US citizens and Green Card holders are taxed on their total worldwide income.

Does that mean that you will be double taxed?

Not if the country in which you made your income has a tax treaty with the US. See the list of countries that have a tax treaty with the US.

Furthermore, Foreign Earned Income Exclusion (FEIE) is a tax benefit which allows US expats to exclude up to a certain amount of foreign earned income from your US taxes. In 2021, for the 2020 tax year, you can exclude up to $107,600 of foreign earned income.

How to qualify for FEIE?

There are two ways.

  • Physical Presence Test: To pass the Physical Presence Test, you will need be outside of the US for 330 full days in a consecutive 12 month period, that begins or ends in the tax year.
  • Bona Fide Resident Test: To pass the Bona Fide Rest Test, you will need to be a resident in a foreign country and be subject to local income taxes for at least a full tax year.

If you would like to know more about US expat taxes, feel free to check out our Expat Tax Guide

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