Cross-Border Tax Compliance and Global Income

US citizens with foreign income, overseas accounts, or international assets face complex requirements including FBAR, FATCA, and foreign earned income rules that require specialized expertise to avoid severe penalties.

US citizens owe tax on global income. Whether you earn money in London, Tokyo, or Lagos, it goes on your US return. The foreign earned income exclusion lets qualifying taxpayers exclude up to $132,900 (2026) of earned income abroad, but it doesn't apply to investment income, and you must meet either the bona fide residence or physical presence test.

FBAR has its own filing threshold. If the aggregate value of your foreign financial accounts exceeds $10,000 at any point during the year, you must file FinCEN Form 114 (FBAR). This is separate from your tax return, has its own deadline, and carries penalties of up to $10,000 per account per year for non-willful violations.

FATCA adds another reporting layer. The Foreign Account Tax Compliance Act requires reporting foreign financial assets above $50,000 (or $200,000 for taxpayers abroad) on Form 8938. FATCA overlaps with FBAR but has different thresholds, different forms, and different penalties.

Foreign tax credits prevent double taxation -- mostly. You can claim a credit for taxes paid to foreign governments, but the calculation has limitations by income category, and some countries' taxes don't fully offset US obligations.

The pitfall: International tax penalties are disproportionately severe. Late FBAR filings, missed Form 8938, or unreported foreign income can trigger penalties that dwarf the underlying tax. A CPA experienced in international issues catches these before they become problems.