Tax Responsibilities of U.S. Citizens and Resident Aliens Living Abroad

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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:

  • Figure out if you’re required to file - this generally depends on your income, filing status, and age.
  • Consider which exclusions and deductions for income and housing that you may qualify for.
  • Know how your type of employment may affect your tax liability.
  • Have what you need and know where to file your tax return.

Taxes for citizens and resident aliens living abroad can be complex. The IRS’s main publication for citizens abroad is IRS Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad – be sure to reference that publication for details to figure out your particular situation.

The IRS’s main publication for citizens and resident aliens abroad is IRS 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 2019 someone filing as single would have to file if their gross income was at least $12,200. For someone filing as married, filing jointly, the amount was $24,400.

These amounts change each year, and can be found in IRS 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.

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 US is income from a foreign source, even if it is deposited to a US bank and your employer is located in the US. 

The amount of foreign earned Income that can be excluded is adjusted annually for inflation.

Chapter 4 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.

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.

Know how who you work for and where you work affects your taxes

If you work for a U.S. company

U.S. employers must withhold income tax from pay of U.S. citizens working abroad, unless

  • the employer is required by law to withhold foreign income tax or
  • the U.S. citizen working abroad will exclude the income under the foreign earned income exclusion and has completed IRS Form 673, Statement for Claiming Exemption from Withholding on Foreign Earned Income Eligible for the Exclusion(s) Provided by Section 911 with your employer.

In general, U.S. Social Security and Medicare taxes apply to wages you earn as an employee outside of the United States:

  • if you work for an American employer;
  • if you work for a foreign affiliate of an American employer; or
  • if you’re living in a country that has a bilateral social security agreement.

Note:  Income from working abroad as an employee of the U.S. Government does not qualify for the foreign income exclusion, the housing exclusion, or the housing deduction.

If you work for yourself

If you live abroad and are a self-employed U.S. citizen or resident, you’re generally subject to self-employment tax.

  • This is a Social Security and Medicare tax on net earnings from self-employment of $400 or more a year.
  • You must take all of your self-employment income into account in figuring your net earnings from self-employment, even income that’s tax-exempt because of the foreign earned income exclusion.

More information concerning self-employment tax is available in Chapter 3 of IRS Publication 54

If you’re working in a U.S. possession

If you’re working in a U.S. possession, the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction don’t apply.

However, if you are a bona fide resident of certain U.S. possessions, you may qualify for an exclusion of your possession income on your U.S. tax return, meaning you may be able to exclude income from sources within the possession and Income that is effectively connected with the conduct of a trade or business within the possession from your U.S. return.

 More information is available in Chapter 4 of IRS Publication 54

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.

Read more about free filing.

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 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 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.

  • ITINs are available for taxpayers or their spouses who aren’t eligible for SSNs.

Automatic extensions

If you are living overseas, you may have an automatic extension.  See “How will this affect me?” for more details.

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.

  • You don’t have to ask the IRS for this extension.
  • For a calendar year return, the automatic 2-month extension is to June 15.
  • You’ll have to pay interest on any tax owed from the regular due date (April 15 for calendar year taxpayers). However, the IRS won’t charge penalties for late payment if you pay by the extended due date.
  • You may also file IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return to receive an additional 4-month extension of time to file, but this form will not extend the time to pay the tax.

Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad

Publication 570, Tax Guide for Individuals With Income From U.S. Possessions

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):

  • Phone: (267) 941-1000 (not toll-free)
  • FAX: (681) 247-3101

Browse common tax issues and situations at Get Help.

If your IRS problem is causing you financial hardship, you've tried repeatedly and aren't receiving a response from the IRS, or you feel your taxpayer rights are not being respected, consider contacting Taxpayer Advocate Service (TAS).

You may be eligible for representation from an attorney, certified public accountant (CPA), or enrolled agent (EA) associated with a Low Income Taxpayer Clinic (LITC). LITCs may also provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language.

Last modified June 1, 2020