Do American citizens living abroad have to pay US taxes?
Yes. US citizens and resident aliens abroad report worldwide income on a US tax return if they meet the 2025 filing rules, even if all income was earned outside the United States. A person can owe $0 after credits or exclusions and still need to file Form 1040.
The US uses citizenship-based taxation, which means moving abroad does not by itself end federal tax filing duties. Read our US expat taxes guide for the broader filing system, or check the IRS rules for US citizens and resident aliens abroad.
These 3 points explain the rule for US citizens abroad:
- Who it applies to: US citizens, green card holders, and resident aliens who meet the filing rules.
- What worldwide income includes: wages, self-employment income, dividends, interest, rent, pensions, retirement income, business profits, and capital gains.
- What filing means: filing a return is separate from owing tax; the Foreign Earned Income Exclusion or Foreign Tax Credit may reduce the final US tax to $0.
Based on our client scenario at TFX: A US citizen in Germany earned $92,000 in salary in 2025 and paid German income tax. She still filed Form 1040, but her US income tax was reduced to $0 after claiming the Foreign Tax Credit on Form 1116.
Taxes for Expats (TFX) helps Americans abroad file US tax returns, claim expat tax benefits, and catch up on missed filings when eligible. Start with a free review using our US expat tax return service.
Do US citizens have to pay taxes if they live abroad?
Yes, US citizens abroad usually remain subject to US tax on worldwide income for the 2025 tax year, filed in 2026. The key question is not only whether tax is owed, but whether Form 1040, FBAR, Form 8938, or another form must be filed.
Do US citizens living abroad have to pay taxes? Yes, if their taxable income produces US tax after exclusions, credits, deductions, and withholding. For many expats, local foreign taxes or the FEIE reduce the US bill, but those benefits do not apply automatically.
Do US citizens have to pay taxes when living abroad? The answer depends on income type, filing status, foreign tax paid, and forms claimed. The IRS still starts from worldwide income, then applies relief such as Form 2555 or Form 1116.
US citizen abroad vs. nonresident alien abroad – the core difference is worldwide income reporting for citizens and resident aliens.
| Taxpayer type | Main US tax rule | Common return | Key difference |
|---|---|---|---|
| US citizen abroad | Reports worldwide income if filing threshold is met | Form 1040 | Citizenship keeps the US filing link active |
| Green card holder abroad | Reports worldwide income as a resident alien unless status changes under tax law | Form 1040 | Immigration status can keep US tax residency active |
| Nonresident alien abroad | Reports US-source or effectively connected income | Form 1040-NR | Foreign-source income is usually outside US tax unless a US rule applies |
NOTE! Moving overseas does not cancel US filing obligations. An American citizen paying taxes abroad may still need a federal return, an FBAR, and possibly Form 8938 even when no US tax is due.
FEIE and FTC callout: The FEIE can exclude up to $130,000 of qualifying foreign earned income for 2025, while the FTC can reduce US tax for eligible foreign income taxes paid. Neither benefit erases FBAR, FATCA, or foreign entity reporting duties.
Filing thresholds for Americans living abroad
For the 2025 tax year, most US citizens abroad under age 65 must file Form 1040 when gross income reaches $15,750 for single filers, $31,500 for married filing jointly, or $23,625 for head of household. Married filing separately has a $5 threshold.
These amounts reflect the 2025 filing-season rules after the One Big Beautiful Bill Act changes. See our guide to the minimum income to file taxes and the IRS 2025 Form 1040 instructions.
For 2025 returns filed in 2026, the main filing threshold is based on filing status, age, and special triggers such as $400 of self-employment earnings.
| Filing status | 2025 filing threshold if under 65 | Common expat trigger that can require filing |
|---|---|---|
| Single | $15,750 | Foreign wages, dividends, rent, or self-employment income |
| Married filing jointly | $31,500 | Combined worldwide income of both spouses |
| Married filing separately | $5 | Separate filing, treaty issues, or spouse filing separately |
| Head of household | $23,625 | Foreign wages plus qualifying dependent rules |
| Self-employed expat | $400 net self-employment earnings | Schedule C and Schedule SE may apply |
The following 4 special situations can change the filing analysis:
- Age 65 or older: Higher thresholds apply because of the additional standard deduction.
- Dependent status: Dependent filing thresholds use separate earned and unearned income tests.
- Self-employment: Net self-employment earnings of $400 generally trigger Schedule SE.
- Information returns: FBAR, Form 8938, Form 5471, Form 3520, or Form 8865 can apply even when income tax is low.
