Moving Abroad? Here's Your U.S. Tax Checklist Before You Leave

1Understand your U.S. tax filing obligations

The United States is one of the only countries that taxes based on citizenship rather than residency. That means U.S. citizens and green card holders generally must continue filing annual federal income tax returns — reporting their worldwide income — no matter where they live.

For the 2025 tax year, filing is generally required once gross income exceeds the standard deduction: $15,750 for single filers and $31,500 for married couples filing jointly. Two thresholds catch many future expats by surprise:

• Married filing separately: a filing requirement can be triggered at just $5 of gross income — a common situation for Americans married to a non-U.S. spouse
• Self-employment: filing is required once net self-employment earnings reach just $400

Expats do get one built-in break: an automatic two-month filing extension to June 15. Keep in mind that any tax owed is still due April 15 — interest accrues after that date — and a further extension to October 15 is available by filing Form 4868.

2Learn about the Foreign Earned Income Exclusion (FEIE)

The FEIE allows qualifying Americans abroad to exclude a significant amount of foreign earned income from U.S. taxation — up to $130,000 per person for the 2025 tax year. A married couple who both work abroad may be able to exclude up to $260,000 combined.

To qualify, you generally must meet one of two tests:

• Physical Presence Test — you spend at least 330 full days in foreign countries during any 12-month period
• Bona Fide Residence Test — you are a genuine resident of a foreign country for at least a full calendar year

Qualifying taxpayers may also be able to claim the Foreign Housing Exclusion for a portion of their housing costs abroad. One important caveat for freelancers and business owners: the FEIE does not reduce self-employment tax (15.3% for Social Security and Medicare), which may still apply unless a totalization agreement between the U.S. and your new country provides otherwise.

Because your travel days during the first year abroad directly affect eligibility, planning your move date carefully can make a real difference.

3Determine whether you'll qualify for the Foreign Tax Credit

If you're paying income tax to another country, the Foreign Tax Credit (claimed on Form 1116) generally provides a dollar-for-dollar credit against your U.S. tax liability — often the better tool if you're moving to a country with tax rates higher than the U.S.

The FEIE and the Foreign Tax Credit can be used together, but not on the same income. The best strategy depends on your country of residence, income sources, and long-term plans. Tax treaties between the U.S. and your destination country may also affect how pensions, investment income, and benefits are taxed — treaty-based positions are typically disclosed on Form 8833.

4Review your foreign reporting requirements

Opening foreign bank and investment accounts may trigger additional U.S. reporting obligations that exist separately from your income tax return. Depending on your situation, you may need to file:

• FBAR (FinCEN Form 114) — required if your foreign accounts combined exceed $10,000 at any point during the year, even for a single day
• FATCA (Form 8938) — for expats, generally required once foreign financial assets exceed $200,000 at year-end ($400,000 for joint filers), or higher amounts at any time during the year
• Other international information returns — foreign corporations, partnerships, trusts, and large foreign gifts each have their own forms

These forms generally don't create additional tax — but the penalties for missing them can be severe. Non-willful FBAR violations alone can carry penalties of more than $16,000 per report. Many taxpayers overlook these filings until penalties become a concern.

If you're already behind, the IRS Streamlined Filing Compliance Procedures allow many non-willful taxpayers to catch up by filing their last three tax returns and six years of FBARs — and expats living abroad may qualify with no penalty at all.

5Review your investment accounts

Before moving abroad, consider how your investments may be affected. Some countries tax investments very differently than the United States, and some U.S. account types lose their advantages overseas. Review:

• Brokerage accounts — some U.S. brokerages restrict or close accounts registered to a foreign address
• Retirement accounts — 401(k) and IRA contributions, distributions, and treaty treatment vary by country
• Foreign mutual funds and ETFs — often treated as PFICs (Passive Foreign Investment Companies), which face punitive U.S. tax treatment and complex reporting
• Stock options and RSUs — cross-border vesting can create taxable income in two countries at once
• Cryptocurrency holdings — U.S. reporting obligations follow you abroad

International tax planning before your move can help avoid unexpected consequences that are difficult to unwind later.

6Evaluate your business structure

If you own a business, relocating internationally may create new reporting requirements — and in some cases, an entirely different tax result. Business owners should review:

• LLC ownership — a U.S. LLC may be treated very differently by your new country of residence
• S Corporation considerations — S corp status carries ownership and residency implications worth reviewing before you leave
• Foreign corporations — owning a meaningful stake in a non-U.S. company can trigger Form 5471 and the anti-deferral rules for controlled foreign corporations
• International payroll and permanent establishment risk — working from another country can create a taxable presence for your company there
• Cross-border tax planning — recent U.S. legislation continues to reshape how foreign business income is taxed

Business owners often benefit most from planning before establishing operations overseas — restructuring after the fact is usually harder and more expensive.

7Organize important financial documents

Before leaving the U.S., gather digital copies of:

• Prior tax returns
• W-2s and 1099s
• Brokerage statements
• Retirement account information
• Bank records
• Business formation documents
• Passport and identification

Having organized records can simplify future tax filings — especially if you later need to substantiate foreign tax credits or use the streamlined procedures to catch up.

8Notify financial institutions

Many banks require updated contact information when customers move internationally. Before you leave, update your:

• Mailing address
• Phone number
• Email address
• Two-factor authentication methods

Pay special attention to two-factor authentication. Losing access to a U.S. phone number is one of the most common — and most avoidable — problems Americans face after moving abroad. Many expats keep a U.S. number through a portable VoIP service for exactly this reason.

9Understand your state taxes before you leave

Moving abroad may resolve your federal residency questions — but not necessarily your state ones. A handful of “sticky” states, including California, Virginia, New Mexico, and New York, may continue to treat you as a resident and tax your worldwide income until you clearly establish your domicile elsewhere.

Most states also don't recognize the Foreign Earned Income Exclusion, so income excluded on your federal return may still be taxable at the state level. Depending on your state, breaking residency cleanly may involve:

• Selling or renting out your home
• Changing your driver's license, voter registration, and mailing address
• Closing state-specific accounts and registrations
• Documenting the date you established your new home abroad

California is among the most aggressive states on this issue. Californians planning an international move should treat state residency planning just as seriously as federal planning.

10Create a long-term tax strategy

International tax planning isn't only about filing returns. Before moving, consider:

• Where you'll become a tax resident
• How your income will be taxed in both countries
• Whether tax treaties apply to your situation
• Future business plans
• Retirement goals
• Estate planning considerations

Planning before your move is generally easier — and far less expensive — than trying to fix issues later.