US expat taxes 2026: Complete guide to filing abroad & avoiding double taxation
Every year, more Americans pack up and start new lives overseas – nearly 9 million, as of 2025, according to the US State Department. Once someone moves abroad, they’re considered an expatriate, but one thing never really changes – taxes. Wherever you go, the IRS still expects a return, and that’s where confusion often begins.
In this guide by Taxes for Expats, we’ll walk you through what to expect in US expat taxes and highlight a few things every American living abroad should know, and even daunting questions we get a lot, like do expats need to pay taxes.
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 are taxed on worldwide income, even when living abroad, so annual filing with the IRS remains required.
- Several tools help avoid double taxation, including the Foreign Earned Income Exclusion, Foreign Tax Credit, and tax treaties.
- Expats receive automatic extensions to file, with options for additional time when needed.
- Foreign bank and investment accounts must be reported through FBAR and FATCA to stay compliant.
- Keeping accurate financial records makes it easier to claim benefits, prove residency, and avoid penalties.
Filing basics to know from overseas
When a person leaves America’s borders, they often imagine their connection to home fades with each new stamp in the passport. But tax obligations have a way of following every citizen across oceans. Many discover only after settling abroad that filing rules have shifted beneath them – new forms, new thresholds, yet the same responsibility. That realization marks the true beginning of managing US expat taxes with confidence while living abroad.
Who must file
Every American remains part of the system that taxes citizens, and they must report income from all countries, including green card holders – even those who have not lived in the United States for years – are still considered tax residents until they formally give up their status. Then there are accidental Americans, people who gained citizenship by birth or parentage but have never lived stateside; they, too, fall under the same reporting rule.
For the 2025 filing year, the standard filing thresholds start at $15,000 for single filers, $30,000 for joint filers, and $22,500 for heads of household, with self-employment income of $400 or more also requiring a return.
The IRS confirmed in its October 9, 2025, release that inflation adjustments for 2026 filing year will further update these thresholds. It all reinforces one truth – US taxes for expats reach wherever citizenship goes.
What you must know
Since the Supreme Court’s 1924 decision in Cook v. Tait, it has been settled law that citizens can be taxed on worldwide income, regardless of residence. Building on that precedent, several core filing requirements shape how US expat taxes are managed each year.
- Form 1040 – reports worldwide income and remains the foundation of every individual return.
- FATCA Form 8938 – reports specified foreign financial assets when thresholds abroad are met.
- FBAR FinCEN 114 – filed separately with the Treasury to disclose foreign accounts exceeding $10,000 at any time.
- Form 8621 – reports Passive Foreign Investment Companies (PFICs), including many non-US mutual funds.
- Form 8949 and Schedule D – report capital gains and losses from investments such as foreign securities.
- Form 3520 – discloses foreign gifts or inheritances received and certain foreign trust transactions.
- Form 3520-A – reports the annual information of a foreign trust with a US owner.
- Form 8833 – can reduce or eliminate double taxation on specific income.
Preparing your return often means gathering far more than just income statements. Essential documentation for your case includes accurate foreign account details, income records, and the streamlined filing procedures if you’re catching up on past years. Having complete records at hand ensures every required form is supported and reduces the risk of IRS penalties for missing or inaccurate information. Having an expert like TFX review your situation ensures every detail is correct – turning a complex process into a smoother experience.
Key protections to avoid double taxation
Reporting the same income in both the US and your country of residence can quickly drain your savings. To prevent that, several protections were created to help those living abroad keep more of what they earn.
- The foreign earned income exclusion (FEIE)
- The foreign tax credit (FTC)
- The foreign housing exclusion (FHE)
- US tax treaties
Which strategy should you choose?
Picking the right tax plan depends on where your money comes from and how your new country taxes it. A consultant in Dubai earns $90,000. If no exclusions are used, the taxable amount after the standard deduction is $74,250, which means about $11,249 in US tax. Using the foreign earned income exclusion (FEIE) makes that income tax-free in the US, saving about $11,249. A housing exclusion for rent or utilities could save even more if the city costs more to live in.
A teacher in France earns $85,000 and pays about 30% to French taxes. The normal US tax would be $10,149, but the foreign tax credit (FTC) lets the $25,500 already paid to France erase that US tax. The leftover amount, about $15,351, can often be used later to cut taxes for up to 10 years. When local taxes are higher, the FTC is usually the better choice.
A retiree in Canada has another setup. The Canada–US tax treaty says Canada can take only 15% tax from many pensions, not the usual 25%. On a $30,000 pension, that saves about $3,000 each year. The rest is balanced with the foreign tax credit. These examples show how the right plan – FEIE, FTC, or treaty helps keep income safe and tax filing simple.
