Living abroad brings exciting opportunities — but it doesn’t eliminate the responsibility to file and pay U.S. taxes. The United States is one of the few countries that taxes based on citizenship, meaning that no matter where you live, you’re still expected to fulfill your obligations to the IRS.
Whether you’re moving overseas permanently, working as a digital nomad, or splitting time between countries, understanding the basics of expat taxes is essential to avoid costly mistakes.
Here are some key tips every American living abroad should know.
1. You Must Still File a U.S. Tax Return
Many expats assume that moving abroad means they no longer have to deal with the IRS. Unfortunately, that’s not true.
If your income exceeds the standard filing threshold (just like if you lived in the U.S.), you are still required to file a U.S. tax return annually, even if you owe no tax after deductions and credits.
This includes income earned from foreign employers, self-employment, or investments.
2. Know How to Qualify for the Foreign Earned Income Exclusion
One major benefit for U.S. expats is the Foreign Earned Income Exclusion (FEIE), which allows you to exclude a certain amount of your foreign income from U.S. taxation.
To qualify, you must pass either the Physical Presence Test or the Bona Fide Residence Test.
It’s important to understand the difference:
- The Physical Presence Test requires you to be outside the U.S. for at least 330 full days within a 12-month period.
- The Bona Fide Residence Test is based on establishing real ties and long-term intent to reside in a foreign country.
Passing the bona fide residence test can be more complex because the IRS looks closely at your overall life abroad — such as residency permits, local employment, and other factors demonstrating your intent to remain.
Choosing the correct test can make a significant difference in your tax outcomes.
3. Stay Aware of U.S. Expat Tax Deadlines
Filing deadlines for expats are slightly different from those for U.S.-based taxpayers.
Expats automatically receive a two-month extension to June 15 to file their federal return. However, any tax owed is still due by April 15 to avoid interest charges.
Self-employed expats must also remember to make estimated tax payments quarterly if they expect to owe at least $1,000 in taxes for the year.
If more time is needed to file, expats can request an extension to October 15 — but again, this does not extend the time to pay taxes owed.
To stay compliant, it’s critical to understand the key expat tax deadlines and plan your filings accordingly.
4. Don’t Forget About FBAR and FATCA Reporting
If you have foreign bank accounts with a combined value exceeding $10,000 at any point during the year, you are required to file a Report of Foreign Bank and Financial Accounts (FBAR) separately from your tax return.
Additionally, if your foreign assets exceed certain thresholds, you may need to report them under FATCA rules using Form 8938.
Penalties for failing to file these reports can be severe, so it’s important to stay ahead of these obligations.
5. Free Resources and Expert Help Are Available
Navigating expat taxes can be complex, especially when dealing with exclusions, credits, and international reporting rules.
Fortunately, there are many free resources available to help.
The IRS website offers extensive information, including detailed instructions for individual tax forms and thousands of pages covering various expat-related topics.
For those who prefer personalized assistance, firms specializing in expatriate taxation are also available.
1040 Abroad, trusted by thousands of U.S. expats worldwide, offers free tax advice to help Americans living overseas better understand their filing obligations and options.
Taking advantage of reliable resources — whether through official IRS materials or experienced professionals — ensures you stay compliant and make the most of your tax benefits while living abroad.
Key Takeaways for U.S. Expats
Living abroad doesn’t exempt U.S. citizens from their tax responsibilities — but with the right knowledge and planning, you can minimize your tax burden and avoid penalties.
By understanding the eligibility requirements for exclusions like the FEIE, staying on top of deadlines, and properly reporting foreign accounts, U.S. expats can manage their taxes confidently while enjoying life overseas.
Staying informed and working with trusted experts ensures you can focus on your international journey — without tax stress following you around the world.