US · Journal
US Tax for Americans Abroad: The 2026 Compliance Guide
Do you have to file US taxes if you live abroad? Who must file, 2025 thresholds, FEIE ($130,000 / $132,900), FTC, FBAR, Form 8938 and a master checklist.
Do you have to file US taxes if you live abroad? Who must file, 2025 thresholds, FEIE ($130,000 / $132,900), FTC, FBAR, Form 8938 and a master checklist.
Yes. US citizens and green card holders generally must file a US federal return every year they meet the filing threshold, wherever they live, because the United States taxes on the basis of citizenship, not residence. Living abroad changes how much you owe, not whether you file: the foreign earned income exclusion and foreign tax credit can reduce or eliminate the tax, but only on a filed return, and foreign accounts, companies and trusts carry separate reporting duties.
The IRS guidance on filing requirements for US citizens and residents abroad is plain: citizens and residents living or traveling abroad generally file income, estate and gift tax returns, and pay estimated tax, just as people living in the US do.
That covers:
These are the gross income thresholds in the 2025 Form 1040 instructions (Chart A). Gross income means worldwide income before exclusions, so a salary you later exclude under the FEIE still counts.
| Filing status | Under 65 | 65 or older |
|---|---|---|
| Single | $15,750 | $17,750 |
| Married filing jointly | $31,500 | $33,100 (one spouse 65+) / $34,700 (both) |
| Married filing separately | $5 | $5 |
| Head of household | $23,625 | $25,625 |
| Qualifying surviving spouse | $31,500 | $33,100 |
Many Americans married to non-US spouses file separately, where the $5 threshold is effectively zero. Publication 54 confirms that if your net earnings from self-employment are $400 or more, you must file whatever your other income.
For a 2025 return, the ordinary due date is April 15, 2026. On top of that, there are three layers of extension:
1. The automatic 2-month extension to June 15. This applies if you live outside the US and Puerto Rico and your main place of business or post of duty is outside the US and Puerto Rico, or if you are in military service on duty abroad. You don't file a form. You attach a statement to your return saying which situation qualifies you. This extends the time to file and pay, but interest runs from April 15.
2. Form 4868 to October 15. If June 15 isn't enough, file Form 4868 by June 15 to get the extra time, up to six months in total. This is an extension of time to file, not to pay.
3. Form 2350 for people who haven't yet qualified for the exclusion. If you moved abroad mid-year and won't pass either test by the due date, Form 2350 requests an extension to (usually) 30 days after you expect to qualify. File it by the due date.
If you expect to owe, estimate and pay by April 15. For a calendar view of every US, UK and UAE date, see our tax deadlines page.
The foreign earned income exclusion removes a capped amount of earned income (wages, salary, self-employment profit) from US income tax. Per the Form 2555 instructions and the IRS tax year 2026 inflation adjustments:
| Tax year | Maximum FEIE per person |
|---|---|
| 2025 (return filed in 2026) | $130,000 |
| 2026 (return filed in 2027) | $132,900 |
To qualify you need foreign earned income, a tax home in a foreign country, and one of two tests:
What the FEIE does not do:
Spouses who both work abroad each get their own exclusion.
On top of the FEIE, you can exclude (employees) or deduct (self-employed) some foreign housing costs. Per the IRS housing guidance, the base amount is 16% of the maximum exclusion, prorated by days, and only costs above it count. Costs are capped: for most locations in 2025 the cap is $39,000 (30% of $130,000), and many expensive cities have higher limits set by IRS notice. For employees, salary counts as "employer-provided amounts", so no separate housing allowance is needed.
Take a single US citizen working in a country with no income tax who passes the physical presence test for all of 2025. She earns a $150,000 salary and pays $45,000 in qualifying rent in a location with no higher-cost adjustment.
| Step | Amount |
|---|---|
| Foreign salary | $150,000 |
| FEIE (2025 maximum) | –$130,000 |
| Housing expenses, capped at the 2025 limit | $39,000 |
| Less base amount (16% × $130,000) | –$20,800 |
| Housing exclusion | –$18,200 |
| Income left subject to US tax | $1,800 |
Because of stacking, that $1,800 is taxed at the marginal rate of a $150,000 earner. She still files Form 1040 with Form 2555, plus an FBAR if her accounts exceed $10,000.
The foreign tax credit reduces your US tax dollar for dollar by the foreign income tax you've paid on the same income. Only income-type taxes qualify, so VAT and property taxes don't. According to the Form 1116 instructions, the credit is worked out separately for each category of income (general, passive and others), and unused foreign tax can be carried back one year and forward ten years. If all your foreign income is passive, it's reported on payee statements and your creditable foreign taxes are no more than $300 ($600 joint), you can claim the credit without Form 1116, but you then give up carryovers for that year.
| Your situation | Usually better | Why |
|---|---|---|
| No or low income tax country (for example, the UAE) | FEIE (+ housing) | There's little or no foreign tax to credit |
| Income tax higher than the US (for example, the UK at higher rates) | FTC | Credits can wipe out US tax and build carryovers for future years |
| Earned income above the FEIE cap | Often FTC | The excess is stacked at high rates under the FEIE |
| You want to claim refundable credits such as the additional child tax credit | Often FTC | Claiming the FEIE blocks the refundable child credit |
| Large investment income | FTC for that income | The FEIE never covers passive income |
| You may move to a low-tax country later | Model both | Revoking the FEIE bars it for 5 years without IRS consent |
On that last row: per the Form 2555 instructions, revoking the exclusion bars it for your next five tax years without IRS approval, so choose with multi-year projections.
