Expat Tax Guide for U.S. Citizens Living Abroad (2026)

Expat tax guide for U.S. citizens living abroad (2026)

You’ve built a life outside the United States. Maybe you’re working in London, retired in Spain, running a business in Canada, or raising a family in Australia. The one thing most expats don’t expect: the IRS still considers you a U.S. taxpayer, and the rules are complicated enough that missing the right form can cost more than the tax itself.

This guide explains how U.S. expat taxes work, which forms come up most often, and where the biggest compliance mistakes happen. It is written as a practical overview — not a substitute for advice tailored to your specific facts.

If you already know you have a problem — unfiled returns, missed FBARs, foreign trusts, or an IRS letter in hand — speak with an expat tax attorney before doing anything else.

In this guide:

The basic rule: worldwide income taxation
The tax return and common expat forms
Filing deadlines
Foreign earned income exclusion (FEIE / Form 2555)
Foreign housing exclusion and deduction
Foreign tax credit (Form 1116)
FEIE vs. foreign tax credit: which one to use
FBAR (FinCEN Form 114)
FATCA and Form 8938
Form 3520: foreign gifts, inheritances, and trusts
PFICs and Form 8621
Foreign retirement accounts, ISAs, TFSAs, and local tax-free accounts
Self-employment and business income abroad
Foreign spouse, filing status, and family issues
State tax problems for expats
Common expat tax mistakes
How to fix missed expat tax filings
Renouncing U.S. citizenship and the exit tax
When to call an expat tax attorney
Expat tax checklist
FAQ

The basic rule: U.S. citizens are taxed on worldwide income

U.S. citizens and resident aliens generally must report worldwide income on a U.S. tax return. Moving abroad does not end that obligation. The same is true for many lawful permanent residents unless and until U.S. tax residency is properly ended.

For expats, worldwide income can include:

Salary, wages, bonuses, and commissions earned from a foreign employer
Self-employment income from consulting, freelancing, or an overseas business
Interest from foreign bank accounts
Dividends and capital gains from foreign brokerage accounts
Rental income from property outside the United States
Pension, retirement, or social security-type payments from another country
Crypto, stock options, partnership income, or business income earned abroad

Many U.S. citizens living abroad do not owe U.S. tax after using the foreign earned income exclusion, foreign tax credit, or treaty positions. The problem is that those benefits usually require a filed return. The IRS does not treat “I would not have owed anything” as the same thing as filing correctly.

That distinction matters. You can have no tax due and still face penalties for missing an FBAR, Form 8938, Form 3520, Form 8621, Form 5471, or another international information return.

The tax return still starts with Form 1040

Most U.S. citizens living abroad begin their tax filings with Form 1040. The return then adds forms and schedules based on the taxpayer’s income, location, assets, and family situation.

Common expat forms include:

Form 2555 for the foreign earned income exclusion and foreign housing exclusion or deduction
Form 1116 for the foreign tax credit
Schedule C for self-employment income
Schedule B for interest, dividends, and foreign account questions
FinCEN Form 114, commonly called the FBAR, for foreign financial accounts
Form 8938 for specified foreign financial assets under FATCA
Form 3520 for certain foreign gifts, inheritances, and foreign trust transactions
Form 3520-A for certain foreign trusts with U.S. owners
Form 8621 for passive foreign investment companies, often foreign mutual funds or ETFs
Forms 5471, 8865, or 8858 for certain foreign corporations, partnerships, or disregarded entities

A simple wage earner abroad may only need Form 1040, Form 2555 or Form 1116, and possibly FBAR/Form 8938. A taxpayer with foreign investment accounts, a non-U.S. spouse, a family business, or foreign retirement plans may need a much deeper review.

Expat filing deadlines: April, June, October, and sometimes later

The normal U.S. tax deadline for calendar-year individuals is April 15, adjusted when the date falls on a weekend or holiday.

U.S. citizens and resident aliens abroad may qualify for an automatic two-month extension to file, often moving the filing deadline to June 15. This applies when the taxpayer’s tax home and abode are outside the United States and Puerto Rico on the regular due date, or when the taxpayer is serving in the military outside the United States and Puerto Rico.

