US tax forms for expats explained (2025 update)
Every year, more Americans settle abroad, yet the IRS still expects a return. Most expats file Form 1040 with key attachments like Form 2555 for the foreign earned income exclusion or Form 1116 for the foreign tax credit. Others must also report foreign accounts through the FBAR and FATCA Form 8938, making expat tax filing an ongoing duty wherever they live.
In this article by Taxes for Expats, a trusted name in cross-border tax help with 20+ years of experience, over 50k returns filed, and a 90% retention rate, you’ll find:
- How to file US taxes from abroad, including dates and extension options
- Several US tax forms for expats and any 2025–2026 updates to those forms
- Common expat mistakes, such as a missing worldwide income reporting, or forgetting offshore accounts
- Why you should always choose Taxes for Expats as DIY is risky, and accuracy matters
Understanding the taxes of US citizens living abroad means staying informed and compliant. Our team makes the process simple, accurate, and stress-free while ensuring full IRS compliance abroad.
How to file US taxes from abroad
Filing IRS taxes from abroad can feel like a storm you didn’t see coming – the dread of an IRS notice landing in your inbox. But here’s the truth: filing expat taxes doesn’t have to be chaos. There’s a simple series of steps that turn the process from overwhelming to manageable – especially with Taxes for Expats guiding you through.
Step 1: Map your year and mark key dates.
Set the expat filing deadline on your calendar for April 15, note the automatic June 15 extension for those abroad, and remember October 15 with Form 4868; in 2025, the June date landed on June 16 due to the weekend. The IRS calls it an automatic 2-month extension when your tax home and main post are outside the US. Interest still accrues from April 15 on any unpaid tax.
Step 2: Gather proof like a seasoned case file.
Collect all your foreign income documentation – treat each page like evidence in a court of record. Use the e-filing from abroad option when your software supports foreign addresses, or choose Free File if eligible. Keep worldwide income in scope, then decide which IRS expat forms fit, like Form 2555 for the FEIE or Form 1116 for the FTC.
Step 3: Convert and classify with care.
For exchange rate reporting, pick a consistent annual or transaction date rate and stick with it – the IRS lists yearly averages and guidance. Sort income and taxes by category before you compute credits or exclusions, so your return reads like a clean legal brief. Keep notes on methods used in case the IRS asks for support later.
Step 4: File and pay with confidence.
You can file US taxes overseas by e-file or by mail, and you can pay electronically from most banks. If more time is needed, submit Form 4868 or use our free tax extension service by April 15 to lock in October 15, and even if you need more time to December 15, use our additional tax extension service. When filing expat taxes, double-check addresses, bank info, and any FEIE or FTC schedules before you hit transmit.
Each year’s new rules and inflation updates can shift the numbers slightly, but the steps remain your anchor. Let Taxes for Expats handle the fine print so your next tax season abroad feels like just another calm day.
Also read. US tax deadlines and extensions 2025
What are the US tax forms for expats abroad?
Moving overseas feels exciting until tax time arrives. Many Americans quickly learn that expatriate tax returns often include more than one filing, each covering a different part of life abroad – from wages to savings and investments. Each form helps keep your reporting clear and compliant wherever you live.
| Form | Who files | Key tip |
|---|---|---|
| 1040: Main income tax return | All US citizens and resident aliens abroad | You get an automatic 2-month extension to June 15; interest still applies after April 15. |
| 2555: Claim Foreign Earned Income Exclusion | Taxpayers with a foreign tax home meeting the time or residence tests | 2025 exclusion: $130,000. It’s one of the most common American overseas tax forms. |
| 1116: Claim Foreign Tax Credit | Those paying or accruing foreign income tax | Keep detailed foreign income reporting records to match credits with income sources. |
| 8938: Report specified foreign financial assets (FATCA) | Expats with assets over $200,000 single or $400,000 joint (year-end) | Filed with your 1040 – different from FBAR, but may overlap. |
| FinCEN 114: Report foreign bank accounts | Anyone with over $10,000 total in foreign accounts | File online with FinCEN by Oct 15; it’s a required IRS form. |
| 5471: Report interest in a foreign corporation | US owners, officers, or directors of foreign corporations | Heavy penalties for late filing – start early if you have a company abroad. |
| 8865: Report interest in a foreign partnership | US partners with ownership or contributions abroad | Similar penalties as 5471; review partnership structures each year. |
| 8621: Report Passive Foreign Investment Companies (PFICs) | US holders of foreign mutual funds or ETFs | Missing this form can keep your tax year open indefinitely |
Form 1040: your annual US tax return
What happens when an American, who moved from Seattle to Germany, still earns a steady paycheck overseas? They quickly discover that filing an expat income tax return isn’t optional – it starts with Form 1040, the same form used by every American taxpayer, whether at home or abroad.
