If you're a U.S. citizen living abroad, or a foreign national earning money in the United States, you're dealing with a separate set of rules on top of everything else. Here's what you actually need to know.
I live outside the United States. Do I still have to file U.S. taxes?
Yes. The U.S. is one of only two countries in the world that taxes its citizens on income earned anywhere in the world, regardless of where they live. If you’re a U.S. citizen or permanent resident, you have a filing obligation every year — even if you owe nothing, even if you haven’t lived in the U.S. for years.
The FBAR is a form you file separately from your tax return to report foreign bank accounts. You have to file it if the combined total in all your foreign accounts exceeded $10,000 at any single point during the year — even briefly. The penalties for not filing are among the most severe in the entire U.S. tax system. A modest set of overseas accounts can easily cross the line.
The FBAR goes to a separate government agency (FinCEN), not the IRS. Form 8938 is filed with your tax return and kicks in at higher dollar thresholds. You may need to file both, and filing one doesn’t cover the other. Both exist because the U.S. requires disclosure of foreign financial assets — and missing either one has real consequences.
Should I use the Foreign Earned Income Exclusion or the Foreign Tax Credit?
These are the two main tools expats use to avoid being double-taxed. The Foreign Earned Income Exclusion (FEIE) lets you exclude up to $130,000 of foreign-earned income from U.S. tax in 2025 ($132,900 in 2026). The Foreign Tax Credit gives you a dollar-for-dollar credit for taxes you already paid in your country. For expat parents especially, the choice matters a lot — claiming the FEIE can actually cost you the refundable part of the Child Tax Credit. Getting this wrong is expensive.
On top of the income exclusion, qualifying expats can also exclude or deduct certain housing costs above a set floor — up to $39,000 in 2025 and $39,870 in 2026, with higher limits in expensive cities. Most expats who qualify for the FEIE also qualify for this and don’t claim it.
When do I need to file as a U.S. expat, and are there any extensions?
Expats automatically get an extra two months to file — until June 15 instead of April 15. You can extend to October 15 by filing a standard extension form, and in some cases to December 15 with a written request. But interest on any unpaid tax starts building from the regular April deadline regardless of extensions. The FBAR has its own deadline too.
I haven’t filed U.S. taxes in years because I live abroad. What do I do?
There’s a program called the Streamlined Filing Compliance Procedures specifically designed for expats in this situation. If your non-filing wasn’t intentional, you can catch up on past returns without the harshest penalties. You generally get one clean shot at it, so doing it correctly the first time matters.
I moved abroad. Do I still owe taxes in the U.S. state I came from?
Maybe. Some states are very aggressive about holding onto you — they’ll keep taxing you if you have any ties left there, like property, a driver’s license, or a registered vehicle. Breaking state residency is its own process, separate from your federal return, and certain states require specific steps before they’ll let go.
I’m self-employed and working abroad. Do I still pay U.S. self-employment tax?
Often yes. The Foreign Earned Income Exclusion reduces your income tax but not your self-employment tax — so even if you exclude your income entirely, you may still owe the 15.3% SE tax on it. A totalization agreement between the U.S. and your country may change this, but those agreements vary significantly.
What happens to my taxes if I give up my U.S. citizenship?
It depends on your financial profile. People who meet certain income or asset thresholds — called “covered expatriates” — may owe an exit tax, which treats all worldwide assets as if they were sold the day before you gave up citizenship. The rules and planning have to happen before you renounce, not after.
I’m not a U.S. citizen but I earn money in the United States. Do I owe U.S. taxes?
Likely yes. Non-residents who earn U.S.-source income generally have to file a U.S. tax return. The rate and rules depend on whether your income is directly tied to a U.S. business activity or is passive income from the U.S. (like dividends or rent). The distinction determines almost everything about how you’re taxed.
An ITIN is a taxpayer identification number for people who need to deal with the IRS but don’t qualify for a Social Security number. Foreign investors, creators, contractors, and others commonly need one to file a return, claim treaty benefits, or reduce the amount withheld from their payments. Applying for one incorrectly causes long delays.
Often yes. The U.S. has treaties with many countries that reduce or eliminate tax on certain types of income. To use those benefits, you usually need to give the person paying you the right paperwork — typically a form called a W-8BEN. Treaty benefits are powerful but easy to lose through paperwork errors.
What is a W-8BEN and why is a U.S. company asking me for one?
A W-8BEN tells the company paying you that you’re a foreign person and what treaty rate should apply to your payments. Without it, the company is required to withhold at the highest default rate. Getting it right up front avoids waiting for a refund later.
I own a U.S. LLC but I live in another country. What do I have to file?
More than most people realize. A foreign-owned single-member U.S. LLC has to file a specific informational report (Form 5472 with a pro-forma corporate return) even if the business had no taxable income. The penalties for missing it are steep. A lot of foreign entrepreneurs form the LLC through an online service and never learn about this requirement until a penalty letter arrives.
I’m a performer or creator and I made money in the United States. How is that taxed?
U.S.-source income earned by non-resident performers and creators is generally subject to U.S. tax, often with withholding at the source. For performers doing significant U.S. work, there are options to reduce over-withholding — but the rules are specialized and worth handling before the money comes in, not after.
How does the IRS decide if I’m a U.S. resident for tax purposes?
Through a day-count formula called the substantial presence test. It adds up the days you’ve spent in the U.S. over a three-year period using a specific formula. If you cross the threshold, you’re taxed as a resident on worldwide income. People who travel frequently to the U.S. need to track their days deliberately.
I’m a foreigner who sold property in the United States. What is FIRPTA?
FIRPTA is a law that requires the buyer of U.S. real estate to withhold a percentage of the sale price from the payment to a foreign seller, as a deposit against any tax owed. The withholding amount is often more than the actual tax — and you can only get it back by filing a return. Sellers are almost always surprised by how much is held at closing.
I’m a foreign investor with U.S. stocks or rental property. How is that income taxed?
U.S. dividends paid to non-residents are typically withheld at 30%, often reduced by treaty. Rental income can be taxed either at 30% of gross rent or at normal rates on net income — and electing the second option is almost always better. The categories matter, and brokers and property managers don’t always apply the right rules.
Taxes were already withheld from my U.S. payment. Do I still need to file?
Often yes — and sometimes filing is the only way to get back what was over-withheld, or to correctly apply your treaty rate. Assuming that withholding is the end of it frequently leaves money with the IRS. A return is also how you stay fully compliant when your situation involves more than a single payment.
Conclusion: Cross-border taxes come with their own forms, their own deadlines, and some of the steepest penalties in the entire tax system — but they’re manageable with the right guidance. If you have further questions or need personalized guidance, our team at Black Inc Tax Services is here to help.
We assist expats and foreign nationals with:
FBAR and Form 8938 foreign asset reporting
Foreign Earned Income Exclusion and Foreign Tax Credit planning
ITIN applications and treaty benefit paperwork (W-8BEN)
U.S. tax filings for foreign-owned LLCs and non-resident income
Disclaimer: This content is for informational purposes only and does not constitute legal or tax advice. Please consult a qualified tax professional for specific guidance.
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