US expat taxes 2026: Complete guide to filing abroad & avoiding double taxation
Every year, more Americans choose to build new lives overseas — nearly 5.5 million, as of 2025. Once you move abroad, you're considered an expatriate, but one thing follows you: the IRS still expects a return. That's where the confusion usually starts.
Most expats are surprised to learn that Americans living overseas are still required to pay US taxes, regardless of where they live or where their income comes from. The good news is that several protections exist to prevent expats from being taxed twice on the same income.
In this guide by Taxes for Expats, we cover everything you need to know about US expat taxes — from which forms to file, to how to legally reduce what you owe. Whether you're new to living abroad or just brushing up on United States expat taxes, this guide has you covered.
Learn more about our services or reach out — we’ll help you stay fully compliant with IRS rules while you build your life overseas.
Key takeaways
-
US citizens living abroad are still taxed on their worldwide income and must file with the IRS each year.
- Several tools — including the Foreign Earned Income Exclusion, Foreign Tax Credit, and tax treaties — exist to prevent double taxation.
- Expats receive automatic filing extensions, with additional time available when needed.
- Foreign bank and investment accounts must be reported through FBAR and FATCA to remain compliant.
- Maintaining accurate financial records simplifies claiming benefits, proving residency, and avoiding penalties.
Filing US taxes overseas: key American expat rules
Filing expat taxes starts with one core rule: US citizenship follows you across borders. Whether you've lived abroad for one year or 20, you're still required to file if you meet the income thresholds. The sections below break down exactly who needs to file and what the process looks like.
Who must file US expat taxes?
US citizenship comes with a tax obligation that doesn't pause when you relocate. Every American — including green card holders who haven't lived in the US for years — is still considered a tax resident until they formally renounce their status.
Even accidental Americans, those who gained citizenship by birth or parentage but never lived stateside, fall under the same rules.
For tax year 2025 (filed in 2026), many people under 65 must file if their gross income is at least the standard deduction for their filing status. Some people must file even below these amounts (for example, certain dependents or people with specific tax situations).
If you're under 65 and wondering whether expat tax filing applies to you, here are the current thresholds for the 2025 tax year:
- Single: file if gross income is $15,750+
- Married filing jointly: file if gross income is $31,500+ (both spouses under 65)
- Head of household: file if gross income is $23,625+
- Self-employment: file if you have $400+ in net earnings from self-employment
- Married filing separately: file if gross income is $5+
These are US tax requirements for expats set by the IRS, and they adjust each year slightly for inflation.
You might not owe US tax (but still have to file)
Many expats report their income and end up owing $0 — or even receiving a refund — because US rules include several ways to reduce or eliminate double taxation. Filing isn't the same as paying, and understanding that distinction removes a lot of unnecessary stress.
That said, here are some common situations where you may owe nothing despite being required to file:
- You live in a higher-tax country and can offset your US liability with a Foreign Tax Credit
- Your salary or earned income qualifies for the Foreign Earned Income Exclusion
- Your gross income falls below the filing thresholds
- US withholding was applied to your income, which could trigger a refund
- Your income is foreign-sourced and covered under a tax treaty
US income tax for expats: how to file
One of the most common questions expats ask is: "Do I still have to file a US tax return if I live abroad?"
The answer is yes — and for many, that comes as a surprise. US citizens abroad and Green card holders are generally treated as US tax residents until they formally abandon lawful permanent resident status (often by filing Form I-407) or otherwise end US residency under the tax rules. Long-term green card holders may also need to consider the US expatriation tax rules when giving up status.
What income goes on the US return?
Worldwide income goes on your return — both earned and unearned — even if it was already taxed abroad. That includes:
- Wages and salary
- Self-employment income
- Rental income
- Interest and dividends
- Capital gains
- Pensions
When reporting foreign income, convert everything to US dollars using the applicable exchange rate and keep records of the conversion method used.