That two-month extension is useful, but it is not a free extension to pay. If tax is due, interest generally runs from the regular April deadline. Penalties may also apply depending on the facts.

Taxpayers who need more time can usually request an extension to October 15 with Form 4868. Some expats may also use Form 2350 when they need additional time to meet the bona fide residence or physical presence test for the foreign earned income exclusion.

The FBAR has its own deadline. FinCEN Form 114 is generally due April 15, with an automatic extension to October 15. You do not file a separate request for that FBAR extension.

The practical takeaway: do not wait until June or October to find out which forms you needed. The filing package often takes longer when foreign accounts, foreign employers, foreign pensions, foreign trusts, or PFICs are involved.

Foreign earned income exclusion: Form 2555

The foreign earned income exclusion, often called the FEIE, lets a qualifying taxpayer exclude a limited amount of foreign earned income from U.S. taxable income.

For tax year 2026, the IRS lists the maximum foreign earned income exclusion as $132,900 per qualifying person (per IRS Rev. Proc. 2025-28; confirm the current figure at IRS.gov before filing). For 2025, the amount is $130,000. For 2024, the amount was $126,500.

The exclusion applies to earned income. That usually means wages, salary, or self-employment income for services performed outside the United States. It does not exclude investment income, pension income, capital gains, rental income, or U.S.-source income.

To claim the FEIE, a taxpayer generally must:

Have foreign earned income
Have a tax home in a foreign country
Meet either the bona fide residence test or the physical presence test
File Form 2555 with the U.S. tax return

The bona fide residence test usually looks at whether the taxpayer was a bona fide resident of a foreign country for an uninterrupted period that includes an entire tax year. The physical presence test generally looks at whether the taxpayer was physically present in one or more foreign countries for at least 330 full days during a 12-month period.

The physical presence test sounds mechanical, but travel days can ruin the count. A taxpayer who spends too many days in the United States, travels through the United States, or miscounts partial days can miss the test.

Foreign housing exclusion and deduction

Some expats also qualify for the foreign housing exclusion or foreign housing deduction. This can help taxpayers whose housing costs abroad are higher than the base amount built into the FEIE rules.

The foreign housing amount is generally based on qualified foreign housing expenses over a base housing amount, subject to location-specific limits and other rules. Employees may use the exclusion. Self-employed taxpayers may use the deduction.

Common expenses may include rent, utilities other than telephone charges, real and personal property insurance, occupancy taxes, nonrefundable lease fees, and certain household repairs. Mortgage principal, domestic labor, lavish expenses, and costs that are not reasonable under the rules generally do not qualify.

This area is detail-heavy. A taxpayer in a high-cost city may benefit. A taxpayer using employer-provided housing may need to review the reporting carefully. A taxpayer claiming both the FEIE and foreign housing exclusion should make sure the Form 2555 math is correct.

Foreign tax credit: Form 1116

The foreign tax credit is often the better tool for U.S. citizens living in countries with high income taxes. Instead of excluding a limited amount of earned income, the foreign tax credit may reduce U.S. tax based on foreign income taxes paid or accrued to another country.

Individuals generally claim the foreign tax credit on Form 1116. The credit is subject to limitations and categories of income. It is not a simple dollar-for-dollar refund of every foreign tax paid, but it can offset U.S. tax on foreign-source income when the rules are met.

The foreign tax credit can be especially important for:

Expats living in countries with higher income tax rates than the United States
Taxpayers with investment income that is not eligible for the FEIE
Taxpayers who want to preserve U.S. child tax credit positions, retirement contributions, or other return items affected by excluding income
Taxpayers with foreign tax paid on passive income, rental income, or business income

The foreign tax credit also creates carryover issues when credits cannot be fully used in the current year. That can be helpful, but only if the return is prepared with the future in mind.

FEIE vs. foreign tax credit: which one should you use?

