U.S. citizens and resident aliens are required to report and pay federal taxes on their worldwide income, regardless of where they live or work. This includes income earned while living outside the United States in 2023. Simply residing abroad does not remove the obligation to file a U.S. federal tax return.
Even individuals who qualify for the Foreign Earned Income Exclusion (FEIE) or who claim a Foreign Tax Credit (FTC) to offset taxes paid to another country are generally still required to file a U.S. tax return. These benefits are only available if a return is properly filed. Failing to file can result in the loss of these valuable tax relief options and may lead to additional IRS assessments, penalties, and interest charges.
Filing Extensions for Americans Living Abroad
U.S. taxpayers living overseas typically qualify for an automatic two-month filing extension, allowing them to file their 2023 federal tax returns by June 17, 2024, without requesting an extension. However, it is important to understand that this extension applies only to filing, not to payment.
Any taxes owed were still due by the standard April deadline, and the IRS will charge interest on unpaid balances starting from that date, even if the filing extension applies.
Foreign Financial Accounts and Reporting Requirements
If you own, control, or have signature authority over foreign financial accounts, additional reporting obligations may apply. This includes:
Reporting income earned from foreign accounts on your U.S. tax return
Disclosing foreign account balances when required
Filing a Foreign Bank Account Report (FBAR) if account thresholds are met
The FBAR is not filed with your tax return and must be submitted separately through the U.S. Treasury Department’s financial reporting system, not the IRS.
Why Compliance Matters
Failure to meet U.S. tax and reporting obligations while living abroad can result in:
IRS penalties and fines
Interest charges on unpaid taxes
Loss of tax benefits and credits
Legal and financial complications
Increased audit risk
Filing correctly and on time ensures access to exclusions, credits, and compliance protections available under U.S. tax law.