US expat tax rate
The US uses a progressive tax system, so the rate you pay depends on your total taxable income after deductions and exclusions. Federal income tax brackets for 2025 tax year, filed in 2026 (Single - taxable income):
| Tax rate | Taxable income (single) |
|---|---|
| 10% | $0 - $11,925 |
| 12% | $11,926 - $48,475 |
| 22% | $48,476 - $103,350 |
| 24% | $103,351 - $197,300 |
| 32% | $197,301 - $250,525 |
| 35% | $250,526 - $626,350 |
| 37% | $626,351+ |
Most expats who use the Foreign Earned Income Exclusion or Foreign Tax Credit end up with a much lower effective rate — or zero tax owed.
What to file
| What you’re reporting | When you use it | Primary forms | Key note for expats |
|---|---|---|---|
| Worldwide income (baseline return) | If you’re required to file a US return | Form 1040 | This is the “main” return; everything else attaches to |
| Wages/salary (US) | If you have W-2 wage income | Form 1040 + W-2 | Still report worldwide income even if living abroad |
| Wages/salary (foreign employer) | Common expat scenario: employed abroad | Form 1040 | You still report this income on the US return (double-tax relief comes later) |
| Self-employment / freelance / business income | If you have net earnings from your own work | Schedule C + Schedule SE | SE tax may still apply even if you live overseas |
| Interest & dividends (US or foreign) | If you earned interest/dividends (and/or meet Schedule B triggers) | Schedule B | Foreign bank/investment income still counts as taxable income reporting |
| Capital gains (stocks/ETFs/crypto sales) | If you sold investments/crypto | Schedule D + Form 8949 | Track basis and currency conversion if transactions are abroad |
| Rental income (US or foreign property) | If you rent out property | Schedule E | Foreign rentals still go on Schedule E (with US tax rules) |
| Pensions/annuities/retirement distributions | If you received retirement income | Form 1040 (sometimes additional schedules) | Tax treatment can vary by income type; keep payer statements |
| Unemployment compensation | If you received unemployment benefits | Form 1040 | US-source unemployment is generally reportable |
| Other income (prizes, gambling, side income not SE, etc.) | If you have miscellaneous income | Schedule 1 (Form 1040) | This is the catch-all bucket many expats forget |
| Adjustments to income (IRA contributions, HSA where eligible, student loan interest, etc.) | If you qualify for “above-the-line” adjustments | Schedule 1 (Form 1040) | Eligibility can be affected by foreign employer plans/income type |
| Additional taxes (e.g., early withdrawal penalties, etc.) | If applicable to your situation | Schedule 2 (Form 1040) | Most expats won’t have many items here, but it’s where they land |
| Credits (non-foreign-tax credits, like CTC, where eligible) | If you’re claiming certain US credits | Schedule 3 (Form 1040) | Some credits have extra requirements for expats (e.g., SSN rules) |
As the Supreme Court confirmed back in 1924 in Cook v. Tait, US citizens can be taxed on worldwide income regardless of where they live — and that principle still shapes every rule above.
What you need to file apart from income tax
Filing Form 1040 is just the starting point. Depending on your financial situation abroad, several additional reporting requirements may apply.
1. Foreign accounts and assets reporting
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FBAR (FinCEN 114) – filed separately with the Treasury (not the IRS). It’s required if your foreign accounts’ combined maximum value was over $10,000 at any time during the year. FBARs are due April 15, with an automatic extension to October 15 (no extension request needed). Applies to bank accounts, brokerage accounts, and certain other financial accounts.
- FATCA (Form 8938) – filed with your tax return if you exceed the expat thresholds. For many people living abroad, that’s more than $200,000 on the last day of the year or $300,000 at any time (single or married filing separately), or more than $400,000 / $600,000 (married filing jointly).
2. Foreign entities or complex international forms
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Form 5471 – for US persons who own or control a foreign corporation
- Form 8865 – for US persons with an interest in a foreign partnership
- Form 8858 – for US persons who own a foreign disregarded entity
- Form 3520/3520-A – discloses foreign gifts, inheritances, and trust transactions. Thresholds vary depending on the source of the gift
- Form 8621 – reports Passive Foreign Investment Companies (PFICs), which include most non-US mutual funds and ETFs
3. Late or missed filings
If you haven't filed in prior years, the IRS has structured pathways to help you catch up. The Streamlined Foreign Offshore Procedures are designed for non-willful non-filers living abroad. There's also the Delinquent International Information Return Submission Procedures for specific missed forms, and the Voluntary Disclosure Program (VDP) for more serious situations.
