Do I need to file if I earn below the FEIE threshold?

Many expats mistakenly assume that if their income is below the Foreign Earned Income Exclusion (FEIE) threshold, they do not need to file a US tax return. This is incorrect. The FEIE is a benefit you claim on your return — it does not eliminate the requirement to file.

Your obligation to file is determined by whether your gross worldwide income exceeds the standard filing thresholds ($14,600 for single, $29,200 for married filing jointly in 2025), not by whether it is below the FEIE limit. Even if you plan to exclude all your foreign earned income using the FEIE, you must still file Form 1040 and Form 2555 to actually claim the exclusion.

Furthermore, the FEIE only applies to earned income — wages, salaries, and self-employment income. It does not cover unearned income such as investment gains, rental income, pensions, or Social Security benefits. So even if your earned income is below the FEIE threshold, you may owe US tax on unearned income.

Filing is also necessary to claim the FEIE in the first place. You must make the election to use the FEIE by filing Form 2555 with a timely filed return (including extensions). If you fail to file and later want to claim FEIE retroactively, you can do so, but the IRS technically has the right to deny a late election. Additionally, to claim the FEIE, you must prove you meet either the Physical Presence Test (330 full days in a foreign country in a 12-month period) or the Bona Fide Residence Test.

We recommend filing every year, even when you expect zero US tax liability, to maintain your FEIE election, document your foreign residence, start the statute of limitations, and preserve your eligibility for any refundable credits.