US Expat Taxes: The Complete 2026 Guide for Americans Living Abroad
- Who Must File US Expat Taxes?
- The Two Protections That Save You Money
- Beyond Income Tax: What Else You Need to Report
- US Expat Taxes by Situation
- Standard US Expat Tax Forms
- Key Deadlines for the 2025 Tax Year (Filed in 2026)
- Your Biggest Worries (And Why They're Overblown)
- How Much Do US Expat Taxes Actually Cost?
- Get Your US Expat Taxes Done Right
Nearly two out of three expats who file owe $0 in US taxes (IRS data, 2016-2021). Here’s exactly why this happens and how it works for you.
If you just learned you need to file US taxes while living abroad, you’re probably worried about owing massive amounts in double taxation. Here’s the relief: most expats discover they owe little to no actual US taxes.
The US tax system includes powerful protections specifically designed to prevent Americans abroad from paying taxes twice on the same income. While you do need to file to claim these protections, the vast majority of expats end up with zero US tax liability.
Who Must File US Expat Taxes?
As a US citizen or green card holder, you must file a US tax return if your worldwide income exceeds these thresholds:
- Single: $14,600
- Married filing jointly: $29,200
- Head of household: $21,900
These thresholds apply regardless of where you live or earn your income. The United States is one of only three countries in the world that taxes based on citizenship rather than residency (along with Eritrea and North Korea).
Good news: You get an automatic two-month extension. Your filing deadline is June 15 (not April 15), giving you extra time to gather documents and claim your protections. Learn more about expat tax deadlines.
Living abroad and unsure what you need to file for 2026?
The Two Protections That Save You Money
The US government recognizes you’re already paying taxes where you live. Rather than imposing additional taxes, the system offers two powerful shields to protect your foreign income.
Protection #1: The Foreign Earned Income Exclusion (FEIE)
For the 2025 tax year (filed in 2026), you can exclude up to $130,000 of foreign earned income from US taxation entirely. If you’re married and both spouses work abroad, the combined limit is up to $260,000.
What this means: Your foreign salary up to $130,000 is invisible to the US tax system.
To qualify, you must meet one of two tests:
- Physical Presence Test: Be in a foreign country for 330 days out of any 365-day period
- Bona Fide Residence Test: Live abroad as a genuine resident for at least one full calendar year
Most expats easily meet one of these requirements. Compare the two tests to determine which works best for your situation.
Protection #2: The Foreign Tax Credit (FTC)
The Foreign Tax Credit gives you a direct credit for every dollar you pay in foreign income taxes. Pay $20,000 in German taxes? You get a $20,000 credit against any US taxes owed.
What this means: If you live in a country with taxes equal to or higher than US rates, this credit often eliminates your US tax bill completely.
Which protection should you use?
- Use FEIE if: You live in a low-tax or no-tax country, earn under $130,000, or want the most straightforward approach
- Use FTC if: You live in a high-tax country and pay foreign taxes equal to or higher than US rates
- Use both: Many expats apply the exclusion for the first $130,000, then use the Foreign Tax Credit for any excess income
Real Examples: Why You’ll Probably Owe Nothing
Sarah earns $90,000 in Singapore:
- Singapore income tax: $0
- US tax before exclusion: ~$12,000
- Foreign Earned Income Exclusion applied: Excludes the entire $90,000
- US tax owed: $0
Marcus earns $110,000 in Germany:
- German taxes paid: ~$28,000
- US tax before credits: ~$18,000
- Foreign Tax Credit applied: $18,000
- US tax owed: $0
Jennifer and Tom (married) earn $200,000 combined in the UK:
- UK taxes paid: ~$45,000
- US tax before credits: ~$32,000
- Foreign Tax Credit applied: $32,000
- US tax owed: $0
This is why nearly 2 out of 3 expats end up owing nothing to the US.
Beyond Income Tax: What Else You Need to Report
Foreign Bank Account Reporting (FBAR)
If your foreign financial accounts totaled $10,000 or more at any time during the year, you must file an FBAR. This includes checking accounts, savings accounts, investment accounts, and even foreign pensions.
- Deadline: April 15, with automatic extension to October 15
- Filed separately: Not with your tax return
- Penalties for missing: Up to $12,500 per violation for non-willful mistakes
Learn everything about FBAR filing requirements.
FATCA Reporting (Form 8938)
If your foreign financial assets exceed certain thresholds, you must also report them on Form 8938:
- Living abroad (single): $200,000 at year-end or $300,000 at any time
- Living abroad (married): $400,000 at year-end or $600,000 at any time
Understand the difference between FBAR and Form 8938.
