Filing taxes from overseas can be confusing, especially for Americans who assume that once they leave the United States, their IRS obligations end. But U.S. citizens and Green Card holders are still required to file a U.S. federal tax return every year, even if they live permanently abroad, earn foreign income, or no longer have financial ties to the U.S.
This guide explains what U.S. expats must know when filing 2025 tax returns, due in 2026, and how to stay compliant while minimizing tax liability.
Who Must File a 2025 U.S. Tax Return in 2026?
The IRS requires the following groups to file:
- U.S. citizens living abroad, even if they pay tax to another country
- Green Card holders residing overseas
- Dual citizens
- Americans who have lived abroad for decades and have no U.S. assets or income
Income type does not change the requirement — salary, freelance income, rental income, Social Security, pensions, crypto gains, and investment income must all be reported.
Important Filing Deadlines for 2026
| Date | What It Means |
| April 15, 2026 | Standard U.S. tax deadline |
| June 15, 2026 | Automatic 2-month extension for Americans living abroad |
| October 15, 2026 | Final extended filing deadline if Form 4868 is filed |
Interest still applies on unpaid tax starting April 15, even if you qualify for the June extension.
Required Forms for U.S. Expats
When filing your 2025 return in 2026, you may need more than just Form 1040.
Core U.S. Tax Forms
- Form 1040 – standard federal income tax return
- Schedule 1, 2, or 3 – depending on income sources and credits
- Schedule B – for interest, dividends, and foreign accounts
Forms to Reduce U.S. Taxes
- Form 2555 — Foreign Earned Income Exclusion (FEIE)
May exclude up to ~$135,000 of foreign-earned income in 2026 (final number set by IRS inflation adjustment). - Form 1116 — Foreign Tax Credit (FTC)
Lets you apply foreign income tax paid as a credit toward U.S. tax.
Foreign Financial Reporting (Penalties Apply if Missed)
- FBAR (FinCEN Form 114) – required if foreign bank account balances exceeded $10,000 at any time in the year
- Form 8938 (FATCA) – required when foreign assets exceed IRS thresholds
- Form 8858, 5471, 8621 – required if you own or transact through foreign companies, trusts, or passive funds
How Expats Can Legally Reduce or Eliminate U.S. Taxes
Many U.S. expats don’t owe tax — but only if they claim the relief provisions correctly.
1. Foreign Earned Income Exclusion (FEIE)
Allows you to exclude foreign wages or contract income if you meet one of these tests:
- Physical Presence Test: 330 full days outside the U.S. in a 12-month period
- Bona Fide Residence Test: long-term residency in one foreign country
2. Foreign Tax Credit (FTC)
Best for expats who pay high tax in a foreign country (UK, EU, Australia, Canada).
It gives a dollar-for-dollar credit for tax paid abroad.
3. Foreign Housing Exclusion
Lets you deduct eligible housing expenses abroad — rent, utilities, security, etc.
Crypto, Stock Trading, Rental Income, and Passive Income Still Count
2026 will include expanded IRS digital-asset tracking.
That means:
- Crypto trading on foreign exchanges is reportable
- Foreign property rental income must be reported
- Foreign brokerage accounts may trigger FBAR and FATCA
- U.S. and foreign retirement plans may require disclosure
If you earn income — the IRS expects it on your return.
If You Haven’t Filed in Years — You Can Catch Up
Thousands of Americans abroad fall behind. The IRS offers a penalty-free option if your failure to file was non-willful:
Streamlined Foreign Offshore Program
- File the last 3 years of tax returns
- File 6 years of FBARs
- Avoid penalties in most cases
This program allows expats to return to compliance without fear of sudden fines — but it may not be available forever, so timing matters.
Step-by-Step Filing Checklist for Expats (2026)
1️⃣ Gather documents: foreign pay slips, bank statements, interest/dividend records, crypto reports, housing receipts
2️⃣ Determine eligibility for FEIE or FTC
3️⃣ Track days inside vs. outside the U.S.
4️⃣ Prepare FBAR totals and FATCA asset values
5️⃣ File Form 1040 + additional forms needed
6️⃣ Submit by June 15 if abroad; request extension if needed
7️⃣ Consider working with an expat tax professional
Final Takeaway
If you are a U.S. citizen or Green Card holder living abroad, filing your 2025 tax return in 2026 is not optional. Whether or not you owe tax, the IRS requires a return — and missing foreign-reporting forms can result in steep penalties.
The key is being early, organized, and informed. With proper planning — and by leveraging FEIE, FTC, and housing exclusions — you can often reduce or even eliminate U.S. tax while maintaining full compliance.