You pay your taxes in Europe. Washington still wants to hear from you every year.
US tax obligations abroad: what your US passport asks of you every year
The US taxes by passport, not by residence. If you are a US citizen or hold a green card, your worldwide income stays taxable in the US and you have the same filing obligations as someone living in Ohio, even if you have lived in Oslo, Stockholm or Amsterdam for thirty years and paid every cent of tax there. This page is your map: who has to file, which forms are involved, how double taxation is avoided, what your bank reports, which deadlines apply and how to catch up or get out. Each topic links to its own in-depth article.
1Who stays taxable in the US while living in Europe
The IRS puts it plainly in Publication 54: as a US citizen or resident alien, your worldwide income is generally subject to US income tax wherever you live, and the same filing requirements apply as for someone at home. Three groups are affected, and in Europe they often overlap.
1.1US citizens, including the accidental ones
Anyone born in the US is a US citizen. That is in the 14th Amendment to the Constitution, and the IRS explicitly points out that virtually everyone born in the US acquires citizenship at birth. If you were born abroad to a US parent, you may also have acquired it at birth, provided your parents met the requirements of the Immigration and Nationality Act. The IRS itself refers to people who are unaware of their status or its consequences. They have come to be called accidental Americans: born in Boston, back in Europe at age three, never set foot in the US again. You don't need a passport for this; the obligation follows citizenship.
1.2Green card holders
If you held a green card at any point during the year, you are a US tax resident for that year under the green card test. Moving back to Europe doesn't change that. Residency only ends when your status formally ends, for example by surrendering your green card with Form I-407, or when you elect to be treated as a resident of a European country under a tax treaty. Both have consequences you should understand beforehand.
1.3Dual citizens
If you hold a European passport alongside your US one, you are a citizen of both countries and at home in both systems. For tax purposes, that means your country of residence and the US both want to see a return, and treaties and tax credits decide which side taxes which income first.
2The US tax return: Form 1040 and the thresholds
Whether you have to file depends on your gross income, your filing status and your age. The thresholds are in the charts of the Form 1040 instructions. For 2025, the threshold for single filers under 65 was $15,750, and for married couples filing jointly $31,500.
Two details are regularly overlooked abroad. First, gross income includes salary you later exclude under the Foreign Earned Income Exclusion. If you earn $90,000 in Copenhagen, you have to file, even if no US tax is due in the end. Second, the threshold for married couples filing separately is $5. If you are married to a partner without a US passport and file separately for that reason, there is practically no minimum. Self-employed people must file once their net self-employment earnings reach $400.
The return itself is the standard Form 1040. What makes it demanding for Americans abroad are the attachments: Form 2555 for the exclusion, Form 1116 for the foreign tax credit, Form 8938 for foreign assets, Form 8621 for funds, depending on your situation Form 5471 for companies you own and Form 3520 for gifts and certain retirement arrangements. For children and a spouse without a US passport, you need a Social Security Number or an ITIN, depending on their role in the return.
If you owe no US tax, you might see the return as a mere formality. It isn't quite: many benefits are only available if you claim them on a filed return. The IRS says so explicitly for the exclusion and the Foreign Tax Credit.
| Filing status | Age at end of 2025 | Required from gross income of |
|---|---|---|
| Single | below 65 | $15,750 |
| Single | 65 or older | $17,750 |
| Married filing jointly | both under 65 | $31,500 |
| Married filing separately | any age | $5 |
| Self-employed | any age | $400 net self-employment earnings |
Source: IRS, Instructions for Form 1040 (2025), Chart A; IRS Publication 54 (12-2025), Filing Requirements. Gross income includes salary excluded under the Foreign Earned Income Exclusion.
3Salary from Europe: Foreign Earned Income Exclusion or Foreign Tax Credit
To keep a salary earned in Stockholm from being fully taxed twice, US law offers two tools. The first is the Foreign Earned Income Exclusion under Section 911. It exempts foreign earned income up to an annually adjusted amount: $130,000 for 2025 and $132,900 for 2026. A housing exclusion may come on top. You need a tax home abroad and must pass one of two tests: you are a resident abroad without interruption for a full calendar year (Bona Fide Residence Test), or you spend at least 330 full days outside the US within a twelve-month period (Physical Presence Test). You claim it on Form 2555.
The second tool is the Foreign Tax Credit on Form 1116. Here you credit the income tax paid in Europe against your US tax. On European salaries, the local tax is often higher than the US tax on the same amount, so the credit can bring the US tax on that income down to zero.
