Living Abroad? 10 Tax Truths Every U.S. Expat Should Know

Living abroad might feel like a fresh start, but when it comes to taxes, the U.S. keeps you on its radar. If you’re an American overseas, you’ll want to grab a cup of coffee (or tea, if you’ve gone full European) and dive into these expat tax essentials. Don’t worry, we’ve boiled the long list down to the must-knows.

1. Yes, You Still Have to File

If you’re a U.S. citizen or green card holder living abroad and your gross income is above the 2025 filing threshold—$15,000 (single), $30,000 (married filing jointly), or $22,500 (head of household)—you’re required to file a U.S. tax return.

Even if you don’t owe anything thanks to exclusions or credits, like the Foreign Earned Income Exclusion, you still have to file to claim them.

2. Deadlines Are Different – Sort Of

The U.S. tax deadline is April 15, but expats get an automatic extension to June 15. A kind gesture, until you remember interest on taxes owed still starts ticking in April.

3. Foreign Earned Income Exclusion (FEIE): Your New Best Friend

Earned less than $130,000? You might dodge U.S. taxes on that income, thanks to the FEIE. But first, you need to meet the “physical presence” test – basically, don’t vacation stateside too long.

4. Double Taxation? Not So Fast

Between tax treaties and the Foreign Tax Credit, you probably won’t be taxed twice. But you’ll have to juggle U.S. rules with your host country’s taxes. Fun!

5. Foreign Bank Accounts Must Be Reported

If you have more than $10,000 in foreign accounts, you need to file an Foreign Bank Account Report (FBAR). Forgetting to file can lead to serious penalties.

6. The FATCA Elephant in the Room

If your overseas assets exceed $200,000 (single) or $400,000 (married), Foreign Account Tax Compliance Act (FATCA) reporting is a must. Transparency is non-negotiable.

7. Social Security for Expats

You can usually collect U.S. Social Security while living abroad, but the U.S. doesn’t send social security benefit payments to a few restricted countries—check before relocating. If you’re working overseas, a totalization agreement may help you avoid paying into two systems and protect your U.S. benefit eligibility.

8. Child Tax Credit Applies

Parents may qualify for up to $2,000 per child through the Child Tax Credit—but only $1,700 is refundable, and that part isn’t available if you claim the Foreign Earned Income Exclusion.

9. Freelancers and Self-Employment Taxes

Self-employed expats still owe U.S. self-employment taxes at 15.3%, even on income earned abroad. Plan accordingly to avoid surprises.

10. State Taxes May Follow You

Certain states are particularly sticky when it comes to taxation. Even if you’ve left the U.S., some states may still consider you a resident for tax purposes—especially if you maintain significant ties, such as owning property, holding a driver’s license, voting, or keeping financial accounts there.

In their eyes, if you still look like a resident on paper, you might still be taxed like one.

In Short: Don’t Wing It Taxes are confusing enough in the U.S.; throw in foreign rules, and it’s chaos. Whether you’re a digital nomad in Lisbon or an expat running a business in Berlin, a professional tax preparer can save you time, money, and stress.

Need support? Smith Patrick CPAs specialize in expat taxes and can help you handle your unique situation, wherever you call home.