US citizens living abroad: the duties that follow you

What this covers

Citizenship-based taxation means a country taxes people because they are its citizens, not only because they live there. The IRS says US citizens and resident aliens living abroad are subject to tax on worldwide income from all sources and generally follow the same filing rules as people living in the US. Most other countries tax mainly by residence, so a US citizen abroad can face two systems at once.

Start from the rule that citizenship keeps you in the US system

Publication 54 says your worldwide income is generally subject to US income tax regardless of where you are living. That applies to US citizens who have never lived in the US as well as those who moved away.

Tax treaties usually do not change this for citizens. The IRS says most treaties include a saving clause that preserves the right of each country to tax its own citizens and residents as if the treaty were not in effect, with some listed exceptions. Many US citizens therefore cannot reduce their US tax using treaty provisions, though the other country may still give credits or reduced rates. See the saving clause entry.

Your country of residence applies its own rules as well. See tax residency.

Check the current IRS filing table, not a remembered number

The IRS says your income, filing status and age generally determine whether you must file. It points to the filing requirements table in chapter 1 of Publication 54. The amounts change each year, so check the current table for the year you are filing.

Publication 54 also says that if your net earnings from self-employment are $400 or more, you must file a return, even when gross income is below the general threshold.

People living abroad get an automatic 2-month extension to file. The IRS says that for a calendar-year filer the extended date is June 15. Publication 54 adds that interest is still charged on tax not paid by the regular due date.

Understand the foreign earned income exclusion and the foreign tax credit

These are the two main ways the US reduces double tax on income earned abroad. They have different conditions and cannot both be used on the same income.

The foreign earned income exclusion applies to foreign earned income. The IRS says you need a tax home in a foreign country and must meet either the bona fide residence test or the physical presence test. The physical presence test needs at least 330 full days in a foreign country or countries during any period of 12 consecutive months. The maximum exclusion is adjusted each year for inflation, so check the current figure and Form 2555.

The foreign tax credit applies to income taxes paid to a foreign country. The IRS says individuals claim it on Form 1116, and that you cannot take a foreign tax credit for taxes on income you exclude. The IRS also says that in most cases taking foreign taxes as a credit is more advantageous than taking them as an itemized deduction. Which approach fits a given year is a question for a professional.

Separate the two foreign account reports

Foreign account reports tell the government what you hold. They are not tax bills, and the two reports have different rules. Filing one does not replace the other, according to the IRS.

Ask which country's social security applies

Income tax relief does not settle social security. Publication 54 says self-employment tax still applies to self-employment income even when that income is excluded from income tax under the foreign earned income exclusion.

The US has totalization agreements with some countries to avoid double social security taxes. The IRS says a person seeking exemption from US Social Security and Medicare taxes under an agreement must get a certificate of coverage from the social security agency of the relevant country. See totalization agreement.

Do not assume your last state let you go

IRS guidance covers federal tax. It does not decide whether a US state still treats you as resident after you move abroad. States apply their own residence rules, and IRS publications do not describe them.

Ask a professional how the state you left treats people who move abroad, and what evidence it expects. Keep dated records of the ties you ended and the ones you kept.

Know what renunciation does and does not do for tax

Giving up US citizenship is a separate legal process outside the IRS. This guide does not cover that procedure. It covers only the tax side, which the IRS administers.

The IRS says the expatriation tax rules apply to US citizens who have renounced their citizenship. A person is a covered expatriate if their average annual net income tax for the five years before expatriation exceeds an inflation-adjusted amount, if their net worth is $2 million or more on the expatriation date, or if they fail to certify on Form 8854 that they met all federal tax duties for the five preceding years.

For a covered expatriate, the IRS says all property is treated as sold at fair market value on the day before the expatriation date, with an exclusion amount that changes each year. A $10,000 penalty may apply for failing to file Form 8854 when required. See exit tax.

Common misconceptions

Questions to take to a professional

1. Given my income, filing status and age, does the current Publication 54 table say I must file this year?
2. Do I meet the bona fide residence test or the physical presence test, and is my tax home abroad?
3. For my situation, how do the foreign earned income exclusion and the foreign tax credit compare over several years?
4. Which of my accounts, pensions and other assets count for the FBAR and for Form 8938?
5. Does a totalization agreement cover my work, and do I need a certificate of coverage?
6. Could the state I left still treat me as resident, and what would it look at?
7. If I am behind on filings, what official procedures exist to catch up?
8. If I am considering renunciation, would I be a covered expatriate?

Questions people ask

Sources

• U.S. citizens and resident aliens abroadOfficial guidance
• U.S. citizens and residents abroad: Filing requirementsOfficial guidance
• Publication 54 (12/2025), Tax Guide for U.S. Citizens and Resident Aliens AbroadOfficial guidance
• Foreign earned income exclusionOfficial guidance
• Foreign Tax CreditOfficial guidance
• Report of Foreign Bank and Financial Accounts (FBAR)Official guidance
• Comparison of Form 8938 and FBAR requirementsOfficial guidance
• Basic questions and answers on Form 8938Official guidance
• Tax treaties can affect your income taxOfficial guidance
• Totalization agreementsOfficial guidance
• Expatriation taxOfficial guidance