US Taxes for Americans Living Abroad: Your Complete Guide
Last updated: 5 April 2026
I am not a tax professional. The information in this blog post is based on my personal experience and research as an American living abroad. Tax laws can be complex and vary based on individual circumstances. If you have specific questions, concerns, or need personalized advice, I strongly recommend consulting a qualified tax professional or accountant familiar with international and expat tax matters.
One of the first things I had to get my head around after moving to France was that I could not simply leave my US tax obligations at the departure gate. America is one of only two countries in the world that taxes its citizens based on citizenship rather than residency — meaning that as long as you hold a US passport, the IRS expects to hear from you every year, regardless of where you live or where you earn your income.
The good news is that the US tax code has specific provisions designed to prevent Americans abroad from being taxed twice on the same income. The frustrating news is that these provisions are not automatic — you have to file to claim them, and the paperwork adds up quickly. I have been navigating this every year since 2020. Here is what you actually need to know about US taxes for Americans living abroad.
Table of Contents
Why You Still Have to File US Taxes From Abroad
Most countries use a residency-based tax system, they tax you because you live or earn money within their borders. The United States uses a citizenship-based system, one shared only with Eritrea. If you are a US citizen or Green Card holder, you are required to report your worldwide income to the IRS every year, no matter where you live.
This was introduced during the Civil War to prevent draft dodgers from escaping taxes by moving abroad, and it has never been repealed and it is not going away any time soon.
The important thing to understand is that filing is not the same as paying. There are mechanisms specifically designed to prevent double taxation, but they only work if you actively claim them. They are not applied automatically. The three main ones are the Foreign Earned Income Exclusion, the Foreign Tax Credit, and the relevant tax treaty provisions between the US and France.
Key Deadlines And the One That Catches Everyone Out
Americans living abroad get an automatic two-month extension to file their return from April 15 to June 15. If you need more time, you can request a further extension to October 15 using Form 4868.
What to keep in mind: the extension applies to filing, not to payment. If you owe taxes, payment is still due on April 15. Interest accrues from that date even if you file later. If you are not sure what you will owe, make an estimated payment by April 15 to avoid penalties. You will receive a refund for any overpayment once you file.
FBAR is due April 15 with an automatic extension to October 15. It is filed separately from your tax return.
The Foreign Earned Income Exclusion (FEIE)
The FEIE allows you to exclude a set amount of foreign earned income from US federal income tax each year, provided you meet the residency and income requirements. This is the most widely used benefit for Americans abroad.
2024 tax year: up to $126,500 per qualifying person
2025 tax year: up to $130,000 per qualifying person
2026 tax year: up to $132,900 per qualifying person
If both you and your spouse qualify, you can each claim your own exclusion, meaning a qualifying couple can shelter up to $260,000 of foreign earned income in 2025.
Who qualifies?
You must meet two conditions. First, your tax home must be in a foreign country. Second, you must meet one of two tests:
- Physical Presence Test: you were physically present in a foreign country for at least 330 full days in any 12-month period. The period does not have to align with the calendar year. Travel days over international waters do not count.
- Bona Fide Residence Test: you established genuine residence in a foreign country for an uninterrupted period that includes at least one full tax year. This is what most long-term expats in France qualify under.
What counts as foreign earned income?
- Salaries and wages from a job abroad.
- Freelance and consulting income earned while living abroad.
- Housing benefits or allowances from an employer (partially excluded via the Foreign Housing Exclusion).
What does not count: US-based income, rental income, capital gains, pensions, dividends, investment income, or unemployment benefits.
2025 update: more detailed Form 2555 reporting required
The IRS now requires more detailed reporting on Form 2555, particularly around travel dates and which qualifying test you are using. Make sure your records of days spent in and outside France are precise before you file. This is especially important if you travel frequently for work.
File Form 2555 with your Form 1040 to claim the FEIE. It is an election, you must actively choose it each year.
The Foreign Tax Credit (FTC)
The FTC allows you to offset your US tax liability dollar-for-dollar by the amount of income tax you have already paid to a foreign government. If you live and pay taxes in France, the French income tax you paid can directly reduce what you owe the IRS on the same income.
Who qualifies?
- You are a US citizen or resident alien.
- You paid or accrued income tax to a foreign country.
- The tax was legally owed and not refundable.
- The income is also subject to US tax.
File Form 1116 to claim the FTC, attached to your Form 1040. You will need to specify the type of income, the amount of foreign tax paid, and the country where you paid it.
