US Citizen Expat Tax: Frequently Asked Questions
US citizens are taxed on worldwide income regardless of where they live. This is unusual — only the US (and Eritrea) tax purely on citizenship. Practical planning revolves around FEIE, FTC, state residency, and (for business owners) GILTI.
Data as of 2026. Sources: OECD, PwC, KPMG, Tax Foundation. Not advice.
Do US citizens pay tax abroad even with no US income?
Yes. The US taxes worldwide income on citizenship basis. You must file a US 1040 even from a 0% country. FEIE and Foreign Tax Credit usually eliminate the actual US tax bill, but the filing obligation is unconditional.
What is FEIE and how much can I exclude?
Foreign Earned Income Exclusion: in 2026 you can exclude ~$130,000 of earned income (wages, self-employment) from US tax if you qualify via Physical Presence Test (330 days outside the US in any 12-month period) or Bona Fide Residence Test. Plus the Foreign Housing Exclusion on top in many cities.
What's the difference between FEIE and Foreign Tax Credit?
FEIE excludes earned income from US tax (zero rate, doesn't touch other income). FTC credits foreign tax paid against US tax owed (works on all income types). High-tax countries: FTC usually better. Low-tax/zero-tax: FEIE usually better. They can be combined.
What is FATCA and do I have to comply?
FATCA requires US persons to report foreign financial accounts ≥$10k (FBAR) and aggregate balances ≥$50k–$200k+ (Form 8938) annually. Foreign banks also report on US clients. Non-compliance penalties are draconian ($10k+ per violation). Compliance is mandatory.
What's GILTI and does it affect me?
Global Intangible Low-Taxed Income — taxes US shareholders on certain CFC earnings. If you own ≥10% of a foreign corporation, GILTI usually applies. There's a 50% deduction and FTC offset, but it can effectively impose ~10.5% US tax on profits earned in a zero-tax jurisdiction.
Does my state still tax me if I move abroad?
Depends on the state. California, New York, Virginia, New Mexico, and South Carolina are "sticky" — they'll keep claiming you unless you formally break domicile. Florida, Texas, Nevada, Washington, Wyoming, Alaska, South Dakota: no income tax, no issue. Move state residence to a no-tax state before going abroad if possible.
Should I renounce US citizenship to save tax?
Rarely worth it for tax alone. Expatriation tax ("exit tax") applies to "covered expatriates" — net worth ≥$2M or average tax liability above a threshold — taxing all unrealised gains as if sold. Plus $2,350 fee, 5-year tax compliance certification, and lifetime visa implications. Get specialist advice.
How do US citizens self-employed abroad handle SE tax?
Self-employment tax (15.3% Social Security + Medicare) is owed on net SE earnings even when FEIE eliminates income tax. Exception: countries with US totalization agreements (UK, Germany, Australia, Japan, Spain, Canada, others) — pay into one system, exempt from the other.
Need help turning the data into a plan?
TaxAtlas covers the rates and rules. For the personal side — exit planning, residency strategy, business structure, or filings — request a response and we'll point you to relevant research or a vetted specialist.
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