American Citizens Abroad - General Tax Filing and Reporting Information

Navigating U.S. Taxes While Living Abroad: What Every Expat Needs to Know

Living and working outside the United States offers incredible experiences, but it doesn't mean leaving U.S. tax obligations behind. The U.S. employs a citizenship-based taxation system, meaning if you are a U.S. citizen or a resident alien (Green Card holder), you are generally required to file a U.S. federal tax return and report your worldwide income, regardless of where you reside.  

While this might sound daunting, several provisions help prevent double taxation and ease the burden. Here’s a guide to understanding your tax filing and reporting responsibilities as a U.S. expat.  

1. The Filing Requirement: Worldwide Income Counts

As a U.S. citizen or resident alien, your filing requirement depends on your gross income from all sources globally, your filing status, and your age. If your worldwide gross income meets the minimum filing threshold for your status, you must file a U.S. tax return (Form 1040).  

• Worldwide Income: This includes all income received – wages, self-employment earnings, investment income, rental income, etc. – earned both inside and outside the U.S.

• Reporting Currency: All income and expenses must be translated and reported in U.S. dollars using a consistent exchange rate method.

• Excluded Income: Even income you might exclude later (like through the Foreign Earned Income Exclusion) must be considered when determining if you meet the filing threshold.

2. Filing Deadlines: Automatic Extensions for Expats

While the standard U.S. tax deadline is typically April 15th, expats living and working abroad get an automatic two-month extension to file their returns.  

• April 15, 2025: Deadline to pay any taxes owed for the 2024 tax year to avoid interest charges. This is also the standard filing deadline for those residing in the U.S.  

• June 16, 2025: Automatic extension deadline for U.S. citizens and resident aliens residing outside the U.S. and Puerto Rico to file their 2024 tax return (Form 1040). (Note: June 15, 2025, falls on a Sunday, so the deadline shifts to the next business day).

• October 15, 2025: Further filing extension deadline if you filed Form 4868 (Application for Automatic Extension of Time To File U.S. Individual Income Tax Return) by the June 16th deadline (or April 15th if you didn't qualify for the June extension). Remember, this extends the time to file, not the time to pay.

• December 15, 2025: In specific situations, expats may be able to request an additional discretionary extension to file by sending a letter to the IRS explaining the need, but this requires IRS approval.  

3. Avoiding Double Taxation: Key Exclusions and Credits

The good news is that most expats don't end up owing significant U.S. taxes, thanks to mechanisms designed to prevent double taxation:  

• Foreign Earned Income Exclusion (FEIE): Allows qualifying individuals to exclude a certain amount of their foreign earned income from U.S. tax. For the 2024 tax year (filed in 2025), the maximum exclusion is $126,500. This applies only to earned income (wages, salaries, self-employment income), not passive income (interest, dividends, capital gains). To qualify, you must meet the Tax Home Test and either the:

• Bona Fide Residence Test: Be a resident of a foreign country for an uninterrupted period covering an entire tax year.  

• Physical Presence Test: Be physically present in a foreign country or countries for at least 330 full days during any 12-consecutive-month period. FEIE is claimed using Form 2555. Note: Income earned as a U.S. government employee abroad does not qualify.  

• Foreign Housing Exclusion/Deduction: If you qualify for the FEIE, you might also be able to exclude or deduct a portion of your qualifying foreign housing expenses (like rent, utilities, repairs) that exceed a base amount. This is also claimed on Form 2555.  

• Foreign Tax Credit (FTC): Allows you to claim a dollar-for-dollar credit for income taxes paid or accrued to a foreign government. This credit directly reduces your U.S. tax liability. You claim the FTC using Form 1116.

• The FTC can be applied to both earned and passive income.  

• You generally cannot claim the FTC on income excluded under the FEIE. Many expats use the FEIE first and then claim the FTC on income exceeding the FEIE limit or on passive income.

• There are limitations based on your U.S. tax liability attributed to foreign income. Unused credits can typically be carried back one year and carried forward up to ten years.  

• Claiming the credit is almost always more beneficial than taking a deduction for foreign taxes paid.

4. Beyond the Tax Return: Reporting Foreign Assets

U.S. expats often have additional reporting requirements related to foreign financial assets:  

• FBAR (FinCEN Form 114, Report of Foreign Bank and Financial Accounts): You must file an FBAR electronically with the Financial Crimes Enforcement Network (FinCEN, a bureau of the Treasury Department) if you had a financial interest in, or signature authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any point during the calendar year.

• Deadline: The FBAR is due April 15th but receives an automatic extension to October 15th.  

• Filing: Filed separately from your tax return via the BSA E-Filing System.

• Form 8938 (Statement of Specified Foreign Financial Assets): Required under the Foreign Account Tax Compliance Act (FATCA), this form is filed with your Form 1040 tax return if the total value of your specified foreign financial assets exceeds certain thresholds. These thresholds are higher for expats:

• Living Abroad (Single/Married Filing Separately): Assets valued over $200,000 on the last day of the year, or over $300,000 at any time during the year.  

• Living Abroad (Married Filing Jointly): Assets valued over $400,000 on the last day of the year, or over $600,000 at any time during the year. (Thresholds are lower for taxpayers living in the U.S.) Specified assets include foreign bank accounts, foreign stocks/securities, foreign partnership interests, etc.  

5. Special Considerations

• Self-Employment Tax: U.S. citizens and resident aliens working abroad as self-employed individuals are generally subject to U.S. self-employment tax (Social Security and Medicare), even if their income is excluded under the FEIE. Totalization Agreements between the U.S. and certain countries may prevent dual social security taxation.  

• State Taxes: Depending on your previous state of residence and its specific rules, you may still have state tax filing obligations even while living abroad.

• Digital Nomads: The same fundamental rules apply. Income earned while working remotely abroad is generally considered foreign earned income, potentially qualifying for the FEIE or FTC if eligibility tests are met.

6. Getting Help and Staying Compliant

Navigating U.S. expat taxes can be complex.

• IRS Resources: The IRS website (irs.gov) has an extensive section for International Taxpayers, including Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.  

• Tax Professionals: Consider consulting a qualified tax professional specializing in U.S. expat tax preparation.

• Catching Up: If you're behind on your filings, the IRS offers the Streamlined Filing Compliance Procedures for eligible taxpayers who certify their failure to file was non-willful. This allows you to catch up on past-due returns and FBARs, often with reduced or waived penalties.  

Living abroad doesn't mean disconnecting from U.S. tax duties. Understanding your obligations, taking advantage of available exclusions and credits, and meeting reporting deadlines are crucial for staying compliant while enjoying your international experience.

7. Country specific

For filing requirements, deadlines, and penalties specific to US citizens in the UK, visit this tax guide.

Last Updated: May 10, 2025