For Americans living abroad
Nobody told you what you had to file. That’s how it usually goes.
The United States is one of only two countries on earth that taxes its citizens on worldwide income no matter where they live. Almost nobody learns this before they leave, and most people find out years later from a friend at a dinner party.
If that’s where you are right now, there is a defined programme for exactly this situation and it usually ends with no penalty at all. Keep reading.
If you’re behind, start here
Three years of returns. Six years of foreign account reports. A statement explaining that you didn’t know.
That’s the whole thing. It’s called the Streamlined Foreign Offshore Procedures, and it exists because the IRS knows perfectly well that most Americans abroad were never told.
You will not be prosecuted for this. You are not going to lose your passport over it. In the ordinary case — you didn’t know, you weren’t hiding anything — the programme carries no penalties at all, and many people find they owe no US tax either, because the credits and exclusions cover it.
The two conditions are straightforward: you have to have lived outside the US for at least one of the last three years, and your failure to file has to have been genuinely non-wilful. For the vast majority of people reading this, both are true.
One year behind or fifteen — it’s the same programme. I’ve never once thought less of someone for arriving with this.
How people end up here
None of these are unusual. Every one of them walks through my door.
You moved for a job and assumed the tax stopped at the border. Every other country works that way. Yours doesn’t.
Your bank asked you to sign a form about being American and you suddenly realised something had been going on without you.
You’re an accidental American — born there, left as a child, hold a passport you’ve barely used, and had no idea any of this applied.
You’ve been filing, but you’re not sure it was right. Nobody has ever explained why the numbers look the way they do.
Your local accountant is excellent and knows nothing about US tax. That isn’t a criticism of them — almost nobody does.
You want to renounce, or apply for something, and discovered you need to be tax-compliant first.
Exclusion or credit — the decision that costs the most
There are two ways to stop being taxed twice on the same income, and choosing between them is the single most consequential decision on an expat return.
The Foreign Earned Income Exclusion lets you exclude a large slice of employment income from US tax entirely, provided you meet either a physical presence test — 330 full days outside the country in a twelve-month period — or a bona fide residence test.
The Foreign Tax Credit instead gives you credit for tax you already paid to your host country. In a high-tax country that credit often wipes out your US liability by itself, and unused credit carries forward for a decade.
The exclusion is usually better in low-tax and no-tax countries. The credit is usually better in high-tax ones, and it has a significant side benefit: excluded income can’t support a retirement contribution, while credited income can. The exclusion also has a trap — once you revoke it, you generally can’t use it again for five years without IRS permission.
Plenty of people are on the wrong one because a preparer picked the familiar option years ago and nobody revisited it. I’ll model both against your actual numbers before deciding.
Reporting your foreign accounts
Two separate requirements that people constantly assume are the same one. They are not, and quite often both apply.
FBAR — FinCEN Form 114
If your foreign accounts added together touched $10,000 at any single moment during the year, you file. Not the balance on the last day — the highest point, across every account combined.
That threshold is far lower than people expect and it catches almost everyone. It counts current accounts, savings, pensions in some cases, and any account you merely have signature authority over — a business account, or a parent’s.
It’s filed separately from your tax return, to a different agency, on a different system.
Form 8938 — FATCA reporting
A different form, a different agency, different thresholds, and a broader definition of what counts. It attaches to your tax return rather than being filed on its own.
The thresholds are considerably higher than the FBAR’s and they change depending on your filing status and whether you live abroad. Living overseas raises them substantially, which is why many people file an FBAR every year and an 8938 never.
It reaches beyond bank accounts — foreign pensions, investments, and interests in foreign entities can all land here.
Why this matters more than the tax itself: the penalties attached to these forms are not proportional to what you owe. They’re flat, they’re per form, they’re per year, and they can dwarf any actual tax liability. That’s exactly why the streamlined programme exists, and why it’s worth going through the door deliberately rather than waiting to be found.
The state you left may not think you left
This one blindsides people. You moved to Lisbon four years ago, and California still considers you a resident — because residency for state purposes turns on domicile, and domicile follows intent rather than geography.
A few states are notoriously reluctant to let go. If you kept a driver’s licence, a voter registration, a mailing address at your parents’ house, a storage unit, or a bank account with an in-state address on it, you may still be filing there. Some of those states have no expiry on the question and will happily assess you years later.
Severing it properly is a set of deliberate, documented steps — and the documentation matters more than the steps, because the burden of proof is usually on you. Done right, it’s the difference between owing a state income tax you’d forgotten about and owing nothing.
If you’re planning a move, this is much easier to do before you go than to argue about afterwards.
What I handle
- Annual returns for Americans abroad, employed or self-employed
- Modelling the exclusion against the credit before choosing
- FBAR and Form 8938 reporting
- Catch-up filings under the streamlined procedures
- Treaty positions and Form 8833
- State residency severance, and defending it if questioned
- Foreign pensions and how your host country’s system is treated
- Self-employment tax and totalisation agreements
- Planning ahead of a move, in either direction
- IRS notices that reach you overseas
What I’ll tell you honestly: if your situation involves a foreign company you control, foreign mutual funds, or a foreign trust, the reporting gets considerably more complex. I’ll say so plainly and either take it on properly or point you to someone who specialises in it. What I won’t do is quietly file something and hope.
The practical side of working with me from six time zones away
Everything is remote and always was. Not a compromise for you — it’s simply how the practice works. Video calls, a secure document portal, electronic signatures. Nothing needs posting anywhere.
I’ll work around your clock. Early mornings for Europe, evenings for Asia. Tell me what’s civilised where you are and we’ll use that.
You get more time than you think. Living abroad gives you an automatic extension to mid-June, and it can be extended further from there. If you’re reading this in April feeling behind, you’re probably not.
And I’m an Enrolled Agent, licensed by the US Treasury, which means if something does go wrong I can deal with the IRS directly on your behalf — from here, in the right time zone, in English, without you making an international phone call to a queue.
Tell me where you are
Which country, roughly how long you’ve been there, and whether you’ve been filing. That’s enough for me to tell you what you’re actually looking at.
You don’t need to have decided anything to send this, and you don’t need to have your paperwork in order. Most people don’t.
Please don’t attach documents or account numbers here. Once we’re talking you’ll get a secure portal.
What happens next
A reply, in a day
From me. I’ll usually be able to tell you from your first message whether you’re looking at a straightforward return or a catch-up.
A call at a sane hour
Half an hour, your time zone. Where you live, what you earn, what accounts exist, which years are open. No judgement and no forms to fill in beforehand.
A fixed price, in writing
Before anything starts, with the scope written down. Catch-up work is quoted as a package, not year by year as we go.
Then it’s handled
Filed, submitted, and finished. Most people describe the feeling afterwards as relief out of proportion to the amount of money involved.
Michael Jones, EA & CFP® — Enrolled Agent, licensed by the U.S. Department of the Treasury to represent taxpayers before the IRS in all fifty states and from anywhere in the world. This page is general information, not advice about your specific situation.