How to avoid double taxation for expats: income protection ways
Paying tax on the same income in two countries is a real risk, but taxation for expats comes with built-in tools to prevent it. Here's a breakdown of the main protections available under US expat taxation rules.
The Foreign Earned Income Exclusion (FEIE)
The FEIE lets you exclude foreign earned income from US federal taxation – up to $130,000 for the 2025 tax year (filing in 2026), adjusted annually for inflation.
To qualify, you must pass either the Bona Fide Residence Test (lived in a foreign country for a full tax year) or the Physical Presence Test (330 full days outside the US in any 12-month period). It applies to wages and self-employment income, but not passive income like dividends or rental income.
The Foreign Tax Credit (FTC)
The FTC lets you reduce your US tax bill by the amount you've already paid to a foreign government. It allows you to use qualified foreign income taxes you paid (or accrued) to reduce your US tax on the same foreign-source income. It’s not always ‘dollar-for-dollar’ in practice because the credit is limited to the amount of US tax attributable to that foreign income.
If you can’t use all the credit this year, you can often carry it back 1 year and then forward up to 10 years (with some exceptions).
The Foreign Housing Exclusion (FHE)
The FHE works alongside the FEIE and lets you exclude qualifying housing costs – rent, utilities, and similar expenses – above a base amount set by the IRS. The exact limit varies by city, with higher limits in expensive locations like London or Singapore.
US tax treaties
The US has tax treaties with over 60 countries. These agreements can reduce or eliminate withholding rates on specific income types – pensions, dividends, royalties – and in some cases, only one country gets to tax that income. Some treaty positions require extra disclosure.
Form 8833 is used to disclose certain treaty-based return positions (and dual-resident treaty positions), but it’s not required for every treaty-related situation.
Which strategy should you choose?
The right combination of protections depends on where your money comes from, where you live, and how that country taxes income – core questions in any expat taxes USA analysis.
Example 1: Consultant in Dubai
- Gross income: $90,000
- Local tax: none (UAE has no income tax)
- Without any exclusion, taxable income after the standard deduction is $74,250, leading to roughly $11,249 in US tax.
- Best strategy: FEIE – the entire $90,000 of earned income can be excluded, reducing US tax to $0.
- If housing costs are high, adding the Foreign Housing Exclusion can reduce the taxable base further.
Example 2: Teacher in France
- Gross income: $85,000
- French taxes paid: ~$25,500 (roughly 30%)
- Without credits, US tax would be $10,149.
- Best strategy: FTC – the $25,500 already paid to France fully offsets the US liability. The remaining ~$15,351 in excess credits can typically be carried forward up to 10 years.
- When local taxes exceed US rates, the FTC usually wins.
Example 3: Retiree in Canada
- Pension income: $30,000
- The Canada–US tax treaty caps Canadian withholding on many pensions at 15% instead of the default 25% – saving roughly $3,000 annually.
- Best strategy: Treaty + FTC – treaty reduces the foreign tax bite, and the FTC handles remaining US liability.
- Pension income doesn't qualify for the FEIE, so treaties and credits are the main tools here.
Quick decision flow
- Low-tax country + mostly wages? → FEIE (often the better choice)
- High-tax country or lots of investment income? → FTC (often the better choice)
- High housing costs + FEIE eligible? → Add the Housing Exclusion/Deduction
- Pension or treaty-specific income types? → Check your treaty position (and consider Form 8833 disclosure)
These decisions sit at the heart of US expat tax rate planning – and the right move depends entirely on your income type, country, and treaty position.
