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

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

Living, working or retiring abroad does not by itself end a U.S. citizen's federal tax responsibilities. Missing an international reporting form can have consequences even when no income tax is due.

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 have unfiled returns, missed FBARs, foreign trusts or an IRS letter, get advice promptly about deadlines and an appropriate compliance path.

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 report worldwide income when a return is required. Filing thresholds depend on status, age and income; special rules can also require filing. Foreign income potentially excluded under the FEIE still counts when assessing the filing threshold. Moving abroad does not itself end citizenship-based taxation or a green card holder's tax residence.

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

Exclusions, credits or applicable treaty provisions may reduce or eliminate U.S. income tax, but obtaining these benefits generally requires a return. No tax due does not necessarily mean no filing obligation.

Missing an FBAR or international information return can have consequences even without income tax due. Penalty rules differ by form. For example, failing to file Form 8621 can affect the assessment period; it does not carry the same automatic monetary penalty as every other 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.

A U.S. citizen or resident alien may qualify for an automatic two-month extension to file and pay federal income tax if, on the regular due date, they live outside the United States and Puerto Rico and their main place of business or post of duty is outside those areas, or they serve in the military or navy outside those areas. Attach a statement explaining eligibility. For calendar-year taxpayers this generally extends the deadline to June 15.

Interest on unpaid tax generally runs from the regular April deadline. For a taxpayer qualifying for this two-month extension, the late-payment penalty generally runs from the extended June deadline. Further filing extensions do not generally extend payment.

Qualifying taxpayers needing more filing time can generally submit Form 4868 by their extended June deadline to obtain an October 15 filing deadline. Form 2350 may provide additional filing time to meet the FEIE residence or presence test if its separate conditions are satisfied.

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.

The maximum FEIE per qualifying person is $132,900 for 2026 under IRS Rev. Proc. 2025-32, $130,000 for 2025 and $126,500 for 2024. A partial qualifying year can reduce the available amount.

The exclusion covers qualifying compensation for services performed abroad, including eligible wages and self-employment earnings. It generally does not cover passive investment or rental income, pensions, capital gains or U.S.-source earnings. Classification and specific exclusions still matter.

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 requires an uninterrupted foreign residence period including an entire tax year. It is available to U.S. citizens and certain resident aliens who are citizens or nationals of treaty countries. The physical presence test generally requires at least 330 full days in foreign countries during 12 consecutive months. Foreign tax home and other eligibility requirements also apply.

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.

Eligible housing costs may include reasonable rent, qualifying utilities, insurance, occupancy taxes, nonrefundable lease fees and repairs. Property purchase costs, domestic labor, lavish expenses and value-enhancing improvements are generally excluded; consult Form 2555 instructions for the complete rules.

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 may be useful in high-tax countries. It can reduce U.S. tax for qualifying foreign income taxes paid or accrued, subject to limits. Whether it is preferable to the FEIE depends on the taxpayer's facts.

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

Unused qualifying foreign income taxes may be carried to other years under applicable category and timing rules. Exceptions apply, so a current excess does not guarantee a usable future credit.

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

Foreign taxes attributable to excluded income cannot also generate a foreign tax credit. Revoking an FEIE election generally prevents re-electing it for the next five tax years without IRS consent. Consider future income and residence changes before deciding.

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.

Subject to exceptions, a U.S. person with a financial interest in or signature or other authority over foreign financial accounts must file an FBAR when their aggregate value exceeds $10,000 during the calendar year. The threshold is not applied separately to each account; use the valuation and aggregation rules in the FBAR instructions.

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 reports specified foreign financial assets under FATCA and is separate from the FBAR. Some taxpayers need both. An individual who is not required to file an income tax return generally need not file Form 8938.

The higher Form 8938 thresholds for people abroad require a foreign tax home and satisfaction of the specified presence-abroad test. For eligible unmarried individuals or married individuals filing separately, assets must exceed $200,000 at year-end or $300,000 at any time; for eligible joint filers, $400,000 or $600,000 respectively. Merely having an overseas address is insufficient.

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.

Forms 3520, 3520-A, 5471, 8621 and 8865 can provide relief from duplicate detailed reporting of certain assets. Individuals generally must still count those assets toward the Form 8938 threshold and identify the other forms as instructed. Check the applicable overlap rules rather than assuming a complete exemption.

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.

Gifts or bequests from nonresident individuals or foreign estates generally become reportable when the applicable aggregate exceeds $100,000, including related donors under the aggregation rules. The corresponding threshold for purported gifts from foreign corporations or partnerships is $20,116 for 2025 and $20,573 for 2026. Such corporate or partnership payments can also be recharacterized as income.

Form 3520 may cover foreign trust creation, transfers, distributions and U.S. ownership. A U.S. owner must ensure required Form 3520-A reporting or file a timely substitute when necessary. Certain retirement or savings arrangements have reporting exceptions; determine whether the specific arrangement qualifies.

Foreign-gift reporting failures can carry a penalty of 5% per month, capped at 25%. Foreign-trust failures generally have different initial penalties: the greater of $10,000 or the applicable percentage amount: 35% of reportable transfers or distributions, or 5% of the U.S.-owned portion of trust assets for specified ownership-reporting failures. Continuing failures and reasonable-cause relief have separate rules; the correct category matters.

