What is the Foreign Earned Income Exclusion in 2026?

The Foreign Earned Income Exclusion (FEIE) lets qualifying Americans exclude up to $132,900 of foreign earned income from US tax for 2026, up from $130,000 in 2025. You claim it on Form 2555 and must pass either the Physical Presence Test (330 full days abroad in 12 months) or the Bona Fide Residence Test. It applies to earned income only, not investment income.

What is the difference between FBAR and FATCA?

FBAR (FinCEN Form 114) reports your foreign bank accounts and is required if they total more than $10,000 at any point in the year. FATCA (Form 8938) reports a broader set of foreign financial assets and, for Americans living abroad, kicks in at much higher thresholds — over $200,000 at year-end for single filers. They are separate filings, and you may need to file one, both or neither.

Do tax treaties stop double taxation for US expats?

Not on their own. The US has tax treaties with Portugal, Spain, Mexico and dozens of other countries, but nearly all contain a saving clause that lets the US tax its citizens as if the treaty did not exist. The tools that actually prevent double taxation are the Foreign Tax Credit and the Foreign Earned Income Exclusion.

US Expat Taxes (2026): The Complete Guide for Americans Abroad

Q: Do US citizens have to pay taxes when living abroad?

Yes. The US taxes its citizens on worldwide income no matter where they live — it is one of the only countries with citizenship-based taxation. You must file a US tax return every year if your income is above the filing threshold, even if you owe nothing. In practice, most expats end up owing little or no US tax once they apply the Foreign Earned Income Exclusion or the Foreign Tax Credit.

Q: When are US expat taxes due in 2026?

Americans living abroad get an automatic extension to June 15, with no form required. But any tax you owe is still due April 15 — the extension is for filing, not paying, so interest accrues on late payments. You can extend filing further to October 15 by submitting Form 4868 by June 15.

By Expat Cove Editorial Team Updated June 7, 2026 Rules verified against the IRS, FinCEN & SSA, June 2026

Short answer: the US taxes citizens on worldwide income wherever they live, so you must file a return every year — but most expats owe little or nothing after using two tools. The Foreign Earned Income Exclusion exempts up to $132,900 of earned income in 2026, and the Foreign Tax Credit offsets US tax with the tax you already paid abroad. Separately, you may have to report foreign accounts (FBAR over $10,000) and assets (FATCA). Expats get an automatic filing extension to June 15, but any tax owed is still due April 15.

On this page

Why expats still file
The FEIE ($132,900)
FEIE vs Foreign Tax Credit
FBAR & FATCA
Forms at a glance
Deadlines
Tax treaties
Self-employment tax
FAQ

Do US citizens have to pay taxes when living abroad?

Yes — you must file every year, even if you owe nothing. The US is one of the only countries that taxes by citizenship, not residence, so your worldwide income stays reportable to the IRS no matter where you live. The good news: filing and owing are different. Once you apply the exclusions and credits below, the large majority of American expats end up with a US tax bill of zero — but skipping the return itself can still trigger penalties.

What is the Foreign Earned Income Exclusion (FEIE)?

It lets you exclude up to $132,900 of foreign earned income in 2026. Claimed on Form 2555, the FEIE rose from $130,000 in 2025. To qualify you must pass one of two tests:

Physical Presence Test: 330 full days outside the US in any rolling 12-month period.
Bona Fide Residence Test: established residence in a foreign country for a full calendar year.

It's earned income only. The FEIE covers wages, salary and self-employment income — not dividends, interest, capital gains or pensions. It also does not erase self-employment (Social Security) tax. For passive or investment income, the Foreign Tax Credit usually does more.

Foreign Tax Credit vs FEIE — which should you use?

Use the Foreign Tax Credit if you live in a higher-tax country; the FEIE if you live in a low-tax one. The Foreign Tax Credit (Form 1116) gives you a dollar-for-dollar US credit for income tax you already paid abroad. In places like Portugal or Spain, where local rates often exceed US rates, the FTC can wipe out your US bill and leave carry-forward credits. The FEIE is stronger in low- or no-tax countries. You can combine them, but not on the same dollar of income.