US Expat Taxes by Situation
Your tax situation varies based on your employment type, location, and life circumstances. Here are specific guides for different expat situations:
Self-Employed & Business Owners
If you’re self-employed, you face unique challenges. The FEIE doesn’t eliminate self-employment tax (15.3% on net business income for Social Security and Medicare).
Key resources:
- How to file self-employment tax as an expat
- Schedule SE guide for expats
- Foreign business expense deductions
- Overseas contractors and taxes
Behind on Filing?
Don’t panic. The Streamlined Filing Compliance Procedures let you catch up without devastating penalties if your non-filing wasn’t intentional.
You need to:
- File your last three tax returns
- File six years of FBAR (if applicable)
- Certify on Form 14653 that your non-compliance was non-willful
- Pay any taxes owed (usually zero)
In 2023, the IRS approved 86% of streamlined filing applications and waived over $6 million in penalties. Get complete guidance on catching up.
State Taxes for Expats
Moving abroad doesn’t automatically end your state tax obligations. Some states, like California, New York, and Virginia, are notoriously “sticky” and may continue to tax your worldwide income even after you move.
Key resources:
- Do expats pay state taxes?
- How to change state residency while abroad
- California state taxes for expats
Most states don’t recognize the FEIE, meaning your excluded federal income may still be subject to state tax if you maintain state residency.
Moving Abroad
Planning to move abroad? Proper preparation can save thousands. Learn about mid-year moves and how to prorate your FEIE.
Standard US Expat Tax Forms
Beyond Form 1040, here are the most common tax forms expats need:
- Form 2555: To claim Foreign Earned Income Exclusion
- Form 1116: To claim Foreign Tax Credit
- Schedule C: For self-employment income
- Schedule SE: To calculate self-employment tax
- Form 8938: For FATCA reporting
- FinCEN Form 114 (FBAR): For foreign bank account reporting
- Form 5471: If you own 10%+ of a foreign corporation
- Form 8621: For PFIC (Passive Foreign Investment Company) reporting
Key Deadlines for the 2025 Tax Year (Filed in 2026)
- April 15, 2026: Payment deadline (any taxes owed)
- June 15, 2026: Automatic filing extension for expats (no forms required)
- October 15, 2026: Extended deadline (must file Form 4868 before June 15)
- April 15, 2026: FBAR deadline (automatic extension to October 15)
Extensions apply only to filing, not payment. Any taxes owed must be paid by April 15 to avoid interest. View complete expat tax deadlines.
Your Biggest Worries (And Why They’re Overblown)
“I’ll owe massive back taxes.” Remember: Two out of three expats owe $0. The protections usually eliminate any tax liability on foreign income.
“The penalties will destroy me financially.” The IRS offers specific amnesty programs for individuals who are unaware of their tax obligations. In 2023, they approved 86% of streamlined applications and waived over $6 million in penalties.
“This is too complicated for me.” While expat taxes can be complex, most situations follow predictable patterns. The two main tools (FEIE and FTC) cover the vast majority of cases.
“I might get audited.” Your audit risk as an expat is extremely low. Discover expat audit rates and the factors that trigger IRS attention.
How Much Do US Expat Taxes Actually Cost?
Most expats spend between $530 and $700 per year on professional tax preparation. The key question isn’t just cost, but value: proper filing prevents penalties (FBAR violations alone can result in fines of up to $12,500 per account) and ensures you claim every available benefit.
Learn about Greenback’s Expat Tax Services
Get Your US Expat Taxes Done Right
Greenback is an American company founded in 2009 by US expats for expats. We have focused exclusively on expat taxes from the beginning. Many of our CPAs and Enrolled Agents are expats themselves, and because they live in 14 time zones, they experience firsthand the challenges of living abroad.
We’ve helped over 23,000 expats file more than 71,000 returns while maintaining a 4.9-star average across over 1,200 TrustPilot reviews. We’re proud of our high repeat client rates and the level of consistency required to prepare accurate tax returns for clients in 190+ countries.
No matter how late, messy, or complex your return may be, we can help. You’ll have peace of mind, knowing that your taxes were done right.
If you’re ready to be matched with a Greenback accountant, click the Get Started button below. For general questions on US expat taxes or working with Greenback, contact our Customer Champions.
Ready to file your 2026 expat taxes with confidence?
This article provides general information and should not be considered specific tax advice. Tax laws are complex and subject to change. Always consult with a qualified tax professional regarding your specific situation.