How much tax do US citizens living abroad pay? The amount depends on taxable income after deductions, exclusions, credits, and foreign taxes paid. A taxpayer with $120,000 of qualifying salary may owe $0 after Form 2555, while a retiree with foreign pension income may need Form 1116 instead.
State and local taxes
State tax filing after moving abroad depends on domicile, state-source income, and the state’s residency rules for 2025, not just where you slept on December 31. A taxpayer can be a nonresident federally abroad but still have a state filing issue.
State rules are not one-size-fits-all. Understand our state taxes and American expats guide, then check the IRS list of state government websites for the state’s current rules.
The following 5 state connections should be reviewed before assuming you are done with state taxes:
- Domicile: whether the state still sees it as your permanent home.
- Driver’s license: whether you kept or renewed a state license.
- Voter registration: whether you stayed registered in the state.
- Property ownership: whether you kept a home or rental property.
- State-source income: wages, business income, rental income, or capital gains tied to that state.
The first state tax question is not “where do I live now?” but whether the old state still has a legal tax connection to income, domicile, or property.
| State connection | Likely filing obligation | Risk factor | First thing to review |
|---|---|---|---|
| Former domicile only | Possible resident or part-year return | Strong ties left behind | State residency rules |
| Rental property in old state | Usually nonresident return | State-source rental income | Schedule E and state return |
| Remote work for US employer | Depends on state sourcing rules | Employer reporting to old state | W-2 state wages |
| No-tax state move before leaving | May help, but not automatic | Weak documentation | Lease, license, voter record |
| Investment income only | Usually federal issue first | State residency claim | Domicile evidence |
NOTE! State residency rules vary by state. A move to a no-income-tax state can help in some cases, but it does not automatically cut ties with California, New York, Virginia, or any other state.
Do I have to file US taxes if I no longer live in the US?
Yes. Leaving the United States does not end federal filing obligations for US citizens and green card holders if their 2025 income meets the filing rules. Resident aliens can also have Form 1040 obligations depending on the green card test or substantial presence test.
Read our guide on green card holders and US tax filing after moving abroad for status-specific details, and review the IRS rules on taxation of resident aliens.
The following 3 taxpayer groups should check US filing rules after moving abroad:
- US citizens abroad: citizenship keeps worldwide income reporting in place.
- Green card holders abroad: lawful permanent resident status can keep US tax residency active.
- Resident aliens: the substantial presence test or green card test can require Form 1040 filing.
If I live abroad, do I pay taxes? You may owe US tax if income remains taxable after deductions, credits, and exclusions. Filing is the first test; payment is the second test.
Are resident aliens living abroad taxed the same way?
Resident aliens and green card holders are usually taxed on worldwide income like US citizens for 2025, but they are not identical in every case. Treaty positions, residency start and end dates, substantial presence exceptions, and Form 1040-NR rules can change the result.
Review TFX’s guide on how to define US alien tax status, then compare it with IRS guidance on the substantial presence test and nonresident alien taxation.
Resident aliens are closer to US citizens for income tax, while nonresident aliens usually file only for US-source or effectively connected income.
| Rule | US citizen abroad | Resident alien abroad | Nonresident alien abroad |
|---|---|---|---|
| Worldwide income | Yes | Yes, if resident for tax purposes | No, unless special rule applies |
| Common form | Form 1040 | Form 1040 | Form 1040-NR |
| Tax status test | Citizenship | Green card or substantial presence | Does not meet resident tests |
| Common exception | Limited treaty saving-clause issues | Treaty, closer connection, exempt days | Treaty rate or exemption |
| Foreign account reporting | Possible FBAR/Form 8938 | Possible FBAR/Form 8938 | Depends on US person status |
Substantial presence test: A noncitizen generally meets the test by being physically present in the US for at least 31 days in the current year and 183 weighted days across the current year and the prior 2 years. Some students, teachers, trainees, and treaty residents may have exceptions.
Having issues determining your physical presence days? Use our substantial presence calculator.
What forms and information must expats report?
A US expat filing inventory starts with Form 1040, then checks foreign income, foreign accounts, foreign assets, and special ownership forms for 2025. A taxpayer can owe no US income tax and still have FBAR, FATCA, or foreign entity reporting.
See our expat IRS tax form checklist and US tax forms for expats before preparing the return.
The following 4 reporting buckets should be checked before filing:
- Income: wages, self-employment, rent, dividends, pensions, gains, and business profits.
- Foreign bank accounts: FBAR through FinCEN Form 114 when the aggregate balance exceeds $10,000.