Note on French social charges: France’s CSG and CRDS contributions do not always qualify as creditable foreign taxes for FTC purposes. Check with a tax professional on how to handle these.
FEIE vs FTC: Which One to Choose?
You generally cannot use the FEIE and the FTC on the same income, you have to choose. This is one of the most consequential decisions in expat tax planning.
- FEIE tends to work better: if you earn below the exclusion limit and live in a low or no-tax country, or if you want to zero out your US tax liability on your foreign wages.
- FTC tends to work better: if you live in France (a high-tax country) and the taxes you pay here exceed your US liability. In many cases the FTC eliminates US tax entirely on the same income.
Important: if you revoke the FEIE, for example to switch to the FTC, you generally cannot reclaim it for five years without IRS approval. This is a long-term decision. Many higher earners and families opt for the FTC as their primary strategy. Get professional advice before switching.
The Foreign Housing Exclusion and Deduction
If you qualify for the FEIE, you may also be able to exclude certain housing expenses above a base amount set by the IRS. Paris qualifies as a high-cost city with location-specific caps.
- Foreign Housing Exclusion: for employees receiving wages
- Foreign Housing Deduction: for self-employed individuals
Both are claimed on Form 2555. Qualifying expenses include rent, utilities (excluding telephone, television, and internet), property insurance, furniture rentals, and residential parking.
2025 base amount: $20,800 (16% of the $130,000 FEIE limit). You can only exclude housing costs above this base, up to location-specific caps. Paris has a higher cap than many cities; confirm the current Paris limit at irs.gov when filing.
FBAR: Reporting Your French Bank Accounts
The FBAR, Foreign Bank Account Report, is not a tax form. It is a financial reporting requirement under the Bank Secrecy Act, filed separately from your tax return to FinCEN (the Financial Crimes Enforcement Network).
Do you need to file?
You must file an FBAR if you are a US citizen, Green Card holder, or US tax resident, and you have a combined total of $10,000 or more across all foreign financial accounts at any point during the calendar year, even for a single day.
This includes: French checking and savings accounts, Livret A, LDD savings accounts, joint accounts, business accounts where you have signing authority, investment accounts, and French PayPal or Wise accounts linked to a French bank.
The combined total is what matters. You may have EUR 4,000 in one account, EUR 3,000 in another, and EUR 5,000 in a joint account, and still cross the $10,000 threshold once converted to USD.
How to file
FBAR is filed through the BSA E-Filing System using FinCEN Form 114. It is not filed with your IRS tax return. Due date: April 15, with an automatic extension to October 15.
FATCA: What Your French Bank Is Already Telling the IRS
FATCA, the Foreign Account Tax Compliance Act, is a 2010 US law that requires foreign financial institutions to report the accounts of US persons to their home government, which then shares the information with the IRS. This is why your French bank asks you to complete W-9 forms and requests your Social Security Number or TIN.
Your French bank is legally required to identify US account holders and report their account details to the French tax authority, which then shares that information with the IRS under the France-US FATCA intergovernmental agreement. The IRS may already know about your French accounts before you file.
Do you need to file Form 8938?
If your foreign financial assets exceed certain thresholds, you must file Form 8938 with your annual Form 1040:
- Single or married filing separately: over $200,000 on the last day of the year, or over $300,000 at any point during the year.
- Married filing jointly: over $400,000 on the last day of the year, or over $600,000 at any point during the year.
FATCA vs FBAR: What Is the Difference?
Feature | FATCA (Form 8938) | FBAR (FinCEN 114) |
Filed with | IRS (with your tax return) | FinCEN (separate from tax return) |
Threshold abroad | $200K-$600K depending on filing status | $10K aggregate foreign account balance |
What is reported | Broad financial assets | Bank and financial accounts only |
Penalties | Up to $10,000-$50,000+ | $10,000+ (non-willful), up to 50% of balance (willful) |
Exchange rate used | IRS Year-End Rates | US Treasury December 31 rate |
State Taxes May Still Apply
Federal taxes are based on citizenship. State income taxes are based on residency, but each state defines residency differently, and some are more aggressive than others about pursuing former residents living abroad. California, New York, and Virginia in particular are known for this.
You may still owe state taxes if you maintain any of the following ties to your former state: a US mailing address there, property, a driver’s licence, voter registration, US-based income, or if you file tax returns as a resident.
To formally break state tax residency: file a part-year or non-resident return for the year you left, update your voter registration to your overseas address, cancel your driver’s licence and car registration, remove your state mailing address, and if you own property, sell or rent it. Check your specific state’s department of revenue website for their exact residency rules.
