Americans Abroad
Do Americans Living Abroad Still File U.S. Tax Returns?
Living overseas rarely ends U.S. filing obligations. Here is what continues, what relief exists, and what people most often overlook.
- Author
- Roger I. Chirino
- Published
- Last reviewed
The United States taxes its citizens and lawful permanent residents on worldwide income regardless of where they live. Moving abroad changes many practical things about a tax return, but it does not by itself end the obligation to file one.
Filing thresholds do not depend on owing tax
Whether a return is required is based on income and filing status, not on the final balance due. It is entirely normal for an American abroad to file a full return, claim relief for foreign taxes paid, and owe nothing — while still being required to file.
Two different forms of relief
The foreign earned income exclusion and the foreign tax credit both reduce double taxation, but they work differently. The exclusion removes a limited amount of earned income from U.S. tax. The credit offsets U.S. tax with foreign income tax already paid. Which produces the better result depends on your income mix, the foreign rate, your family situation, retirement contributions, and your plans for future years. Neither is universally preferable, and switching between them is not always free — revoking the exclusion can restrict its use for several years.
Reporting that is separate from the return
Foreign bank and financial accounts may require an FBAR (FinCEN Form 114), filed separately from the income tax return. Specified foreign financial assets may require Form 8938 with the return. Ownership in a foreign company, an interest in a foreign trust, or receipt of a large foreign gift can each trigger their own information return. These obligations frequently exist even when no additional tax is due, and the penalties are tied to the missed form rather than to unpaid tax.
The state you left
- Some states continue to treat a departing resident as a resident until domicile clearly changes.
- Property, licenses, voter registration, and family ties are commonly weighed.
- Planning the state exit at the same time as the move is far easier than arguing it later.
If you are behind
Falling behind is common among Americans abroad, particularly among those who learned of the requirement years after moving. Corrective procedures exist, and the appropriate route depends on whether the failure was non-willful, whether tax is owed, and which forms were involved. A review before filing anything is usually time well spent.
Sources and official references
Educational information only
This article is general and educational and is not individualized tax, accounting, or legal advice. Tax law changes frequently, and the outcome of any situation depends on its specific facts. Please consult our firm or another qualified professional before acting.