- Foreign financial assets: Form 8938 when specified foreign financial assets exceed the relevant threshold.
- Special ownership: Forms 5471, 8865, 8858, 3520, or 3520-A for certain entities, trusts, or gifts.
The master filing inventory should separate income tax forms from foreign account, asset, and ownership reporting forms.
| Form | What it reports | When needed | Documents to gather |
|---|---|---|---|
| Form 1040 | Worldwide income | Filing threshold met | Wage slips, tax statements, bank records |
| Form 2555 | FEIE and housing exclusion/deduction | Qualifying foreign earned income | Travel calendar, employer records, housing costs |
| Form 1116 | Foreign Tax Credit | Foreign income taxes paid or accrued | Foreign tax assessment, payment proof |
| Schedule B | Interest, dividends, foreign account questions | Foreign accounts or passive income | Bank and brokerage statements |
| Schedule C | Self-employment income | Business or freelance income | Revenue, expenses, invoices |
| Schedule E | Rental income and royalties | Foreign or US rental property | Lease, repairs, mortgage interest |
| FBAR | Foreign financial accounts | Aggregate balance over $10,000 | Highest balances by account |
| Form 8938 | Specified foreign financial assets | FATCA thresholds met | Asset statements and valuations |
| Form 5471/8865/8858 | Foreign entity ownership | Ownership or control thresholds met | Entity records, financial statements |
| Form 3520/3520-A | Foreign trusts and certain gifts | Trust or large foreign gift rules | Gift documents, trust statements |
The following 3 document groups should be ready before filing:
- Income records: employer forms, invoices, pension slips, rent statements, and brokerage summaries.
- Foreign tax records: assessments, payslips showing withholding, receipts, and tax-payment confirmations.
- Account records: year-end and highest-balance statements for foreign bank, pension, brokerage, and investment accounts.
What income do Americans abroad have to report?
Americans abroad report worldwide taxable income for 2025, including wages, self-employment, pensions, dividends, interest, rent, capital gains, and business profits. The form used depends on the income type, and relief depends on whether the income is earned, passive, retirement, or business income.
Use our guide on where to report foreign income on Form 1040 and our explanation of earned income vs. unearned income to classify each item before choosing Form 2555 or Form 1116.
The following 7 income categories commonly appear on expat returns:
- Wages: salary from a foreign or US employer.
- Self-employment: freelance, consulting, contractor, or small business income.
- Pensions: foreign pension, US retirement distributions, and annuities.
- Dividends and interest: foreign bank interest and brokerage income.
- Rent: foreign rental property income.
- Capital gains: sales of shares, funds, crypto, or foreign real estate.
- Business profits: foreign entity or partnership income.
Income type decides the form: earned income may fit Form 2555, while foreign taxes on passive or pension income usually point to Form 1116.
| Income type | Where it commonly appears | Common form or schedule |
|---|---|---|
| Foreign wages | Employer payroll or payslip | Form 1040, Form 2555, Form 1116 |
| Self-employment | Client payments, invoices | Schedule C, Schedule SE, Form 2555 |
| Pension | Pension administrator statement | Form 1040, Form 1116 |
| Dividends | Brokerage statement | Schedule B, Form 1116 |
| Interest | Foreign bank statement | Schedule B, Form 1116 |
| Rent | Tenant payments | Schedule E, Form 1116 |
| Business profits | Foreign company records | Form 5471, 8865, 8858, or Schedule C |
Do I have to pay tax if I work abroad? You must report qualifying work income if a US return is required. You may then reduce US tax through the FEIE, FTC, or housing exclusion, depending on the income and taxes paid.
US income tax return (Form 1040)
Form 1040 is the core federal tax return for US citizens abroad for the 2025 tax year, even when every dollar was earned outside the United States. Foreign income, exclusions, credits, and schedules attach to Form 1040 rather than replacing it.
See our Form 1040 explained guide and Form 1040 Schedule 1 guide for how income flows through the return. The IRS also provides current details for Form 2555.
The following 5 attachments often appear with an expat Form 1040:
- Schedule B: foreign account questions, interest, and dividends.
- Schedule C: self-employment or contractor income.
- Schedule E: rental property and royalty income.
- Form 2555: FEIE and foreign housing exclusion or deduction.
- Form 1116: Foreign Tax Credit by income category.
FBAR (FinCEN Form 114)
FBAR applies when a US person’s foreign financial accounts exceed $10,000 in aggregate at any point during the calendar year. The 2025 FBAR is filed electronically with FinCEN, not attached to Form 1040, and has an automatic extension to October 15, 2026.