Which route is better depends on your income, family and plans. The exclusion does not reduce US self-employment tax; if you choose it, you cannot claim a credit for tax on the same income; and your remaining income is taxed at the rate that would have applied without the exclusion. Pensions and investment income are not earned income and never qualify for the exclusion.
4Tax treaties and the saving clause
Form 1040, FBAR and Streamlined for US citizens living in Europe.
5Reporting accounts: FBAR and Form 8938
Separately from your tax return, you must report your accounts outside the US to the US Treasury once their combined maximum value exceeded $10,000 at any point during the year. This report is the FBAR (Report of Foreign Bank and Financial Accounts), filed on FinCEN Form 114 through the BSA E-Filing System. It doesn't go to the IRS with your return but electronically to FinCEN. Whether the account earns anything is irrelevant; current accounts, savings accounts and brokerage accounts all count, and even signature authority over someone else's account, such as your parents', can trigger the requirement.
Alongside it there is Form 8938, the tax return attachment under FATCA. It covers foreign financial assets more broadly but has much higher thresholds for people living abroad: for single filers more than $200,000 at year end or more than $300,000 at any time during the year, double that for married couples filing jointly. A state pension from your country of residence does not have to be reported there, but an occupational or private pension can be reportable.
People who mix up the two often file only one. The table shows why you almost always need both once your assets grow.
| Item | FBAR (FinCEN Form 114) | Form 8938 |
|---|---|---|
| Filed with | FinCEN, electronically via BSA E-Filing | IRS, attached to Form 1040 |
| Threshold, single | Total of all foreign accounts over $10,000 at any time during the year | over $200,000 at year end or over $300,000 at any time during the year |
| Threshold, married filing jointly | no joint threshold; each person counts their own accounts | over $400,000 at year end or over $600,000 at any time during the year |
| Deadline | April 15, automatically extended to October 15 | with the tax return, including extension |
| Penalty for failure to file | civil maximums, adjusted for inflation every year | $10,000, plus up to another $50,000 after an IRS notice |
Source: IRS, Report of Foreign Bank and Financial Accounts (FBAR); FinCEN, Report Foreign Bank and Financial Accounts; IRS, Instructions for Form 8938 (Reporting Thresholds, Penalties). The Form 8938 thresholds apply if your tax home is abroad and you meet the presence abroad test.
7Funds, ETFs and your brokerage account: the PFIC trap
For many Europeans, a monthly savings plan into a broadly diversified European ETF is the obvious way to invest. For US citizens, US tax law treats it especially harshly. The reason is the PFIC regime: a foreign company counts as a Passive Foreign Investment Company if at least 75 percent of its gross income is passive or at least 50 percent of its assets produce passive income. Passive income includes dividends, interest and capital gains. A European investment fund that holds securities therefore typically meets one of the two tests.
Without special elections, gains on the sale of a PFIC and its excess distributions are spread over the holding period, taxed at the top rate for each of those years and hit with an interest charge. The elections that soften this either require the fund to provide an annual information statement to US standards (Qualified Electing Fund), or they tax the gains every year, even if you don't sell (mark-to-market). You also have to file Form 8621 for every fund, unless the total value of your PFIC holdings at year end is no more than $25,000 ($50,000 if filing jointly) and there were no excess distributions or sales.
The obvious fix, buying US funds, often fails in Europe at the bank: without a key information document under the PRIIPs Regulation, banks generally won't execute purchases for retail clients. And between the two problems sits the question of where a US citizen in Europe can even open a brokerage account.
8Owning your own company as a US citizen
If you are a US citizen holding a limited company in Europe, from the US point of view you own a foreign corporation. If you hold a majority, it becomes a Controlled Foreign Corporation, and parts of its profit can be taxed in the US in your hands before a single euro is distributed. The IRS specifically points out that certain persons connected to foreign corporations must file Form 5471, an extensive information return including the company's balance sheet and income statement.
For the freelancer who runs a practice as a limited company, or the founder with a holding company, this is no side issue: it is the biggest item on the annual US return. Whether and how European tax is credited against US tax depends on elections you need to know and set correctly every year.
9Family: Child Tax Credit and a spouse without a US passport
Children are an item on the US return that can bring money in. For 2025 the Child Tax Credit is up to $2,200 per child, of which up to $1,700 can be refunded as the Additional Child Tax Credit. Since the One Big Beautiful Bill Act, it requires Social Security Numbers. Whether a child has one depends on whether the child is a US citizen, which in turn depends on the requirements for acquiring citizenship at birth abroad.