Many expats ask whether they should use the foreign earned income exclusion or the foreign tax credit. The answer depends on income type, country of residence, family situation, long-term plans, and whether the taxpayer has foreign taxes available to credit.

The FEIE may work well when:

The taxpayer has earned income from work performed abroad
The foreign country has low or no income tax
The taxpayer qualifies under the bona fide residence or physical presence test
The taxpayer does not need to use foreign tax credits for that income

The foreign tax credit may work better when:

The taxpayer lives in a higher-tax country
The taxpayer has foreign tax paid on the same income the United States taxes
The taxpayer has investment income, pension income, or other income not covered by the FEIE
Excluding income would create problems with other U.S. tax benefits

The choice is not always annual and isolated. Once you revoke the FEIE, restrictions may apply before you can elect it again without IRS consent. A taxpayer who expects income or country of residence to change should think beyond the current tax year.

For high-income expats, mixed-income households, and taxpayers with stock compensation or self-employment income, this is a planning decision. Do not choose based only on which form seems easier.

FBAR: FinCEN Form 114

The FBAR is one of the most common traps for U.S. citizens abroad.

A U.S. person generally must file an FBAR if the aggregate value of foreign financial accounts exceeded $10,000 at any time during the calendar year. “Aggregate” means the combined maximum value of all reportable foreign accounts, not each account separately.

Foreign financial accounts can include:

Foreign checking and savings accounts
Foreign brokerage accounts
Certain foreign retirement or pension accounts
Foreign mutual fund accounts
Some cash-value insurance or annuity accounts
Accounts where the taxpayer has signature authority, even if the taxpayer does not own the money

The FBAR is not filed with Form 1040. It is filed electronically through FinCEN’s BSA E-Filing system. The form is due April 15 with an automatic extension to October 15.

A common mistake is assuming that no FBAR is required because no account individually exceeded $10,000. If one account reached $6,000, another reached $4,500, and another reached $1,000, the aggregate maximum exceeds $10,000. That can trigger the filing requirement.

Another mistake is assuming foreign accounts do not matter because all income was reported or no tax was due. FBAR is an information reporting rule. It can apply even when the account produced little or no income.

Segal, Cohen & Landis (SCL) has a dedicated FBAR guide for deeper filing, deadline, and penalty issues: https://scltaxlaw.com/international-tax/fbar-attorney/

FATCA and Form 8938

Form 8938 is an IRS form used to report specified foreign financial assets under FATCA. It is separate from the FBAR. Some taxpayers need both.

For unmarried taxpayers living abroad, Form 8938 generally applies when specified foreign financial assets are more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year. For married taxpayers filing jointly and living abroad, the thresholds are generally more than $400,000 on the last day of the year or more than $600,000 at any time during the year.

Form 8938 can cover assets that are not reported on the FBAR, and FBAR can cover accounts that are not handled the same way on Form 8938. The forms are related, but not interchangeable.

Specified foreign financial assets may include foreign financial accounts, foreign stock not held in a financial account, interests in foreign entities, and certain financial instruments or contracts with foreign issuers or counterparties.

Some assets reported on other international forms may not need to be duplicated on Form 8938 in the same way. For example, the IRS instructions include overlap rules for assets reported on Forms 3520, 3520-A, 5471, 8621, 8865, or similar forms. That is a reason to prepare the full international filing package together instead of handling each form in isolation.

Form 3520: foreign gifts, inheritances, and trusts

Form 3520 can apply when a U.S. person receives certain large gifts or bequests from foreign persons, has transactions with foreign trusts, receives distributions from foreign trusts, or is treated as an owner of a foreign trust.

For many expats, the most common Form 3520 issue is a large gift or inheritance from a non-U.S. family member. A foreign gift is not usually taxable income to the recipient, but it can still be reportable. That distinction is where many penalties begin.

A U.S. person generally reports gifts or bequests from nonresident alien individuals or foreign estates when the amount exceeds $100,000. For gifts from foreign corporations or foreign partnerships, the threshold is inflation-adjusted. The IRS lists $20,116 for 2025 and $20,573 for 2026.