Read our detailed FBAR filing guide and our FBAR vs. Form 8938 comparison. FinCEN explains the FBAR $10,000 filing threshold, and the IRS explains the FBAR due date and automatic extension.
Threshold callout: Add every foreign financial account together. A taxpayer with $4,000 in a checking account, $3,500 in savings, and $3,200 in a brokerage account crossed $10,700, so FBAR filing is required.
The following 5 account types often count for FBAR:
- Foreign checking accounts
- Foreign savings accounts
- Foreign brokerage or investment accounts
- Certain foreign pension or retirement accounts
- Accounts with signature authority, even without ownership
FATCA (Form 8938)
Form 8938 applies to specified foreign financial assets when values exceed FATCA thresholds, and it is filed with the federal income tax return. For expats living abroad, the key 2025 thresholds are $200,000/$300,000 for non-joint filers and $400,000/$600,000 for joint filers.
See our guide to Form 8938 filing requirements and our FBAR vs. FATCA comparison. The IRS explains Form 8938 thresholds for taxpayers living abroad.
For expats living abroad, Form 8938 starts at $200,000 at year-end or $300,000 anytime for non-joint filers.
| Filing status and residence | File Form 8938 if value is more than this on Dec. 31 | File Form 8938 if value is more than this anytime in 2025 |
|---|---|---|
| Single or married filing separately living abroad | $200,000 | $300,000 |
| Married filing jointly living abroad | $400,000 | $600,000 |
| Single or married filing separately living in the US | $50,000 | $75,000 |
| Married filing jointly living in the US | $100,000 | $150,000 |
The following 4 assets can surprise expats under FATCA:
- Foreign brokerage accounts
- Foreign partnership interests
- Certain foreign pensions
- Foreign mutual funds or investment funds
NOTE! FATCA does not replace FBAR. A taxpayer may need both Form 8938 and FinCEN Form 114, and foreign entity or trust forms can still apply.
Foreign property reporting
Personally owned foreign real estate is usually not reported on FBAR or Form 8938 by itself, but related income, sale gain, rental activity, or entity ownership can create US reporting. For 2025, foreign rental income usually belongs on Schedule E.
Read our foreign property tax guide and our guide to rental properties on a US tax return. The IRS provides current pages for Form 8938 and Schedule E.
The following 4 related forms should be checked when foreign property is involved:
- Schedule E: rental income and expenses.
- Form 4562: depreciation for rental property.
- Form 1116: foreign tax paid on rental income or sale gain.
- Form 5471, 8865, or 3520: property held through a foreign corporation, partnership, or trust.
Ownership alone is usually different from income-producing property or entity-owned property.
| Situation | Usually reported on US return? | Common form |
|---|---|---|
| Foreign home used personally | Usually no income form | None, unless sold or financed through entity |
| Foreign rental property | Yes | Schedule E, Form 4562 |
| Foreign property sold at a gain | Yes | Schedule D/Form 8949, Form 1116 if foreign tax paid |
| Property owned by foreign corporation | Possibly | Form 5471 |
| Property owned by foreign trust | Possibly | Form 3520/Form 3520-A |
Based on our client scenario at TFX: A US citizen owned a Lisbon apartment personally and rented it for €18,000 in 2025. The property itself was not an FBAR account, but the rental income went on Schedule E and the foreign tax paid was reviewed for Form 1116.
What happens if you don’t file your US taxes?
Missing required US tax returns or foreign account reports can lead to penalties, interest, and loss of filing options. For 2025 returns filed in 2026, the IRS failure-to-file penalty can reach 25% of unpaid tax, while FBAR penalties depend on willfulness.
Read our guide on what happens if you don’t file an expat tax return and the IRS page on penalties for current penalty categories.
Consequence summary box: Late filing, late payment, missing information returns, and unfiled FBARs are separate problems. A taxpayer can face more than 1 penalty type if both the tax return and foreign account reports are late.
The following 4 consequences should be checked before deciding how to catch up:
- Late-filing penalty: usually 5% of unpaid tax per month, up to 25%.
- Late-payment penalty: usually 0.5% of unpaid tax per month, up to 25%.
- Interest: accrues on unpaid tax and certain penalties until paid.
- Information-return penalties: can apply to FBAR, Form 8938, Form 5471, Form 3520, and other forms.
Penalties and interest
For 2025 returns required in 2026, the failure-to-file penalty is usually 5% per month on unpaid tax, up to 25%. The failure-to-pay penalty is usually 0.5% per month, and interest generally accrues until the balance is paid.
