Living abroad doesn’t exempt you from U.S. taxes. If you’re a U.S. citizen, you’re still required to file a federal tax return every year and report your worldwide income—just like someone living in the States.
But unlike stateside taxpayers, expats often face extra reporting requirements. If you have foreign income, foreign bank accounts, foreign financial assets, or ties to foreign businesses, you’ll likely need to file additional tax forms. Knowing which forms apply can help you reduce your taxable income, claim valuable tax benefits, and avoid double taxation or serious IRS penalties.
What You Have Determines What You File
| If you have... | You must file... | Why it matters |
|---|---|---|
| Foreign earned income and want to exclude it | Form 2555 | To claim the Foreign Earned Income Exclusion (up to $126,500 for 2024) |
| Foreign income taxes paid and want to offset U.S. tax | Form 1116 | To claim the Foreign Tax Credit and avoid double taxation |
| Foreign bank accounts with a total balance over $10,000 at any time | FBAR (FinCEN Form 114) | Required under Bank Secrecy Act; filed electronically and separate from Form 1040 |
| Foreign financial assets exceeding FATCA thresholds | Form 8938 | Required under FATCA; filed with your federal tax return |
| Ownership (10% or more) in a foreign corporation | Form 5471 | Reports financials of the foreign corporation |
| Ownership or control in a foreign partnership | Form 8865 | Reports your share of partnership income and structure |
| Ownership of a foreign disregarded entity (like a sole proprietorship abroad) | Form 8858 | Reports income and operations of the foreign entity |
| Holdings in passive foreign investment companies (PFICs), like foreign mutual funds | Form 8621 | Required for each PFIC; includes detailed reporting rules |
| Foreign trust ownership or receipt of large foreign gifts | Form 3520 / Form 3520-A | Reports foreign trusts or gifts over $100,000 |
| Using a tax treaty to reduce or eliminate U.S. tax | Form 8833 | Reports treaty position to the IRS to avoid or reduce U.S. taxation |
Explanation of Each Form
Form 2555 – Foreign Earned Income Exclusion (FEIE)
Qualifying expats can exclude up to $130,000 of foreign earned income for the 2025 tax year. You must meet the:
- Bona Fide Residence Test or
- Physical Presence Test (330 full days in a foreign country within a 12-month period).
The form purpose is to reduce taxable income and prevent double taxation. Expats must file this form to claim the FEIE.
Form 1116 – Foreign Tax Credit (FTC)
The foreign tax credit allows a dollar-for-dollar credit for foreign income taxes paid on income not excluded under the FEIE. You must allocate income properly—you can’t use both exclusions on the same income.
FTC can be more beneficial for expats in high-tax countries. The maximum FTC depends on the ratio of foreign income to gross income and your total U.S. tax liability.
FBAR (FinCEN Form 114) – Foreign Bank Account Report
You must file FBAR if the aggregate value of your foreign bank accounts exceeded $10,000 at any point during the year. This includes investment accounts and other financial accounts.
The FBAR is separate from your tax return and must be filed electronically. Failing to file can result in severe penalties, including fines. The IRS and Treasury have systems to report foreign financial accounts. Foreign banks are required to report accounts held by U.S. citizens to the IRS under FATCA.
Form 8938 – FATCA Reporting of Foreign Financial Assets
Under FATCA, you need to file Form 8938 if your foreign assets exceed:
- $200,000 for single filers living abroad,
- $400,000 for married filers living abroad.
This form covers foreign bank, investment, and other financial accounts. It is separate from FBAR but often both apply. Failing to report may result in penalties.
Form 5471 – Information Return of U.S. Persons With Respect to Certain Foreign Corporations
Form 5471 applies to certain U.S. persons with specified relationships to foreign corporations. It is not automatically required from every U.S. officer, director, or person who owns at least 10% of a foreign corporation.
The Form 5471 filer categories cover several different situations. These include certain U.S. shareholders of controlled foreign corporations or section 965 specified foreign corporations, U.S. persons who control a foreign corporation, specified stock acquisitions or dispositions, and certain U.S. citizen or resident officers and directors when a U.S. person makes a reportable stock acquisition.
For example, the 10% threshold may be relevant when a person acquires or disposes of shares, becomes a U.S. person, or qualifies as a U.S. shareholder of a CFC or section 965 specified foreign corporation. It does not mean that every 10% shareholder must file Form 5471 every year.
Direct, indirect, and constructive ownership rules can affect whether Form 5471 is required. Our Form 5471 filing guide explains who must file, the different filer categories, and the reporting requirements. If your foreign company qualifies as a controlled foreign corporation, our CFC guide explains the additional GILTI and Subpart F tax rules that may apply.
Form 8865 – Foreign Partnerships
Required if you control or have significant interest in a foreign partnership. It reports your share of income, deductions, and financial position.
Form 8858 – Foreign Disregarded Entities
File if you own a foreign business treated as a disregarded entity under U.S. tax laws.
Form 8621 – Passive Foreign Investment Companies (PFICs)
Required for foreign mutual funds or other passive foreign investment companies. You must file even without distributions. PFICs receive special IRS scrutiny.
Forms 3520 & 3520-A – Foreign Trusts and Gifts
- Form 3520: Report gifts over $100,000 from a foreign person or involvement with foreign trusts.
- Form 3520-A: Filed by U.S. owners of foreign trusts.
Form 8833 – Treaty-Based Return Position Disclosure
File when using applicable tax treaties to reduce or eliminate U.S. tax on same income. Treaties can provide critical tax benefits to prevent double taxation.
Key Deadlines for Expats
- April 15: File federal tax return (Form 1040). U.S. citizens living abroad must pay taxes on their worldwide income by April 15 to avoid penalties.
- June 15: Automatic 2-month extension for citizens living abroad.
- October 15: Final extension deadline if requested.
- FBAR: Also due April 15 with automatic extension to October 15. Must be filed electronically.
Essential Filing Notes
- Americans living abroad qualify for special exclusions and credits.
- You must file Form 1040 annually even while living abroad.
- Determine your filing status each year. Your age generally determine standard deduction and filing threshold.
- The IRS can track foreign income and financial accounts through FATCA and global cooperation.
- Failure to file required tax forms like FBAR and FATCA can lead to IRS penalties and pay interest on late payments.
- Some states may continue to tax expats depending on filing requirements table and state residency rules.
Need Help Filing?
US taxpayers—including citizens living abroad and resident aliens—still have tax obligations under the Internal Revenue Code. You may need to file a U.S. tax return and report foreign income, foreign assets, foreign financial accounts, and even foreign housing expenses.
Whether it’s foreign income taxes paid, tax treaties, or passive foreign investment companies, getting it right means knowing which tax forms to file. Filing the wrong income tax return—or missing a reporting threshold—can increase your tax liability.
Not sure what you need to file? Contact us—we offer free tax advice to US expats and can help you figure it out, no strings attached.
