The Ultimate Guide to U.S. Tax Forms for American Expats

Good, responsible citizenship involves filing and paying taxes dutifully. By paying taxes, you’re helping the government raise funds for various economic and social services programs, such as those related to health, education, and infrastructure, to mention a few.

As a U.S. citizen working abroad, you have an obligation to file taxes from your income. Typically, foreign countries require that you present U.S. tax forms as supporting documents for opening a bank account, buying a property, and other financial transactions.

Essential Tax Forms for US Expats

Sounds like a lot of work? To help you get around the complexity of tax filing, we have here essential and up-to-date information about the U.S. tax forms you need to accomplish as an American expat, organized in one, easy-to-navigate page.

1. Form 8854 – Initial and Annual Expatriation Statement

Giving up your U.S. citizenship and retiring overseas should be done properly by filing Form 8854. This is to prove that you don’t owe the government any tax bills.

Form 8854 also shows you don’t have the status of a covered expatriate or someone who either has:

• a personal net worth of over $2 million at the time of expatriation;
• an average net income liability of over $171,000—the set amount for 2020—incurred in the past five years; or
• a tax return filing for the past five years, but which you have failed to indicate on Form 8854.

Note: Even if you’re no longer a U.S. citizen, you may still receive social security and pension benefits, annuities, or other retirement income, although a portion may be taxed.

2. Form 2555 – Foreign Earned Income Exclusion (FEIE)

The Foreign Earned Income Exclusion (FEIE) is a provision that lets you claim tax deductions on your foreign-sourced income or salary to lower the total amount of your taxable income. Qualifying for the FEIE may also make you eligible for foreign housing exclusion or deduction.

To receive the FEIE benefit, you must meet these four requirements:

• You must have foreign earned income.
  
• You must have a tax home, an area in a foreign country where you’re conducting your business or employment. Note that Guam and Puerto Rico are under the United States’ control, so they’re not considered a foreign country.
  
• You pass either the bona fide residence test or physical presence test. You qualify for the first test if you have established residence in another country and intend to live and work there for a year or more. In contrast, the second test is more lenient since it only requires you to be present in a foreign country for at least 330 days within a 12-month period.
  
• You must make a valid election by completing Form 2555 and submitting it to the Internal Revenue Service (IRS) with your tax return by April 15 of each tax year.

Note: For 2020, the maximum amount of foreign earned income exclusion is $107,600.

3. Form 1116 – Foreign Tax Credit (FTC)

Just like Form 2555, Form 1116 lowers your U.S. tax dues through the Foreign Tax Credit. Under the FTC, you are entitled to receive a U.S. tax credit for foreign taxes you have paid while working overseas, making it a protective measure against paying taxes twice on your income, aka double taxation.

You can claim this via tax deduction or tax credit, although most taxpayers choose to claim a credit for foreign taxes.

More Foreign Tax Credit FAQs →

4. Form 8960 – Net Investment Income Tax (NIIT)

The IRS uses Form 8960 to determine your net investment income (NII), as well as the amount to be deducted from it to represent your 3.8% Medicare contribution tax.

Note that the NIIT only applies if you have investment income that is above zero and a Modified Adjusted Growth Income (MAGI) of over $125,000, $200,000, or $250,000—depending on your civil status.

5. Form 1120-F – U.S. Income Tax Return of a Foreign Corporation

If you own a foreign corporation with business in the United States, you’ll also need to file a U.S. income tax return.

Form 1120-F contains information about your corporation’s income, gains, losses, credits, and deductions. Altogether, the IRS will use the information to determine if you have any tax liability on your U.S. income.

6. Form 5471 – Information Return of U.S. Persons with Respect to Certain Foreign Corporations

If you’re a taxpayer who owns shares in a foreign corporation, you’re required to file Form 5471 or an information return.

Unlike a tax return that involves filing tax information, an information return only serves as a record of which U.S. citizens or residents have interest or control in certain foreign corporations. For the IRS, Form 5471 is a valuable record that ensures U.S. taxpayers are disclosing whatever asset they have overseas.

Filing Form 5471 has the same deadline as that of your individual income tax return. Not filing on time may incur penalties from $10,000 up to $50,000 for each year of continued failure, as well as deductions on the foreign tax credit.

7. Form 8833 – Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b)

As an American expat, you can use Form 8833 to claim certain tax benefits based on treaties that the United States has with other countries.