See our guide to 5 ways the IRS can fine taxpayers and our first-time penalty abatement relief guide. The IRS explains failure-to-file penalties, failure-to-pay penalties, and interest.
The fastest-growing balance is usually unpaid tax plus monthly penalties and interest, not the return preparation fee.
| Issue | 2026 rule or amount | What triggers it |
|---|---|---|
| Failure to file | 5% per month, up to 25% | Filing after the deadline with unpaid tax |
| Failure to pay | 0.5% per month, up to 25% | Paying tax after April 15, 2026 |
| FBAR non-willful penalty | Up to $16,536 per violation for penalties assessed after Jan. 17, 2025 | Late or missing FBAR without willfulness |
| FBAR willful penalty | Greater of $165,353 or 50% of account balance | Willful FBAR violation |
Based on our client scenario at TFX: A taxpayer owed $4,000 with a return filed 4 months late. The failure-to-file penalty alone could reach $800 before considering failure-to-pay penalties and interest.
Streamlined filing compliance procedure
The IRS streamlined filing compliance procedures help eligible non-willful taxpayers catch up by filing 3 years of tax returns and 6 years of FBARs. Streamlined foreign procedures can reduce or remove certain penalties, but relief is not automatic and depends on the facts.
Read our Streamlined Filing Compliance Procedures guide and Streamlined Foreign Offshore Procedures guide. The IRS explains the official streamlined filing compliance procedures.
The following 4 steps make up the streamlined filing workflow:
- Confirm non-willfulness: the missed filing was not intentional tax evasion.
- Prepare prior-year returns: usually the last 3 delinquent or amended federal returns.
- Prepare delinquent FBARs: usually the last 6 FBAR years.
- Submit certification and payment: include required non-willfulness certification and pay tax plus interest.
Foreign and domestic streamlined procedures differ most in residency requirements and penalty treatment.
| Procedure | Best fit | Key filing package | Penalty treatment |
|---|---|---|---|
| Streamlined foreign offshore procedures | Eligible taxpayers living outside the US | 3 returns, 6 FBARs, certification | No miscellaneous offshore penalty for qualifying filers |
| Streamlined domestic offshore procedures | Eligible taxpayers living in the US | 3 returns, 6 FBARs, certification | 5% miscellaneous offshore penalty generally applies |
Missed filings should be reviewed before choosing a disclosure path. Start with our streamlined filing procedure service if you have 3+ missing returns or unfiled FBARs.
What tax breaks are available for US expats?
US expats may reduce 2025 US tax through the $130,000 Foreign Earned Income Exclusion, foreign housing exclusion or deduction, Foreign Tax Credit, Child Tax Credit, and totalization agreements. Each benefit has a different form, income type, and eligibility test.
Read our guides to the Foreign Earned Income Exclusion and the Foreign Tax Credit before choosing a filing method.
The following 5 tax relief paths should be reviewed:
- FEIE: excludes qualifying earned income on Form 2555.
- Foreign housing exclusion or deduction: reduces eligible housing-related foreign earned income.
- FTC: credits eligible foreign income taxes on Form 1116.
- Child Tax Credit: can provide a refundable benefit through Schedule 8812.
- Totalization agreement: can prevent double Social Security tax in covered countries.
Foreign earned income exclusion (FEIE)
For the 2025 tax year, the FEIE lets a qualifying taxpayer exclude up to $130,000 of foreign earned income on Form 2555. It applies to earned income only, so wages and self-employment income are treated differently from pensions, dividends, interest, rent, and gains.
See our guide to Form 2555 and the foreign earned income exclusion and the IRS page on figuring the FEIE.
FEIE is strongest for qualifying earned income, but it does not remove FBAR, FATCA, or self-employment tax issues.
| FEIE item | Rule | Common mistake |
|---|---|---|
| Who qualifies | Tax home abroad plus bona fide residence or physical presence test | Counting travel days incorrectly |
| What income qualifies | Wages and self-employment income earned abroad | Trying to exclude pensions or capital gains |
| 2025 limit | Up to $130,000 per qualifying person | Using the 2026 amount on a 2025 return |
Based on our client scenario at TFX: A single US citizen in Singapore earned $145,000 in wages in 2025 and qualified under the physical presence test. Form 2555 could exclude $130,000, leaving $15,000 before other deductions and credits, but FBAR and FATCA still needed a separate review.
Foreign housing exclusion
For 2025, the foreign housing exclusion or deduction is calculated on Form 2555 and starts after a base housing amount tied to 16% of the FEIE limit. A full-year 2025 filer starts with a base housing amount of $20,800 before location limits apply.