Decision table
| Option | Best for | Doesn’t help with | Typical forms | Key gotcha |
|---|---|---|---|---|
| FEIE (Foreign Earned Income Exclusion) | You have earned income (salary/self-employment) and live in a low-tax / no-tax country; you can meet Bona Fide Residence or Physical Presence tests | Unearned income (dividends, capital gains, interest), most US tax on investments; doesn’t automatically solve state tax issues | Form 2555 (+ Form 1040) | Taking FEIE can reduce/limit certain credits (and you must qualify each year); using FEIE can also affect how much foreign tax credit you can use on the same income |
| FTC (Foreign Tax Credit) | You pay meaningful foreign income tax (often in high-tax countries); you have mixed income (wages + investments) and want to reduce US tax broadly | Doesn’t help if foreign taxes are low; credit is limited by US tax on that foreign income; sourcing/baskets can limit results | Form 1116 (+ Form 1040) | “Baskets” and limitations matter; you may need to track carryovers and categorize income properly |
| Foreign Housing Exclusion/Deduction | You have high housing costs abroad (rent/utilities) and also qualify for FEIE tests; often helpful in high-cost cities | Doesn’t help without FEIE qualification; doesn’t apply to all housing costs and is limited by IRS rules | Form 2555 (+ Form 1040) | Housing amounts are capped/limited; rules vary by location and what counts as eligible housing expenses |
| Tax Treaty positions | You have pensions, social security equivalents, specific investment income issues, or residency tie-breaker situations where treaty provisions reduce/assign taxing rights | Treaties don’t override all US rules; not a “blanket exemption”; doesn’t replace filing requirements | Often Form 8833 (when required) + Form 1040 (and sometimes 1116/2555) | Treaty disclosure may be required; treaty interpretation can be nuanced and depends on your country + income type |
US expat tax deadlines & extensions (for 2025 tax year, filed in 2026)
Deadlines can catch anyone off guard, especially when you're juggling foreign time zones and documents. Here's what every American abroad needs to know to stay on track this year.
Filing deadline for expats
For most expats, the standard federal deadline is April 15, 2026. If you qualify (living and working abroad), you get an automatic 2-month filing extension (generally to June 15).
To use it, attach a statement to your return explaining which qualifying situation applies. Even with the extension, any tax not paid by the regular due date starts accruing interest from April 15.
When either date falls on a weekend or public holiday, the next business day becomes your official deadline.
Two things to keep in mind:
- You must attach a statement confirming that you live abroad (best practice – it protects you if the IRS questions your automatic extension).
- Payment is still due April 15 – the automatic extension applies to filing, not to any tax owed. Interest starts accruing from April 15, even if you file later.
Can expats get more time to file taxes?
Yes – expat tax filing comes with an automatic two-month extension, pushing your deadline from April 15 to June 15. But if you need even more time, two additional options exist.
Form 4868 extends your filing deadline to October 15, 2026. It's straightforward to file and available to all taxpayers.
Pro tip: Form 4868 doesn't extend FEIE qualification. Filing late doesn't give you extra time to meet the Physical Presence Test or Bona Fide Residence Test — you need to qualify based on actual days abroad.
Form 2350 is a special extension specifically designed for expats who haven't yet met the requirements for the Foreign Earned Income Exclusion. It lets you extend your deadline only as long as needed to qualify — no longer.
Pro tip: Form 2350 is specifically for meeting FEIE tests. Don't use it as a general extension — it's a targeted tool for qualifying periods.
Payment deadlines don't move either way. Any tax owed starts accruing interest from April 15, 2026, regardless of which extension you use.
Also read. Full guide to expat filing deadlines
State tax issues for expats & domicile traps
Do expats still pay state taxes after moving abroad? It's a question many dread, and the answer depends on how strongly you remain tied to a particular state.
- California often keeps residents on its books if they maintain a home, family, or financial base there.
- Virginia looks at both where you intend to return and how many days you spend there each year.
- South Carolina may still treat you as a resident if it's your permanent home, even while living abroad.
NOTE! Domicile traps happen when expats keep deep ties – like property ownership, a state driver's license, or voter registration. Cutting those ties cleanly can help confirm you've truly shifted your tax home abroad.