Dual-resident taxpayers use this form to make the treaty-based return position disclosure required by Regulations section 301.7701(b)-7.

8. FinCEN Form 114 – Foreign Bank Account Report (FBAR)

Also known as the Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Bank and Financial Accounts, its purpose is to document your foreign financial accounts when their total combined value exceeds $10,000 at any time during the calendar year.

The types of financial accounts you need to report on Form 114 include bank accounts, brokerage accounts, mutual funds, trusts, or any other account where you have signature authority or ownership interest.

9. Form 1040-X – Amended U.S. Individual Income Tax Return

If you made an error in claiming deductions or exemptions, you could make amendments to your tax return by filing Form 1040-X. As a result of the amendment, you may expect to either receive a refund or owe IRS additional taxes, such as when you made an inaccurate reporting of your income.

The statute of limitations to claim a refund by filing an amended tax return three years from the filing due date of the original return or within two years from the tax payment date, whichever comes later.

10. Form 8829 – Expenses for Business Use of Your Home

If you’re using your home as an office for your business, you can claim tax deductions using Form 8829.

To qualify for home office deduction, the space has to be used exclusively for business—not personal—activities like meeting clients or as a work area. You also need to present proof that it’s a regular business that operates daily, such as work logbooks or calendar software documenting your daily business activities.

11. Schedule C – Profit or Loss from Business

As the name of the form suggests, you use this to report the amount of money you made or lost in operating a sole proprietorship business. Using that information will determine how much of your business’s income is subject to tax or otherwise.

12. Form 8621 – Shareholder of a Passive Foreign Investment Company (PFIC)

You may be maintaining an account in PFICs, which are mutual funds, investment trusts, or exchange-traded funds based outside the United States. If your accounts from these funds have given you an income in the form of interest or dividends, you should report it using Form 8621.

Note that you need to file a separate form for each of your PFIC investments.

13. Form 1099-MISC – Miscellaneous Income

There are different types of Form 1099, which are used to report income from various types. The main types of miscellaneous income include rent from real estate property or personal property and royalties paid to you for project-based work.

14. Form 8938 – Statement of Specified Foreign Financial Assets

If you’ve acquired any financial assets by living or working abroad, you need to report your foreign assets by filing Form 8938. The types of foreign assets you need to disclose include financial accounts held in a foreign financial institution, investments like stocks, financial instruments like notes and bonds, and foreign entities like foreign corporations.

15. Form 5472

This form acts as an information return on U.S. corporations with at least 25% foreign ownership or foreign corporations engaged in a U.S. trade or business. Its purpose is to record or disclose information about foreign corporations’ reportable transactions.

16. Form 3520/Form 3520-A

Filing of Form 3520 or 3520-A is applicable in any of the following transactions:

• You own a part of a foreign trust.
  
• You either transfer assets to a foreign trust or receive direct or indirect contributions from a foreign trust.
  
• You receive gifts or inheritance from foreign persons worth more than $100,000 or foreign corporations worth more than $15,601.

The main difference between these two forms is that Form 3520-A is filed by people who manage foreign trusts with U.S. beneficiaries.

17. Form 8858 – Information Return of U.S. Persons with Respect to Foreign Disregarded Entities

The IRS defines a foreign disregarded entity (FDE) as an entity that wasn’t established or organized in the United States. FDEs are also regarded as one and the same entity with the owner rather than separate entities.

18. Form 8865 – Return of U.S. Persons with Respect to Certain Foreign Partnerships

This tax form applies to you if you are a partner in a foreign partnership—meaning a partnership that wasn’t organized in the United States. By filing Form 8865, you’re reporting the partnership’s income and financial position, as well as transactions between you and the partnership.

19. Form 14653 / Form 14654 – Certification of Non-Willful Conduct

If you failed to file FBAR or FinCEN Form 114 and are getting into voluntary compliance under one of the Streamlined Procedure filings, you will need to certify that such conduct was not willful by submitting the Form 14653 or Form 14654. Specify the reasons for your failure to report all income, pay all tax, and submit all required information returns, explaining the special circumstances surrounding your position and how the failure was non-willful.

Stay Compliant With Your U.S. Tax Filing Requirements

Being an American expat doesn’t put an end to your U.S. tax obligations since the U.S. collects taxes based on citizenship, not residency. Even if you have moved to another country, you are still required to file your tax returns accurately and on time.

Let Tax Samaritan help you. We make tax filing easy for you through our tax services for expats. Learn more about our expertise in tax filing!