See our foreign housing exclusion guide and Form 2555 guide for foreign earned income. The IRS explains the foreign housing exclusion or deduction.
Housing relief applies only after FEIE eligibility is met and only to eligible housing costs above the base amount.
| Housing item | 2025 rule | Practical note |
|---|---|---|
| Eligible costs | Rent, utilities other than telephone, insurance, occupancy taxes, certain repairs | Must be reasonable housing costs |
| Base amount | $20,800 for a full-year 2025 qualifying period | Prorated for shorter qualifying periods |
| Default cap | $39,000 of housing expenses before high-cost locality adjustments | High-cost cities may have higher IRS limits |
| Interaction with FEIE | Claimed on Form 2555 with FEIE | Housing is calculated before the remaining FEIE |
Based on our client scenario at TFX: A teacher in Tokyo paid $34,000 in eligible rent and utilities in 2025. The housing amount started at $34,000 minus $20,800, before checking Tokyo’s IRS locality limit and employer-provided income rules.
Foreign tax credit (FTC)
The Foreign Tax Credit reduces US tax for eligible foreign income taxes paid or accrued, usually on Form 1116. Unlike the FEIE, the FTC can apply to several income categories, and unused credits may carry back 1 year and forward 10 years.
Compare our guide on Foreign Tax Credit vs. Foreign Earned Income Exclusion with IRS guidance on how to claim the Foreign Tax Credit and how to figure the credit.
FTC often works best when foreign income tax is high, while FEIE often works best for earned income in low-tax countries.
| Feature | FEIE | FTC |
|---|---|---|
| Main form | Form 2555 | Form 1116 |
| Best use case | Earned income abroad with low or no foreign tax | Foreign income already taxed by another country |
| Income types | Earned income only | Wages, passive income, pensions, rent, and other categories if eligible |
| Carryover | No | Usually 1-year carryback and 10-year carryforward |
| Child Tax Credit impact | Can reduce earned income used for ACTC | May preserve income for refundable credit calculations |
The following 3 foreign taxes commonly qualify for FTC review:
- Foreign income tax withheld from wages
- Foreign tax paid with an annual assessment
- Foreign tax on pension, rental, or investment income
Child Tax Credit (CTC): Get a refund while abroad
For 2025, the Child Tax Credit is worth up to $2,200 per qualifying child, and the Additional Child Tax Credit can be refundable up to $1,700 per qualifying child. Expats usually claim it on Form 1040 with Schedule 8812.
Read our Child Tax Credit guide and our update on US expat Child Tax Credit OBBB SSN rules. The IRS explains current Child Tax Credit rules.
The following 4 eligibility items should be checked before claiming the credit:
- Qualifying child: the child must meet age, relationship, residency, support, and dependent tests.
- SSN rule: required Social Security numbers must be valid for employment and issued before the return due date.
- Earned income: ACTC generally requires at least $2,500 of earned income.
- Schedule 8812: used to calculate CTC, Credit for Other Dependents, and ACTC.
The refundable CTC result often depends on whether Form 2555 removes earned income from the ACTC calculation.
| Item | 2025 rule | Why it matters abroad |
|---|---|---|
| Maximum CTC | $2,200 per qualifying child | Reduces tax before refund rules |
| Maximum ACTC | $1,700 per qualifying child | Can create a refund if rules are met |
| Earned income floor | $2,500 | Needed for refundable ACTC |
| Form | Schedule 8812 | Attached to Form 1040 |
Based on our client scenario at TFX: A married couple in Spain had 2 qualifying children and paid enough Spanish tax to use Form 1116 instead of Form 2555. Keeping earned income on the return helped preserve the Schedule 8812 calculation for the refundable ACTC.
Totalization agreements
Totalization agreements coordinate Social Security coverage so a worker is usually covered by 1 country’s system at a time. They matter most for self-employed expats facing the US 15.3% self-employment tax and a foreign social insurance charge.
Read our guide to bilateral Social Security agreements for expats. Also, the SSA explains US international Social Security agreements, and the IRS explains self-employment tax.
A totalization agreement affects Social Security coverage, not regular federal income tax on Form 1040.
| Work situation | Possible Social Security result | First document to check |
|---|---|---|
| US employee temporarily assigned abroad | May stay under US Social Security | Certificate of coverage |
| Self-employed expat in treaty country | May pay into only 1 system | Agreement country rules |
| Self-employed expat in non-agreement country | US SE tax may still apply | Schedule SE and local rules |
| Local employee of foreign employer | Usually host-country system, but facts matter | Country agreement text |
The following 3 situations make a certificate of coverage useful:
- Temporary foreign assignment
- Self-employment in a country with an agreement
- Employer request for proof that foreign social tax should not apply
Based on our client scenario at TFX: A self-employed consultant in the UK earned $80,000 in 2025. Before applying FEIE, the return needed a totalization review because the US self-employment tax rate is 15.3% unless coverage shifts under the agreement.
