Do I need to file a tax return as an American living abroad?
If you are a US citizen or green card holder, you have to file a US tax return. The same filing requirement threshold applies to an American living in the US or overseas, which is in most cases:
| at the end of the year your filing status is |
you will need to file a return if your gross income is at least…. |
| Single under 65 | 12,950.00 |
| Single 65 or older | 14,700.00 |
| Married filing jointly (both spouses under 65) | 25,900.00 |
| Married filing jointly (one spouse 65 or older) | 27,300.00 |
| Married filing jointly (both spouses 65 or older) | 28,700.00 |
| Married filing separately | 5.00 |
| Head of household under 65 | 19,400.00 |
| Head of household 65 or older | 21,150.00 |
| Qualifying widow(er) under 65 | 25,900.00 |
| Qualifying widow(er) 65 or older | 27,300.00 |
What is the deadline to file?
As an American living abroad, you have an automatic 2-month extension to file your return (June 15). However, note that you must pay any tax due by April 15 or interest will be charged starting from April 15.
Will I owe taxes?
For 2022 the first USD 112,000 of wages are tax free. This is called the “Foreign Earned Income Exclusion” (form 2555). See “How does the Foreign Earned Income Exclusion work.”
How does the Foreign Income Exclusion work?
To be eligible to claim the exclusion, one of the two following tests needs to apply:
Physical presence test: spend at least 330 full calendar days during a period of 12 consecutive months outside of the US.
Bona-fide resident test: Establish residency in a foreign country for the full calendar year.
I will be outside the US for 330 days, but not in one calendar year.
Can I still use the Foreign Earned Income Exclusion to reduce my tax bill?
Yes, the Physical Presence Test requires that you be inside a foreign country for 330 days in any 365-day period. This can run from January to December or from June to May. If the time is split across two tax years, you will get a pro rata exclusion for each year. If you have not yet been abroad for 330 days but you will be, you can file for an extension using Form 2350, which will allow you to wait until you meet the 330-day requirement.
What is the FBAR and how does it work?
If you are a US person who has ownership or control (signature authority) of foreign accounts with an aggregate value of over the equivalent of USD 10,000 at any point during the year, you are required to file the FBAR.
The FBAR is filed electronically to the Department of Treasury by April 15. The FBAR is not attached to your return but filed separately.
What is the difference between the FBAR and form 8938?
Both are used to report your foreign financial assets.
FBAR needs to be filed if the aggregate value of your foreign account(s) is more than USD 10,000.
Form 8938 needs to be filed if the value of the total foreign assets are as follows for taxpayers living overseas:
- Unmarried people (or filing separately): more than USD 200,000 at the end of the year or more than USD 300,000 at any time
during the year. - Married filing jointly: more than USD 400,000 at the end of the year or more than USD 600,000 at any time during the year.
In contrast with the FBAR, the form 8938 needs to be sent with your tax return.
Form 8938 does not substitute the FBAR. Even if you need to file form 8938, you will still have to file the FBAR.
I have not filed since I am living abroad, what do I do?
Since 2014, there is the streamlined procedure for people who have not filed in a non-willful way. This procedure will put you back on track.
This procedure requires you to file returns for the last 3 years (2019, 2020, 2021) and the last 6 years of the FBAR (2016 to 2021)
NOTE: DO NOT FORGET TO FILE THE CURRENT YEAR (2022).