Top Ten Expat Tax Tips for Americans Living Abroad (2026)
Top Ten Tax Tips for Expat Americans Filing Abroad (2026)
Each year, Americans abroad must file their U.S. tax returns just as if they were U.S. persons living in the United States. Whether the expat is a U.S. citizen, lawful permanent resident, or foreign national who meets the substantial presence test, if they are a U.S. person for tax purposes, they are still required to file U.S. tax returns. Most expats will receive an automatic extension until June instead of April to file the tax return. When it comes to filing U.S. tax returns as an American abroad, there are a few nuances for taxpayers living overseas, such as the different FATCA threshold requirements for foreign residents, along with various income and tax reduction strategies. Though from a baseline perspective, Americans abroad are still required to file U.S. taxes. Let’s look at 10 important facts about expat tax filing.
Due Date and 2 Month Automatic Extension
Taxpayers who are considered foreign residents obtain an automatic two-month extension on their tax filings. Thus, while the tax return deadline for U.S. residents is April 15th, Americans living abroad typically have until June 15th to file the return without having to file an extension. Taxpayers can still file an extension to October and sometimes even a potential extension to December.
Form 8938 Threshold is Higher
The threshold requirements for filing Form 8938 are significantly higher for taxpayers who live overseas. For taxpayers abroad, depending on whether they are filing single/separately or married filing jointly, the threshold will range from $200,000 to $600,000, whereas for domestic filers, the range is $50,000 to $150,000.
FBAR Threshold is the Same
Even though the threshold requirements for filing Form 8938 are higher for taxpayers living abroad, the FBAR threshold requirement remains the same. As a reminder, the FBAR threshold is if the taxpayer has more than $10,000 in annual aggregate total on any day of the year, combined for all the different accounts they have — not just $10,000 per account.
Extension to October or December
For taxpayers who live in the United States, the final due date for filing a tax return is October 15th (when they are on extension. For taxpayers who live overseas, they may be able to apply for an additional extension to December, but the IRS is not required to grant the extension.
Foreign Earned Income Exclusion
Taxpayers who live and work overseas may qualify for the foreign earned income exclusion, which allows them to exclude upwards of $130,000 of earned income from their U.S. tax return, in addition to certain housing expenses. It is important to note that taxpayers still include this income on their tax return, but file a Form 2555 along with their tax return to exclude the income (in other words, taxpayers cannot just not file the tax return because their earned income is below $130,000).
Foreign Tax Credits
Taxpayers who already paid foreign taxes on income that is reportable on their U.S. tax return may qualify for foreign tax credits to reduce or minimize their U.S. tax liability on the foreign income. Noting that taxpayers cannot claim both the foreign earned income exclusion and foreign tax credits on the same dollar of income because that would be considered double dipping (although, depending on how much earned income they have, they may be able to apply both the FEIE and the FTC to that category of income, such as high-income earners)
Treaty Election May Apply
Some taxpayers who are U.S. persons but live in a foreign treaty country may qualify to make a treaty election to be treated as a non-resident alien for tax purposes. If they are eligible to do so, they may be able to file a Form 104-NR to report their U.S.-sourced income only and not a 1040 to report their worldwide income. The IRS takes the position that qualifying for one of these treaty elections does not eliminate the requirement for them to report for account, assets, investments on many of the international information reporting forms.
Foreign Rental Property
For taxpayers who have foreign rental properties, it is important to keep in mind that foreign rental income is taxable on a U.S. tax return. Taxpayers can typically claim all the same deductions and expenses they would claim on a US property, and they may also claim depreciation on the structure, which may help to reduce or eliminate tax liability. Likewise, if foreign taxes were already paid on the income, then the taxpayer may qualify for foreign tax credits.
Foreign Mutual Funds/ETFs
Foreign mutual funds/ETFs are typically considered to be PFIC. If the taxpayer owns a PFIC (Passive Foreign Investment Company), then, unless an exception or exclusion applies, they typically have to file a Form 8621 to report each PFIC. In addition, if the taxpayer sold or otherwise received a significant dividend distribution, they may also have to complete the excess distribution calculation and pay tax on the income at a tax rate significantly higher than the domestic version of the same investment.
Accidental Americans
It is not uncommon for taxpayers to learn that they were actually American because they had American parents, even though they have lived their entire life overseas. Typically, taxpayers learn about their U.S. status when they apply for a visa, only to learn that they are actually considered an American. For taxpayers in this situation, they are deemed ‘Accidental Americans,’ and there are various amnesty programs that taxpayers can use to get into compliance, and oftentimes this will result in little to no penalty or income tax liability.
Late Filing Penalties May be Reduced or Avoided
For Taxpayers who did not timely file their FBAR and/or other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist Taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.
Late-Filing Disclosure Options
If a Taxpayer is out of compliance, there are various international offshore tax amnesty programs that they can apply to safely get into compliance. Depending on the specific facts and circumstances of the Taxpayers’ noncompliance, they can determine which program will work best for them.
*Below please find separate links to each program with extensive details about the reporting requirements and examples.
Streamlined Filing Compliance Procedures (SFCP, Non-Willful)
The Streamlined Filing Compliance Procedures is one of the most common programs used by Taxpayers who are non-willful and qualify for either the Streamlined Domestic Offshore Procedures or Streamlined Foreign Offshore Procedures.
Streamlined Domestic Offshore Procedures (SDOP, Non-Willful)
Taxpayers who are considered U.S. residents and file timely tax returns each year but fail to report foreign income and/or assets may consider the Streamlined Domestic Offshore Procedures.
Streamlined Foreign Offshore Procedures (SFOP, Non-Willful)
Taxpayers who are foreign residents may consider the Streamlined Foreign Offshore Procedures which is typically the preferred program of the two streamlined procedures. That is because under this program Taxpayers can file original returns and the 5% title 26 miscellaneous offshore penalty is waived.
Delinquent FBAR Submission Procedures (DFSP, Non-Willful/Reasonable Cause)
Taxpayers who only missed the FBAR reporting and do not have any unreported income or other international information reporting forms to file may consider the Delinquent FBAR Submission Procedures — which may include a penalty waiver.
Delinquent International Information Returns Submission Procedures (DIIRSP, Reasonable Cause)
Taxpayers who have undisclosed foreign accounts and assets beyond just the FBAR — but have no unreported income — may consider the Delinquent International Information Return Submission Procedures. Before November 2020, the IRS was more inclined to issue a penalty waiver, but since then this type of delinquency procedure submission has morphed into a reasonable cause request to waive or abate penalties.
IRS Voluntary Disclosure Procedures (VDP, Willful)
For Taxpayers who are considered willful, the IRS offers a separate program referred to as the IRS Voluntary Disclosure Program (VDP). This program is used by Taxpayers to disclose both unreported domestic and offshore assets and income (before 2018, there was a separate program that only dealt with offshore assets (OVDP), but that program merged back into the traditional voluntary disclosure program (VDP).
Quiet Disclosure
Quiet disclosure is when a Taxpayer submits information to the IRS regarding the undisclosed foreign accounts, assets, and income but they do not go through one of the approved offshore disclosure programs. This is illegal and the IRS has indicated they have every intention of investigating Taxpayers who they discover intentionally sought to file delinquent forms to avoid the penalty instead of submitting to one of the approved methods identified above.
Current Year vs. Prior Year Non-Compliance
Once a Taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, Taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.
Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)
In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties.
Need Help Finding an Experienced Offshore Tax Attorney?
When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for Taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting. *This resource may help Taxpayers seeking to hire offshore tax counsel: How to Hire an Offshore Disclosure Lawyer.
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure. Contact our firm today for assistance.