Skip to main content

U.S. citizens and residents abroad – Filing requirements

 

If you are a U.S. citizen or resident living or traveling outside the United States, you generally are required to file income tax returns, estate tax returns, and gift tax returns and pay estimated tax in the same way as those residing in the United States. Your income, filing status, and age generally determine whether you must file a return. Usually, you must file a return if your gross income from worldwide sources is at least the amount shown for your filing status in the filing requirements table in chapter 1 of Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.

If you are the dependent of another taxpayer, see chart B - For children and other dependents in the instructions for Form 1040 and Form 1040-SR for more information on whether you must file a return.

Foreign currency

You must express the amounts you report on your U.S. tax return in U.S. dollars. If you receive all or part of your income or pay some or all your expenses in foreign currency, you must translate the foreign currency into U.S. dollars. Information about currency conversion can be found at foreign currency and currency exchange rates.

Gross income

Gross income includes all income you receive in the form of money, goods, property, and services that is not exempt from tax. In determining whether you must file a return, you must consider as gross income any income that you exclude as foreign earned income or as a foreign housing amount. If you are self-employed, your gross income includes the amount on the Gross Income line of Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship).

In addition, you may be required to file Form 8938, Statement of Specified Foreign Financial Assets, if you have an interest in specified foreign financial assets with a value above the reporting threshold that applies to you. Other forms that you may have to file include Form 3520 or Form 3520-A if you made contributions to or received income from a foreign trust, are treated as the owner of a foreign trust under the grantor trust rules of Internal Revenue Code section 671-679, or received a gift or bequest from a foreign person in excess of the reporting threshold.

Report of foreign bank and financial accounts

FinCEN Report 114, Report of Foreign Bank and Financial Accounts (“FBAR”) (formerly TD F 90-22.1) must be filed if you had a financial interest in, or signature or other authority over, any bank, securities, or other financial account(s) in a foreign country, the aggregate value of which exceeds $10,000 at any time during the calendar year. You do not have to file the report if the assets are with a U.S. military banking facility operated by a U.S. financial institution or if the combined assets in the account(s) are $10,000 or less during the entire year.

File the FBAR electronically through the BSA e-file system. For questions, see FinCEN’s website for contact information.

Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts

U.S. persons (and executors of estates of U.S. decedents) must file Form 3520 to report:

  • Ownership of, transfer(s) to and distribution(s) from a foreign trust, note that a foreign trust may include a foreign pension or retirement plan treated as a trust
  • Receipt of more than $100,000 in gifts or bequests from a nonresident alien individual or foreign estate (including foreign persons related to that nonresident alien individual or foreign estate)
  • Receipt of gifts from foreign corporation(s) or foreign partnership(s) that exceed the section 6039F threshold amount (available at IRS.gov/Newsroom/Inflation-Adjusted-Tax-Items-by-Tax-Year)

Note: Form 3520 does not have to be filed to report the following transactions:

  • Transfers to a funded nonqualified deferred compensation arrangement described in section 402(b)
  • Transfers to a stock, bonus, pension, or profit-sharing trust that would qualify for exemption section 501(a) except for the fact that it is a trust created or organized outside the United States described in section 404(a)(4)
  • Amounts paid or accrued by an employer under a qualified foreign plan described in section 404A
  • Transfers to, ownership of, and distributions from a Canadian registered retirement savings plan (RRSP), a Canadian registered retirement income fund (RRIF), or any other Canadian retirement plan that is within the meaning of section 3 of Revenue Procedure 2014-55. See Revenue Procedure 2014-55, 2014-44 I.R.B. 753, at irs.gov/IRB/2014-44_IRB#RP-2014-55
  • Certain eligible individuals’ transfers to, ownership of, and distributions from certain tax-favored retirement trusts as described in section 5 of Revenue Procedure 2020-17. See Revenue Procedure 2020-17, 2020-12 I.R.B. 539, at irs.gov/IRB/2020-12_IRB#RP-2020-17 
  • Certain eligible individuals’ transactions with, and ownership of, certain tax-favored foreign trusts that are established and operated exclusively or almost exclusively to provide pension or retirement benefits, or to provide medical, disability, or educational benefits, as described in proposed regulations under section 6048. You may rely on these proposed regulations for any tax year ending after May 8, 2024, and beginning on or before the date that final regulations are published in the Federal Register, provided you and all related persons (within the meaning of sections 267(b) and 707(b)(1)) apply the proposed regulations in their entirety and in a consistent manner for all tax years beginning with the first tax year of reliance until the applicability date of the final regulations. See Proposed Regulations section 1.6048-5 as published in the Federal Register at govinfo.gov/content/pkg/FR-2024-05-08/pdf/2024-09434.pdf

See the Instructions for Form 3520 for more detailed information regarding exclusions from reporting.

See Revenue Procedure 2014-55, 2014-44 I.R.B. 753, at irs.gov/IRB/2014-44_IRB#RP-2014-55 and Revenue Procedure 2020-17, 2020-12 I.R.B. 539, at irs.gov/IRB/2020-12_IRB#RP-2020-17 for further details.

Caution: Revenue Procedure 2020-17 does not provide relief from any other required information reporting of such trusts (such as Form 8938, Statement of Specified Foreign Financial Assets and FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), nor does it provide any relief from taxation.

Form 3520 is due on the 15th day of the 4th month following the end of the taxpayer’s tax year; for a calendar year individual this is generally the same day as the filer’s income tax return is due. Some taxpayers living and working outside the United States have until the 15th day of the 6th month to file the form. Remember to check box 1k and include the form number of the tax return to be filed if an extension of time to file has been requested. See the “When and Where to File” in the Instructions for Form 3520 for more detailed information.

Caution: A penalty applies if Form 3520 is not filed timely or if the information is incomplete or incorrect. Generally, the initial penalty is equal to the greater of $10,000 or the following (as applicable):

  • 35% of the gross value of property you transferred to the foreign trust for failure to report the creation of or transfer to the foreign trust in Part I
  • 35% of the gross value of distributions you received from the foreign trust for failure to report receipt of such distributions in Part III 

Note: Additional penalties will be imposed if the noncompliance continues. 

Caution: If a complete Form 3520 is not filed by the due date, including extensions, the time for assessment of any tax imposed with respect to any event or period to which the information required to be reported in Parts I through III of such Form 3520 relates will not expire before the date that is 3 years after the date on which the required information is reported. See section 6501(c)(8).

Form 3520-A is due by the 15th day of the 3rd month after the end of the trust’s year. If you are the owner of a foreign trust and the foreign trust fails to file Form 3520-A, you must complete Form 3520-A to the best of your ability and attach it to your Form 3520 by the due date of your Form 3520. Be sure to check the “Substitute Form 3520-A” box at the top of the Form 3520-A that is attached to your return. 

Note: Form 3520 is not eligible for e-filing; mail it and Form 3520-A, if applicable, to the address under “When and Where to File” in the Instructions for Form 3520.

Caution: You may be liable for a penalty equal to the greater of $10,000 or 5% of the gross value of the portion of trust assets that you are treated as owning if you do not submit the Form 3520-A completed to the best of your ability. There are additional penalties for continuing failure to file after notice by the IRS. 

Related