Do US citizens living abroad still have to pay US taxes?

Yes. The US taxes citizens and green card holders on worldwide income regardless of where they live. You must file a US federal tax return annually, report foreign accounts via FBAR (FinCEN 114) if they exceed $10,000 aggregate, and file Form 8938 (FATCA) if foreign assets exceed $200,000 at year-end (single expat). Source: IRS.gov

US Expat Tax Guide 2026 — FATCA, FBAR and Filing Abroad

⚠️ Critical — all US citizens and green card holders, wherever they live

The US taxes citizens on worldwide income regardless of residence — one of only two countries globally that does this. Annual filing is mandatory even if you owe zero tax. Non-compliance carries severe financial penalties and in wilful cases, criminal prosecution.

FBAR vs FATCA — two entirely separate obligations

The most commonly confused requirements in US expat tax. Separate forms, separate agencies, separate thresholds, separate penalties. Many expats who file one are unaware they must also file the other.

Feature	FBAR — FinCEN Form 114	FATCA — IRS Form 8938
Filed with	FinCEN — not the IRS. Separate system.	IRS — attached to your Form 1040 tax return
Threshold (expat abroad)	Aggregate foreign accounts > $10,000 at any point during the year	Foreign assets > $200,000 at year-end (single); doubles for married filing jointly
What it covers	Bank accounts, brokerage accounts, foreign pensions where you have financial interest or signature authority	All FBAR accounts PLUS foreign stocks, securities, partnerships held directly
Deadline	April 15, auto-extended to October 15. Tax return extension does NOT extend FBAR separately.	With Form 1040 — June 15 for expats. Extendable to October 15.
Non-willful penalty	Up to $13,627 per violation per year	$10,000 per form. Additional $10,000 per 30 days after IRS notice (up to $50,000)
Willful penalty	Greater of $136,272 or 50% of account balance. Criminal prosecution possible.	40% penalty on underpayment attributable to unreported assets

Both forms are required when both thresholds are met

Filing one does not substitute for the other. They serve different legal purposes, go to different agencies, and carry separate, stacking penalties.

Foreign Earned Income Exclusion (FEIE)

US expats who qualify as living abroad — meeting the Physical Presence Test (330+ days outside the US in a 12-month period) or the Bona Fide Residence Test (established residence abroad) — can exclude foreign-earned income from US tax up to the annual FEIE limit. The limit for 2025 (filed in 2026) is $130,000, indexed for inflation annually. This significantly reduces or eliminates US tax liability for many expats. It does not remove your filing obligation or FBAR/FATCA requirements.

Never filed since leaving the US? Streamlined Compliance

If your non-compliance was non-willful (you didn't know the requirements), the IRS Streamlined Filing Compliance Procedures allow you to catch up on 3 years of tax returns and 6 years of FBARs without penalties. This programme is significantly more lenient than standard delinquency procedures. However, it closes the moment the IRS contacts you first. Act before they do.

IRS — Streamlined Filing Compliance Procedures →

⚠️ FATCA and your foreign bank account

Under FATCA, foreign banks in 110+ countries must report US account holders directly to the IRS. The IRS may already know about your foreign accounts even if you haven't disclosed them. Some banks in Thailand, UAE and other popular expat destinations have started declining US citizen accounts due to FATCA compliance costs.

US Expat Tax Guide 2026 — FATCA, FBAR and Your Obligations Abroad

FBAR vs FATCA — two entirely separate obligations

Foreign Earned Income Exclusion (FEIE)

Never filed since leaving the US? Streamlined Compliance

The Expat Briefing