Filing Your U.S. Taxes While Living Abroad
Categories: Finance
So you’re a US citizen and have chosen the Netherlands to live and work. But did you know the USA requires overseas income to be declared when earned abroad? This guide will tell you how to deal with this.
Filing taxes in the USA, even if you don’t live there
Are you a U.S. citizen, green card holder, or “Accidental American” (those born in the USA but have never resided there)? Did you know your income from abroad follows the same rules as in the United States? No matter where you live, you must file a federal tax return and report your worldwide income. There is a tax filing deadline for citizens living abroad. The next deadline is June 15, 2026.
Important filing dates for U.S. taxpayers living abroad
- April 15, 2026 – filing deadline for any balance due (pay by this date to avoid interest)
- June 15, 2026 – expat filing deadline without extension
- October 15, 2026 – with Form 4868 (extension)
- December 16, 2026 – special case (letter to the IRS)
Penalty note: In 2026, if your tax return is not filed within 60 days of the due date, you may be charged a minimum late-filing fee of $510 or 100% of taxes owed, whichever is lower.
Three levels of government impose income taxes in the U.S.:
- federal government
- state governments
- (sometimes) local governments
Taxes on income are applied at a percentage rate at both the federal and state levels. The tax rates, application methods, types of income taxable, and the deductions and credits available vary considerably at these three levels.
Renouncing citizenship to avoid filing a tax return in the USA
You won’t pay U.S. taxes if you renounce your U.S. citizenship. But the government charges $2,350 to do so. You may also be subject to an exit tax. Exit tax is defined by a complex calculation that includes several factors, such as having many assets or a net worth of $2 million. If you wanted to renounce your citizenship and had to pay an exit tax, your tax liability is calculated as if you sold your assets at fair market value. However, it goes without saying that if you decide to renounce your U.S. citizenship, you are taking a major, life-changing step. You should consider all the pros and cons. You would also need another passport. Your renunciation appointment will require you to bring this document. Without a second passport, the State Department will deny anyone the right to renounce their U.S. citizenship.
Thresholds for filing based on types of income
American citizens living abroad, regardless of where they earn income, must file a tax return if their total income in 2025 exceeds the following minimum thresholds. These thresholds are the same as for U.S. residents, since the IRS doesn’t distinguish between residents and nonresidents for these purposes.
| Your IRS filing status | at the end of 2025, you are | Minimum income threshold |
| Single | Under 65 | $15,750 |
| 65 or older | $17,750 | |
| Married filing jointly | Under 65 (both spouses) | $31,500 |
| 65 or older (one spouse) | $33,100 | |
| 65 or older (both spouses) | $34,700 | |
| Married filing separately | Any age | $5 |
| Head of household | Under 65 | $23,625 |
| 65 and older | $25,625 | |
| Qualifying widower | Under 65 | $31,500 |
| 65 and older | $33,100 | |
| If you are self-employed, the minimum income threshold is $400, irrespective of your marital status or age. Being self-employed overrides all of the categories. | ||
You’ll generally need to have a kid to qualify as a head of household. If you are unsure what your filing status is, the IRS has a handy tool that walks you through some questions to give you your definition. The IRS also has a tool that helps you determine whether you need to file a tax return by asking several questions about your income.
The amount of tax you will pay depends on several factors, including your filing status, deductions, credits, and taxable income. For the 2025 tax year, the U.S. federal system uses seven tax brackets ranging from 10% to 37%.
Double taxation
Double taxation occurs when the same income is taxed twice. Double taxation on income can often be avoided in two main ways: by applying for the Foreign Earned Income Exclusion or by claiming the Foreign Tax Credit.
| Foreign Tax Credit | Foreign Earned Income Exclusion | |
| Overview | The Foreign Tax Credit reduces a taxpayer’s U.S. tax liability dollar-for-dollar when qualifying foreign income taxes are paid. | The Foreign Earned Income Exclusion allows taxpayers to exclude up to $130,000 of foreign-earned income from U.S. taxes (2025 figure). There are two tests they must pass to qualify: the Physical Presence Test or the Bona Fide Residence Test.
To establish a foreign tax residence, the taxpayer must be physically outside the U.S. for 330 days during a 12-month period. To qualify for the Bona Fide Residence Test, taxpayers must establish their tax home in a foreign country for an uninterrupted period of time, covering an entire tax year. |
| Pros | Taxpayers earning income in a high-tax country are more likely to benefit from the Foreign Tax Credit since it is applied dollar-for-dollar against their U.S. tax liability.
