U.S. Expat Tax Filing Requirements for Americans Abroad

Begin with worldwide income and the annual filing requirement

U.S. citizens and resident aliens generally report worldwide income even while living and working outside the United States. Wages, self-employment income, interest, dividends, capital gains, rental income, pensions, and business income should be reviewed under the federal rules that apply to the year.

A return is not automatically required for every person abroad. Filing thresholds depend on filing status, age, dependency status, self-employment income, and other rules. Determine the filing requirement before applying an exclusion or credit; the IRS states that qualifying benefits for Americans abroad generally must be claimed on a filed U.S. return.

Separate income-tax relief from information reporting

The foreign earned income exclusion and foreign tax credit address different parts of the income-tax calculation. Neither automatically resolves a foreign-account or foreign-asset reporting requirement.

• Form 2555 may be used to claim the foreign earned income exclusion or related housing amounts when the tax-home and residence or presence requirements are met.
• Form 1116 may be used to claim a foreign tax credit for qualifying foreign income taxes, subject to separate income categories, limitations, and coordination rules.
• FinCEN Form 114, commonly called the FBAR, is filed separately from the federal income-tax return when its requirements are met.
• Form 8938 is attached to an applicable annual return when the specified-person, asset, and threshold rules require it.
• Ownership of a foreign corporation, partnership, disregarded entity, trust, pension, investment fund, or other arrangement can create separately scoped reporting beyond a standard individual return.

Review deadlines, payments, and state ties separately

Certain taxpayers abroad receive an automatic two-month extension to file a federal income-tax return, but an extension to file does not generally postpone interest on unpaid tax from the regular payment due date. A later extension may also be available when properly requested. Confirm the dates and qualifications for the specific filing year rather than assuming every taxpayer with a foreign address receives the same treatment.

Moving abroad does not automatically end state residency, domicile, withholding, estimated-tax, or source-income obligations. Preserve move dates, homes, work locations, licenses, voter and vehicle records, family ties, and state-source income records for a separate state analysis.

Organize the facts before choosing forms or elections

A U.S. tax engagement does not include preparation of a foreign-country return or foreign legal advice unless that work is separately provided by a qualified professional. Complex international information returns should be identified and accepted in writing before work begins.

• Citizenship, green-card history, countries and dates of residence, and days in the United States
• Foreign and U.S. income statements, tax assessments, payment records, and exchange-rate support
• Foreign financial accounts, signature authority, maximum balances, and jointly owned accounts
• Foreign pensions, investments, trusts, gifts, businesses, entities, and ownership percentages
• Prior federal and state returns, elections, carryovers, and any delinquent filing years