If you’re a U.S. citizen or resident alien, the rules for filing income tax returns and paying estimated tax are generally the same whether you’re in the United States or abroad. No matter where you live, your worldwide income is subject to U.S. tax.
To understand and fulfill your tax responsibilities as a U.S. citizen and resident alien living abroad, there are a few things you need to do:
Taxes for citizens and resident aliens living abroad can be complex. The IRS’s main publication for citizens abroad is Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad – be sure to reference this publication for details to figure out your particular situation.
The IRS’s main publication for citizens and resident aliens abroad is Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
Your income, filing status, and age generally determine whether you must file a U.S. income tax return.
You generally need to file a return if your gross income from worldwide sources is at least the amount shown for your filing status.
For example, for 2021 someone filing as single would have to file if their gross income is at least $12,550. For someone filing as married, filing jointly, the amount is $25,100.
These amounts change each year, and can be found in Publication 54, under Filing Requirements.
Note: If your net earnings from self-employment are $400 or more, you must file a return even if your gross income is below the amount listed for your filing status.
Depending on your Adjusted Gross Income (AGI), you may be able to file electronically with the IRS using Free File Fillable Forms or with commercial tax software.
If you are a bona fide resident of Guam, the Commonwealth of the Northern Mariana Islands, American Samoa, the U.S. Virgin Islands, or Puerto Rico for the entire tax year, you’ll probably have to file a tax return with the tax department of one of these territories. Go to that tax department for forms and advice, not the IRS. Additional information is available in Chapter 1, Filing Information, of IRS Publication 54.
Note: You must report all income in U.S. dollars on your return. If you receive all or part of your income, or pay some or all of your expenses in foreign currency, you‘ll need to translate those amounts into U.S. dollars.
Make sure you have what you need to file
You need a Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN) to file a return. Anyone you claim as a dependent on your return also needs an SSN or ITIN.
Automatic extensions
If you are living overseas, you may have an automatic extension. See the section “How will this affect me?” below for more details.
The Foreign Earned Income Exclusion
Although you’re required to report your worldwide income on your U.S. income tax return, you may qualify to exclude some of your foreign earned income from tax under the foreign earned income exclusion.
A note about foreign earned income: Foreign earned income is wages, salaries, professional fees, and other compensation received for personal services you performed in a foreign country, no matter where or how you are paid, as long as your tax home is in a foreign country and you meet either the bona fide residence test or the physical presence test. Any compensation you make from work that is performed outside the U.S. is income from a foreign source, even if it is deposited to a U.S. bank and your employer is located in the U.S.
The amount of foreign earned income that can be excluded is adjusted annually for inflation.
Chapter 4, Foreign Earned Income and Housing Exclusion – Deduction, of IRS Publication 54 has a good discussion and covers all the requirements.
The Foreign Housing Exclusion or Deduction
The exclusion is for housing considered paid with employer-provided amounts. The deduction is for housing paid with self-employment earnings. You can claim this exclusion or deduction if your tax home is in a foreign country and you meet either the bona fide residence test or the physical presence test.
Housing expenses include things like rent, utilities (other than phone charges), and real and personal property insurance.
A detailed list of housing expenses is included in IRS Publication 54.
Foreign Tax Credit or Deduction
If you paid or accrued foreign taxes to a foreign country on foreign source income and are subject to U.S. tax on the same income, you may be able to take either a credit or an itemized deduction for those taxes.
However, you can’t take a foreign tax credit for taxes on income you excluded under the foreign earned income exclusion or the foreign housing exclusion.
Additional information is available in Chapter 5, Deductions and Credits, of IRS Publication 54.
Automatic Extensions
If you’re a U.S. citizen or resident alien residing overseas, or are in the military on duty outside the U.S., you’re allowed an automatic 2-month extension from the regular due date of your return to file your income tax return and pay any amount due.
Additional information is available in Chapter 1, Filing Information, of IRS Publication 54.
The Taxpayer Advocate Service is an independent organization within the IRS that helps taxpayers and protects taxpayers’ rights. We can offer you help if your tax problem is causing a financial difficulty, you’ve tried and been unable to resolve your issue with the IRS, or you believe an IRS system, process, or procedure just isn’t working as it should. If you qualify for our assistance, which is always free, we will do everything possible to help you.
Visit www.taxpayeradvocate.irs.gov or call 1-877-777-4778.
Low Income Taxpayer Clinics (LITCs) are independent from the IRS and TAS. LITCs represent individuals whose income is below a certain level and who need to resolve tax problems with the IRS. LITCs can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee. For more information or to find an LITC near you, see the LITC page on the TAS website or Publication 4134, Low Income Taxpayer Clinic List.
The IRS office in Philadelphia, Pennsylvania provides international tax assistance. This office is open Monday through Friday from 6:00 a.m. to 11:00 p.m. EST (10:00 a.m. to 3:00 a.m. GMT):
(267) 941-1000 (not toll-free)
