91: US Expat Taxes: What every American moving abroad should know
Thinking about moving abroad but unsure how U.S. taxes work
U.S. taxes for expats can be complicated, especially when you’re navigating life abroad for the first time. In this episode, I sit down with international tax expert Alex McGowin to unpack what Americans living overseas need to know—from filing requirements to key strategies like the Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit (FTC). Whether you’re already abroad or planning a move, this conversation will help you avoid costly mistakes and better understand your tax obligations.
Here are the top things Americans need to know about taxes when living overseas.
1. You Still Have to File U.S. Taxes
Even if you live abroad full-time, U.S. citizens are required to file a federal tax return every year. This includes reporting your worldwide income, even if you’ve already paid taxes to a foreign government.
Many Americans assume that once they leave the U.S., they’re off the hook. Not true.
BUT the good news is that many countries have a tax treaty with the U.S. which means you won’t have to pay double tax. And depending on the country you might even pay less taxes.
2. You May Not Owe, But You Still Have to Report
While you still need to file, you may not owe taxes—thanks to tools like the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC).
- FEIE lets you exclude up to $126,500 (2024) in foreign-earned income.
- FTC allows you to get a dollar-for-dollar credit for foreign taxes paid.
Alex shares how to determine which strategy is right for your situation, and how to avoid double taxation.
3. Expats Who Are Self-Employed Need to Plan Carefully
If you’re self-employed or running a business abroad, you’ll need to pay attention to self-employment tax, which isn’t covered by FEIE.
Alex explains how certain business structures can help reduce tax exposure, especially for long-term expats.
4. Retirement, Remote Work, and Tax Residency
We also covered how tax laws apply differently depending on your work setup:
- Remote workers: Still taxed by the U.S. on income even if your employer is foreign.
- Retirees: Foreign pensions may or may not be taxable depending on the country.
- Business owners: Structuring your company properly is critical to avoid extra layers of tax.
5. FBAR, FATCA, and the Other Forms You Shouldn’t Ignore
If you have more than $10,000 in foreign financial accounts at any point in the year, you likely need to file an FBAR (Foreign Bank Account Report). You may also have to file Form 8938 under FATCA.
Skipping these forms can lead to serious penalties—even if you owe nothing in taxes.
6. Should You DIY or Hire a Pro?
Alex shares when it’s reasonable to file your own expat taxes—and when it’s time to hire a professional.
In short: if your financial situation is simple, tools like MyExpatTaxes or TaxSlayer can help. But if you’re running a business, investing internationally, or have multiple income streams, it’s worth getting expert help.
Listen to the full episode with Alex McGowin here:
👉 Listen on Spotify | Listen on Apple Podcasts
Check out Alex’s firm: https://mcgowantax.com
Getting Serious About Life Abroad? These Guides Will Help You Prepare
