Complete Guide to US Expat Tax Filing 2026

As a US citizen or green card holder living abroad, you are required to file US tax returns regardless of where you live or earn income. The US is one of only two countries in the world that taxes based on citizenship rather than residency. This guide covers the key rules, updated figures, and planning considerations for the 2025 tax year and 2026 income.

Who Must File

• US citizens living anywhere in the world
• Green card holders (lawful permanent residents)
• US persons with worldwide income above the applicable filing threshold

Filing Thresholds for 2025 (returns filed in 2026)

• Single, under 65: $14,600
• Married filing jointly, both under 65: $29,200
• Head of household, under 65: $21,900

Even if your income falls below these thresholds, filing may still be required or advisable — for example, to claim a refund of withheld taxes, to satisfy FBAR-related obligations, or to establish a filing record.

Foreign Earned Income Exclusion (FEIE)

The FEIE allows qualifying expats to exclude foreign earned income from US taxation up to the annual limit. To qualify, you must meet either the Physical Presence Test or the Bona Fide Residence Test, and your tax home must be in a foreign country.

What Qualifies as Foreign Earned Income

• Wages, salaries, and professional fees earned abroad
• Self-employment income from services performed outside the US
• Bonuses and commissions from foreign sources

Physical Presence Test

Be physically present in one or more foreign countries for at least 330 full days during any 12 consecutive months. Travel days to and from the US count as US days. The 12-month period does not need to align with the calendar year.

Bona Fide Residence Test

Be a bona fide resident of a foreign country for an uninterrupted period that includes an entire tax year. The IRS evaluates the totality of facts: where your home is, your visa status, your intent to remain, and your social and economic ties. There is no day-count formula — it is a facts-and-circumstances determination.

Foreign Housing Exclusion / Deduction

In addition to the FEIE, qualifying expats may exclude or deduct certain housing costs (rent, utilities, etc.) above a base amount. The housing exclusion limit varies by location and is updated annually.

Foreign Tax Credit

If you pay income taxes to a foreign government, you may claim the Foreign Tax Credit (FTC) on Form 1116 to offset your US tax liability dollar-for-dollar. The FTC is often more advantageous than the FEIE for expats in high-tax countries (such as Germany, France, or the UK) where foreign tax rates exceed US rates.

The FEIE and FTC can be used together in some situations — for example, using the FEIE on earned income up to the exclusion limit and the FTC on income above that limit or on passive income. However, electing the FEIE can reduce or eliminate your ability to contribute to a Roth IRA, since FEIE-excluded income is not treated as compensation for IRA purposes. A careful analysis of your specific situation is essential before electing either method.

FBAR and FATCA Reporting

FBAR (FinCEN Form 114)

Required if you have a financial interest in, or signature authority over, foreign financial accounts with an aggregate value exceeding $10,000 at any point during the calendar year. Filed electronically through FinCEN's BSA E-Filing System — separately from your tax return.

• Deadline: April 15, with an automatic extension to October 15
• Penalties: FinCEN civil penalty maximums are adjusted annually for inflation. After Bittner v. United States (2023), the Supreme Court held that non-willful FBAR penalties apply per report (per year), not per account — a significant change from prior IRS practice.

FATCA (Form 8938)

Required for specified foreign financial assets above certain thresholds. Filed with your tax return.

• Single/MFS living abroad: $200,000 (year-end) or $300,000 (any time)
• MFJ living abroad: $400,000 (year-end) or $600,000 (any time)

FBAR and FATCA overlap but are not identical — both may be required for the same accounts.

Key Deadlines for 2026 (2025 Tax Year)

Common Mistakes to Avoid

• Not filing US returns while living abroad — the obligation does not disappear when you leave the US
• Failing to report foreign bank accounts (FBAR) — penalties can be severe even for non-willful violations
• Automatically choosing FEIE without analysis — in high-tax countries, the FTC is often more beneficial
• Miscounting travel days — travel days to/from the US count as US days under the Physical Presence Test
• Missing state tax obligations — some states continue to assert residency even after you move abroad
• Not maintaining documentation — travel logs, lease agreements, and foreign tax receipts are essential
• Electing FEIE and then contributing to a Roth IRA — FEIE-excluded income is not treated as compensation for IRA purposes