Foreign trust reporting can be more complicated. Form 3520 may apply to creation of a foreign trust, transfers to a foreign trust, distributions from a foreign trust, or certain ownership issues. Form 3520-A may also be required for a foreign trust with a U.S. owner.

Penalties can be severe. Depending on the part of the form and the failure, penalties may be based on the value of the property transferred, distributions received, or trust assets involved. The IRS instructions and international information reporting penalty pages describe penalties that can start at the greater of $10,000 or a percentage of the relevant transaction or value.

If you received a large foreign gift, inherited assets from a non-U.S. person, contributed to or received money from a foreign trust, or have a foreign pension or savings arrangement that may be treated as a trust, do not file casually. Review the issue before the deadline.

SCL’s Form 3520 resources: Form 3520 attorney page: https://scltaxlaw.com/international-tax/form-3520/ Form 3520 penalties and defense: https://scltaxlaw.com/international-tax/form-3520-penalties/ Foreign trust reporting: https://scltaxlaw.com/international-tax/foreign-trust-reporting/

PFICs and Form 8621

PFIC stands for passive foreign investment company. The term often catches U.S. citizens abroad by surprise because many ordinary foreign mutual funds, exchange-traded funds, investment trusts, and pooled funds can be PFICs for U.S. tax purposes.

The PFIC rules are harsh. They can turn a normal investment account into a complicated U.S. tax problem. They can also create Form 8621 filing obligations, special tax calculations, interest charges, and election decisions.

A taxpayer may run into PFIC issues through:

A foreign brokerage account holding non-U.S. mutual funds
Canadian mutual funds or Canadian-domiciled ETFs
UK funds held inside an ISA
Foreign pension or investment wrappers
Foreign investment products recommended locally without U.S. tax review

Do not assume an ETF is safe just because it is an ETF. U.S.-listed ETFs may be simpler from a PFIC standpoint, but foreign-domiciled ETFs can still create PFIC reporting. The wrapper matters. The fund’s domicile matters. The taxpayer’s U.S. status matters.

If a taxpayer already owns PFICs, the strategy depends on the year acquired, whether prior reporting was done, whether a QEF or mark-to-market election is available or sensible, and whether cleanup is needed for missed years.

SCL’s PFIC page: https://scltaxlaw.com/international-tax/pfic-reporting/

Foreign retirement accounts, ISAs, TFSAs, and local tax-free accounts

One of the hardest parts of U.S. citizen living abroad taxes is that foreign accounts do not always receive the same treatment in the United States that they receive locally.

An account may be tax-free, tax-deferred, or lightly taxed in the country where the taxpayer lives. The United States may not treat it the same way.

Examples include:

UK ISAs
Canadian TFSAs
Foreign pensions and retirement plans
Foreign employer trusts
Education savings accounts
Local investment wrappers

A UK ISA may be tax-free in the United Kingdom, but that does not automatically make it tax-free for U.S. purposes. A Canadian TFSA may be tax-free in Canada, but U.S. persons often still need to report income annually for U.S. tax purposes. Foreign funds inside those accounts may also create PFIC issues.

Treaty analysis matters. Some retirement plans receive specific treaty treatment. Other accounts do not. The name of the account is not enough. You have to review the legal structure, assets inside the account, income generated, reporting forms, and treaty position.

SCL has a UK ISA guide here: https://scltaxlaw.com/international-tax/uk-isa-tax/

Self-employment and business income abroad

Self-employed expats often focus on the FEIE and forget that self-employment tax is a separate issue.

A U.S. citizen abroad who works as a consultant, freelancer, contractor, creator, or business owner may owe U.S. self-employment tax unless an exception or totalization agreement applies. The foreign earned income exclusion can reduce income tax, but it generally does not eliminate U.S. self-employment tax by itself.

Business owners may also have foreign entity reporting:

Form 5471 for certain foreign corporations
Form 8865 for certain foreign partnerships
Form 8858 for certain foreign disregarded entities or branches
Form 926 for certain transfers to foreign corporations

Those forms carry their own penalty structures. A small foreign company can create a large U.S. reporting problem if the forms are missed.