Filing US taxes as an expat: what happens if you don't file or pay
Nothing unsettles expats more than IRS penalties that pile up while they're thousands of miles away. Expat tax law doesn't pause for international mail delays or time zone confusion — lapses lead to real bills. Understanding US tax rules for expats around penalties is the first step to avoiding them.
| Situation | What happens | What to do next (safer move) | Key nuance/gotcha |
|---|---|---|---|
| You don’t file a return | Late-filing penalties can apply; the IRS can file a substitute return (often worst-case); you may miss out on credits/refunds | File ASAP (even if you can’t pay in full). If you’re behind multiple years, consider a formal catch-up path | The statute of limitations usually doesn’t start until you file. If you never file, there’s generally no clock running on the assessment |
| You file, but don’t pay (or underpay) | Interest + late-payment penalties can accrue; IRS billing/collection notices may follow | File on time (or extend) + pay what you can; set up a payment plan if needed | An extension is an extension to the file, not to pay - interest can still accrue from the original due date |
| You file late (but owe $0) | Often no late-filing penalty if nothing is owed, but it can still create compliance issues (and other forms may still be required) | File to close the loop and keep proof of compliance | People assume “I owe $0, so I can ignore filing”—but some expats still must file (SE income, MFS, etc.) |
| You were due a refund but didn’t file | You can lose the refund | File and claim it promptly | Refund forfeiture rule: generally, refunds must be claimed within 3 years of the original due date (including extensions). After that, the refund is typically gone |
| You’re behind several years (income tax + possible international forms) | Higher risk of penalties and “snowballing” compliance issues | Do a quick triage: How many years? Any foreign accounts? Any unreported income? | Getting current “randomly” can be risky if there are offshore reporting issues—pick the right path |
| You have unreported foreign accounts / offshore issues | Potentially significant penalties depending on facts; IRS may view ad-hoc filings as “quiet disclosure” risk | Use an approved compliance route rather than guessing | This is where choosing Streamlined vs VDP matters most |
If any of this applies to your situation, getting current on your expat tax filing sooner rather than later almost always costs less than waiting.
Special considerations for digital nomads and retirees
Life abroad brings different challenges depending on how you earn and live. Here's what changes depending on your situation.
Digital nomads: what changes?
If you work remotely while traveling through multiple countries, your tax picture is more complex than most. Income sources, travel dates, and local tax rules all affect your US return — and potentially your obligations abroad.
As an expat filing US taxes, make sure to track carefully:
- Days in each country – these determine whether you trigger local tax residency and whether you meet the Physical Presence Test for the FEIE
- Visas and legal status – some countries tax based on visa type or length of stay
- Tax home – the IRS requires you to have a tax home in a foreign country to claim the FEIE; frequent moves can complicate this
- Remittance-based tax regimes – in countries like the UK, some income is only taxed when it's brought into the country, which affects timing and planning
Use our FEIE calculator to estimate potential exclusions and compare them with possible foreign tax credits before you file.
Retirees: pensions, Social Security, and treaties
Retirees living abroad face a slightly different set of questions — mainly around how pensions, Social Security, and investment income are handled under US rules and tax treaties.
Retired expat US tax filing often focuses on:
- Treaty rates on pensions – many US tax treaties reduce the source country's withholding rate on pensions, often to 15% or lower, depending on the specific treaty. On a $30,000 pension, moving from a 25% rate to 15% can be worth $3,000 annually.
- Social Security abroad – US Social Security benefits are generally still taxable by the US; some countries also have the right to tax them under a treaty. Totalization agreements can prevent double Social Security contributions if you're working abroad.
- Investment income – dividends, interest, and capital gains don't qualify for the FEIE, so retirees typically rely on the FTC and treaty protections to manage their US liability.
- PFIC rules – foreign mutual funds and ETFs are often classified as Passive Foreign Investment Companies (PFICs), which come with punitive US tax treatment. Get advice before investing in local funds abroad.
Other tax situations expats should know
Some parts of US expat taxes go beyond the basics and need extra attention when planning your return. Certain credits and reporting rules can make a real difference in your final tax result.
