<p>The United States is one of only two countries in the world (along with Eritrea) that taxes its citizens on <strong>worldwide income</strong>, regardless of where they live or where the income is earned.</p><h2>Who Must File</h2><p>All US citizens and permanent residents (Green Card holders) living abroad must file a US tax return if their income exceeds the filing threshold β€” even if they pay taxes in their country of residence.</p><h2>Foreign Earned Income Exclusion (FEIE)</h2><p>The most powerful tool for expats. For 2024, you can exclude up to <strong>$126,500</strong> of foreign earned income (wages, self-employment) from US taxation, provided you meet the <strong>Physical Presence Test</strong> (330 days outside the US in a 12-month period) or the <strong>Bona Fide Residence Test</strong>. Claim on <strong>Form 2555</strong>.</p><h2>Foreign Tax Credit</h2><p>If you pay taxes to a foreign government, you can claim a dollar-for-dollar credit on your US return using <strong>Form 1116</strong>. This prevents double taxation on income not covered by the FEIE.</p><h2>FBAR and Form 8938</h2><ul><li><strong>FBAR (FinCEN 114):</strong> Required if foreign financial accounts exceed $10,000 at any point during the year. Penalties for non-filing: up to $10,000 per violation.</li><li><strong>Form 8938 (FATCA):</strong> Required for foreign assets above $200,000 (single abroad) or $400,000 (MFJ abroad).</li></ul><h2>Filing Deadline for Expats</h2><p>Expats get an <strong>automatic 2-month extension</strong> to June 15, with an additional extension to October 15 available on request.</p><p><em>Source: IRS Publication 54; Form 2555 Instructions; FinCEN 114; Form 8938</em></p>