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United States Tax Guide
Everything digital nomads need to know about taxes in United States
183 day threshold
USD
Updated 2024-12-01
Overview
The United States taxes its citizens and resident aliens on worldwide income, regardless of where they live. US expats have special provisions like the Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit to reduce or eliminate double taxation.
Quick Facts
183
Day Threshold
USD
Currency
10%
Top Tax Rate
12+
Tax Treaties
Tax Residency Rules
How United States determines tax residency
- US citizens are taxed on worldwide income regardless of residence
- Green card holders are treated as tax residents
- Substantial Presence Test: 31 days in current year AND 183 days weighted over 3 years
- Tax treaties may modify residency rules
Tax Rates
| Type | Rate | Description |
|---|---|---|
| Income Tax | 10% - 37% | Progressive federal tax brackets |
| Self-Employment | 15.3% | Social Security and Medicare taxes |
| Capital Gains | 0% - 20% | Long-term capital gains rates |
| State Tax | 0% - 13.3% | Varies by state |
Special Programs
Foreign Earned Income Exclusion (FEIE)
Exclude up to $126,500 (2024) of foreign earned income from US tax
Eligibility
- •US citizen or resident alien
- •Tax home in foreign country
- •Meet Physical Presence or Bona Fide Residence test
Benefits
- Exclude foreign earned income up to annual limit
- Additional housing exclusion available
- Can significantly reduce or eliminate US tax liability
Foreign Tax Credit
Credit for taxes paid to foreign governments
Eligibility
- •Paid or accrued foreign income tax
- •Tax must be legal and actual foreign tax liability
- •Cannot be used on FEIE-excluded income
Benefits
- Dollar-for-dollar credit against US tax
- Excess credits can be carried forward/back
- Useful for income above FEIE limit
Filing Requirements
- 1Annual tax return (Form 1040) required for all citizens
- 2Form 2555 for FEIE claims
- 3FBAR (FinCEN 114) if foreign accounts exceed $10,000
- 4Form 8938 (FATCA) for specified foreign financial assets
- 5Filing deadline: June 15 (automatic extension for expats), October 15 with extension
Remote Work Considerations
- • US source income taxable regardless of location
- • Work location determines income source for services
- • FEIE only applies to foreign-sourced earned income
- • Digital nomads must track work locations carefully
Double Taxation Treaties
United States has tax treaties with these countries
UK
Germany
France
Canada
Japan
Australia
Netherlands
Switzerland
Spain
Italy
Portugal
Thailand
Frequently Asked Questions
Do I need to file US taxes if I live abroad?
Yes, US citizens and green card holders must file US taxes regardless of where they live, if their income exceeds filing thresholds.
Can I use both FEIE and Foreign Tax Credit?
You can use both, but not on the same income. The Foreign Tax Credit is typically used for income above the FEIE limit or for passive income.
What is the Substantial Presence Test?
A formula to determine tax residency: be present 31+ days in current year AND have 183+ days when counting current year fully, prior year at 1/3, and second prior year at 1/6.
Important Disclaimer
This guide provides general information only and should not be considered professional tax or legal advice. Tax laws change frequently, and individual circumstances vary. Always consult with a qualified tax professional familiar with United States tax law before making decisions based on this information. Last updated: 2024-12-01.
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