Digital nomads and location-independent workers should also be aware of:

Source-of-income rules that affect which country taxes what income
Permanent establishment risk in countries where work is regularly performed
Local tax residency that may be triggered by extended stays
VAT or GST obligations in countries where services are provided or received
Whether a U.S. LLC creates tax or registration issues in the country where they live

The U.S. return is only one side of the analysis. Cross-border business arrangements should be reviewed before problems arise, not after.

Foreign spouse, filing status, and family issues

Marriage to a non-U.S. spouse creates additional filing decisions.

A U.S. citizen married to a nonresident alien spouse may be able to file as married filing separately, make an election to treat the spouse as a U.S. resident for tax purposes, or qualify for head of household in limited situations. Each choice has consequences.

Electing to treat a nonresident spouse as a U.S. resident can open access to a joint return, but it may also bring the spouse’s worldwide income and assets into the U.S. reporting system. That can affect foreign account reporting, Form 8938 thresholds, treaty positions, and future exit planning.

Children can also create U.S. tax issues. Some children born abroad are U.S. citizens. Some families miss filing obligations for dual-citizen children with foreign accounts, education funds, or investment accounts. The dollar amounts may be small at first, but the reporting can matter.

Family gifts and inheritances need special care. A foreign parent wiring money for a home purchase may create a Form 3520 filing requirement even when no U.S. income tax is owed on the gift.

State tax problems for expats

Leaving the United States does not always end state tax residency. Some states are more aggressive than others.

A taxpayer may still have state filing issues if they keep:

A home available for use
A driver’s license
Voter registration
Business operations
Bank and brokerage accounts
A spouse or dependents in the state
A pattern of returning regularly

California, New York, and several other states can be especially fact-specific. Moving abroad should be documented like any other residency change. Keep records showing where you lived, worked, paid rent or owned property, enrolled children in school, obtained local identification, and built your actual life.

State residency is not solved by saying “I live overseas now.” It is solved by facts.

Common expat tax mistakes

Many IRS problems for expats start with one of the following mistakes.

Mistake 1: assuming foreign tax replaces the U.S. return Paying tax in another country may help through the foreign tax credit, but it does not automatically replace the U.S. filing requirement.

Mistake 2: using the FEIE when the foreign tax credit is better The FEIE is popular because it sounds simple. It is not always the best answer. In high-tax countries, the foreign tax credit may preserve more long-term value.

Mistake 3: missing FBAR because no single account exceeded $10,000 FBAR uses aggregate value. Multiple small accounts can trigger the rule.

Mistake 4: ignoring Form 8938 because FBAR was filed FBAR and Form 8938 are separate. Filing one does not automatically satisfy the other.

Mistake 5: treating foreign gifts as “not taxable” and stopping there A foreign gift may not be income, but Form 3520 may still be required.

Mistake 6: buying local mutual funds without PFIC review Foreign mutual funds and foreign-domiciled ETFs can create Form 8621 and PFIC tax issues.

Mistake 7: assuming a foreign retirement account is treated like a U.S. retirement account Some foreign pensions have treaty protection. Others do not. Some accounts have annual U.S. income tax, FBAR, Form 8938, Form 3520, or PFIC issues.

Mistake 8: filing quietly after years of noncompliance A quiet disclosure means filing old or amended returns without using the correct IRS compliance procedure. That can be risky, especially when foreign accounts or information returns are involved.

How to fix missed expat tax filings

If you are behind, do not panic and do not file randomly. The right path depends on whether the failure was non-willful, whether tax is owed, whether foreign accounts were involved, and whether the IRS has already contacted you.

Possible cleanup paths include:

Streamlined Foreign Offshore Procedures for eligible non-willful taxpayers residing outside the United States
Streamlined Domestic Offshore Procedures for eligible non-willful taxpayers residing in the United States
Delinquent FBAR submission procedures in limited cases
Delinquent international information return submission procedures in limited cases
IRS voluntary disclosure practice for taxpayers with willfulness or criminal exposure concerns
Reasonable cause submissions for certain penalty situations

The Streamlined Foreign Offshore Procedures generally require the most recent three years of delinquent or amended tax returns and the most recent six years of delinquent FBARs, along with a certification of non-willful conduct. Eligibility and facts matter.

