For most of my clients with income abroad, the answer starts with a hard yes and ends with relief. The United States taxes its citizens and residents on worldwide income. Where you earned it and where you live do not remove the filing.
That sounds heavy. The rules that follow exist to keep you from paying tax twice, and most people who use them owe little or nothing to the US.
The starting rule
If you hold a US passport or a green card, you report your income no matter which country it came from or which country you live in. A salary in Bogotá, rental income in Madrid, freelance work billed to a client in Dubai, all of it belongs on your US return.
The return is required. The tax, for many filers, is not, once the next two tools apply.
Two tools keep you from paying twice
| Tool | What it does | 2026 key number |
|---|---|---|
| Foreign Earned Income Exclusion (Form 2555) | Leaves foreign salary or self-employment income off your US tax | Up to $132,900 per person |
| Foreign Tax Credit (Form 1116) | Credits tax you paid to another country | Dollar-for-dollar |
You qualify for the exclusion by living abroad, through either a full tax year of residence or enough days outside the country under the physical presence test. Earn under the limit and your foreign earned income can face zero US income tax. The credit covers what the exclusion misses. Between the two, double taxation is the exception, not the norm.
The form that catches people off guard
The FBAR is disclosure, not tax
If your foreign bank and financial accounts added up to more than $10,000 at any point in the year, you file an FBAR (FinCEN Form 114). It reports the accounts. It does not tax them. Skipping it carries penalties that dwarf the effort of filing, and it is the piece expats miss most.
The payoff for getting it right
People with international income sit in the part of the code where mistakes get expensive and planning pays off. Filed the right way, your foreign income can cost you nothing in US tax while keeping you clean with both countries. This is the work I do every week for clients who live, earn, or invest across borders. If that is you, and you are not sure you are filing everything you should, let’s map it out. Book a consultation.