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Eight categories covering the most complex cross-border issues US citizens face when living outside the United States. Written for context - not a substitute for professional advice.
Americans are taxed on worldwide income regardless of where they live. Understanding FBAR, FATCA, and the FEIE is essential for every expat.
US citizens and permanent residents must file federal tax returns on their worldwide income, regardless of where they reside. The filing threshold is the same as for US residents. Many expats are surprised to learn there is no automatic exemption just for living overseas.
The FEIE (Form 2555) allows qualifying expats to exclude a significant portion of foreign-earned income from US taxation - around $120,000–$130,000 depending on the year, indexed for inflation. You must pass either the Bona Fide Residence test or the Physical Presence test to qualify.
If you have foreign financial accounts with an aggregate value exceeding $10,000 at any point during the year, you must file an FBAR (FinCEN 114) by April 15. Penalties for willful non-disclosure are severe. This is separate from your tax return.
FATCA (Form 8938) requires reporting of foreign financial assets above certain thresholds directly on your tax return. Thresholds vary based on filing status and whether you reside abroad. FATCA reporting overlaps with, but does not replace, FBAR.
If you pay taxes in your host country, the Foreign Tax Credit may reduce your US tax liability dollar-for-dollar. This is often more beneficial than the FEIE for those in high-tax countries. Many expats use a combination of both strategies.
Maintaining US banking access as an expat has become harder since FATCA. Here's what you need to know about keeping accounts open and moving money efficiently.
Many traditional US banks will close accounts when they discover you live abroad, citing FATCA compliance costs. Strategies include maintaining a US mailing address (family member, virtual mailbox), choosing expat-friendly banks like Charles Schwab, USAA, or certain credit unions that have more flexible policies.
Traditional wire transfers are expensive and slow. Services like Wise (formerly TransferWise), Revolut, and local solutions in your host country offer significantly better rates for moving money internationally. For large transfers, Wise Business or dedicated FX services like OFX or Moneycorp can save thousands in fees.
Schwab Bank is widely recommended in expat communities for its global ATM fee reimbursement (unlimited, worldwide) and its lenient approach to account holders with foreign addresses. The Schwab One brokerage account paired with the Schwab Bank account is a common setup.
US credit scores do not transfer internationally. Conversely, years abroad can thin out your US credit history. Keeping at least one active US credit card (with full payoff each month to avoid foreign interest) helps maintain your US credit profile for when you return.
Americans living abroad retain the right to vote in federal elections under UOCAVA. Registration and ballot request procedures vary by state.
The Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA) protects the voting rights of US citizens living outside the country. You register and vote in the last state where you were domiciled - even if you have no current intent to return.
Use the FPCA to simultaneously register to vote and request an absentee ballot. Submit a new FPCA each January (or at any point before an election) to ensure your registration is current. The Federal Voting Assistance Program (FVAP) at fvap.gov manages this process.
You vote in the last state where you were domiciled before moving abroad. If you never plan to return to that state (or any US state), this can create tension with domicile planning. Some states have more favorable rules for overseas voters - this is a legitimate consideration when selecting your domicile state.
Wills, estate planning, powers of attorney, and general legal protections for Americans living abroad - covering both US and host-country considerations.
A US will may not be recognized in your host country, and local inheritance laws may override your intentions. Many expats need both a US will (governing US assets) and a local will (governing in-country assets). Seek attorneys qualified in both jurisdictions.
A US power of attorney may not be automatically recognized in your host country. Many expats create separate powers of attorney - one valid under US law, one valid locally. For the US document to be accepted abroad, it typically needs an apostille and certified translation.
Expats without a clear US domicile face uncertainty about which jurisdiction governs contracts, estate matters, and family law disputes. Most advisors recommend maintaining a nominal domicile in a favorable state to avoid legal limbo. See the Domicile section for full coverage.
Healthcare as an American abroad involves navigating ACA obligations, international health insurance, and access to US care when you visit.
The Affordable Care Act individual mandate penalty was reduced to $0 at the federal level after 2018. Expats who qualify under the FEIE are generally considered to have minimum essential coverage (or an exemption applies). However, state-level mandates (Massachusetts, New Jersey, California) may still apply depending on your domicile state.