All US citizens and green card holders must file a federal return each year, even while living abroad. According to the IRS, “If you are a US citizen or resident alien, your worldwide income is generally subject to US income tax, regardless of where you are living.” That means worldwide income reporting – from wages, dividends, or property – still applies even if all income is earned overseas.
Those abroad receive an automatic extension to June 15 to file their expat tax return, though a further extension to October 15 can be requested if needed. The payment due date remains April 15, so any tax owed must be paid or estimated by then to avoid interest. Following the IRS update, the standard deduction for 2025 filings is $15,750 for single filers, $31,500 for those married filing jointly, and $23,625 for head of household, with new 2026 figures also published.
Form 2555 and foreign income exclusion
The foundation for how taxpayers claim the foreign earned income exclusion goes back to landmark cases like Sochurek v. Commissioner, which defined the bona fide residence test, and Vento v. Commissioner, which later confirmed how those rules apply in real life for expats. These decisions shaped what counts as residence abroad and how taxpayers prove their eligibility on an expat income tax return.
Form 2555 allows qualified taxpayers to exclude a portion of foreign wages and self-employment earnings from US taxation, helping reduce double taxation on overseas income. For the foreign earned income exclusion 2025, the limit is $130,000 per person. On October 9, 2025, the IRS announced that for 2026, the amount rises to $132,900, reflecting inflation adjustments. To claim FEIE, filers must attach Form 2555 to their return and accurately report their income and residency details. The exclusion applies only to earned income vs unearned income, meaning salary or business income qualifies, but dividends and capital gains do not. If you are confused about the exact amount, you could always use our FEIE calculator.
Eligibility depends on how long someone lives abroad and the depth of their residence ties, measured by two key qualification tests:
- The physical presence test requires being present in a foreign country for 330 full days in any 12-month period while maintaining a foreign tax home.
- The bona fide residence test involves showing continuous residence that includes an entire tax year, judged by lifestyle, intent, and ties abroad.
NOTE! Many taxpayers combine FEIE with the foreign housing exclusion for added savings. For 2025, the housing base is $20,800 with a standard cap of $39,000, and for 2026, the base increases to $21,264 with a cap of $39,870, using the IRS’s 16% and 30% formulas.
Form 1116: your guide to claiming the foreign tax credit (FTC)
The FTC has, over the years, become a reliable source of relief for American expats managing taxes in two countries. Take a typical case, for instance: Erin, a US engineer in Germany, who earns the equivalent of $120,000 a year and pays around 35% in German income tax. When she files her US return, the foreign tax credit for expats helps offset those foreign taxes – a clear example of how the IRS system for double taxation relief works in practice.
Cases like this were exactly what the IRS intended when it introduced the credit to reduce US income tax on earnings already taxed abroad. The foreign tax credit directly cuts the US tax bill by the amount of qualified foreign income tax paid, up to the limit calculated on Form 1116. It works especially well in high-tax countries like Germany, France, or Japan, where local tax rates often exceed US rates, allowing taxpayers to offset their US liability in full.
The IRS carryover rules let unused credits roll back one year and forward for ten, ensuring that expats can fully benefit when foreign tax payments vary from year to year. Most taxpayers who claim foreign tax credit attach Form 1116, though a simple de minimis election lets single filers skip it if their total qualified foreign taxes are $300 or less ($600 for joint filers).
Form 8938 (FATCA) vs FBAR: key differences
Form 8938 and the FBAR often go hand in hand. The IRS confirms that Form 8938 does not replace the FBAR, and many taxpayers must file both. Knowing the difference keeps your filings accurate and shields you from steep penalties.
