of birth, social security benefits being paid through the consulate and a big old guess factor. 
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

It's very safe to assume the State Department has a keen interest in overstating that particular number.


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## maz57 (Apr 17, 2012)

Bevdeforges said:


> If you want corroboration for that 700,000 figure, try here:
> https://www.irs.gov/uac/SOI-Tax-Stats-Historic-Table-2
> 
> Click on the "Other Areas" link for whatever year you choose. For 2013, the number of returns filed is 695,230 - close enough for government work to 700,000.
> ...


Thank you, Bev. For saving me from wasting a portion of a nice spring day or filing a FOIA request!


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## maz57 (Apr 17, 2012)

I also ran across this: 

Counting the Uncountable: Overseas Americans | migrationpolicy.org

"The State Department's most recent figure (January 2013) of U.S. citizens living overseas (which is the source of other organizations' estimates such as the Association of Americans Resident Overseas [AARO]) stands at 6.8 million, up from 6.3 million in July 2012. The State Department forms its overall calculation based on estimates from embassies, consulates, and a variety of other sources. One such source is registration with the embassy, a practice likely to be far more common in high-risk countries such as Iraq or Afghanistan, but lower in France or Germany, therefore potentially introducing a country-specific bias. It is likely, although unknown, whether the State Department includes dual citizens in its estimates, which often run two to three times higher than estimates made by foreign governments."

The rest of the article is an interesting read. It describes in detail the difficulty of accurately measuring the numbers of overseas Americans. Co-author Amanda von Koppenfels is a name familiar to me as the one who also did the online survey of US expats a few years ago.

That State would include duals in their estimates seems a reasonable assumption because US citizenship always trumps any other citizenship as seen from a US government point of view. Other governments would presumably do the same for their duals.

I don't see how undocumented US citizens could possibly be included in State's estimates.


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## Bevdeforges (Nov 16, 2007)

Hey, Maz, thanks for that. A very interesting article.

I remember the test Census they conducted a few years back (well, more than a few now). Was still active in AARO at that time, and frankly that's the only reason I even heard about it. The expat crowd here was always saying that the government should take out ads in the International Herald Tribune since "most" American expats would read that. But I don't believe there is any reliable means of even contacting "most Americans" overseas. Some are actively avoiding news from the Old Country (especially these days!) and others just don't give a damn.
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

Bevdeforges said:


> The expat crowd here was always saying that the government should take out ads in the International Herald Tribune since "most" American expats would read that.


Wow, what a truly strange group. It's now called the International New York Times, by the way. Its official circulation is currently 242,073 -- less than the fairly reliable estimate of the number of American students studying abroad.


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## Bevdeforges (Nov 16, 2007)

BBCWatcher said:


> Wow, what a truly strange group..


Yeah, that was pretty much my take, too. You should have seen the look on their faces when I said that I almost NEVER read the IHT (back when that's what it was called). I have access to it now, with my online NYT subscription, but prefer the "real thing" for my US news. (Oh yeah, and these days the ad blocker would kind of negate the usefulness of the government taking out ads....)

But after reading that article, I tend to think that perhaps the lower end of those estimates of US citizens living abroad are closer to the truth. Obviously, there's no way to get a handle on the "undocumented" Americans. And looking at the "usual sources" I suspect there's a fair amount of overlap and miscounting possible there.

Also, the definition of "overseas Americans" - are we talking about only those who meet either the physical presence or bona fide resident test? or just all Americans in a given country with expected stay of more than 90 days? those with (or without) significant ties back to the US? 

If that 2.2 million estimate is anywhere near accurate, then 700,000 returns is actually pretty significant. But ultimately, I suspect the "true" number of Americans resident overseas is pretty much impossible to discover.
Cheers,
Bev


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