Moving abroad doesn’t mean you can forget taxes—far from it. Here’s what every future expat should understand about taxation across borders.
1. Do You Still Owe U.S. Taxes?
If you’re American, the answer is yes. The U.S. taxes citizens on worldwide income—even if you live in Bali.
2. Foreign Earned Income Exclusion (FEIE)
You may exclude up to ~$120,000 (2025 estimate) of foreign earned income from U.S. tax—but you must qualify via the Physical Presence or Bona Fide Residency Test.
3. Foreign Tax Credit (FTC)
If you pay taxes abroad, you might avoid double taxation by claiming a credit on your U.S. return.
4. Totalization Agreements
To prevent double social security payments, the U.S. has agreements with many countries. Check if yours is one of them.
5. Bank Account Reporting (FBAR & FATCA)
Have foreign accounts totaling more than $10,000? You must report them via FBAR. Some accounts must also be reported under FATCA.
6. Self-Employment Abroad
Freelancers and business owners still owe self-employment tax. Planning your business structure can make a big difference.
7. Watch Local Rules
Some countries tax your global income. Others (like the Dominican Republic) may only tax locally earned income.
8. Get Professional Help
Work with a tax advisor who specializes in expat issues. The cost is worth avoiding penalties and errors.
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