US Expat Tax Filing: What Americans Abroad Must Know

US Citizens Must File from Anywhere

The United States taxes its citizens and permanent residents on worldwide income, regardless of where they live. Even if you have not set foot in the US for years, you must file an annual federal tax return if your income exceeds the filing threshold.

Key Expat Tax Benefits

Foreign Earned Income Exclusion (FEIE)

Exclude up to $130,000 (2025, adjusted for inflation) of foreign earned income. You must meet either:

Bona Fide Residence Test: Tax resident of a foreign country for a full calendar year

Physical Presence Test: Present outside the US for 330 full days in any 12-month period

File Form 2555 to claim the FEIE.

Foreign Housing Exclusion

Exclude additional amounts for qualifying housing expenses (rent, utilities, insurance) above a base amount of approximately $19,500. The maximum exclusion varies by city.

Foreign Tax Credit

Claim a dollar-for-dollar credit for taxes paid to foreign governments using Form 1116. Generally more beneficial than the FEIE when foreign tax rates exceed US rates.

Reporting Requirements

FBAR (FinCEN Form 114)

If you have foreign financial accounts with an aggregate value exceeding $10,000 at any point during the year, you must file an FBAR. This includes bank accounts, investment accounts, and signatory authority over business accounts.

Filed electronically through the BSA E-Filing system

Due April 15 with automatic extension to October 15

Penalties for non-filing: up to $12,909 per violation (non-willful) or $129,210 or 50% of account balance (willful)

FATCA (Form 8938)

Report specified foreign financial assets if the total value exceeds:

$200,000 on the last day of the year or $300,000 at any time (single, living abroad)

$400,000 on the last day or $600,000 at any time (married filing jointly, living abroad)

Other Forms

Form 2555: Foreign Earned Income Exclusion

Form 1116: Foreign Tax Credit

Form 8621: Passive Foreign Investment Companies (PFICs)

Form 5471: US shareholders of certain foreign corporations

Form 8865: US partners in foreign partnerships

Common Expat Mistakes

Not filing at all because you assume you do not owe. Filing is required even if your tax liability is zero.

Missing the FBAR deadline - penalties are severe.

Not reporting foreign retirement accounts which may need to be reported on FBAR and Form 8938.

Investing in PFICs (most foreign mutual funds) which face punitive US tax treatment.

Forgetting state taxes - check if your former state still considers you a resident.

Filing Deadlines for Expats

April 15: Standard deadline (automatic 2-month extension to June 16 for expats abroad)

June 16: Extended deadline for US citizens living abroad

October 15: Final extension deadline (must request by April 15)

Interest accrues on unpaid tax from April 15 regardless of extensions.

Strategies for Expats

Compare FEIE vs FTC each year - the optimal choice depends on your specific situation

Use the housing exclusion in high-cost cities to maximize savings

Avoid PFICs - invest through US-based brokerages and funds

Consider Roth IRA contributions if you have US-source earned income

Keep meticulous records of time spent in each country

Taxation.ai for Expats

Taxation.ai handles the complexity of expat tax filing with multi-country support, automatic FEIE/FTC optimization, and built-in FBAR and FATCA compliance checking. Upload your documents from anywhere in the world and file with confidence.