2025 Tax Rules: If you’re a U.S. citizen or a resident alien living in another country, you still have to follow most of the same tax rules as people living in the United States. The IRS expects you to report all your income, no matter where it comes from in the world.
So even if you earn money in another country, you need to include it on your U.S. tax return. The law says that all worldwide income must be reported and taxed according to the U.S. tax code.
Social Security Payments June 2025: When Will the Remaining Checks Arrive?
2025 Tax Rules: Who Can Get the Foreign Earned Income Exclusion?
There are some tax breaks for people who live and work outside the U.S., and many Americans qualify for them. These benefits are not automatic though you have to file your tax return in the U.S. to claim them. One of the most well-known breaks is the foreign earned income exclusion.
To claim these benefits, you must have income in the country of residence, your tax home must be in a foreign country and you must meet one of the following conditions:
- A US citizen who is a legal resident of a foreign country or countries for an uninterrupted period that includes an entire tax year
- A foreign resident of the United States who is a citizen or national of a country with which the United States has an income tax treaty in force and who is a legal resident of a foreign country or countries for an uninterrupted period including an entire taxable year
- A US citizen or US resident alien who is physically present in one or more foreign countries for at least 330 full days during any period of 12 consecutive months.
This lets some people skip paying taxes on a part of the money they make outside the U.S., but only if they meet certain rules. There are also things like the foreign housing exclusion and the foreign housing deduction, which help with some housing expenses while living abroad.
Social Security Retirement Age Update 2025: What you Need to know About Full Benefits
Other Important Rules for U.S. Taxpayers Abroad
People who have foreign bank accounts must tell the U.S. government about them. Even if those accounts don’t earn any income, the person still needs to file a special form called the FBAR (Report of Foreign Bank and Financial Accounts). This report goes to the Treasury Department, not the IRS, but it’s still required.
if someone has any virtual currency like Bitcoin or other crypto they must include that on their tax return too. The IRS treats crypto the same way it treats other types of property. So just like with buying or selling a house, crypto transactions can bring tax bills.
