An American expat is a U.S. citizen or lawful permanent resident who lives primarily in a foreign country. The word is shorthand, not a legal category: in everyday use it covers anyone who has moved abroad for work, retirement, school, or family, and it says nothing about giving up citizenship. What matters for expats is that moving overseas does not end your relationship with the U.S. government. You still owe federal income tax on your worldwide income, you still have to disclose foreign bank accounts above certain thresholds, and most federal rules that applied to you at home continue to apply abroad.
The tax code uses the related word “expatriate” more narrowly, to mean a citizen who formally renounces citizenship or a long-term green card holder who gives up that status.1Cornell Law Institute. Definition: Expatriate From 26 USC 877A(g)(2) That is a separate legal act, covered at the end of this article. Nearly all Americans abroad are expats only in the colloquial sense; their citizenship is intact.
You are also allowed to hold another nationality at the same time. The State Department’s position is that U.S. law does not force you to choose between American citizenship and a foreign one, and naturalizing elsewhere does not by itself put your U.S. citizenship at risk.2Travel.State.Gov. Dual Nationality Dual nationals owe allegiance to both countries, must follow the laws of each, and must use a U.S. passport when entering or leaving the United States.
You Still Owe U.S. Income Tax on Worldwide Income
The United States is one of only two countries that taxes its citizens on worldwide income regardless of where they live. Every citizen owes federal tax on all income, whether it comes from a foreign employer, rental property overseas, or interest in a foreign bank account, even in a year you never set foot in the country.3Office of the Law Revision Counsel. 26 USC 1 – Tax Imposed Federal rates for 2026 run from 10 percent to 37 percent depending on income and filing status.4Internal Revenue Service. Federal Income Tax Rates and Brackets
You file the same Form 1040 you would file at home. Expats who live abroad and have their main place of business outside the United States on April 15 get an automatic two-month extension to June 15. You do not have to request it, but you should attach a statement to your return explaining that you qualified. Interest still accrues on unpaid tax from April 15 forward, even during the extension.5Internal Revenue Service. U.S. Citizens and Resident Aliens Abroad
Tools That Reduce Double Taxation
The tax code offers two main tools to keep you from being taxed twice on the same income. The Foreign Earned Income Exclusion lets qualifying expats exclude up to $132,900 of foreign earned income per person for the 2026 tax year.6Internal Revenue Service. Figuring the Foreign Earned Income Exclusion It applies only to earned income like wages and self-employment income, not to investment returns, pensions, or rental income. To use it you must pass either the bona fide residence test or the physical presence test, which requires 330 full days in a foreign country over 12 consecutive months.7Office of the Law Revision Counsel. 26 USC 911 – Citizens or Residents of the United States Living Abroad Even if all your income is excluded, you still have to file a return and claim the exclusion on it.
You can also exclude or deduct certain housing costs paid abroad, such as rent, utilities, and insurance. The 2026 base housing exclusion limit is $39,870, though the actual figure varies by location and days abroad. Claiming the housing exclusion reduces the room you have under the earned income exclusion, so the two need to be planned together.
The Foreign Tax Credit is the other main tool. Income tax you pay to a foreign government generates a dollar-for-dollar credit against your U.S. tax on the same income.8Office of the Law Revision Counsel. 26 USC 901 – Taxes of Foreign Countries and of Possessions of the United States You cannot use it on income you already excluded under the FEIE; each dollar of income gets one benefit or the other. For expats earning above the exclusion cap or with significant investment income, the credit is often more valuable than the exclusion.
State Taxes May Follow You
Federal taxes are not the whole story. Some states continue to treat you as a resident after you move abroad, especially if you keep a driver’s license, voter registration, bank accounts, or property there. They look at where you intend to return, where your family lives, and how many days you spend in the state. If your last U.S. home was in a state with an income tax, check its rules for establishing a new domicile abroad; the requirements vary widely.
You Must Report Foreign Financial Accounts
Separate from the tax return itself, expats face two disclosure regimes for accounts and assets held abroad. Many people have to file both.
The first is the Report of Foreign Bank and Financial Accounts, known as the FBAR. If the combined value of all your foreign financial accounts, including bank accounts, brokerage accounts, mutual funds, and certain insurance policies, exceeds $10,000 at any point during the year, you have to file one.9Office of the Law Revision Counsel. 31 USC 5314 – Records and Reports on Foreign Financial Agency Transactions The threshold is based on the peak balance across all your accounts combined, not each account on its own. The FBAR is filed electronically through FinCEN’s BSA E-Filing System, not with your tax return. It is due April 15 with an automatic extension to October 15 that requires no request.10Internal Revenue Service. Report of Foreign Bank and Financial Accounts (FBAR)
The second is Form 8938, created by the Foreign Account Tax Compliance Act (FATCA), which is filed with your tax return. Thresholds are higher for expats than for taxpayers at home. A single filer living abroad has to file if specified foreign financial assets exceed $200,000 on the last day of the tax year or $300,000 at any point during the year; for a married couple filing jointly, those numbers are $400,000 and $600,000.11Internal Revenue Service. Summary of FATCA Reporting for U.S. Taxpayers The penalty for failing to file Form 8938 starts at $10,000, with another $10,000 added for each 30-day period the failure continues after an IRS notice, up to $50,000 on top of the initial penalty.12Office of the Law Revision Counsel. 26 USC 6038D – Information With Respect to Foreign Financial Assets FBAR violations carry their own separate penalties. The forms overlap heavily but cover slightly different assets and go to different agencies.