The FBAR is filed electronically with FinCEN, separately from your return. You must file if you have a financial interest in, or signature authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during the calendar year. Add together the highest balance of every account, so several modest accounts can trigger it.
If you've missed years, see our guide to catching up on missed FBARs.
Form 8938 is filed with your return (only if you must file one) and doesn't replace the FBAR. The higher "living abroad" thresholds apply if you meet the bona fide residence or 330-day test. Per the Form 8938 instructions:
| Filer | Living abroad: last day of year | Living abroad: any time in year | Living in the US: last day / any time |
|---|---|---|---|
| Single or married filing separately | more than $200,000 | more than $300,000 | $50,000 / $75,000 |
| Married filing jointly | more than $400,000 | more than $600,000 | $100,000 / $150,000 |
The penalty for failing to file is $10,000, plus $10,000 for each 30 days of non-filing after 90 days from an IRS notice, up to a further $50,000. There's also a 40% penalty on any underpayment linked to an undisclosed foreign asset.
These forms are where expat compliance gets expensive:
Penalties are listed on the IRS international information reporting penalties page; reasonable-cause relief exists but isn't guaranteed.
Moving abroad doesn't automatically end state residency. Many states keep taxing you while you remain domiciled there. A home kept available, a state driver's license, voter registration and family left behind all keep ties alive. Cut what you can, document your intention to stay abroad, and file a part-year return for the year you leave if required. Our residency guide covers the tests in more depth. Our guide to breaking state tax residency when you move abroad covers this in full.
Self-employed Americans abroad owe US self-employment tax (Social Security and Medicare) on net earnings of $400 or more, even when the FEIE wipes out their income tax. The relief is a totalization agreement: the US has Social Security agreements with a number of countries that stop dual contributions on the same work. To rely on one, you get a certificate of coverage from the country where you pay into the system and attach a copy to your Form 1040 each year you're exempt. Here is what to know about the US-UK certificate of coverage.
| Obligation | Who | Form | Deadline (2025 year) | Penalty exposure |
|---|---|---|---|---|
| Federal income tax return | Citizens and green card holders over the gross income threshold; $400+ net self-employment | 1040 | Apr 15, 2026; auto to Jun 15 abroad; Oct 15 with 4868 | 5% of unpaid tax per month, max 25%; minimum $525 if over 60 days late |
| Foreign earned income exclusion | Those with foreign earned income passing bona fide residence or 330-day test | 2555 | With the 1040 | Exclusion may be unavailable if not claimed on a timely return |
| Foreign tax credit | Those who paid foreign income tax | 1116 | With the 1040 | Lost credit or carryovers |
| FBAR | Foreign accounts over $10,000 in aggregate at any time | FinCEN 114 | Apr 15; auto to Oct 15 | Non-willful up to $10,000; willful up to greater of $100,000 or 50% (inflation-adjusted) |
| FATCA asset report | Abroad: over $200,000 year-end / $300,000 any time (single) | 8938 | With the 1040 | $10,000, plus up to $50,000 after notice; 40% understatement penalty |
| Foreign corporation | Certain officers, directors and shareholders | 5471 | With the 1040 | $10,000 per failure, plus up to $50,000 |
| Foreign partnership | Certain partners | 8865 | With the 1040 | $10,000 per failure, plus up to $50,000 |
| Foreign gifts over $100,000 or trust transactions | Recipients, owners, beneficiaries | 3520 | With the 1040 (extensions apply) | Gifts: 5% per month, max 25%; trusts: greater of $10,000 or 35% |
| Foreign trust annual return | US-owned foreign trusts | 3520-A | 15th day of 3rd month after trust year end | Greater of $10,000 or 5% of trust assets |
| PFIC holdings | Holders of non-US funds | 8621 | With the 1040 | Punitive default tax regime on distributions and gains |
| State return | Anyone still domiciled in a state | State form | State due date | State penalties and interest |
The failure-to-file figures come from the IRS failure-to-file penalty page.
Acting before the IRS contacts you matters. For non-willful filers, the Streamlined Foreign Offshore Procedures generally work like this:
1. Confirm eligibility. In at least one of the three most recent years whose due date has passed, you had no US abode and were outside the US for at least 330 full days, and your failures were non-willful (negligence, inadvertence, mistake or a good-faith misunderstanding).
2. Prepare three years of returns. Late original or amended 1040s with every required information return (5471, 8938, 3520 and so on).
3. File six years of FBARs electronically with FinCEN.
4. Sign Form 14653, the non-willful certification, with a full factual narrative.
5. Pay all tax and interest due. Qualifying submissions aren't hit with failure-to-file, failure-to-pay, accuracy-related, information-return or FBAR penalties for the covered years.
The procedures aren't available once the IRS has opened an examination. Read our full walkthrough of the Streamlined Foreign Offshore Procedure, and our missed US tax returns guide if you're weighing up your options.
A salaried expat with simple finances can often self-file with care. Professional input earns its keep when you own a foreign company, hold non-US funds, have a trust or inheritance, are self-employed, or are catching up. At Next Tax Source, an IRS Enrolled Agent reviews and signs off every US return, and cross-border work is coordinated with the relevant country specialist. If that sounds useful, see our US–UK expat tax service. This article is general information, not advice for your circumstances. We cover the self-employment tax trap in Streamlined filing separately.