The IRS voluntary disclosure practice is different. It is generally used when there may be willfulness, fraud, criminal exposure, or other high-risk facts. Taxpayers should not self-diagnose willfulness based on hope or fear. This is where attorney-client privilege matters.

SCL’s offshore voluntary disclosure resource: https://scltaxlaw.com/irs-voluntary-disclosure-program-foreign-accounts/

Renouncing U.S. citizenship and the exit tax

Some long-term expats eventually consider renouncing U.S. citizenship or abandoning a green card. The U.S. tax system has specific rules for this.

Under Internal Revenue Code Section 877A, a “covered expatriate” — generally a U.S. citizen or long-term resident who meets certain income, net worth, or compliance thresholds — may be subject to an exit tax. The exit tax generally treats covered assets as if they were sold on the day before expatriation and taxes any resulting gain.

Covered expatriate thresholds and Form 8854 filing requirements are complex. The analysis depends on the individual’s net worth, average annual net income tax liability over the prior five years, and whether five years of tax compliance can be certified.

This is one of the areas where getting advice early — before renouncing — matters most. The exit tax and expatriation rules are beyond the scope of this overview. If this applies to your situation, speak with an expat tax attorney before taking steps to renounce or abandon status.

When to call an expat tax attorney

Not every expat needs a tax attorney for a routine annual return. Many compliant taxpayers with simple wage income can work with a qualified expat tax preparer.

You should consider speaking with an expat tax attorney if:

You have unfiled U.S. tax returns
You missed FBARs or Form 8938
You received an IRS notice, CP15, CP215, penalty letter, or audit letter
You have foreign trusts, foreign gifts, or foreign inheritances
You own foreign mutual funds, foreign ETFs, or other PFICs
You own a foreign company or partnership
You need to decide between streamlined procedures and voluntary disclosure
You are worried the IRS may view past conduct as willful
You want attorney-client privilege before explaining sensitive facts

Attorney-client privilege is different from working with a CPA or enrolled agent. If the issue involves potential penalties, willfulness, offshore accounts, false prior filings, or IRS contact, get legal advice before making statements or filing a cleanup package.

Segal, Cohen & Landis handles IRS tax controversy and international reporting matters for U.S. taxpayers with foreign accounts, foreign assets, foreign trusts, and unfiled returns. The firm brings 33+ years of tax attorney experience, has helped 25,000+ clients, offers fixed fees and a fee guarantee on qualifying matters, and includes former IRS insight through Tolu Edun, a former IRS Senior Revenue Officer, along with attorneys trained at the IRS Office of Chief Counsel. That combination matters when the question is not just how to file a form, but how to protect the taxpayer if the IRS says the form was late, incomplete, or false.

Expat tax checklist

Use this checklist before filing a U.S. return from abroad:

Confirm U.S. status: citizen, green card holder, resident alien, or former resident.
Gather all income: wages, self-employment, pension, rental, investment, crypto, and business income.
Identify foreign taxes paid or accrued.
Decide whether Form 2555, Form 1116, or both should be part of the strategy.
Count foreign account maximum values for FBAR.
Review Form 8938 thresholds for specified foreign financial assets.
Check for foreign gifts, inheritances, and trusts that may require Form 3520 or Form 3520-A.
Review foreign mutual funds, ETFs, and pooled investments for PFIC issues.
Identify foreign corporations, partnerships, and disregarded entities.
Review foreign pensions, ISAs, TFSAs, retirement plans, and insurance wrappers.
Confirm state tax residency and filing obligations.
Review filing deadlines and extension needs.
If prior years are missing, choose a proper cleanup procedure before filing.

This is more than paperwork. The forms tell a story. Make sure the story is consistent before it reaches the IRS.

