US Expat Taxes in Nigeria

Tax Treaty Information

FBAR & FATCA Requirements

FBAR: A US person generally files FinCEN Form 114 when foreign accounts over which they have a financial interest or signature or other authority exceed $10,000 in aggregate at any time during the calendar year. Review applicable exceptions. File separately with FinCEN; the account need not earn taxable income. Form 8938 is separate from FBAR. For qualifying individuals abroad, specified foreign financial assets exceeding $200,000 at year-end or $300,000 during the year trigger the threshold for unmarried or separate filers; joint filers use $400,000/$600,000. The higher thresholds require a foreign tax home and the prescribed residence or physical-presence test. A Nigerian address alone is insufficient. If no income-tax return is required, Form 8938 is not required. Check the applicable instructions and exceptions. For FBAR, determine each account’s maximum annual value in its currency, then convert using Treasury’s rate for the calendar year’s last day. If Treasury provides no rate, use another verifiable rate and identify its source. Do not substitute the closing balance for the annual maximum. FBAR penalties depend on the facts; civil maximums are adjusted for inflation. Foreign companies and pension arrangements need separate classification and reporting review. Form 5471 depends on the applicable filer category, not simply holding an officer title or a stated ownership percentage. Foreign-trust ownership or transactions may require Forms 3520 and 3520-A; qualifying retirement arrangements can have reporting exceptions. An exception to those trust forms does not remove a separate FBAR or Form 8938 obligation. For late filings, assess Streamlined Foreign Offshore eligibility before submitting. Non-residency, non-willfulness and other conditions apply; tax and interest remain payable, and specified penalty relief is conditional.

Foreign Earned Income Exclusion (FEIE)

For tax year 2026, the maximum foreign earned income exclusion is $132,900 per qualifying person, adjusted for a partial qualifying year. You need foreign earned income, a foreign tax home and an applicable residence or physical-presence test. A US citizen may qualify through bona fide foreign residence for an uninterrupted period including an entire tax year, or at least 330 full days in foreign countries during 12 consecutive months. Resident aliens have additional eligibility conditions for the residence test. Report the income and claim the exclusion on the required return; living in Nigeria does not make it automatic. The exclusion does not reduce self-employment tax. Foreign housing relief depends on eligible expenses, qualifying days and location limits. The housing amount subtracts a base amount calculated from 16% of the annual exclusion maximum, prorated for qualifying days. For 2026, $39,870 is the general housing-expense limit, not the amount automatically excluded; location-specific limits may differ. Employer-provided amounts support the housing exclusion, while self-employment earnings support the housing deduction. Check the applicable Form 2555 instructions before calculating either. Compare the exclusion and foreign tax credit using your income, tax payments and eligibility. Taxes attributable to excluded income cannot also generate a foreign tax credit. Nigerian tax bands alone do not establish which election produces the better result.

Common Tax Issues in Nigeria

• 1Applying the Nigeria Tax Act: Use the individual or company rules relevant to the taxpayer. Income deductions, disposal exemptions and sector-specific provisions can affect liability; the headline rate alone is insufficient.
• 2Company Tax and Shareholder Review: The Nigeria Tax Act 2025 provides a 0% company-tax rate for qualifying small companies and 30% for other companies from commencement, with a provision for a later rate reduction by presidential order. Check the applicable statutory definition, asset and turnover conditions, special rules and any effective rate-changing order before calculating liability. Review the Nigerian company’s obligations separately from those of its US owners. Do not automatically put tax paid by the company on an individual shareholder’s Form 1116. The IRS generally requires a creditable foreign tax to be imposed on the claimant, paid or accrued, legally owed, and an income tax or tax in lieu of one; assess the entity, ownership and any applicable special rules before selecting forms.
• 3Individual Deductions and Rent Relief: Calculate chargeable income after eligible deductions under the Nigeria Tax Act 2025. The Act lists qualifying housing-fund, health-insurance and pension contributions, interest on loans to develop an owner-occupied home, and specified life-insurance or deferred-annuity payments. Rent relief is the lower of 20% of annual rent paid or NGN 500,000, with accurate disclosure of rent and required information. Claim deductions in the prescribed form and retain supporting documents; the tax authority may refuse an unsupported claim.
• 4Business Incentives: The Act provides a 5% annual credit for eligible qualifying capital expenditure, subject to its timing, certification and use conditions. NIPC says existing Pioneer Status certificates retain relief for their unexpired approved term. Confirm transition and application requirements with NIPC before assuming eligibility.
• 5Tax ID and Registration: The official Tax ID retrieval service uses NIN-linked records for individuals and CAC-linked records for registered entities. NRS also presents separate registration categories for individuals, corporations, non-residents and free-trade-zone entities. Confirm the category and required evidence before applying.
• 6Service Fees and Foreign Tax Credits: Before treating Nigerian withholding as a US credit, verify the applicable Nigerian liability, recipient and any refund entitlement. The IRS creditability tests concern the tax legally owed, not simply the amount deducted from an invoice. Select the US form by taxpayer type: individuals generally use Form 1116, while corporations use Form 1118. Retain the contract, payment statement and tax evidence for review.
• 7Late or Incorrect Filings: JRB’s 2026 personal-income-tax guidance lists an initial NGN 100,000 penalty for failure to file or incomplete/inaccurate returns, plus NGN 50,000 for each subsequent month of non-compliance. Confirm the applicable offence, period and authority before calculating exposure. US filing, payment and information-return penalties are separate; FBAR civil maximums are inflation-adjusted and depend on the facts.
• 8Late US Returns and FBARs: Streamlined Foreign Offshore Procedures require non-willful conduct, the applicable non-residency test and all other eligibility conditions. An existing IRS civil examination or criminal investigation makes the taxpayer ineligible. Qualifying submissions generally cover the three most recent overdue return years, required information returns and six overdue FBAR years, with tax, interest and a signed certification. The specified penalty relief depends on complete compliance with the instructions; living in Nigeria alone does not establish eligibility.
• 9Oil-Sector Employment and Ownership: The Act’s petroleum taxes address company operations and depend on the applicable regime. Separate those company liabilities from an employee’s personal tax. Employer-paid petroleum tax does not automatically become the employee’s Form 1116 credit; review who legally owes the tax and the applicable credit rules.

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Frequently Asked Questions: US Taxes in Nigeria

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