Living abroad doesn’t end your U. S. tax obligations. What young expats need to know

Living abroad doesn't end your U. S. tax obligations. What young expats need to know. When Americans abroad may need to file an FBARKhanchit Khirisutchalual | Istock | Getty ImagesOpening an everyday checking or savings account in another country could introduce a reporting obligation expats never encountered while living in the U.

What happened

Skip NavigationMarketsBusinessInvestingTechPolitics & PolicyVideoWatchlistInvesting ClubPROLivestreamMenuKey PointsAmericans living abroad may still need to file a U. Tax experts advise Americans to understand both countries' rules before accepting a job or moving overseas. watch nowVIDEO2:1202:12Living abroad doesn't end your U. S. tax obligationsNews VideosFor young Americans who turn a study-abroad experience into a move overseas, taxes can become an added challenge. "However, that was before Charron learned about the tax obligations for Americans living abroad. S. taxes and taxes to the country that you're living in," said Sheneya Wilson, a certified public accountant and CEO of Fola Financial, based in New York. watch nowVIDEO4:5504:55Democratic senators' tax plans: Here's what to knowSquawk BoxOne provision that may help some Americans abroad is the foreign earned income exclusion.

Living abroad does not necessarily mean paying tax twice, but Americans may have to navigate filing requirements in both the U. Erin Collins, who leads the Taxpayer Advocate Service, an independent organization within the IRS, said in her latest annual report to Congress that the challenges facing taxpayers living abroad are among the "most serious problems" confronting American taxpayers.

The wider picture

Americans living abroad may still have to file U. S. return, especially if you are fully living abroad, does not mean that you necessarily are going to have to pay U. S. citizens living abroad who meet certain requirements generally get an automatic two-month extension to file their federal income tax return and pay federal income tax, according to the IRS. Courtesy: Reese CharronBefore accepting an overseas job or making a move, Americans should understand how living in another country could affect their income taxes, bank and investment accounts, and other financial obligations, experts said.

Americans living overseas may still face U. S. tax-filing and foreign-account reporting rules — even when they ultimately owe no U. S. income tax. Foreign bank accounts can trigger separate reporting known as FBAR, once combined balances exceed $10,000. S. citizens, taxpayers abroad remain subject to U. "Taxes may complicate a move abroadReese Charron attended a program hosted by the University of Virginia.

What has been reported

Charron, a 21-year-old senior at the University of Virginia, said the study-abroad experience gave her an opportunity to immerse herself in Spanish culture and a different way of life. However, that doesn't necessarily mean they'll face double taxation. Reese Charron said she's considering moving abroad after graduation. Courtesy: Reese CharronDepending on their circumstances, Americans abroad should also consider the foreign tax credit for income taxes paid to another country if they owe U. S. taxpayer living in a foreign country must also generally file a separate form directly with the IRS as part of their annual federal income tax return to report specified foreign financial assets worth more than $200,000 on the last day of the tax year, or more than $300,000 at any time during the year.

Understanding where you'll need to file, what you'll need to report, and how the two countries' tax systems interact can help prevent an unexpected tax problem. The foreign earned income exclusion and foreign tax credit may help some taxpayers avoid double taxation. S. tax laws, even though they must also comply with the tax requirements of the country in which they live and work," Collins wrote to CNBC in an email.

What happens next

S. tax and foreign information reporting requirements can result in large penalties. Courtesy: Reese CharronCollege student Reese Charron tells CNBC that tax issues weren't top of mind when she was studying in Valencia, Spain, earlier this year. "I already speak the language, and I just loved how slow-paced [and] community-based the entirety of my experience was there," Charron said. Now, she said, she has more factors to consider before making a move. S. citizens who are required to file a federal income tax return generally must report their worldwide income to the IRS, even if they live and work in another country, tax experts said.

For the 2026 tax year, eligible taxpayers may be able to exclude up to $132,900 of foreign earned income from U. Taxpayers must meet specific requirements and generally must file a U.