Questions about your situation? Segal, Cohen & Landis offers confidential consultations for U.S. citizens living abroad. Whether you are filing for the first time, catching up on missed years, or dealing with an IRS notice, our attorneys can help you understand your options. Contact us to schedule a consultation.

FAQ: U.S. citizen living abroad taxes

Do U.S. citizens living abroad have to file U.S. tax returns? Usually, yes, if they meet the normal income filing thresholds. U.S. citizens and resident aliens generally report worldwide income even when they live outside the United States. Tax benefits like the foreign earned income exclusion or foreign tax credit may reduce or eliminate U.S. tax, but they usually require filing a return.

Is foreign income taxable in the United States? Foreign income is generally reportable by U.S. citizens and resident aliens. Whether it is ultimately taxed depends on exclusions, credits, treaties, income type, and the taxpayer’s facts.

What is the foreign earned income exclusion for 2026? For tax year 2026, the IRS lists the maximum foreign earned income exclusion as $132,900 per qualifying person (per IRS Rev. Proc. 2025-28). The 2025 amount is $130,000, and the 2024 amount was $126,500.

What is the difference between FEIE and the foreign tax credit? The FEIE excludes a limited amount of qualifying foreign earned income. The foreign tax credit may reduce U.S. tax based on foreign income taxes paid or accrued. The FEIE is claimed on Form 2555. The foreign tax credit is generally claimed on Form 1116.

Do expats need to file FBAR? A U.S. person generally must file an FBAR if the aggregate value of foreign financial accounts exceeded $10,000 at any time during the year. The FBAR is filed with FinCEN, not attached to Form 1040.

Are FBAR and Form 8938 the same thing? No. FBAR and Form 8938 are separate reporting regimes. Some taxpayers file both. FBAR is filed with FinCEN. Form 8938 is attached to the IRS income tax return.

Do I need Form 3520 for a gift from foreign parents? Possibly. A U.S. person generally reports gifts or bequests from nonresident alien individuals or foreign estates when the total exceeds $100,000. The gift may not be taxable income, but it can still be reportable.

Are foreign mutual funds a problem for U.S. taxpayers? They can be. Many foreign mutual funds and foreign-domiciled ETFs may be PFICs. PFICs can require Form 8621 and may create unfavorable tax treatment if not handled correctly.

Can the IRS restrict or revoke my passport? Yes. The IRS can certify a seriously delinquent tax debt to the State Department, which may then refuse to issue or renew a U.S. passport. Generally this applies when a federal tax debt exceeds a statutory threshold (adjusted annually) and the debt is unresolved. Segal, Cohen & Landis has a dedicated resource on IRS passport restrictions: https://scltaxlaw.com/irs-passport-restrictions/

What if I have not filed U.S. taxes for years while living abroad? Do not simply file old returns without reviewing the best compliance path. Depending on the facts, streamlined procedures, delinquent FBAR procedures, delinquent information return procedures, voluntary disclosure, or reasonable cause arguments may be available.

Should I use an expat tax attorney or a CPA? A CPA may be appropriate for routine compliant filings. An expat tax attorney is often the safer starting point when there are unfiled returns, missed foreign account reports, foreign trust issues, Form 3520 penalties, PFIC problems, IRS notices, potential willfulness concerns, or a need for attorney-client privilege.

Talk with a tax attorney before the forms become penalties

U.S. taxes abroad are manageable when the filing position is built correctly. Problems usually arise when taxpayers guess, rely on local tax treatment, or assume no U.S. tax means no U.S. filing.

If you are a U.S. citizen living abroad, a green card holder overseas, or a taxpayer with foreign accounts or foreign assets, Segal, Cohen & Landis can help you identify what needs to be filed, what can be fixed, and how to approach the IRS before the issue gets worse.

33+ years of tax attorney experience. 25,000+ clients helped. Fixed fees on qualifying matters. Former IRS insight on staff — including a former IRS Senior Revenue Officer and attorneys trained at the IRS Office of Chief Counsel.

Call Segal, Cohen & Landis for a confidential consultation with a tax attorney before you file, amend, or respond to the IRS.