I live abroad full-time now — do I really still have to file US taxes every year?
Yes. The United States taxes on the basis of citizenship, not residence. If you are a U.S. citizen or a green-card holder, you must file a U.S. tax return and report your worldwide income every year — no matter where you live, where you earn the money, or whether another country already taxed it. Filing is the obligation; owing tax is a separate question — and two big reliefs often reduce the actual bill to zero.
The filing obligation in one paragraph
The IRS states it plainly: the rules for filing income, estate, and gift tax returns are generally the same whether you are in the United States or abroad, and you are subject to tax on worldwide income from all sources. Moving abroad changes nothing by itself. For green-card holders, the obligation continues until lawful permanent resident status is formally ended — simply leaving the country does not do it.
The two reliefs that usually wipe out the bill
| Relief | 2026 key facts | Form |
|---|---|---|
| Foreign Earned Income Exclusion (FEIE) | Exclude up to $132,900 of foreign earned income per qualifying person — wages, salaries, self-employment income; not dividends, interest, or capital gains | Form 2555 |
| Foreign Tax Credit (FTC) | Dollar-for-dollar credit for income tax you paid to a foreign government | Form 1116 |
To claim the FEIE you must pass one of two tests: the bona fide residence test (you established a home in a foreign country for an uninterrupted period covering a full calendar year) or the physical presence test (330 full days in foreign countries during any 12-month period). A married couple where both spouses qualify can exclude up to $265,800 combined for 2026. You cannot claim either relief without filing a return.
The extra filings people miss
- FBAR: If your foreign financial accounts total more than $10,000 at any time during the year, file FinCEN Form 114 electronically by April 15 (automatic extension to October 15).
- Form 8938 (FATCA): Filed with your tax return at higher thresholds than the FBAR — living abroad raises those thresholds.
- Self-employment tax: The FEIE does not cover Social Security and Medicare tax on self-employment income, unless a totalization agreement applies.
- State taxes: Some states keep taxing former residents; cutting ties properly matters.
Behind on filing? The streamlined route
If you did not know you had to file and the failure was non-willful — a mistake or good-faith misunderstanding, not deliberate — the IRS Streamlined Filing Compliance Procedures let you catch up:
| Streamlined Foreign Offshore | Streamlined Domestic Offshore | |
|---|---|---|
| Who | Living abroad, no U.S. abode | Living in the U.S. |
| Tax returns | Last 3 years | Last 3 years |
| FBARs | Last 6 years | Last 6 years |
| Certification | Form 14653 (non-willfulness) | Form 14654 |
| Offshore penalty | None | 5% of the highest aggregate balance |
You still pay any tax and interest due, but for many expats the exclusions and credits mean little or no tax is owed. You generally cannot use streamlined if the IRS has already started an examination of your returns.
Frequently asked questions
I haven't filed in 8 years. Will the IRS penalize me?
If your failure was non-willful, the streamlined procedures are designed exactly for this — three years of returns and six years of FBARs, usually with no offshore penalty under the foreign route. Willful cases belong in a different, harsher process, so get advice if you are unsure which applies.
Does the FEIE cover my investment income?
No. It covers earned income only — salary, wages, self-employment. Dividends, interest, rental income, and capital gains are not excludable, though the Foreign Tax Credit may still help.
I'm a green-card holder who moved back home years ago. Am I still on the hook?
Quite possibly yes. Until you formally abandon the green card (for example, by filing Form I-407) or it is otherwise terminated, the IRS generally treats you as a tax resident with a worldwide filing obligation.
Sources
- Entry source: https://taxexodus.com/blog/digital-nomad-tax-guide-2026/
- IRS, "U.S. citizens and resident aliens abroad": https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad
- IRS, "Streamlined filing compliance procedures": https://www.irs.gov/individuals/international-taxpayers/streamlined-filing-compliance-procedures