U.S. citizens must file U.S. tax returns on worldwide income, even when living abroad. Here's how the foreign income exclusion and other tools work.

U.S. Taxes on Foreign Income

The U.S. is one of the few countries that taxes its citizens on worldwide income regardless of where they live.

Exclude up to $130,000 (2025) of foreign earned income from U.S. taxes if you:

Pass the bona fide residence test (full tax year as bona fide resident of foreign country), OR
Pass the physical presence test (330+ days in a foreign country in a 12-month period)

Does NOT exclude: Passive income, Social Security, pension income, U.S.-sourced income

Additionally exclude housing costs above a base amount (varies by country).

Take a credit (not just a deduction) for income taxes paid to foreign governments. Generally better than the FEIE for high-tax countries.

If you have foreign financial accounts totaling $10,000 at any time during the year, you must file FinCEN Form 114 (FBAR).

Report foreign financial assets on your tax return if they exceed $200,000 on the last day of the year (or $300,000 at any point).

The U.S. has tax treaties with many countries that can reduce double taxation.

Living or working abroad? U.S. expat taxation is complex — don't risk the substantial penalties.

Taxes on Foreign Income for U.S. Citizens Living Abroad