Then there is the question of how you file with a spouse who is not a US citizen. Under certain conditions, US law lets you treat your spouse as a resident for a joint return, but then with their worldwide income. Only a side-by-side calculation shows whether that beats filing separately. If you also receive child benefits from your home country, include them in the same calculation.
10Pensions across the Atlantic
11Gifts and inheritances across the Atlantic
If your parents back home give you, a US citizen, a gift or leave you an inheritance, there is usually no gift tax in the US, but there is a reporting duty. If you are a US person and receive more than $100,000 in a year from a foreign person without a US passport or from a foreign estate, you report it on Form 3520. If there is no reasonable cause, the penalty for failing to report is 5 percent of the value per month, up to 25 percent.
Conversely, US citizens are subject to US estate and gift tax on their worldwide assets, with a high exemption. If you are not a US citizen and leave US assets behind, you'll find the rules in our article on US estate tax for non-US citizens.
12Deadlines through the year
The base date is April 15 of the following year. If you live and work outside the US on that date, you automatically get two more months, until June 15, and attach a short statement to your return. With Form 4868, which must arrive by June 15, the filing deadline moves to October 15. If you need even more time, you can ask the IRS by letter by October 15 for two more months, until December 15. That is at the IRS's discretion, and it only gets back to you if it says no.
The key point is in the fine print: an extension moves the filing date, not the payment date. Interest runs from April 15, and if you live abroad, late payment penalties from June 15. The FBAR is also due April 15 and automatically extended to October 15, no request needed. On top of that come the deadlines in Europe, such as your home country's income tax return. Because the US return credits your European tax, it pays to finish the European return first.
| Item | Deadline | Note |
|---|---|---|
| Payment of US tax | April 15, 2026 | Interest runs from this date, even with an extension |
| Form 1040, automatic extension | June 15, 2026 | Attach a statement that you live and work abroad |
| Form 1040 with Form 4868 | October 15, 2026 | File by June 15, check line 8 |
| Additional discretionary extension | December 15, 2026 | Letter to the IRS by October 15 |
| FBAR | April 15, 2026, automatically October 15, 2026 | no request needed |
13Missing years: catching up without penalties
People who learn about their US tax obligations through FATCA or a letter from their bank have often filed nothing for years. For them, the IRS created the Streamlined Filing Compliance Procedures, first offered on September 1, 2012 and expanded later. For people living abroad, the route is called the Streamlined Foreign Offshore Procedures. To qualify, in at least one of the last three years you must have had no abode in the US and spent at least 330 full days outside the US, your failure must not have been willful, and the IRS must not have opened an examination against you. The IRS itself gives the example of a man born in the US who moved to Germany with his parents at age five and stayed there.
You file the tax returns for the last three years with all schedules, the FBARs for the last six years and the signed statement on Form 14653. If you meet the requirements, you pay no penalties for late filing, late payment, information returns or FBARs, though you do pay the tax and interest. According to the IRS, even if you have already filed some missing years, you can still use the procedure; penalties already assessed will not be waived, however.
If you only missed FBARs but reported all your income, there is a separate, simpler route. How to get your first filing as an Accidental American right is covered in our article on your first filing as an Accidental American.
Catch up on missed US tax returns and FBARs through the Streamlined procedure.
14The US state you left behind
Federal tax is not the only tax. If you move from California, New York or Virginia to Europe, check whether your state still treats you as a resident. States have their own rules on when residency ends, and they are not bound by the federal rules. Find out what your state requires before you move, not when a letter arrives.
If you have never lived in the US, this does not affect you. But if you return home to Europe after a few years in the US, document your departure from the state just as carefully as your arrival in Europe. For the year of the move itself, separate federal part-year rules apply.
15Getting out: giving up citizenship or your green card
If you want to be rid of the obligations for good, you can renounce US citizenship before a US consular officer abroad or, as a green card holder, end your status. Since April 13, 2026, the fee for the Certificate of Loss of Nationality has been $450; before that it was $2,350. Our take on this change is in our article on the fee.
For tax purposes, one question decides the outcome: are you a covered expatriate? You are if your average annual US income tax over the last five years exceeded $211,000 (figure for 2026), your net worth on the day you expatriate is at least $2 million, or you cannot certify on Form 8854 that you met all your obligations for the last five years. In that case, all your assets are treated as sold the day before, and the gain above an exclusion of $910,000 (2026) is taxed. If you became a US citizen and a citizen of another country at birth, are still a citizen and tax resident there, and were US resident for no more than ten of the last fifteen years, you are exempt from the first two tests, but not the third.
