Yes — U.S. citizens living abroad often still have to file and pay U.S. taxes, even if they already pay taxes in their country of residence.
Here’s the simple breakdown:
- U.S. Tax Obligation: The U.S. taxes its citizens on worldwide income, no matter where they live.
- Foreign Taxes: If you live abroad, you usually also pay income taxes to that country.
- Avoiding Double Taxation: To prevent being taxed twice, the U.S. offers:
- Foreign Earned Income Exclusion (FEIE) – lets you exclude up to a certain amount of foreign earned income from U.S. tax.
- Foreign Tax Credit (FTC) – gives you a credit for taxes you paid to another country.
- Tax Treaties – some countries have treaties with the U.S. to reduce or eliminate double taxation.
👉 So technically, you don’t usually “pay twice,” but you do file twice (with the IRS and the foreign country), and you may owe some U.S. tax if the foreign tax is lower than U.S. rates.
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Here’s a simple table that shows how U.S. citizens living abroad usually avoid paying taxes twice:
| Method | What It Does | Limitations |
|---|---|---|
| Foreign Earned Income Exclusion (FEIE) | Lets you exclude up to about $126,500 (2024) of foreign earned income from U.S. tax. | Only applies to earned income (salary, self-employment). Doesn’t cover investment or rental income. |
| Foreign Tax Credit (FTC) | Gives you a credit for taxes you already paid to a foreign country, reducing your U.S. tax bill. | If foreign taxes are lower than U.S. taxes, you may still owe the IRS. |
| Tax Treaties | Agreements between the U.S. and some countries to prevent double taxation or reduce rates. | Not all countries have treaties. Rules vary by country. |
👉 Bottom line: U.S. citizens abroad usually file in both countries, but tools like FEIE, FTC, and treaties mean they rarely pay full tax twice.