Do You Need to File a U.S. Tax Return? A Guide for Americans Abroad

The first step in understanding your U.S. filing obligations is determining your U.S. status. The rules that apply to you — and the forms you may need to file — differ significantly depending on whether you are a U.S. citizen, a permanent resident, a resident alien under the Substantial Presence Test, or a non-resident alien.

U.S. Citizen You are a U.S. citizen if you were born on U.S. soil (including U.S. territories and possessions), or if one or both of your parents were U.S. citizens who resided in the United States for a qualifying period of time. Citizenship acquired at birth — including by descent — creates a lifetime U.S. tax filing obligation regardless of where you live.

If you are unsure whether you hold U.S. citizenship, you can contact AET for guidance or contact the U.S. Embassy or Consulate in your country of residence for a formal determination.

Permanent Resident (Green Card Holder) You are a U.S. resident alien for tax purposes if you hold or have held a U.S. green card at any time during the calendar year. This is known as the Green Card Test.

An important and frequently misunderstood point: an expired green card does not end your U.S. tax filing obligation. You remain a U.S. resident alien for tax purposes until your permanent resident status is formally abandoned through the USCIS process (Form I-407) and, for tax purposes, Form 8854 is filed. Until that process is complete, you are required to file U.S. returns as a resident alien.

Resident Alien — Substantial Presence Test Even without U.S. citizenship or a green card, you may be treated as a U.S. resident alien for tax purposes if you spend significant time in the United States and meet the Substantial Presence Test.

To meet the test, you must be physically present in the United States for at least 31 days during the current year, and a total of 183 days over a three-year period calculated as follows:

• All days present in the current year
• Plus one-third of days present in the prior year
• Plus one-sixth of days present in the year before that

If the weighted total equals or exceeds 183 days, you meet the Substantial Presence Test and are treated as a U.S. resident alien for that year — meaning you are subject to U.S. tax on your worldwide income.

Canadians who spend extended periods in the United States — commonly referred to as snowbirds — are a common example of people who may unknowingly meet this test. The Canada-U.S. Tax Treaty provides a tie-breaker rule that can establish Canadian residency for treaty purposes even if you meet the Substantial Presence Test, but the treaty position must be formally claimed on a U.S. return.

Non-Resident Alien If you are not a U.S. citizen, do not hold a green card, and do not meet the Substantial Presence Test, you are a non-resident alien. Non-resident aliens have more limited U.S. filing obligations — generally based on U.S. source income and U.S.-based assets rather than worldwide income. See the non-resident alien section below for specifics.

If you fall into any of these categories, your U.S. filing obligations are broad. The rules for filing income, estate, and gift tax returns are generally the same whether you are in the United States or abroad. Your worldwide gross income — all income you receive in any form from any source, unless specifically exempt — is subject to U.S. reporting.

You are generally required to file a U.S. return if your gross income exceeds the filing threshold for your age and filing status. Current thresholds are published by the IRS annually and vary by filing status. However, income level is not the only trigger — see the next section for situations that require filing regardless of income.

Available tools to reduce or eliminate U.S. tax liability include:

• Foreign Tax Credit (Form 1116): Allows you to credit foreign taxes paid against your U.S. tax liability on the same income, preventing double taxation in most cases
• Foreign Earned Income Exclusion (Form 2555): Allows qualifying expats to exclude a portion of foreign earned income from U.S. taxation — $126,500 for 2024, adjusted annually for inflation
• Tax treaties: The United States has tax treaties with many countries that affect how certain types of income are taxed on each side

These tools mean that most U.S. persons living abroad owe little or no U.S. tax — but they must still file a return to claim them.

Non-Resident Aliens

For non-resident aliens, U.S. filing obligations are generally triggered by U.S. source income or U.S.-based activities. You may be required to file a U.S. non-resident return (Form 1040NR) if any of the following apply:

• You received U.S. source income that is reportable and not all applicable U.S. tax was withheld at source
• You were engaged in a trade or business in the United States — even if you had no U.S. source income from that business, or your income is exempt under a tax treaty
• You own U.S. real property and use it as a rental
• You represent a deceased person, trust, or estate with U.S. filing obligations
• You are married to a U.S. person and have elected to be treated as a U.S. resident for tax purposes
• You are present in the United States on an F, J, M, or Q visa as a teacher, trainee, or student
• You owe certain special taxes including Alternative Minimum Tax, additional tax on a qualified retirement plan, household employment taxes, or recapture of certain credits
• You received HSA, Archer MSA, or Medicare Advantage MSA distributions

Non-resident aliens who meet the Substantial Presence Test may also be required to file, as described above.

One of the most important things to understand about U.S. expat tax obligations is that income thresholds are not the only trigger. Several situations create a U.S. filing obligation regardless of how much income you earn — and some create information reporting obligations entirely separate from the tax return.

The following situations require filing even when income is below the standard threshold:

You received advance payments of the premium tax credit through the Health Insurance Marketplace

You are being claimed as a dependent on another person’s U.S. tax return

Your net earnings from self-employment are $400 or more

You sold your home — even if you can exclude the capital gain, including your principal residence

You received distributions from an HSA, Archer Medical Savings Account, or Medicare Advantage MSA

You took a distribution from a U.S. retirement account before age 59½

You own 10% or more of a non-U.S. corporation or partnership — directly, indirectly, or constructively, including through a spouse’s ownership

You own certain non-U.S. investments including foreign mutual funds, ETFs, TFSAs, RESPs, ISAs, or Superannuation accounts

For many expats, the most significant compliance burden is not the tax return itself but the information returns that accompany it — or in some cases, must be filed independently of it. These forms report the existence of foreign accounts, assets, and relationships to the IRS and FinCEN. They generally do not create a tax liability, but penalties for non-filing can be severe — starting at $10,000 per form per year in many cases.

The most common information returns for expat filers include:

FBAR (FinCEN 114) — Required for U.S. persons with more than $10,000 in foreign financial accounts at any point during the year, across all accounts combined. Filed separately from the tax return with FinCEN. See our FBAR Resource Guide →

Form 8938 (FATCA) — Required for U.S. persons with specified foreign financial assets above the applicable threshold for their filing status and residency. Filed with the tax return. See our Form 8938 vs. FBAR guide →

Forms 3520 and 3520A — Required for U.S. persons with foreign trusts, including TFSAs, RESPs, RDSPs, ISAs, Superannuation accounts, and many employer pension plans. Filed with or separately from the tax return depending on the form.

Form 5471 — Required for U.S. persons who own 10% or more of a non-U.S. corporation. One of the most complex information returns in the system; penalties start at $10,000 per form per year.

Form 8621 — Required for U.S. persons who own shares in a Passive Foreign Investment Company (PFIC) — which includes most non-U.S. mutual funds and ETFs. The computation requirements are significant.

Form 8865 — Required for U.S. persons with ownership interests in foreign partnerships.

Form 8854 — Required in the year you relinquish U.S. citizenship or abandon permanent resident status. Non-filing can result in continuing U.S. tax obligations even after expatriation.

Your AET Tax Specialist will identify which information returns apply to your situation during the intake process. If you are coming into compliance for the first time, see our guide to the Streamlined Filing Compliance Procedures →