Social Security and Self-Employment
If you are self-employed abroad, you must report your worldwide self-employment income on your annual Form 1040 using Schedule C. In the US, self-employment tax runs 15.3% — 12.4% Social Security and 2.9% Medicare, on net earnings over $400 per year.
If you are legally registered in France and contributing to French cotisations sociales, you may be exempt from US self-employment tax under the US-France Totalization Agreement, a bilateral treaty that prevents double Social Security taxation.
To claim the exemption, you need a Certificate of Coverage from French Social Security (attestation de droits from Assurance Maladie), which confirms you are covered in France. You will still need to file your US tax return annually, report your self-employment income on Schedule C, and may need Form 8833 if claiming treaty benefits.
Filing When Married to a Non-US Spouse
If you are married to a French national, like I am, you have a few options for how to file:
Married Filing Separately
The simplest approach if you do not want your spouse involved in the US tax system. You report only your own worldwide income. You may lose access to some credits and benefits, but this keeps your spouse’s French income out of the IRS’s view entirely. This is the most common approach for American-French couples.
Married Filing Jointly
You can elect to treat your non-US spouse as a US tax resident and file jointly. This gives access to more credits but requires reporting your spouse’s worldwide income on your US return, including everything earned in France. Your spouse will need an ITIN (Individual Taxpayer Identification Number). This election is difficult to revoke and is generally a long-term commitment. Do not make it without professional advice.
Head of Household
In limited circumstances, you may be able to file as head of household, if you live separately from your non-US spouse, pay more than half the costs of maintaining a home for a qualifying dependent, and your spouse is a nonresident alien. Specific IRS criteria apply.
Child Tax Credit and Other Family Benefits
If you have children, you may qualify for the Child Tax Credit, subject to the following general requirements:
- Child must be under 17 at the end of the tax year.
- Child must be claimed as a dependent on your US return.
- Child must be a US citizen, national, or resident alien.
- Child must have a valid Social Security number.
- You must have earned income (wages or self-employment).
If you claim the FEIE, you may be unable to receive the refundable portion of the Child Tax Credit. If you use the FTC instead, you may qualify for the Additional Child Tax Credit (up to $1,700 per child for 2024, check the IRS for the 2025 figure when filing).
Dependent Care Credit
If you pay for childcare in France, crèche, nounou, or assistante maternelle, so you can work or run a business, you may be eligible for this credit. You will need to report the provider’s name and French tax identification number. This credit cannot be used if you exclude your income via the FEIE.
Education-related Credits
These generally apply only if you have a child attending a US-based university and you are paying US college tuition. Foreign schooling typically does not qualify. Income and residency thresholds apply.
Exchange Rate Reporting
All amounts on your US return must be in US dollars. You must convert foreign income and expenses using official exchange rates. The IRS does not publish a single fixed rate, you can use the US Treasury yearly average exchange rate, the rate on the specific date of the transaction, or reputable sources like the Federal Reserve, OANDA, or X-Rates.
If You Are Considering Renouncing Your Citizenship
Renouncing US citizenship to avoid future tax filings does not erase past obligations. You must be fully compliant for the five years prior to renunciation, and you may be subject to an exit tax depending on your net worth and income history.
Requirement | Description |
5 Years of Tax Compliance | All returns filed and any owed taxes paid |
Form 8854 | Certify tax compliance, report net worth and income |
Exit Tax | May apply if net worth is $2M or above, or high average income |
Final Return | Dual-status return due for the year of renunciation |
Possible ongoing US tax | Dividends from US stocks and US real estate income may still be taxed after renunciation |
After renunciation you are no longer subject to US taxation on worldwide income, but you may still owe taxes on US-sourced income, such as dividends from US stocks or rental income from US property, through withholding taxes.
Resources I Actually Use
MyExpatTaxes
MyExpatTaxes is IRS-compliant tax software built specifically for Americans living abroad. They offer federal and state filing packages, automatic FBAR filing, and support for the FEIE, FTC, Child Tax Credit, and married filing separately with a non-US spouse. I have been using them since I moved to France in 2020 and they are one of the only platforms that handles a nonresident alien spouse properly.
20% discount code here if you’re looking for a service for your tax return.
France Fiscal Support (Facebook Group)
A private Facebook group run by tax professionals with international and French tax expertise. Good for general questions, situation-specific guidance, and access to detailed guides. For anything specific to your filing situation, still consult a professional directly.
Other Resources
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