US expat taxes: the filing basics
US citizens and green card holders file a US return every year, wherever they live, reporting income from anywhere in the world. Most expats owe little or nothing once they claim the foreign earned income exclusion or the foreign tax credit. But you still have to file, and report foreign accounts over $10,000 on an FBAR.
Updated November 2026 · By Pankil Kumar, Managing Partner
Quick facts
- Who files. US citizens and green card holders, anywhere
- File by. June 15 if you live abroad. Tax is due April 15
- Exclusion. $132,900 of 2026 foreign earned income
- FBAR. Foreign accounts over $10,000 combined
- Self-employed. File with $400 or more of net earnings
Do you have to file if you live abroad?
Usually, yes. The filing thresholds are the same as for someone living in the US, roughly the standard deduction for your filing status. Self-employed expats file once net earnings reach $400. And if you're married to a non-US spouse and file separately, the threshold drops to just $5 of gross income.
The foreign earned income exclusion doesn't get you out of filing. It's claimed on a return, so you file to use it. Many people who skip filing because they "owed nothing" find out years later that they lost the exclusion or missed FBARs along the way.
Exclusion or credit, which is better?
Both stop you paying tax twice on the same income. Which one wins depends mostly on the tax rate where you live.
| Feature | Foreign earned income exclusion | Foreign tax credit |
|---|---|---|
| Form | 2555 | 1116 |
| How it works | Leaves up to $132,900 of 2026 foreign wages or self-employment income off your return | A dollar-for-dollar credit for income tax you paid to another country |
| Covers | Earned income only | Earned and investment income taxed abroad |
| To qualify | 330 full days abroad in 12 months, or a full tax year of bona fide residence | Foreign income tax actually paid or accrued |
| Usually better in | Low-tax or no-tax countries | Countries with tax rates near or above US rates |
| Worth knowing | Rules out the refundable part of the child tax credit. Revoking it generally means waiting five years to use it again | Unused credits carry back one year and forward ten |
You can use both in the same year on different income, like the exclusion on your salary and the credit on foreign rental income. The best mix is worth running both ways before you file the first time, because switching later has limits.
What else do expats have to file?
- FBAR (FinCEN Form 114) if your foreign bank and financial accounts together topped $10,000 at any point in the year. Filed with FinCEN, not the IRS.
- Form 8938 if your foreign financial assets are larger. For a single filer living abroad, over $200,000 at year end or $300,000 at any time. Double those for married couples filing jointly.
- Form 5471, in many cases, if you own 10% or more of a foreign corporation, including your own company abroad.
- Form 8621 for foreign mutual funds and similar pooled investments, which the US treats harshly.
- Form 3520 for large gifts or inheritances from non-US people, and for foreign trusts.
Do you still pay self-employment tax abroad?
Often, yes. The exclusion lowers income tax but not the 15.3% self-employment tax. The US has totalization agreements with about 30 countries that stop you paying social security to both. Each agreement decides which country's system covers you, and a certificate of coverage proves it to the other side.
When is everything due?
| Date | What's due for tax year 2026 |
|---|---|
| April 15, 2027 | Any tax owed, to avoid interest. FBAR, with an automatic extension |
| June 15, 2027 | Form 1040 if you live abroad on April 15. Attach a statement saying so |
| October 15, 2027 | Form 1040 with a Form 4868 extension. Extended FBAR |
If you need more time to pass the 330-day or bona fide residence test, Form 2350 can extend the filing date until after you qualify.
Do you still owe a state return?
Maybe. Some states keep treating you as a resident if you keep a home, a driver's license or voter registration there, and California, Virginia, New Mexico and South Carolina are known for holding on. Others let go once you've clearly moved. Check your last state before you assume you're done.
What if you've never filed?
You're far from alone. Many Americans abroad, especially those who left as children or were born overseas, find out late. The IRS Streamlined Foreign Offshore Procedures let people whose failure wasn't willful catch up with three years of returns and six years of FBARs, without penalties for those who qualify. We check that you qualify first.
Sources
- IRS: US citizens and resident aliens abroad
- IRS: Foreign earned income exclusion
- IRS Publication 54: Tax guide for US citizens and resident aliens abroad
- IRS: Comparison of Form 8938 and FBAR requirements
- FinCEN: Report foreign bank and financial accounts
- IRS: Streamlined filing compliance procedures
General information, not tax advice for your situation.
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Do I pay tax twice as an American abroad?
Usually not. The foreign earned income exclusion or the foreign tax credit removes most double tax. You still file the US return to claim them.
Does the exclusion cover my investments or rental income?
No. It only covers earned income, like wages and self-employment income. Investment and rental income can often be covered by the foreign tax credit instead.
Is the FBAR filed with my tax return?
No. It's filed separately with FinCEN through its BSA E-Filing system. We prepare it alongside your return so the account details match.
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