Living outside the United States does not usually end your U.S. tax responsibilities. American citizens and resident aliens are generally taxed on their worldwide income, regardless of where they live, work or receive payment.
That means income earned from a foreign employer, overseas business, freelance work, investments or rental property may still need to be reported on a U.S. federal income tax return.
However, filing a return does not necessarily mean paying tax twice. The Foreign Earned Income Exclusion, Foreign Tax Credit and certain tax treaties may help qualifying taxpayers reduce or eliminate double taxation.
This updated guide explains what Americans abroad should know when filing their 2025 federal tax returns during the 2026 filing season.
Do U.S. Citizens Living Abroad Have to File Taxes?
U.S. citizens and resident aliens living overseas generally follow the same federal income tax filing rules as taxpayers living in the United States.
When determining whether you must file, you normally need to include income from worldwide sources—even income that may later qualify for the Foreign Earned Income Exclusion.
For the 2025 tax year, the general gross-income filing thresholds for most taxpayers are:
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Single, under age 65: $15,750
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Single, age 65 or older: $17,750
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Head of household, under age 65: $23,625
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Head of household, age 65 or older: $25,625
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Married filing jointly, both spouses under 65: $31,500
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Married filing jointly, one spouse age 65 or older: $33,100
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Married filing jointly, both spouses age 65 or older: $34,700
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Married filing separately: $5
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Qualifying surviving spouse, under age 65: $31,500
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Qualifying surviving spouse, age 65 or older: $33,100
These are general thresholds. Different filing requirements may apply to dependents, taxpayers with special types of income and people who can be claimed on another person’s tax return.
Self-employed taxpayers generally must file if their net earnings from self-employment were at least $400—even when their total income falls below the regular filing threshold.
The IRS filing requirements for Americans abroad provide additional guidance.
Important 2026 Tax Deadlines for Americans Abroad
For most calendar-year taxpayers, the regular federal income tax deadline for filing a 2025 return is:
April 15, 2026
Qualifying U.S. citizens and resident aliens who live and work outside the United States on the regular due date generally receive an automatic two-month extension:
June 15, 2026
You do not normally need to file Form 4868 to receive this initial two-month extension. However, you should attach a statement to the return explaining that you qualified for the automatic overseas extension.
Taxpayers who need additional time can generally file Form 4868 and request an extension until:
October 15, 2026
An extension gives you additional time to file, but it does not necessarily eliminate interest on unpaid tax. Interest may be charged from the regular April deadline, even when the taxpayer qualifies for the overseas filing extension.
Read the IRS rules for the automatic two-month extension before relying on it.
Important Tax Forms for U.S. Expats
The forms required depend on your income, accounts, investments and country of residence. Common expat tax forms include:
Form 1040
Form 1040 is the primary federal individual income tax return. Americans living abroad generally use the same form as taxpayers living in the United States.
Form 2555
Qualifying taxpayers use Form 2555 to claim the Foreign Earned Income Exclusion and, when applicable, the foreign housing exclusion or deduction.
Form 1116
Form 1116 is generally used to claim the Foreign Tax Credit for qualifying income taxes paid or accrued to another country.
FinCEN Form 114—FBAR
The Report of Foreign Bank and Financial Accounts, commonly called the FBAR, is filed electronically with the Financial Crimes Enforcement Network rather than as part of Form 1040.
Form 8938
Form 8938 is used to report specified foreign financial assets when their total value exceeds the applicable FATCA reporting threshold.
Depending on your circumstances, you may also need forms covering foreign corporations, partnerships, trusts, gifts, retirement arrangements or ownership interests in overseas businesses.
Foreign Earned Income Exclusion for 2025
For tax year 2025, a qualifying taxpayer may be able to exclude up to $130,000 of foreign earned income.
If two spouses both work abroad and each independently qualifies, each spouse may potentially claim an exclusion of up to $130,000. The exclusion is limited to each person’s qualifying foreign earned income.
The maximum exclusion rises to $132,900 for tax year 2026, but that amount applies to returns generally filed in 2027—not the 2025 return being filed during 2026.
To qualify for the Foreign Earned Income Exclusion, a taxpayer must generally:
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Have foreign earned income;
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Have a tax home in a foreign country; and
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Meet either the bona fide residence test or physical presence test.
Bona Fide Residence Test
A U.S. citizen may qualify by being a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year.
Whether someone is a bona fide resident depends on the complete facts and circumstances. Simply living abroad for a certain number of days does not automatically establish bona fide residence.
Physical Presence Test
A taxpayer may qualify by being physically present in one or more foreign countries for at least 330 full days during a period of 12 consecutive months.
Travel dates are important. Partial days and time spent in international waters or U.S. territory may affect the calculation.
The Foreign Earned Income Exclusion applies to earned income from services performed abroad. It generally does not exclude pension income, Social Security benefits, capital gains, dividends or other passive investment income.
See the IRS explanation of the Foreign Earned Income Exclusion for its eligibility requirements.
Foreign Tax Credit
The Foreign Tax Credit may reduce U.S. income tax based on qualifying income taxes paid or accrued to a foreign country.
Unlike a deduction, a tax credit generally reduces tax liability dollar for dollar, subject to applicable limitations. Taxpayers commonly claim the credit by filing Form 1116.
The Foreign Tax Credit may be preferable to the Foreign Earned Income Exclusion in some cases, particularly when:
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The foreign country has an income tax rate similar to or higher than the U.S. rate;
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The taxpayer wants to preserve certain U.S. tax benefits;
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Income exceeds the maximum Foreign Earned Income Exclusion;
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The taxpayer receives income that does not qualify as foreign earned income; or
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Unused foreign tax credits may be carried to another tax year.