Child Tax Credit – Expats with dependent children can often claim this credit even when using the Foreign Earned Income Exclusion. Each qualifying child must have a valid Social Security Number, and the credit amount depends on IRS income limits. For many families, this credit reduces the total tax owed or creates a refund.
Owning a foreign business – Running or investing in a company overseas brings additional reporting requirements. Expats who own part or all of a business may need to file Form 5471 for foreign corporations, Form 8865 for foreign partnerships, or Form 8858 for foreign disregarded entities. These forms disclose ownership, income, and transactions between you and the business. The penalties for mistakes are significant, so professional guidance is worthwhile here.
Professional expat tax filing services – why trust experts?
When multiple countries, currencies, and filing deadlines collide, it's easy to miss details that cost you money. At Taxes for Expats, a dedicated CPA handles filing taxes for expats. We cover everything — federal and foreign returns, FBAR, FATCA, treaty benefits, and audit support. Trusted by 50,000+ expats from 190+ countries, with a 90% client retention rate and 4.9-star reviews.
FAQs on US expat tax laws and requirements
Yes — many expats file and owe nothing. The Foreign Earned Income Exclusion, Foreign Tax Credit, and tax treaties can reduce or eliminate your US tax liability, even if you still need to file.
Filing means submitting your return to the IRS. Paying means sending money owed. You may be required to file even if you owe $0. Missing a filing requirement can trigger penalties even when no tax is due.
The standard deadline for American expat tax is April 15, but expats living abroad automatically get until June 15. With Form 4868, you can extend to October 15. Form 2350 offers additional time specifically for qualifying under FEIE rules.
Most expats file Form 1040 as the core return. Depending on their situation, they may also file Form 8938 (FATCA), FinCEN 114 (FBAR), Form 2555 (FEIE), Form 1116 (FTC), and various forms for foreign businesses, trusts, or investments.
Yes. If the combined balance of your foreign accounts exceeded $10,000 at any point during the year, you're required to file an FBAR (FinCEN 114) with the Treasury. FATCA reporting via Form 8938 applies at higher thresholds.
The IRS has structured programs to help you catch up. The Streamlined Foreign Offshore Procedures are the most common path for expats who missed filings without willful intent — they let you file three years of returns and six years of FBARs with reduced penalties. You can turn to CPA or a service company that helps with filing taxes for American expats for a detailed strategy.
No — they refer to the same thing. "Expat tax" and "expatriate tax" are shorthand ways of describing the US tax obligations that apply to Americans living outside the US. Some people also use the term to refer to the exit tax that applies when someone formally gives up their citizenship or long-term green card.
It depends on the state. California, Virginia, and South Carolina are known for aggressively maintaining residents on their tax rolls even after a move abroad. The key factor is domicile — if you still own property, hold a state license, or maintain strong financial ties, you may still owe state taxes.
Foreign pensions are generally taxable in the US unless a tax treaty says otherwise. Many treaties set reduced withholding rates — often 15% instead of 25% — on pension income. Social Security benefits may also be taxed by both countries unless a totalization agreement or treaty prevents it.
Yes. Self-employment income is subject to both income tax and self-employment (SE) tax, even abroad. The FEIE can exclude the income tax portion, but SE tax still applies unless a totalization agreement between the US and your country of residence exempts you.
Start with your income types (earned vs. passive), your country of residence (and whether it has a treaty with the US), and whether you have foreign financial accounts or business interests. A free consultation with a CPA who specializes in expat taxes can give you a clear answer in one conversation.
The US tax brackets don't change because you live abroad — the same progressive rates apply. What changes is how much of your income is actually subject to US tax, thanks to the FEIE, FTC, and treaty provisions. Many expats end up with a much lower effective rate than they'd expect.
Assuming they don't need to file because they live abroad, or because they already paid taxes in another country. Both are wrong. The obligation to file exists regardless, and skipping returns triggers penalties that compound quickly. The second most common mistake is choosing the wrong exclusion method (FEIE vs. FTC) for their specific income and country situation.