The same rules apply to green card holders who held a green card in at least eight of the last fifteen tax years. We describe the process at the consulate in our guide to renouncing US citizenship.
Form 1040, FBAR and Streamlined for US citizens living in Europe.
- US citizens and green card holders are taxed in the US on their worldwide income, even if they live in Europe; this includes accidental Americans.
- Whether you must file Form 1040 depends on your gross income; for single filers under 65, the threshold for 2025 was $15,750, and excluded foreign salary counts toward it.
- The Foreign Earned Income Exclusion and the Foreign Tax Credit prevent double taxation; because of the saving clause, tax treaties help US citizens only in specific areas.
- Alongside the tax return come the FBAR, Form 8938, Form 8621 for funds and, depending on your situation, Form 5471 and Form 3520; your bank reports in parallel under FATCA.
- If you have missed years, you can catch up through the Streamlined Foreign Offshore Procedures; if you want out, you need the last five years in order and Form 8854.
Frequently asked questions
Do I have to file a US tax return as a US citizen living in Europe?
Yes, once your worldwide gross income reaches the threshold for your filing status. For 2025, that was $15,750 for single filers under 65, just $5 for married couples filing separately, and $400 of net earnings for the self-employed. Where you live makes no difference.
Does this apply even if I have never lived in the US?
Yes. If you were born in the US or acquired citizenship at birth through a US parent, you are a US citizen with the same obligations as any other US citizen abroad, even without a US passport or a Social Security number.
So do I pay tax twice?
In most cases, no. You can exclude salary earned in Europe up to $130,000 (2025) using the Foreign Earned Income Exclusion, or credit European tax against US tax with the Foreign Tax Credit. Because tax rates on salaries in many European countries are often higher, there is frequently nothing left to pay in the US. You still have to file the return.
What is the difference between FBAR and FATCA?
You file the FBAR yourself once your foreign accounts together exceeded $10,000 at any point during the year. FATCA is the law under which your bank reports your accounts. On top of that comes Form 8938, which you file with your tax return if your foreign assets exceed the higher thresholds.
When is my US tax return due if I live abroad?
If you live abroad, the filing deadline is automatically extended to June 15, and with Form 4868 to October 15. The tax itself is due on April 15, and interest runs from then. The FBAR is due on April 15 and is automatically extended to October 15.
I have never filed. What now?
If your failure was not willful and the IRS has not started an examination, the Streamlined Foreign Offshore Procedures are the route designed for you: tax returns for the last three years, FBARs for the last six years and Form 14653. If you meet all the requirements, you pay no penalties for late filing, late payment or missed FBARs.
How we help you
- US taxes for US citizens abroadForm 1040, FBAR and Streamlined for US citizens living in Europe.
- Streamlined FilingCatch up on missed US tax returns and FBARs through the Streamlined procedure.
- US Tax ConsultationYour US tax question, answered by people who know both sides.
- IRS letters and penaltiesMail from the IRS? We reply, request penalty relief and put things right.
All guides on this topic
Never filed a US tax return? Check Streamlined first Read more → 
Renouncing US citizenship: the path for Accidental Americans Read more → 
Brokerage accounts for US citizens in Europe: banks, ETF savings plans and PFIC Read more → 
US exit tax: when leaving triggers a deemed sale Read more → 
FATCA in Europe: what your bank reports about you to Washington Read more → 
FBAR reporting: why Washington wants to know about your account in Europe Read more → 
Filing late FBARs: which way back fits your case Read more → 
FEIE or Foreign Tax Credit: which method protects your salary Read more → 
Your own company as a US citizen: CFC, Form 5471 and GILTI Read more → 
Giving up your green card and taxes: I-407, exit tax and the final year Read more → 
Child benefits and the Child Tax Credit: your choice of form decides Read more → 
To the IRS, your ETF is a PFIC: what Form 8621 requires Read more → 
US gifts and taxes: when you need Form 3520 or Form 709 Read more → 
State tax after you move abroad: when your state keeps taxing you Read more → 
The Streamlined Procedure explained: three tax years, six FBARs Read more → 
US tax return deadlines abroad: your calendar Read more → 
US dual citizens: what you owe the IRS and your home tax authority every year Read more → More on US taxes for Americans abroad
All articles → Never filed a US tax return? Check Streamlined first Read more → Renouncing US citizenship: the path for Accidental Americans Read more → 
America takes your data. It gives very little back. Read more → Brokerage accounts for US citizens in Europe: banks, ETF savings plans and PFIC Read more → US exit tax: when leaving triggers a deemed sale Read more →