Do I need to file US taxes while living abroad?

Yes, US citizens and permanent residents (green card holders) are required to file a US federal tax return regardless of where they live in the world. The United States taxes its citizens on worldwide income, which means your obligation to file does not end when you move overseas. This is known as citizenship-based taxation, and the US is one of only two countries in the world that follows this practice (the other being Eritrea).

You must file a US tax return if your gross income exceeds the standard filing thresholds set by the IRS, which for tax year 2025 are $14,600 for single filers and $29,200 for married filing jointly. However, even if your income falls below these thresholds, you may still need to file if you have self-employment income of $400 or more, or if you need to report foreign financial accounts.

The good news is that the US tax code provides several mechanisms to help prevent double taxation. The Foreign Earned Income Exclusion (FEIE) allows you to exclude up to $126,500 (2024 amount, adjusted annually for inflation) of foreign earned income from US taxation. The Foreign Tax Credit (FTC) lets you offset your US tax liability by the amount of taxes you pay to your country of residence. Additionally, tax treaties between the US and many other countries provide further protections against double taxation.

Failing to file can result in serious penalties, including failure-to-file penalties of 5% per month (up to 25%), failure-to-pay penalties, and potential criminal prosecution in extreme cases. If you have fallen behind on your filings, the IRS Streamlined Filing Compliance Procedures may allow you to catch up without facing penalties. We strongly recommend consulting with an expat tax specialist to ensure you remain compliant while minimizing your tax burden.