What forms do US expats need to file?
Most US expats start with Form 1040, but not every expat files every international form. For 2025 returns filed in 2026, the required forms depend on income type, foreign tax paid, account balances, asset values, entities, trusts, gifts, and pensions.
The IRS forms and publications library is the official source for current revisions, while TFX’s expat form guides help translate which forms fit common overseas situations.
Form 1040 is the base return; international forms are added only when a specific income, asset, account, or ownership trigger applies.
| Form | Category | Main trigger |
|---|---|---|
| Form 1040 | Federal income tax return | Filing threshold met |
| Form 2555 | Exclusion | Qualifying foreign earned income |
| Form 1116 | Credit | Eligible foreign income taxes paid or accrued |
| Schedule B | Income and foreign account questions | Interest, dividends, foreign accounts |
| Schedule C | Business income | Self-employment or contractor income |
| Schedule SE | Self-employment tax | Net self-employment earnings of $400 or more |
| Schedule E | Rental and royalty income | Foreign rental property or royalties |
| FinCEN Form 114 | FBAR | Foreign financial accounts over $10,000 aggregate |
| Form 8938 | FATCA | Specified foreign financial assets above threshold |
| Form 5471 | Foreign corporation | Ownership/control reporting thresholds |
| Form 8865 | Foreign partnership | Partnership ownership or transfers |
| Form 8858 | Foreign disregarded entity/branch | Ownership or operation trigger |
| Form 3520 | Foreign trust or large foreign gift | Trust transaction or reportable gift |
| Form 3520-A | Foreign trust annual return | US owner of foreign trust |
The deadlines and extensions section should be reviewed after the form matrix, because Form 8938 follows the income tax return deadline while FBAR has its own FinCEN filing system.
US tax filing deadlines
For 2025 returns, the regular federal deadline is April 15, 2026, and qualifying taxpayers abroad get an automatic filing extension to June 15, 2026. Tax payments are still due by April 15, and Form 4868 extends filing to October 15, 2026.
Use our guide on filing for a US tax extension from abroad and our guide to estimated tax payments. The IRS explains when to file and the automatic 2-month extension for US citizens and resident aliens abroad.
The filing extension changes the paper deadline, but April 15, 2026 remains the payment date for 2025 tax owed.
| Date | What happens | Action |
|---|---|---|
| April 15, 2026 | Regular Form 1040 deadline and tax payment deadline | Pay 2025 tax due or estimated balance |
| June 15, 2026 | Automatic expat filing deadline | File if eligible abroad and no Form 4868 filed |
| October 15, 2026 | Extended filing deadline with Form 4868 | File final federal return |
| April 15, 2026 | FBAR due date | Automatic FinCEN extension applies |
| October 15, 2026 | FBAR automatic extension date | File FinCEN Form 114 electronically |
| April 15, June 15, Sept. 15, 2026, Jan. 15, 2027 | 2026 estimated tax payment dates | Use Form 1040-ES when required |
The following 4 steps help expats who need more time:
- Pay by April 15: pay the best estimate of 2025 tax owed.
- Use June 15 only if eligible: attach the required statement when needed.
- File Form 4868 by the deadline: extend filing to October 15.
- Track FBAR separately: FinCEN Form 114 is not part of Form 1040.
Overseas retirement taxes for US citizens
US citizens abroad report worldwide retirement income for 2025, including US retirement distributions, foreign pensions, annuities, and some foreign social security-type payments. Tax treaties can change which country has taxing rights, but the treaty article and saving clause must be checked country by country.
Read our guide on whether a foreign pension is taxable in the US and our guide to US retirement accounts held by Americans abroad.
The IRS provides the official US tax treaty list, and the SSA provides international Social Security resources.
The following 3 retirement categories need separate treatment:
- Foreign pensions: may be taxable in the US even without Form 1099.
- Retirement annuities: may need basis and distribution calculations.
- US retirement accounts abroad: IRA, 401(k), and Roth treatment follows US rules, while the host country may classify them differently.