Serious Tax Debt Can Cost You Your Passport
Expats who fall well behind on federal taxes risk losing their passport. The IRS can certify your debt to the State Department if you owe more than $66,000 in legally enforceable federal tax debt, including penalties and interest, for 2026.13Internal Revenue Service. 2026 Adjusted Items (Rev. Proc. 2025-32) The threshold adjusts each year for inflation. Once the debt is certified, the State Department can deny a new passport application, refuse to renew an existing one, or revoke a current passport.14Internal Revenue Service. Revocation or Denial of Passport in Cases of Certain Unpaid Taxes For someone living abroad, that is not an inconvenience; it is an immediate crisis.
You Can Still Vote From Abroad
American citizens living overseas keep the right to vote in federal elections for president, U.S. senator, and U.S. representative under the Uniformed and Overseas Citizens Absentee Voting Act. You register and request an absentee ballot at the same time by submitting a Federal Post Card Application.15Office of the Law Revision Counsel. 52 USC Ch. 203 – Registration and Voting by Absent Uniformed Services Voters and Overseas Voters in Elections for Federal Office Your last U.S. address before moving abroad serves as your voting residence, even if you no longer have any ties there. The federal law guarantees the right only for federal offices, but most states and territories let overseas citizens vote absentee in state and local elections under their own rules.16U.S. Department of Justice. The Uniformed and Overseas Citizens Absentee Voting Act
Social Security Usually Follows You, Medicare Usually Does Not
If you qualify for Social Security retirement, disability, or survivor benefits, you can generally keep receiving them while living abroad. As a U.S. citizen, payments continue as long as you are eligible and live somewhere the Social Security Administration can send them, and they can go to a foreign bank account or overseas address in most countries.17Social Security Administration. Your Payments While You Are Outside the United States Treasury regulations block payments to Cuba and North Korea, and SSA restricts payments to several former Soviet republics because it cannot reliably distribute or verify them there.18eCFR. 31 CFR Part 211 – Delivery of Checks and Warrants to Addresses Outside the United States, Its Territories and Possessions
If you split your career between countries, you may not have enough credits in either system alone to qualify for benefits. Totalization agreements let you combine credits from both systems and also stop you from being taxed into both social security systems on the same earnings. The United States has these agreements with 30 countries.19Social Security Administration. U.S. International Social Security Agreements
Medicare is the opposite story. It generally does not cover healthcare you receive outside the United States, with only a few narrow exceptions involving foreign hospitals near the border or on the route through Canada between Alaska and another state. Part D prescription drug coverage does not apply to medications bought abroad at all.20Medicare.gov. Medicare Coverage Outside the United States That creates a decision for expats approaching 65. If you skip Part B while abroad because you cannot use it, you face a permanent late enrollment penalty when you eventually enroll: an extra 10 percent added to your Part B premium for each full 12-month period you could have signed up but did not, for as long as you have Part B.21Medicare.gov. Avoid Late Enrollment Penalties Some expats pay Part B premiums during years abroad to avoid the surcharge later; others accept the penalty. The right choice depends on how long you plan to stay abroad and whether you plan to come back.
Renouncing Citizenship Is a Separate Step
Living abroad, even for decades, does not end your U.S. citizenship. Ending it takes a formal, irreversible act performed voluntarily before a U.S. diplomatic or consular officer at an embassy or consulate.22Office of the Law Revision Counsel. 8 USC 1481 – Loss of Nationality by Native-Born or Naturalized Citizen; Voluntary Action; Burden of Proof; Presumptions The State Department charges $2,350 for the renunciation process.
Renouncing can also trigger an exit tax if you are a “covered expatriate.” You fall into that group if any one of these is true: your net worth is $2 million or more on the date you renounce, your average annual net income tax liability for the five years before renunciation exceeds roughly $211,000 (adjusted for inflation; the figure was $206,000 for 2025), or you cannot certify that you have complied with all federal tax obligations for the previous five years.23Internal Revenue Service. Expatriation Tax For covered expatriates, the tax code treats most worldwide assets as if sold the day before renunciation, with gain above an exclusion amount taxed at ordinary rates, and special rules for deferred compensation, retirement accounts, and trust interests. That makes renunciation a financial decision that needs planning well before the appointment.