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

A U.S. exchange listing alone does not determine PFIC status. The fund's legal structure and domicile, the foreign corporation income or asset tests, any applicable exceptions and the investor's U.S. status require review. Foreign-domiciled ETFs may be PFICs.

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.

An election to treat a nonresident spouse as a U.S. resident for federal income tax can enable a joint return and bring worldwide income and Form 8938 obligations into scope. Its treaty and future-year effects require review. The election by itself does not establish residence for FBAR purposes.

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

Moving abroad does not necessarily end state tax residence. Domicile, statutory residence rules, state-source income and any available exceptions require a state-specific review.

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

Document where you live, work, maintain a home and family, and establish community ties. For states such as California and New York, the applicable domicile and residence rules must be applied to the full facts. A single retained tie or document does not decide the result.

State filing duties depend on the state's rules and the facts, including any continuing state-source income after residence ends.

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: choosing the FEIE without comparing the foreign tax credit. Excluding income is not always the best result; assess foreign taxes, other benefits and future-year consequences.

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 prior-year returns without assessing the available compliance options. Filing outside a procedure can leave penalties or other exposure unresolved. Late filing is not automatically improper, but the facts and available procedures should be reviewed promptly.

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 meeting the specific nonresidency and other requirements
Streamlined Domestic Offshore Procedures for eligible non-willful taxpayers meeting the domestic requirements, including prior-return requirements and the applicable offshore penalty
Late FBAR filing with an accurate explanation and review of any applicable compliance procedure; filing late does not automatically waive penalties
Delinquent international information return submission under current instructions; eligibility, filing method and potential penalties require review
IRS voluntary disclosure practice for taxpayers with willfulness or criminal exposure concerns
Reasonable cause submissions for certain penalty situations

The foreign streamlined procedure generally covers the latest three tax-return years whose due dates have passed and six FBAR years whose due dates have passed. Required information returns, a non-willfulness certification, and payment of tax and interest are part of the submission. Specific nonresidency and other eligibility tests apply; an IRS civil examination or criminal investigation generally prevents use. Qualifying compliant submissions can receive the procedure's penalty relief; the domestic procedure has different rules.

The IRS voluntary disclosure practice requires a timely, accurate and complete disclosure and cooperation. It may be relevant where willfulness or criminal exposure is a concern, but it does not guarantee immunity. Obtain legal advice about eligibility and protection of confidential communications before submitting sensitive facts.

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, covered-expatriate status can result from an average income-tax-liability test, a net-worth test or failure to certify the required prior compliance, subject to exceptions. The regime applies to relevant former citizens and long-term residents. Most covered property is generally treated as sold the day before expatriation, with an exclusion for part of the gain; deferred compensation, certain tax-deferred accounts and nongrantor trusts have special rules.

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 need advice about protecting confidential legal communications before discussing sensitive facts

Attorney-client privilege can protect qualifying confidential legal communications, but it has limits and is not automatic for ordinary return preparation or underlying facts. Section 7525 provides a narrower privilege for certain federally authorized tax-practitioner advice in specified noncriminal federal tax matters. Get legal advice about the applicable protection, exceptions and possible waiver.

Segal, Cohen & Landis can discuss international tax reporting and IRS controversy issues. Before engaging a professional, confirm relevant experience, who will handle the matter, the scope of representation and the written fee terms. No specific result is guaranteed.

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.

For help assessing filing obligations, missed years or an IRS notice, contact Segal, Cohen & Landis to discuss a consultation and the scope of assistance.

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 maximum FEIE for 2026? It is $132,900 per qualifying person under IRS Rev. Proc. 2025-32. The maxima are $130,000 for 2025 and $126,500 for 2024. Partial-year qualification can reduce the available exclusion.

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 an FBAR? Subject to exceptions, a U.S. person with financial interest in or signature or other authority over foreign financial accounts must file when their aggregate value exceeds $10,000 during the year. File electronically with FinCEN, separately from 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 gifts from foreign parents require Form 3520? They may. The reporting threshold for gifts or bequests from nonresident individuals or foreign estates generally exceeds $100,000 in the applicable aggregate, including related donors. A nontaxable gift 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 tax debt affect a passport? The IRS can certify qualifying seriously delinquent tax debt to the State Department, which may deny or revoke a passport. Certification requires more than exceeding the annually adjusted debt threshold: a federal tax lien with relevant administrative remedies exhausted or lapsed, or a levy, generally must have occurred. Exceptions apply. SCL's resource: https://scltaxlaw.com/irs-passport-restrictions/

What if I have missed years of U.S. filings abroad? Promptly assess the applicable filing and compliance options, including streamlined procedures, late FBAR or information-return filings, voluntary disclosure and any reasonable-cause position. Eligibility and penalty treatment differ; no option guarantees relief.

Should I use an expat tax attorney or a CPA? A qualified preparer may handle routine compliant returns. Legal advice is useful for unfiled returns, foreign reporting failures, penalties, IRS disputes, possible willfulness or questions about privilege. Confirm the professional's relevant qualifications and engagement scope.

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 or green card holder abroad, or have foreign accounts or assets, Segal, Cohen & Landis can discuss filing requirements, possible corrections and how to respond to the IRS.

Ask about the team's relevant experience, available services, fee terms and who will handle your matter. Confirm the engagement in writing.

Contact Segal, Cohen & Landis to discuss a consultation before filing, amending or responding to the IRS.