Many U.S. citizens and green card holders assume that moving abroad eliminates their U.S. tax obligations. In reality, the United States taxes its citizens and residents on worldwide income, regardless of where they live or work.

This guide explains the core U.S. tax filing requirements for Americans living and working abroad, common mistakes expats make, and how to remain compliant while minimizing tax exposure.

Do Americans Abroad Still Have to File U.S. Taxes?

Yes. U.S. citizens and green card holders are generally required to file U.S. tax returns annually, even when they reside overseas. Filing obligations are based on citizenship and residency status, not location.

Worldwide Income Reporting

All income earned abroad—including wages, self-employment income, rental income, and investment income—must be reported on a U.S. tax return. Foreign-source income does not automatically exempt a taxpayer from filing.

Foreign Earned Income Exclusion (Form 2555)

The Foreign Earned Income Exclusion allows qualifying taxpayers to exclude a portion of earned income from U.S. taxation if they meet the physical presence or bona fide residence test. Proper qualification and documentation are critical.

Foreign Tax Credit vs Foreign Earned Income Exclusion

In some cases, claiming the foreign tax credit may be more beneficial than the exclusion. Choosing the wrong strategy can result in higher long-term tax liability.

FBAR and FATCA Reporting for Expats

Americans abroad often maintain foreign bank accounts, which may trigger FBAR and FATCA reporting requirements. These forms are separate from the tax return and carry significant penalties if missed.

Common Tax Mistakes Made by Americans Abroad

Common errors include assuming no filing is required, failing to report foreign accounts, misunderstanding tax treaty benefits, and missing filing deadlines.

How to Fix Past Non-Compliance

Taxpayers who failed to file U.S. tax returns or international forms while abroad may qualify for the Streamlined Filing Compliance Procedures. Early correction often reduces penalties significantly.

When to Seek Professional Guidance

Professional guidance is recommended when income is earned in multiple countries, foreign assets are involved, or prior filings are incomplete or incorrect.