Taxes & Finance

US citizens and resident aliens are taxed on worldwide income no matter where they live, and must file Form 1040 whenever gross income meets the filing threshold for their status (just $5 for married filing separately). IRS Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad (Rev. 12/2025), is the controlling reference for expatriate filing. Taxpayers whose tax home and abode are outside the United States on the regular April 15 due date receive an automatic 2-month extension to file (generally June 15, with a statement attached to the return), but interest accrues on any tax unpaid after April 15. Critically, a return generally must be filed even when exclusions or credits eliminate all US liability, because those benefits are elections claimed on the return itself. Two separate information-reporting regimes apply on top of the income tax return. The FBAR (FinCEN Form 114) is required when the aggregate value of foreign financial accounts exceeds $10,000 at any time in the calendar year; it is filed electronically with FinCEN through the BSA E-Filing System, not with the IRS, and is due April 15 with an automatic extension to October 15. Separately, FATCA's Form 8938 (Statement of Specified Foreign Financial Assets) attaches to the Form 1040 at higher thresholds for taxpayers living abroad, and the IRS publishes a comparison chart because one filing does not satisfy the other. To mitigate double taxation, taxpayers may qualify for the Foreign Earned Income Exclusion on Form 2555 ($130,000 for tax year 2025; $132,900 for 2026 per Rev. Proc. 2025-32), the Foreign Tax Credit on Form 1116 (Publication 514), and income tax treaty provisions described in Publication 901 — noting that most treaties contain a 'saving clause' preserving US taxation of its own citizens, and that treaty-based return positions generally require disclosure on Form 8833 subject to a $1,000 penalty for failure to file. Ongoing payment obligations continue abroad. Because foreign employers do not withhold US tax, expatriates who expect to owe $1,000 or more after withholding and credits generally must make quarterly estimated payments using Form 1040-ES under the rules in Publication 505. Self-employed citizens abroad owe US self-employment tax (15.3%: 12.4% Social Security plus 2.9% Medicare) on net self-employment earnings of $400 or more regardless of residence, and the FEIE does not reduce self-employment tax; bilateral totalization agreements can assign coverage to the host country when documented with a certificate of coverage attached to the return. State income tax is a separate, state-law question: states apply their own domicile and residency rules, and some continue to assert taxing jurisdiction over former residents until domicile is affirmatively severed. This summary presents IRS and FinCEN requirements as published and is not tax advice; individual circumstances vary.

Key Points

• 1US citizens abroad must file Form 1040 on worldwide income; those outside the US on April 15 get an automatic 2-month filing extension to June 15 (June 16 in 2025), but interest accrues on tax unpaid after April 15 (IRS Publication 54).
• 2FBAR (FinCEN Form 114) is required if aggregate foreign account balances exceed $10,000 at any time during the calendar year; it is filed with FinCEN's BSA E-Filing System, not the IRS, and records must be kept for 5 years (fincen.gov).
• 3FATCA Form 8938 attaches to the tax return for taxpayers living abroad with specified foreign financial assets over $200,000 on the last day of the year or $300,000 at any time ($400,000/$600,000 married filing jointly); it is in addition to, not a substitute for, the FBAR.
• 4The Foreign Earned Income Exclusion (Form 2555) is $130,000 per qualifying person for 2025 and $132,900 for 2026 (Rev. Proc. 2025-32); it requires a foreign tax home plus either the bona fide residence test or the physical presence test (330 full days in a 12-month period). The 2025 foreign housing expense limitation is generally $39,000.
• 5Foreign Tax Credit (Form 1116, Publication 514): no credit is allowed for foreign taxes paid on income excluded under the FEIE, and revoking an FEIE election bars re-electing it for 5 tax years without IRS approval — key factual constraints when comparing credit versus exclusion.
• 6Quarterly estimated payments via Form 1040-ES are generally required when at least $1,000 in tax will be owed after withholding and credits, since foreign employers do not withhold US tax (Publication 505).
• 7Self-employment tax of 15.3% applies to net self-employment earnings of $400 or more regardless of country of residence, and the FEIE does not reduce it; a totalization agreement with a certificate of coverage from the host country can exempt the income from US SE tax (Schedule SE instructions).