| Form 8938 | FinCEN Form 114 | |
|---|---|---|
| Who files | Certain individuals and domestic entities that hold specified foreign assets. | US persons with a financial interest in or authority over foreign financial accounts. |
| Trigger | Filing is required when reporting thresholds are met for taxpayers living abroad. | File when the total value of all accounts tops $10,000 at any time in the year. |
| Reporting thresholds | Living abroad: Single or MFS over $200,000 on the last day of the year or $300,000 at any time; MFJ over $400,000 on the last day or $600,000 at any time. | $10,000 aggregate value across all accounts, measured at any point in the year. |
| What it covers | FATCA reporting for specified foreign assets like stock, trusts, and ownership in foreign companies. | Disclosure of bank, brokerage, pension, and insurance accounts through FinCEN Form 114. |
| Where to file | Attach to your Form 1040 and submit with your tax return. | File electronically through the FinCEN BSA e-Filing system, not with the IRS. |
| Due date | Same as your tax return – automatic June 15 extension for expats, and up to October 15 with Form 4868. | April 15 deadline with an automatic extension to October 15 (no form required). |
| Penalties | Up to $10,000 for failing to file, rising to $50,000 after notice; 40% accuracy penalty for related underpayments. | Non-willful up to $16,536 per violation; willful, the greater of $165,353 or 50% of the account balance. |
Forms 5471, 8865, and 8621: Reporting businesses and investments abroad
The thought of handling these three filings can be overwhelming for anyone living abroad. Each one carries strict rules, steep penalties, and pages of technical detail that often leave expats anxious about making a single mistake.
Form 5471
Used by US officers, directors, and shareholders of certain foreign corporations to report ownership and activity. A controlled foreign corporation exists when US shareholders own more than 50 percent of the vote or value. Penalties start at $10,000 per form and can rise by $10,000 every 30 days after notice, up to a $50,000 limit. Many filers look for Form 5471 expat guidance because this form attaches to the individual return when the tests apply.
Form 8865
Covers foreign partnership reporting for control, major owners, transfers, and changes in ownership share. Penalties start at $10,000 and can rise in $10,000 steps after notice up to $50,000, with possible foreign tax credit reductions. Schedules K-2 and K-3 include the international detail partners need for Form 8865 foreign partnership compliance.
Form 8621
Applies to shareholders of a passive foreign investment corporation when there are distributions, sales, elections, or annual reporting under section 1298(f). PFIC taxation can add interest charges on extra distributions and gains under section 1291. A QEF election lets the shareholder report yearly ordinary income and net capital gain based on a PFIC annual statement.
A mark-to-market election under section 1296 treats yearly changes as ordinary income or loss if the stock is marketable. For small indirect holdings, a $5,000 exception can waive Part I reporting at year-end when no sale or payout occurs, and many investors tag filings as Form 8621 PFIC to stay organized.
Common expat tax mistakes and how to avoid them
When life overseas gets busy, it’s easy to overlook a detail or two at tax time. Those slips can lead to steep expat tax penalties, yet TFX’s experts know how to spot problems early and keep your return on track.
- Forgetting to report foreign bank accounts can lead to missing FBAR penalties; keeping a yearly list of all balances helps prevent this.
- Misunderstanding eligibility rules often causes FEIE misuse; confirming the physical presence or bona fide residence test before filing avoids disqualification.
- Overlooking overseas earnings results in unreported foreign income; tracking all deposits and requesting annual statements keeps everything transparent.
- Procrastinating until deadlines pass leads to late filing; setting calendar reminders and filing electronically ensures returns stay on time.
Why choose Taxes for Expats for expat tax filing
Filing taxes from abroad can feel overwhelming – the forms, the rules, and the fear of getting something wrong. That anxiety disappears the moment a real person steps in to help. With Taxes for Expats, every return is reviewed by a seasoned CPA for Americans abroad who knows the ins and outs of cross-border filings. Our long-term clients – more than 90% return annually – say it best on Trustpilot: “Finally, expat tax filing help that feels personal and professional.” With us, you gain:
- a trusted expat tax advisor to guide you through the process so you can meet global tax compliance requirements without mistakes.
- truly stress-free filing that covers everything from Form 1040 and FBAR to FEIE and FATCA.
- our proven expat tax preparation services to simplify how you file expat taxes – the confident, clear way to stay compliant wherever you live.
FAQ
Return due April 15, automatic extension to June 15 for those abroad, Form 4868 extends to October 15, a discretionary filing-only extension to December 15 may be requested by letter, and FBAR is due April 15 with an automatic move to October 15.
The FEIE allows up to $130,000 per qualifying taxpayer for 2025, with housing amounts computed from that figure.
Yes, a return is still required when your income meets filing thresholds, and benefits like the FEIE or credits apply only if you file.
Yes, Taxes for Expats routinely prepares late and multi-year returns and FBAR catch-up filings with dedicated CPA support.