Key deadlines & extensions (for 2025 tax year, filed in 2026)
Deadlines can catch anyone off guard, even the most careful expats. Knowing the right dates, forms, and steps can save you a lot of stress later on. Think of this as your friendly reminder to stay on top of your US expat taxes while living abroad – so nothing important slips through the cracks.
Filing deadline for expats
For most expats, the main filing date for federal returns is April 15, 2026. The IRS automatically gives those living abroad extra time, pushing the filing date to June 15, 2026. When any of these dates fall on a weekend or public holiday, the next business day becomes your official deadline.
Extension options & payment deadlines
Let’s say a marketing consultant in France needs extra time to gather foreign documents. They file Form 4868, which extends their filing deadline to October 15, 2026. Meanwhile, a teacher in Japan waiting to meet the 330-day rule under the Physical Presence Test uses Form 2350 – that special form lets them extend only as long as needed to qualify for the foreign earned income exclusion.
Payment deadlines, however, don’t budge. Any balance owed starts accruing interest from April 15, 2026, even if you file later. For instance, paying on May 30 still means interest for the full period since April 15.
Sorting through these extension rules can be stressful, especially when juggling foreign time zones and documents. Thankfully, Taxes for Expats offers two simple services – one that manages filing extensions through October 15 and another that secures the additional 2-month extension to December 15, 2026, for qualified expats.
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.
What happens if you fail to file or pay your taxes
Nothing unsettles expats more than IRS penalties that pile up while they’re thousands of miles away. Imagine missing a deadline because of slow international mail or time zone confusion – those lapses can lead to unexpected bills.
| Issue | What happens | Relief path |
|---|---|---|
| Late filing of the return | A failure-to-file penalty of 5% per month, up to 25% of the tax due, applies. When over 60 days late, a minimum penalty kicks in. | First-time abatement or reasonable cause relief can remove penalties if you act quickly. |
| Late payment of tax | A failure-to-pay penalty of 0.5% per month, up to 25%, is charged. Interest also builds from April 15, 2026. | Paying promptly or setting up an IRS payment plan can lower the rate to 0.25% per month. |
| Foreign account or asset noncompliance | Missing FBAR or FATCA filings can trigger separate civil penalties of $10,000 for non-reporting. | The Streamlined Foreign Offshore Procedures offer relief for non-willful expats who catch up voluntarily. |
| Criminal exposure | Willful tax evasion or willful FBAR violations can lead to criminal investigation, large fines, and possible incarceration. | The IRS Voluntary Disclosure Program allows taxpayers with willful issues to come into compliance and reduce criminal risk. |
Special considerations for digital nomads and retirees
Life abroad brings new freedom, but it also comes with unique tax questions. As a digital nomad who works from several places each year, you need to keep track of income sources, travel dates, and local tax rules. Some nations apply a remittance tax, which only taxes income when it’s brought into the country. In places like the United Kingdom, that can shape how and when earnings become taxable. Before filing taxes as an expat, it helps to use our FEIE calculator to estimate potential exclusions and compare them with possible foreign tax credits. These tools simplify planning and reduce the risk of paying more tax than necessary while living abroad.
Retirees experience similar challenges with an added layer of treaty rules. Many treaties decide which country can tax pensions, often limiting the source country’s rate to 15%. Coordination between the two systems also ensures you’re not contributing to social security twice. Understanding these details of US expat taxes makes it easier to manage global income with confidence and clarity.
NOTE! FEIE excludes income tax only. Self–employment (SE) tax still applies unless a totalization agreement exempts you.
Also read. Digital nomad taxes
Other tax situations expats should know
Some parts of US expat taxes go beyond the basics and need a little extra care when planning your return. Certain credits and reporting rules can make a big difference in your final tax result. Understanding these special cases helps you stay compliant while keeping more of what you earn when filing.
- Child tax credit – Expats with dependent children can often claim this valuable 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 income limits set by the IRS. For many families, this credit can reduce the total tax owed or even create a refund.
- Owning a foreign business – Running or investing in a company overseas brings extra 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
- Form 8858 for foreign disregarded entities
These forms disclose ownership, income, and transactions between you and the business. Because the rules are complex and penalties for mistakes can be high, getting help from a professional who understands US expat taxes is the safest way to stay compliant.
Professional expat tax services – why trust experts with your return?
Handling US expat taxes can quickly become overwhelming when multiple countries, currencies, and filing rules collide. Between keeping up with the IRS, meeting foreign reporting deadlines, and understanding treaty benefits, it’s easy to miss important details that affect your refund or create unexpected tax bills. That’s where expert guidance makes all the difference.
At Taxes for Expats, our specialists help Americans living abroad stay compliant, organized, and stress-free. From federal and foreign return preparation to FBAR and FATCA reporting, tax planning, and audit support, every step is handled with care and clarity. Working with us ensures you claim every available benefit, avoid costly mistakes and penalties, and keep your focus where it belongs – on building your life abroad.