What do you have to report? FBAR & FATCA

Reporting is separate from taxes — and the thresholds differ. Even if you owe no tax, you may have to disclose foreign accounts and assets:

FBAR (FinCEN Form 114): required if your foreign accounts total more than $10,000 at any point in the year. Filed electronically with FinCEN, not the IRS.
FATCA (Form 8938): for Americans living abroad, required when specified foreign assets exceed $200,000 at year-end (single/MFS) or $400,000 (joint). Filed with your 1040.

Moving money to fund these accounts is its own topic — see how to transfer money from the US to Portugal.

US expat tax forms at a glance (2026)

Common US expat tax & reporting forms, 2026. Thresholds shown are for Americans living abroad.
Form	What it does	When you need it
Form 1040	Your annual US tax return	Income above the filing threshold (almost always)
Form 2555	Foreign Earned Income Exclusion	Exclude up to $132,900 of earned income
Form 1116	Foreign Tax Credit	Credit for income tax paid abroad
FinCEN 114 (FBAR)	Report foreign bank accounts	Accounts over $10,000 combined
Form 8938 (FATCA)	Report foreign financial assets	Assets over $200,000 (single) at year-end

When are US expat taxes due in 2026?

You get an automatic extension to June 15 — but pay by April 15. Americans abroad on the regular deadline receive a two-month automatic extension to June 15, no form needed. The catch: the extension is to file, not to pay — interest runs on any unpaid tax from April 15. Need more time? File Form 4868 by June 15 to push the filing deadline to October 15.

Do tax treaties stop double taxation?

Not by themselves — the "saving clause" sees to that. The US has income tax treaties with Portugal, Spain, Mexico and dozens of other countries, but nearly all include a saving clause that lets the US tax its own citizens as if the treaty didn't exist. Treaties still matter for specific items (pensions, students, government pay, and avoiding double Social Security tax), but the real shields against double taxation are the Foreign Tax Credit and the FEIE. Country specifics: Portugal taxes, Spain taxes, Mexico taxes.

What about self-employment tax?

Freelancers abroad usually still owe 15.3% US self-employment tax. The FEIE removes income tax on earned income but not Social Security and Medicare (self-employment) tax. The only way out is a totalization agreement — a treaty that decides which country's social system you pay into. If your country has one with the US and you pay into the local system, you can be exempt from US self-employment tax; if it doesn't, you generally owe it.

Expat taxes are filable yourself — but easy to get wrong

FEIE-vs-FTC, FBAR and FATCA stack in ways generic US software handles badly. For anything beyond a simple salary, an expat-focused tax service or an international tax accountant is usually worth it — and the fee is often deductible.

See a worked country example →

General information, not tax advice — your situation is specific to you. Verify current figures with the IRS or a qualified professional before filing.

Frequently asked questions

Do I have to file US taxes if I live abroad and owe nothing?

Yes. Filing is required whenever your income exceeds the threshold, even if exclusions and credits reduce your bill to zero. Not filing can trigger penalties; owing zero usually cannot.

How much foreign income can I exclude in 2026?

Up to $132,900 of foreign earned income via the Foreign Earned Income Exclusion (Form 2555), provided you pass the Physical Presence or Bona Fide Residence test.

Should I use the FEIE or the Foreign Tax Credit?

The FEIE suits low-tax countries; the Foreign Tax Credit suits higher-tax countries like Portugal or Spain, where it can erase your US bill and build carry-forward credits. They can be combined, but not on the same income.

When is the expat tax deadline?

An automatic extension to June 15, with no form needed — but any tax owed is still due April 15. File Form 4868 by June 15 to extend filing to October 15.

Do I still pay self-employment tax abroad?

Usually yes — 15.3% — because the FEIE doesn't cover it. You're exempt only if your country has a totalization agreement with the US and you pay into the local social system.

Expat Cove Editorial Team

We verify every figure against the IRS, FinCEN and SSA and date it. Tax thresholds change yearly and your situation is individual — treat this as a map, not advice, and confirm with the IRS or a qualified expat tax professional before you file.