Most expats rely on international health insurance plans (not tied to any country) from providers like Cigna Global, Aetna International, BUPA Global, or local country insurance. Key factors: does it cover emergency evacuation? Does it include US coverage for visits home? What are the annual limits and deductibles?
If your international plan doesn't cover the US (or has limited US coverage), you may need a short-term travel plan for visits home. US healthcare is notoriously expensive without insurance. Some expats maintain a catastrophic-only US plan or ensure their international plan includes US emergency coverage.
Veterans living abroad can still access many VA benefits, though some services are more limited outside the United States.
VA disability compensation can be paid to veterans living abroad. Payments are typically made via direct deposit or international wire. Veterans must maintain updated contact information with the VA and may need to complete periodic review forms. Some countries have restrictions on receiving VA payments - check with the VA's Foreign Medical Program.
VA medical facilities are only in the US and some territories. The Foreign Medical Program (FMP) covers treatment for service-connected conditions at non-VA facilities in certain countries. For non-service-connected care, veterans generally need their own international health insurance.
The GI Bill can be used at foreign schools approved by the VA. Benefits structure may differ from US usage. Veterans should apply through the VA and confirm their target school is approved. The VA's Education Benefits (Chapter 30, 33) have different rules for foreign training.
Marriage, prenuptial agreements, children, and family life across borders - covering US citizenship transmission, international marriage contracts, custody, and document complexities.
Without a US domicile state, an American marrying abroad faces the question of which law governs a prenuptial agreement. The answer depends on where you marry, where assets are held, and which country's courts might one day have jurisdiction. This is one of the most legally complex situations expats face.
A well-drafted prenup should include an explicit choice-of-law provision specifying which jurisdiction's law governs the agreement. When there is no US domicile, parties often choose a US state law (such as New York or Delaware) for predictability, combined with the local country's requirements for formal validity.
The default property division rules differ dramatically by US state - and by country. Without a prenup, you may be subject to community property rules in your host country without realizing it. A marriage contract allows you to opt out of default rules that may not serve your interests.
Children born abroad to at least one US citizen parent may automatically acquire US citizenship - but the rules are complex and depend on the year of birth, whether parents were married, and how long the US citizen parent lived in the US before the birth. Register the birth at the nearest US embassy or consulate as soon as possible.
A marriage performed abroad is generally recognized in the US if it was valid in the country where it took place. However, requirements vary - some US states have specific documentation requirements for foreign marriages. Apostilles and certified translations of foreign marriage certificates are typically required for US legal purposes.
Custody disputes across international borders are governed by the Hague Convention on Parental Responsibility (if both countries are signatories), but enforcement is inconsistent. Parental abduction is a serious risk in some jurisdictions. A custody agreement that is valid in both countries - and registered in both - is the strongest protection.
Your domicile determines which US state (if any) has a claim on your income, estate, and legal affairs - even when you live abroad.
Domicile is your permanent legal home - where you intend to return when you are done living elsewhere. It is different from residency. You can be a resident of France but domiciled in Texas. Your domicile state can tax your worldwide income and governs your estate even if you live abroad indefinitely.
To abandon a domicile, you must physically leave and intend never to return as your permanent home. Intent is key - and states scrutinize it. Evidence of domicile includes where you vote, driver's license, property ownership, bank accounts, and where you say "home" is. Abandoning a high-tax state like California or New York requires deliberate action.
If you have flexibility, states with no income tax (Florida, Texas, Nevada, Wyoming, South Dakota) and favorable estate tax laws are popular for expats. South Dakota and Wyoming in particular have strong trust and asset protection laws, making them common choices for expats who want to establish a new domicile before moving abroad.
Some long-term expats have successfully argued they have no US domicile - but this creates significant complications for voting, estate planning, and legal matters. Without a domicile, there is no clear jurisdiction for probate, contract disputes, or family law matters under US law. Most advisors recommend maintaining at least a nominal domicile in a favorable state.