The fundamental rule
Americans are taxed worldwide. Moving abroad doesn't change that.
The United States is one of only two countries (with Eritrea) that taxes its citizens based on citizenship rather than residency. This means that even if you retire to Portugal, Spain, or Thailand and pay taxes there, you are still legally required to file a US federal tax return every year — and in most cases pay US taxes on top of local taxes, unless you plan correctly.
⚠️ The planning window matters: Key tax decisions — whether to use the Foreign Earned Income Exclusion (FEIE) or Foreign Tax Credit (FTC), what to do about Medicare, which state to sever ties with — need to be made before you leave the US, ideally 6–12 months in advance. Retroactive planning is expensive. Proactive planning can save thousands.
The good news: a well-structured plan can legally reduce — or even eliminate — your US tax burden abroad. The Foreign Earned Income Exclusion allows qualifying Americans to exclude up to $132,900 of earned income from US tax in 2026. The Foreign Tax Credit lets you offset US taxes with taxes paid abroad. These tools are powerful, but they require specialist knowledge to apply correctly.
Before you choose a service
The 6 terms every American abroad needs to understand
FEIE — Foreign Earned Income Exclusion
Excludes up to $132,900 of foreign-earned income (wages, self-employment) from US tax in 2026. Requires meeting the Physical Presence Test or Bona Fide Residence Test. Does not apply to passive income (pensions, Social Security, rental income, dividends).
FTC — Foreign Tax Credit
Credits foreign taxes paid against your US tax bill, dollar for dollar. Often better than FEIE for retirees with passive income in high-tax countries. Must choose either FEIE or FTC — not both on the same income.
FBAR — Foreign Bank Account Report
Required if your foreign financial accounts exceed $10,000 at any point during the year. Filed separately from your tax return with FinCEN. Penalty for non-filing: up to $25,000 per form, per year. Frequently overlooked.
FATCA — Foreign Account Tax Compliance Act
Requires disclosure of foreign financial assets over $200,000 (single, abroad) on Form 8938. Your foreign bank also reports your account to the IRS. Non-compliance penalties are severe.
US Tax Treaty
Bilateral agreements that determine which country has primary taxing rights on specific income types. The US has treaties with Portugal, Spain, Mexico, and many other expat destinations — but not Thailand, Panama, or Costa Rica.
Streamlined Filing Procedure
IRS amnesty program for Americans who missed filing requirements while abroad. Allows catching up on years of unfiled returns without the standard penalties. Time-limited opportunity — file before the IRS finds you first.
Service comparison — 2026
The four services worth considering
The expat tax market has two categories: full-service CPA firms (you upload documents, a licensed professional prepares your return) and DIY software (you answer questions, the software generates forms). Both have their place. Which is right depends on your complexity, budget, and comfort level.
Best for Retirees
Federal return cost
From $565
Trustpilot rating
5.0 (1,600+ reviews)
Return preparers
CPAs and IRS EAs only
FBAR filing
Included / add-on
Error guarantee
Fix errors + IRS penalties covered
Pricing model
Flat fee — no hourly billing
Why retirees choose it
Dedicated accountant — same person handles your return year after year
Deep expertise in passive income taxation (pensions, Social Security, IRA distributions abroad)
Strong FEIE vs FTC analysis — critical for retirees choosing between exclusion and credit
Flat-fee pricing — know what you pay before you start
"Make It Right" guarantee — errors fixed at no cost, IRS penalties covered
Watch out for
More expensive than DIY options — justifiable for complex situations, potentially overkill for simple FEIE returns
Trustpilot rating
5.0 (4,787 reviews)
State returns
Yes — rare for expat software
Strengths
Lowest cost for straightforward expat returns with FEIE or FTC
Also handles state returns — most expat software doesn't
Saves prior-year data — significantly faster from year two onwards
Guides you through Physical Presence Test and FEIE eligibility clearly
Watch out for
DIY — you are responsible for inputs; errors are your responsibility
Complex situations (foreign corporations, PFIC, rental income abroad) may require CPA support
Specialisation
US expat returns only
Treaty expertise
Strong — updated as treaties change
Streamlined filing
Yes — catch-up service
Strengths
Deep treaty expertise — important for Portugal, Spain, Germany destinations
Strong for Streamlined Filing Procedure (catching up missed years)
25 years focused exclusively on US expat returns — experience shows
Watch out for
Pricing less transparent than some competitors — requires consultation for exact quote
Federal return
$500 (published)
Pricing model
Every form published flat price
Form 5472 (LLC)
$300 (published)
Strengths
Complete price transparency — know exactly what you'll pay before engaging
Good value CPA option vs Greenback for straightforward returns
Handles foreign-owned US LLC reporting (Form 5472) — specialist capability
Watch out for
Smaller team than Greenback — may have longer turnaround during tax season
Side-by-side
Quick comparison
| Service |
Model |
Federal return |
Best for |
FBAR |
Reviews |
| Greenback |
Full CPA service |
From $565 |
Retirees, passive income, complex situations |
Yes |
5.0 ⭐ (1,600+) |
| MyExpatTaxes |
DIY software |
From $115 |
Straightforward FEIE/FTC, state returns needed |
Add-on |
5.0 ⭐ (4,787) |
| TFX |
Full CPA service |
Quote required |
Treaty analysis, streamlined filing, catch-up |
Yes |
Strong |
| 1040 Abroad |
CPA boutique |
$500 (published) |
Budget CPA option, transparent pricing, LLC filings |
Yes |
Strong |
Which is right for you?
Choose based on your situation
💼 You're a retiree with pension, Social Security, or IRA distributions abroad:
Use a full CPA service — Greenback or TFX. Passive income taxation abroad is complex. The FEIE does not apply to retirement income. The FTC may be your best tool. A specialist CPA earns their fee many times over in tax savings for this situation.
💻 You're a remote worker or freelancer with a clean employment income:
MyExpatTaxes is excellent value. The FEIE is straightforward to apply, the software guides you clearly, and the $115+ price point is hard to beat for what you get.
📅 You've missed filing for several years:
Contact TFX or Greenback immediately. The IRS Streamlined Filing Procedure allows you to catch up without standard penalties — but only if you file before the IRS finds you first. Do not use DIY software for this.
🏢 You own a foreign company or US LLC as a non-resident:
You need Form 5472 — penalty for non-filing is $25,000 per form, per year. Use 1040 Abroad (published flat fee) or Greenback. MyExpatTaxes has limited support for this.
Which countries have the best tax treaties for Americans?
ExpatAce scores tax complexity, treaty status, and FEIE eligibility across 102 cities. Take the free quiz to see how your top destinations compare on tax, cost, safety, and visa access.
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102 cities · 49 countries · Free · Tax treaty status scored for every destination
Tax laws change frequently. Fee information reflects publicly available pricing as of April 2026 and may have changed. Nothing on this page constitutes tax, legal, or financial advice. ExpatAce is not a licensed tax preparer or advisor. Always consult a qualified CPA or IRS Enrolled Agent for your specific tax situation. Some links on this page are affiliate links — we may earn a commission at no extra cost to you. This does not affect our recommendations. FEIE figure of $132,900 reflects the 2026 tax year exclusion amount. Our methodology →