US Taxes for Expats: What You Need to Know
US Tax Obligations for Americans Abroad
Unlike most countries, the US taxes its citizens on worldwide income regardless of where they live. This means American expats have ongoing US tax obligations.
Key Requirements
Annual Tax Filing
You must file a US tax return if your income exceeds the filing threshold, even if you owe no tax. The deadline for expats is automatically extended to June 15, with an additional extension available to October 15.
FBAR (Foreign Bank Account Report)
If your foreign accounts exceed $10,000 at any point during the year, you must file FinCEN Form 114. Deadline: April 15 (auto-extended to October 15).
FATCA (Form 8938)
Report foreign financial assets if they exceed:
- $200,000 on the last day of the year, or
- $300,000 at any point during the year
- (Thresholds are higher for married filing jointly)
Tax Benefits for Expats
Foreign Earned Income Exclusion (FEIE)
Exclude up to $126,500 (2024) of foreign earned income from US tax if you meet either:
- Physical Presence Test: Present in foreign country 330 days in 12-month period
- Bona Fide Residence Test: Tax resident of a foreign country for a full calendar year
Foreign Tax Credit
Credit for taxes paid to foreign governments, reducing your US tax liability. Often better than FEIE for higher earners.
Foreign Housing Exclusion
Exclude certain housing expenses above a base amount, in addition to FEIE.
Tax-Friendly Destinations
Some countries have no income tax or territorial tax systems:
- UAE: No personal income tax
- Panama: Territorial tax (foreign income not taxed)
- Portugal: NHR regime offers tax benefits for 10 years
- Paraguay: Territorial tax system
Tax Treaties
The US has tax treaties with many countries that can prevent double taxation. Check if your destination has a treaty.
Important Warnings
- Don't ignore US taxes — penalties for non-filing are severe
- PFIC rules make foreign mutual funds tax-nightmares
- Self-employment tax still applies even with FEIE
- State taxes — some states tax former residents
Getting Help
US expat taxes are complex. Consider working with:
- A CPA specializing in expat taxes
- Services like Greenback Expat Tax Services or Bright!Tax
- The IRS Taxpayer Advocate Service for issues
This is general information only. Consult a qualified tax professional for advice specific to your situation.