Retirement income is still reportable even when no US payer issues Form 1099.
| Retirement item | Often taxable on US return? | May need special reporting? | Common confusion |
|---|---|---|---|
| Foreign pension | Yes, fully or partly | Possible Form 8938, FBAR, Form 1116 | No US form arrives |
| Foreign annuity | Yes, depending on basis | Possible Form 8938 | Cost basis records |
| US IRA/401(k) abroad | Yes under US rules | Form 1099-R if US payer | Host-country treaty treatment |
| Foreign social insurance | Treaty-dependent | Possible Form 1116 | Whether treaty article changes tax |
| Roth IRA abroad | US tax-free treatment may not be respected abroad | Host-country reporting | Foreign country may tax growth |
Based on our client scenario at TFX: A US citizen in France received €24,000 from a French pension in 2025 and no US Form 1099. The pension still needed US review, currency conversion, treaty analysis, and Form 1116 consideration for French tax paid.
How can US citizens living abroad file taxes?
US citizens abroad file by collecting 2025 income records, converting foreign currency to US dollars, choosing FEIE or FTC treatment, checking FBAR/FATCA triggers, and submitting Form 1040 by the applicable 2026 deadline. Multi-country income or overdue returns should be reviewed before filing.
See our guide on filing a US tax return online from abroad and our last-minute US income tax return checklist. The IRS explains foreign currency and exchange rates for reporting in US dollars.
The following 6-step workflow fits most expat filings:
- Collect income records: wages, invoices, pension statements, rent, and investment income.
- Collect tax records: foreign assessments, withholding, and payment confirmations.
- Convert to USD: use a consistent method that fits the transaction type.
- Choose relief method: compare Form 2555, Form 1116, or both.
- Check reporting forms: FBAR, Form 8938, entity forms, trust forms, and gift forms.
- Submit and save records: e-file where available, or mail forms that cannot be e-filed.
Do you pay US taxes if you live abroad? You pay only if US tax remains after the return calculation. The filing workflow still matters because foreign taxes, account thresholds, and deadline choices decide the forms and the final amount.
Paying American taxes while living abroad often means coordinating US filing with host-country tax dates. If the foreign return is not ready by June 15, Form 4868 can extend the US filing deadline to October 15, but it does not extend payment of US tax owed.
Your US taxes, handled by tax professionals – wherever you are
TFX helps US citizens and green card holders abroad file 2025 returns, review FBAR/FATCA triggers, claim available expat tax benefits, and catch up on missed filings when eligible. Penalty relief depends on facts, non-willfulness, IRS rules, and proper submission.
Start with our free intro consultation or review our US expat tax return service if you already know you need to file.
The following 4 service areas match the highest-risk issues in this guide:
- Expat return preparation: Form 1040, Form 2555, Form 1116, and related schedules.
- FBAR/FATCA support: FinCEN Form 114 and Form 8938 threshold review.
- Late-filing cleanup: streamlined procedures and other catch-up paths when eligible.
- Cross-border filing review: income, credits, state issues, pensions, and entity reporting.
The following 3 trust points help set expectations:
- Credentials: returns are prepared by professionals who work with expat filings.
- Process: TFX collects documents securely and maps forms before filing.
- Response expectations: your filing path is reviewed before submission, especially if foreign accounts, pensions, or past-due years are involved.
FAQ
Yes. US citizens abroad report worldwide income on Form 1040 if they meet the filing rules, but credits and exclusions can reduce the final US tax to $0 .
Yes, foreign income still counts for US filing purposes. The taxpayer may then claim the FEIE on Form 2555 or FTC on Form 1116 if eligible.
No. Foreign taxes may reduce US tax through Form 1116, but they do not replace Form 1040, FBAR, Form 8938, or other required US reporting.
The regular payment deadline is April 15, 2026 . Qualifying taxpayers abroad get an automatic filing extension to June 15, 2026 , and Form 4868 can extend filing to October 15, 2026 .
FBAR is required when foreign financial accounts exceed $10,000 in aggregate at any point during 2025. It is filed electronically with FinCEN as Form 114.
Eligible non-willful taxpayers may use streamlined filing compliance procedures. The foreign streamlined route usually requires 3 years of returns, 6 years of FBARs, certification, and payment of tax plus interest.
Renunciation does not erase past tax obligations. It can also trigger expatriation tax rules, so review our guide on citizenship renunciation tax implications and the IRS page on expatriation tax .
US tax returns are reported in US dollars. The IRS allows foreign currency conversion based on the transaction type, with yearly average rates often used for recurring income and spot rates used for specific transactions.
A foreign inheritance is not usually US income, but gifts or inheritances over $100,000 from a foreign person can require Form 3520 reporting. The income produced by inherited assets may also be taxable.
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