US Expat Taxes in the Bahamas

Tax Treaty Information

FBAR & FATCA Requirements

FBAR and Form 8938 have different filing tests. A US person with a financial interest in or signature authority over foreign financial accounts generally must file an FBAR if their combined value exceeds USD 10,000 during the calendar year, subject to exceptions. File it separately with FinCEN; earning no taxable income does not remove the account-reporting test. For specified individuals who qualify as living abroad, Form 8938 thresholds are more than USD 200,000 at year-end or USD 300,000 during the year when unmarried or filing separately; joint filers use USD 400,000 or USD 600,000 respectively. The higher abroad thresholds require a foreign tax home and the applicable presence-abroad test. If you do not have to file an income-tax return, you do not have to file Form 8938. Otherwise review the form’s asset definitions, exceptions and filing-status rules; an overseas address alone does not settle eligibility. Directly held foreign real estate is not itself reported on either form. An interest in a foreign entity holding property can be a specified foreign financial asset for Form 8938. Review the ownership structure and associated accounts separately before buying property through a company. Late reporting requires a fact-specific review. FBAR civil penalty limits are adjusted annually. Streamlined Foreign Offshore relief requires eligibility, non-willful conduct, the applicable non-residency test and complete compliance with the submission instructions. The procedure generally covers the three most recent return years whose due dates have passed and six such FBAR years; tax and interest remain payable. Submit the required non-willfulness certification. An existing IRS civil examination or criminal investigation makes a taxpayer ineligible. Previously assessed penalties are not automatically abated, and submission does not prevent an audit.

Foreign Earned Income Exclusion (FEIE)

The Foreign Earned Income Exclusion requires foreign earned income, a foreign tax home and an applicable residence or physical-presence test. US citizens can qualify through bona fide residence covering an entire tax year; qualifying resident aliens have additional nationality conditions for that test. The physical-presence route generally requires at least 330 full days in foreign countries during 12 consecutive months. Moving to the Bahamas alone does not establish eligibility. For tax year 2026, the maximum FEIE is USD 132,900 per qualifying person, limited by eligible earnings and adjusted for partial-year qualification. Report the income and claim the exclusion on a return; it is not automatic. Calculate any foreign housing exclusion first because it reduces the earnings available for FEIE. The exclusion does not reduce self-employment tax. A qualifying self-employed person may instead be eligible for a foreign housing deduction. Tax on remaining non-excluded income is calculated using the rates that would apply without the exclusion. Compare your income types, qualifying days and available credits before choosing the treatment.

Common Tax Issues in Bahamas

• 1Moving does not settle your US tax position: review worldwide income, return-filing thresholds and available relief alongside the Bahamian taxes applying to your activities.
• 2Foreign Tax Credit eligibility depends on qualifying foreign taxes imposed on you and paid or accrued, subject to the applicable credit limit. Living in the Bahamas does not by itself determine whether you have such taxes. Review qualifying taxes and any available carryovers; taxes attributable to FEIE-excluded income cannot also generate a credit.
• 3Income above the FEIE limit is not excluded by the FEIE. Calculate tax on remaining income under the IRS stacking rule, and assess other applicable deductions or credits separately rather than assuming there can be no offset.
• 4Self-employment: the FEIE does not reduce self-employment tax. The Bahamas is not on the SSA list of agreement partners; review coverage and the applicable US calculation rather than treating 15.3% of all income as the answer.
• 5Local costs: the standard VAT rate is 10%, with zero-rated and exempt supplies. Property tax depends on the property category; do not apply the owner-occupied schedule automatically to a rental or vacant plot.
• 6Foreign-account reporting: review FBAR and Form 8938 separately, including ownership or authority, asset definitions, thresholds and exceptions. An account can be reportable even when it earns no taxable income.
• 7Domestic Minimum Top-up Tax: scope depends on multinational presence and consolidated group revenue of at least €750 million in at least two of the four preceding fiscal years. DIR instructions state that the Act is deemed in force from January 1, 2024, but does not apply to a group fiscal year beginning before January 1, 2025 unless an Income Inclusion Rule (IIR) or Undertaxed Profits Rule (UTPR) must apply for that year to each group constituent entity located in the Bahamas. Small businesses and purely domestic groups are outside the scope described in DIR’s FAQ.

Local Resources

Frequently Asked Questions: US Taxes in Bahamas

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