This means that when a US citizen moves to another country that also imposes income taxes, they are required to report income to both the foreign tax authority and the IRS, resulting in potential double taxation. Even “accidental Americans”—those born abroad to US citizen parents—are subject to these tax rules.
If you are a U.S. citizen or resident living or traveling outside the United States, you generally are required to file income tax returns, estate tax returns, and gift tax returns and pay estimated tax in the same way as those residing in the United States.
Dual citizens are often required to file tax returns in both countries. However, tax treaties and other benefits can be used to avoid double taxation. Using these benefits, most US dual citizens who live abroad can erase their US tax liability.
Foreign Tax Credit
If you qualify for the Foreign Tax Credit, the IRS will give you a tax credit equal to at least part of the taxes you paid to a foreign government. In many cases, they will credit you the entire amount you paid in foreign income taxes, removing any possibility of US double taxation.
Limit on excludable amount
The maximum foreign earned income exclusion amount is adjusted annually for inflation. For tax year 2023, the maximum foreign earned income exclusion is the lesser of the foreign income earned or $120,000 per qualifying person. For tax year 2024, the maximum exclusion is $126,500 per person.
However, you may qualify to exclude your foreign earnings from income up to an amount that is adjusted annually for inflation ($107,600 for 2020, $108,700 for 2021, $112,000 for 2022, and $120,000 for 2023). In addition, you can exclude or deduct certain foreign housing amounts.
For the year of your move, you'll file a part-year resident tax return in each state you lived in. However you won't have to pay double the state tax. Each state taxes the income that was earned in that particular state, but most states don't tax the income earned in the other state.
As a result of these agreements, Social Security provides benefits to people who have worked in both the United States and in a foreign country with such an agreement, but whose periods of coverage in the United States would not otherwise be sufficient to qualify for U. S. benefits.
Most American expats do not end up owing U.S. taxes
In most situations, U.S. expats can offset foreign-earned income with: The Foreign Tax Credit (FTC) The Foreign Earned Income Exclusion (FEIE) The Foreign Housing Exclusion.
Absences of more than 365 consecutive days
You must apply for a re-entry permit (Form I-131) before you leave the United States, or your permanent residence status will be considered abandoned. A re-entry permit enables you to be abroad for up to two years.
Does the US Have a Tax Treaty with the United Arab Emirates? No, there is currently no US-UAE tax treaty. However, because the UAE has no income tax, Americans living abroad in the UAE are only required to file US taxes anyway.
Yes, if you are a U.S. citizen or a resident alien living outside the United States, your worldwide income is subject to U.S. income tax, regardless of where you live. However, you may qualify for certain foreign earned income exclusions and/or foreign income tax credits.
An LLC, or Limited Liability Company, avoids double taxation through its unique legal structure. Unlike a C corporation, which is taxed separately from its owners, an LLC is considered a "pass-through" entity for tax purposes. This means that the income earned by the LLC is not taxed at the corporate level.
Americans who retire overseas still have tax obligations. Typically, you will have to file a tax return with both the US government and your new host country. You may even have to file a tax return with the US state you used to live in.
It depends. Each country is different, but for the most part, U.S. expats must file both U.S. taxes and taxes for their country of residence. For example, let's say you have Canada/U.S. dual citizenship, living in Canada.
Do not have to choose one nationality over the other. As a U.S. citizen, you may naturalize in another country without risking your U.S. citizenship.
The U.S. Government recognizes that dual nationality exists but does not encourage it as a matter of policy because of the problems it may cause. Claims of other countries on dual national U.S. citizens may conflict with U.S. law, and dual nationality may limit U.S. Government efforts to assist citizens abroad.
The Foreign Earned Income Exclusion, or FEIE, is also known as Form 2555 by the IRS. This expat benefit allows you to avoid double taxation by excluding up to a certain amount of foreign earned income from your US taxes. In 2025, for the 2024 tax year, you can exclude up to $126,500 of foreign earned income.
The United States' tax code places a double-tax on corporate income with one tax at the corporate level through the corporate income tax and a second tax at the individual level through the individual income tax on dividends and capital gains.
As a US Person, you have to file a US federal tax return to report your worldwide income regardless of where you live and work. The only way to avoid submitting a US tax return is to renounce your US citizenship. Even doing so doesn't always ensure you are out of the US tax system forever.
Importantly, U.S. citizens are always considered U.S. tax residents, even if they live in a foreign country or claim residency elsewhere. They are subject to citizenship-based taxation, meaning they must report and pay taxes on their worldwide income until they formally renounce their citizenship.
Key Takeaways. Expats can use the FEIE to exclude foreign income from US taxation. For the entire tax year 2024, the maximum exclusion amount under the FEIE is $126,500. To qualify for the FEIE, you must meet the standards of the physical presence test or the bona fide residence test.