In many higher-tax jurisdictions, local income tax rates can exceed the top U.S. marginal rate (currently 37%), which can make the Foreign Tax Credit especially useful. |
Foreign Earned Income Exclusion (FEIE) can be helpful if you get the 30% ruling.
The Foreign Earned Income Exclusion can allow you to shield up to $130,000 (2025 figure) from U.S. taxation. There are also specific foreign housing amounts you can exclude or deduct. The base limit is $20,800. You may be able to claim certain eligible housing and lodging costs, depending on your situation. |
| Cons | Because they are not income taxes, foreign real estate taxes, social security contributions, and property taxes generally do not qualify for the credit.
If you have the 30% ruling here in the Netherlands, the Foreign Tax Credit may not always be the best option. Some foreign taxes are not eligible. |
Foreign Earned Income Exclusion has a high bar. You must meet the Physical Presence Test (330 full days outside the U.S. in a 12-month period) or qualify under the Bona Fide Residence Test.
It requires filing multiple tax forms. It is binding; you must keep using it yearly. If you revoke it, you can’t use it again for 5 years. |
| Can I use both? | In the same year, you can take both the Foreign Earned Income Exclusion and the Foreign Tax Credit; they can be used together, although they are not on the same dollar of income. | |
Tax Treaties
It’s important to check whether the host country has a tax treaty with the United States, as this can also affect one’s overall tax obligation. In most cases, the two methods above help avoid double taxation.
Totalization Agreement
Totalization agreements are agreements between countries to eliminate dual social security coverage. This is when a person from one country works in another country and pays social security taxes to both countries. Under each Totalization Agreement, workers’ coverage is generally assigned to the country with the strongest economic attachment. Workers and employers typically obtain exemptions from social security taxes in other countries if they meet some requirements.
Totalization agreements help fill gaps in benefit protection for workers who have divided their careers between the United States and another country. U.S. agreements can be misinterpreted as allowing employees with dual coverage or their employers to select the system to which they will contribute.
Often, one needs to submit a document from the local authorities to prove that one is covered (or not) in the country of residence.
Child Tax Credits
Children under 17 may qualify for a refundable tax credit of up to $1,700. Both the taxpayer and the child must meet several requirements to qualify for the credit. An additional child tax credit may be available when a taxpayer’s child tax credit exceeds their tax liability. Individuals receiving less than the full child tax credit are eligible for the additional tax credit. Taxpayers who do not owe taxes may receive a refund from the additional child tax credit. To claim this credit, taxpayers must meet additional requirements. Taxpayers can lower their tax liability with a nonrefundable tax credit to zero, but not below zero. There is no refund for the Child Tax Credit.
Taxpayers can get a refund while lowering their tax liability to zero with a refundable tax credit. Refunds are available for the additional child tax credit.
The child tax credit can still be claimed by U.S. citizens living abroad, provided the child has a valid SSN. You must file your tax return differently than in the U.S. You can’t claim the refundable portion if you claim the foreign-earned income exclusion.
It may still be possible to receive a refund if the foreign income exclusion isn’t claimed and the foreign tax credit is.
Streamlined Filing Procedure
The IRS requires expats to file tax returns yearly, despite many living abroad for years without realizing the need. If this sounds like you, don’t panic; the IRS has created a way for you to get caught up. There is a penalty-free process called the Streamlined Filing Compliance Procedure. This is to assist individuals who have not willfully or purposefully attempted to evade taxes. They were simply unaware. This procedure is a once-in-a-lifetime opportunity, so it can only be done once.
Under the streamlined foreign offshore process, you typically file 3 years of tax returns (2025, 2024, 2023) and 6 years of FBARs (2020 through 2025), along with a non-willful certification.
As part of your application, you must include a signed statement stating that failure to file was not willful. When incorrect returns have been filed previously, amended returns can be filed. A prerequisite for the program is that you must show that you would have filed if you had known it was required. To qualify, you must have been physically present outside the United States for at least 330 full days during one of the three most recent tax years without having an address in the United States during the three most recent tax years.
Summary
This article provides tips on filing US taxes abroad; however, it isn’t a comprehensive guide. There is a well-written guide on the IRS website; however, even with that guidance, taxes can be complicated. Taxbrella, based in the Netherlands, helps U.S. citizens living there file their U.S. tax returns.