The same income generally cannot be used to claim both the Foreign Earned Income Exclusion and a Foreign Tax Credit for the foreign taxes attributable to the excluded income.
Choosing between the exclusion, the credit or a combination requires careful analysis. The best choice may vary based on income, country of residence, family situation and long-term tax planning.
FBAR Requirements for Foreign Accounts
You may need to file an FBAR if:
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You are a U.S. person with a financial interest in, signature authority over or other authority over one or more foreign financial accounts; and
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The combined maximum value of all qualifying foreign accounts exceeded $10,000 at any point during the calendar year.
The $10,000 threshold applies to the aggregate value of the accounts, not to each account separately.
For example, if one foreign account held $6,000 and another held $5,000 at the same time, the combined value exceeded $10,000 and both accounts may need to be reported.
Foreign bank, brokerage and certain other financial accounts may be reportable. The FBAR is generally due April 15, with an automatic extension to October 15.
Learn more from the IRS guidance on foreign bank account reporting.
Form 8938 and FATCA Reporting
Form 8938 and the FBAR are separate reporting requirements. Filing one does not automatically replace the other.
For qualifying taxpayers living abroad, Form 8938 is generally required when specified foreign financial assets exceed:
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Single or married filing separately: More than $200,000 on the final day of the year or more than $300,000 at any time during the year.
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Married filing jointly: More than $400,000 on the final day of the year or more than $600,000 at any time during the year.
Lower thresholds generally apply to taxpayers living in the United States.
Form 8938 is attached to the federal income tax return, while the FBAR is filed separately. Because the two forms cover overlapping but not identical assets, some taxpayers must file both.
The IRS comparison of Form 8938 and FBAR requirements can help explain the differences.
Do Expats Pay Social Security and Medicare Taxes?
The Foreign Earned Income Exclusion does not eliminate self-employment tax.
Americans who operate a business or work as independent contractors abroad may still owe U.S. Social Security and Medicare taxes on their net self-employment earnings, even when their income qualifies for the FEIE.
A Totalization Agreement between the United States and another country may help determine which country’s social security system covers the taxpayer and may prevent dual social security taxation.
However, the United States does not have a Totalization Agreement with every country. The taxpayer’s work arrangement, legal status and country of residence must be reviewed carefully.
Can Former State Residents Still Owe State Taxes?
Moving abroad does not automatically end state tax residency.
Some states may continue to treat a taxpayer as a resident when the person maintains significant connections, such as:
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A permanent home;
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A driver’s license;
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Voter registration;
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Business interests;
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A mailing address;
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Financial accounts; or
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An intention to return.
Florida does not impose an individual state income tax, which can simplify matters for taxpayers who have legitimately established Florida domicile. However, claiming Florida residency while maintaining substantial connections to another state may still create questions.
State residency is determined separately from federal tax residency and should be evaluated before filing.
What If You Have Not Filed U.S. Taxes for Several Years?
Americans living abroad sometimes discover that U.S. filing and foreign account reporting obligations continued even after they moved overseas.
The IRS Streamlined Foreign Offshore Procedures may offer a path to compliance for eligible taxpayers whose failure to file or report foreign assets resulted from non-willful conduct.
Eligible taxpayers generally submit recent delinquent or amended tax returns, required information returns and FBARs, together with a detailed certification of non-willful conduct.
“Non-willful” generally refers to conduct caused by negligence, inadvertence, mistake or a good-faith misunderstanding of the law.
The streamlined procedures are not appropriate for every case. A taxpayer who is already under examination or whose conduct may have been willful should obtain professional advice before making a submission.
Review the official IRS Streamlined Foreign Offshore Procedures before taking action.
Common Expat Tax Mistakes
Taxpayers living abroad should avoid these common mistakes:
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Assuming that living outside the United States ends the obligation to file.
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Excluding foreign income before determining whether the filing threshold was met.
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Believing the automatic extension also eliminates interest on unpaid tax.
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Forgetting foreign accounts when calculating the $10,000 FBAR threshold.
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Assuming Form 8938 and FBAR are the same requirement.
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Claiming the FEIE without meeting the tax-home and residence or presence tests.
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Using the same foreign income for both FEIE and Foreign Tax Credit benefits.
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Assuming FEIE eliminates self-employment tax.
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Ignoring foreign retirement accounts, business interests, trusts or digital assets.
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Waiting until the deadline to collect foreign income and account records.
Documents to Gather Before Filing
Before preparing a U.S. tax return from abroad, collect:
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Foreign and U.S. wage statements;
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Self-employment income and expense records;
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Foreign income-tax statements;
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Bank and investment account statements;
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Maximum annual balances for foreign accounts;
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Records of foreign housing expenses;
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Entry and exit dates for international travel;
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Foreign pension and retirement account documents;
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Ownership records for overseas companies or partnerships;
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Prior-year U.S. federal and state tax returns; and
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Copies of previously filed FBARs and Forms 8938.
Foreign amounts generally must be converted into U.S. dollars using an appropriate exchange rate and a consistent method.
Get Help Filing U.S. Taxes From Abroad
Expat tax returns can involve several overlapping systems: worldwide-income reporting, foreign tax credits, income exclusions, foreign account disclosures, self-employment tax and state residency.
A filing strategy that works well for one taxpayer may not be appropriate for another. Your country of residence, income sources, account balances, business ownership and future plans can all affect the result.
Naples Taxes provides personalized tax preparation and planning support for U.S. taxpayers with domestic and international filing considerations.
If you are living abroad, returning to the United States or catching up on prior-year filings, contact Naples Taxes or call (239) 431-5755 to discuss your situation.
This article provides general educational information and does not constitute individualized tax or legal advice. Tax rules and filing requirements can vary according to each taxpayer’s circumstances.