Do Americans Living Abroad Have to File U.S. Taxes?

Most Americans, residing inside the United States, understand that filing an annual tax return and paying taxes is a necessity each year. But for Americans residing outside of the United States there are sometimes questions about who needs to file and pay. Particularly for those with dual citizenship and who are already paying taxes to the country within which they reside.

The short answer is yes. The United States is one of only two countries that taxes its citizens on worldwide income regardless of where they live. The other is Eritrea.

What Is FATCA and What Did It Change?

The 2010 Foreign Account Tax Compliance Act, or FATCA, was passed in an effort to make it more difficult for Americans, regardless of where in the world they live and regardless of dual citizenship, to avoid U.S. taxation. The obligation to file was not new. U.S. citizens had owed tax on worldwide income for decades before FATCA passed. What the law changed was enforcement. Foreign financial institutions now report their U.S. account holders to the IRS, and taxpayers with specified foreign financial assets above the reporting threshold report them on Form 8938.

When FATCA was put into practice, Americans living abroad were served notices by their local banks that required them to respond to questions about their citizenship. The answers to these questions were then forwarded to the IRS. Individuals who meet the reporting threshold and fail to file Form 8938 face a penalty of $10,000, with up to $50,000 more if the failure continues after the IRS sends notice, for a maximum of $60,000 per year.

For some Americans living abroad and already paying taxes in their country of residence this came as a surprise. Foreign tax credits are available to help reduce the U.S. tax bill, but many people learned through those bank notices that they had been required to file all along.

Some responded to notices by simply renouncing their American citizenship. As reported by the Federal Register, the number of Americans seeking to renounce their citizenship increased dramatically after FATCA went into effect, from a high of approximately 600 people a decade earlier to 5,132 people expatriated in 2017. In 2014, following a sharp increase in renunciation requests, the State Department raised the processing fee from $450 to $2,350, a 422 percent increase. The State Department cut the fee back to $450 effective April 13, 2026.

Who Actually Has to File?

Your income, filing status, and age determine whether you must file. The filing threshold generally matches the standard deduction amount for your filing status. A single filer under 65 who earned less than that amount as an employee typically does not need to file a return.

The threshold is considerably lower for self-employment income. Americans working abroad as contractors or freelancers often meet it at a much smaller income level.

Gross income for this purpose means worldwide gross income. It includes money, goods, property, and services from all sources, and you must count foreign earned income even if you intend to exclude it later.

When Are Expat Tax Returns Due?

Your return is due April 15, the same date that applies to taxpayers inside the United States. U.S. citizens and resident aliens living abroad on that date receive an automatic two-month extension to June 15 without requesting it. The same extension applies to military members on duty outside the country.

The extension applies to filing, not to payment. Interest accrues on any unpaid tax from the regular April due date, so taxpayers who expect to owe should pay an estimate by then.

A further extension to October 15 is available by filing Form 4868 before the automatic two-month extension expires.

How Do You Avoid Being Taxed Twice?

Several provisions exist to prevent double taxation. Most Americans abroad who claim them correctly end up owing no U.S. tax at all.

Foreign Earned Income Exclusion. Claimed on Form 2555, the FEIE lets you exclude a substantial amount of foreign earned income from U.S. tax. The exclusion was $130,000 for the 2025 tax year and increased to $132,900 for 2026.

Foreign Tax Credit. Claimed on Form 1116, the FTC offsets foreign income taxes you already paid on a dollar-for-dollar basis.

Tax treaties. The U.S. has income tax treaties with more than 60 countries, and each one sets its own terms for how income gets divided between the two tax authorities.

To claim the FEIE you must pass either the Bona Fide Residence test or the Physical Presence test. The Physical Presence test requires 330 full days in a foreign country during any 12 consecutive months, and a full day means a complete 24 hours. A long international flight can break the count, since time in international airspace does not qualify.

Foreign income taxes may be taken as an itemized deduction instead of a credit, but not as both in the same tax year. Switching from the Foreign Earned Income Exclusion to the Foreign Tax Credit can also prevent you from claiming the exclusion again for five years.

What Is an FBAR and Do You Need to File One?

If your foreign financial accounts added together exceeded $10,000 at any point during the year, you have to file FinCEN Form 114, commonly called the FBAR. That’s the combined value across all accounts, not per account, and it applies even when the accounts generate no taxable income at all.

The FBAR goes to the Treasury Department through the BSA e-filing system rather than to the IRS with your return. It’s generally due April 15.

Form 3520 is a separate requirement. You file it if you received more than $100,000 in gifts or bequests from a nonresident alien, or if you own or received distributions from a foreign trust. Some foreign pensions and retirement plans meet the IRS definition of a foreign trust.

What If You’ve Never Filed While Living Abroad?

Dual citizens in particular often do not realize the obligation applies to them. The IRS created the Streamlined Filing Compliance Procedures for this situation.

To qualify, you generally must have lived outside the United States without a U.S. abode for at least 330 days during one of the last three years. The failure to file also has to have been a genuine mistake rather than a deliberate one. The procedures allow you to file several years of returns and FBARs together.

Do Expats Still Owe State Taxes?

Some do. Whether you owe depends on the state you lived in before leaving and whether you still receive income sourced there, such as rent from a property you kept.

State rules vary considerably. Some states release you once you establish residency elsewhere, while others continue to treat you as a resident based on factors like property ownership or voter registration. A move that happens partway through the year may require a part-year resident return.

Whether you’re an American citizen living domestically or abroad, we understand that tax season can be stressful and we are here to help. Our software works to provide a simplified, streamlined tax-filing process that takes the confusion out of even the most complex filing situations.

Note: Tax laws may change with little notice. We do our best to keep this information current, but it is provided on an “AS IS” basis. It should not be considered, legal, financial, or other professional guidance. For more, see our terms.