U.S. citizens and resident aliens living abroad must still file a U.S. tax return on their worldwide income. Even if you pay foreign income taxes in your country of residence, U.S. tax laws require you to report income from a foreign country and meet filing obligations every year.
This guide explains the tax filing process step by step, and shows how to avoid double taxation.
Step-by-Step: How to File US Taxes from Abroad
1. Determine if You Must File
U.S. citizens and resident aliens must file a tax return if their worldwide income exceeds the IRS filing thresholds. Net self-employment income over $400 also triggers a filing obligation. Check the minimum income requirements here.
2. Choose the Correct Tax Forms
- Form 1040 – standard for U.S. citizens and resident aliens to report worldwide income.
- Form 1040NR – for nonresident aliens with U.S.-source income.
For more details, see our guide on U.S. tax forms for expats.
3. Claim Expat Tax Benefits
- Foreign Earned Income Exclusion (FEIE): Exclude up to $130,000 of foreign earned income if you qualify under the bona fide residence test or physical presence test.
- Foreign Tax Credit (FTC): Claim credits for foreign income taxes paid to reduce your U.S. tax liability.
- Foreign Housing Expenses: Deduct certain housing costs if you live in a high-cost foreign country.
Not sure which option applies? Our guide on FEIE vs. Foreign Tax Credit explains how to choose the best tax savings strategy.
4. File on Time
The standard U.S. tax filing deadline is April 15, but expats get an automatic two-month extension until June 15. You can extend further to October 15 (Form 4868) or even December 15 by request. Check our expat tax deadlines guide for details.
5. Report Foreign Financial Accounts
If the aggregate value of your foreign bank accounts exceeded $10,000 during the year, you must file a Foreign Bank Account Report (FBAR) on FinCEN Form 114. Learn how to calculate the maximum account value for FBAR purposes.
Additionally, if you hold significant foreign financial assets (such as mutual funds or brokerage accounts) exceeding IRS thresholds, you may need to file Form 8938.
6. Convert Foreign Currency
Report all foreign income, foreign housing expenses, and deductions in U.S. dollars. The Internal Revenue Service provides yearly exchange rates, but you must apply them consistently throughout the tax year.
7. Pay Taxes and Estimated Payments
Even if you file with extensions, taxes owed are due April 15. Otherwise, you face interest and penalties. Learn how to make estimated tax payments or use your 1040-V payment voucher to pay taxes directly online.
8. Report Foreign Income and Other Assets
- Foreign financial assets: File Form 8938 if your balances exceed IRS thresholds.
- Foreign trusts: Forms 3520/3520-A may be required.
- Mutual funds: Special reporting and tax treatment may apply.
- Income from a foreign country: See how to file taxes without a W-2 if your foreign income is not documented on U.S. forms.
Can You File US Taxes from Another Country?
Yes. You can file US taxes while living abroad using IRS form Form 1040. Many expats file electronically through tax software, but paper tax returns are also accepted. Hiring a tax professional ensures accuracy and compliance with US tax laws.
What Happens If You Don’t File US Taxes While Living Abroad?
Failing to file a federal tax return exposes you to penalties, interest, and possible loss of the foreign earned income exclusion or foreign tax credit. Not filing can also increase your overall tax burden because you won’t be able to use tax treaties or credits to prevent double taxation.
Should You File US Taxes From Abroad Yourself?
Technically, you can prepare and file your own U.S. tax return while living abroad. But for most expats, it quickly becomes overwhelming. The average American spends 36 hours each year on tax preparation, and expat taxes are far more complicated because of:
- Special IRS forms for foreign financial accounts and significant foreign financial assets
- Complex coordination between the foreign earned income exclusion, foreign tax credit, and tax treaties
- Ever-changing U.S. tax laws that create new filing requirements every tax year
In our experience, many expats only realize they made a mistake when they receive an IRS notice — and then they reach out to us in panic. By that time, their tax situation often requires amending prior-year returns, which we handle frequently. In fact, we amend hundreds of expat tax returns every year due to missed exclusions, incorrect reporting of foreign income, or overlooked forms.
Choosing a tax professional from the start helps you avoid these stressful scenarios. It ensures your tax obligations are met, your tax benefits are maximized, and your tax burden is minimized.
At 1040 Abroad, we pride ourselves on high customer satisfaction by providing expats with peace of mind and accurate, timely filing.
