US taxes when you live abroad

This is general information for planning, not tax advice. Your situation depends on your income types, your state and your destination's rules. Confirm with a qualified cross-border tax professional before you act.

You still file, every year

The IRS treats citizens abroad the same as citizens at home for filing: your filing status, age and gross income from worldwide sources decide whether you must file.

Source: IRS, "U.S. citizens and resident aliens abroad, filing requirements".

The two main tools for not paying twice

Foreign Earned Income Exclusion (Form 2555). Excludes foreign earned income up to a yearly cap: 130,000 dollars for tax year 2025 and 132,900 dollars for tax year 2026, per qualifying person. It applies to earned income such as wages and self-employment income, not to pensions, dividends or interest.

Source: IRS, "Figuring the foreign earned income exclusion".

Foreign Tax Credit (Form 1116). If you pay income tax to another country on income the US also taxes, you can usually take a credit for it, which in most cases is worth more than deducting it.

Source: IRS, "Foreign tax credit".

Which one fits, or whether to combine them, depends on your income mix and your new country's rates. This is exactly the conversation to have before the move.

Deadlines

The regular due date stays April 15. If you qualify as living abroad, you get an automatic extension to June 15 to file, but interest accrues on any tax not paid by April 15.

Source: IRS, "U.S. citizens and resident aliens abroad, automatic 2-month extension of time to file".

Reporting foreign accounts and assets

FBAR (FinCEN Form 114). Required if the combined value of your foreign financial accounts exceeded 10,000 dollars at any time in the year. Due April 15, with an automatic extension to October 15.

Source: IRS, "Report of foreign bank and financial accounts (FBAR)".

Form 8938. A separate report filed with your return. For taxpayers living abroad, the thresholds are more than 200,000 dollars on the last day of the year or more than 300,000 dollars at any time (single), and more than 400,000 or 600,000 dollars (married filing jointly).

Source: IRS, "Comparison of Form 8938 and FBAR requirements".

These are reporting forms, not extra tax. The penalties for missing them are why they belong on the checklist.

Your state may not let go

Leaving the US does not always end state residency. California, for example, has no equivalent of the federal Foreign Earned Income Exclusion, so income you exclude federally can still count for California. Some states treat you as a continuing resident until you show a new domicile, and moving abroad does not always count. If you are leaving one of those states, plan the exit with your tax professional.

Source: California Franchise Tax Board, 2025 Schedule CA (540) instructions.

The other side: your new country (Portugal as the example)

When Portugal taxes you. You become Portuguese tax resident if you spend more than 183 days there in any 12-month period, or keep a home there you intend as your habitual residence. Residents are taxed on worldwide income at progressive rates from 12.5 to 48 percent for 2026.

Sources: Portal das Financas, IRS Code article 16, "Residencia"; Portal das Financas, IRS Code article 68, "Taxas gerais".

The old NHR break is closed. The Non-Habitual Resident regime was revoked from 1 January 2024 for new arrivals. Its successor, IFICI (often called NHR 2.0), is a 20 percent rate on income from eligible research and innovation activities for ten years, with tight eligibility, and foreign pensions are generally excluded from its exemption. Do not plan around the old headline rate.

Source: Portal das Financas, IFICI frequently asked questions.

Treaties. A US-Portugal income tax treaty is in force, and a US-Portugal Social Security totalization agreement has been effective since 1 August 1989, so a worker is covered and taxed by only one country's social security system.

Source: Social Security Administration, POMS RS 02001.550, "Effective date of the U.S.-Portuguese totalization agreement".

The honest part

The tax picture is the most common regret among people who have already moved, and it is almost always avoidable by having the conversation before the move rather than at the first filing. A planning tool cannot replace that conversation. What it can do is make sure you arrive at it with the right questions and your numbers in one place.

Take Root Abroad shows the tax posture for each country next to the visa route and the costs, sourced and dated, with a clear flag where we are estimating. See how countries compare at takerootabroad.com/compare.