The United States taxes its citizens on worldwide income wherever they live. A person who holds U.S. citizenship along with another citizenship is treated like any other U.S. citizen for federal tax purposes. This overview explains when dual citizens must file, the common foreign reporting forms, and the main tools for limiting double taxation.
Citizenship-Based Taxation
According to the IRS, U.S. citizens and resident aliens who live abroad are taxed on their worldwide income, and the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether they live in the United States or abroad (Publication 54). Holding a second citizenship does not change that result.
Tax treaties provide limited help on this point. The IRS explains that, with certain exceptions, treaties do not reduce the U.S. tax of U.S. citizens, because most treaties contain a “saving clause” that preserves the right of the United States to tax its own citizens.
When a Return Is Required
A U.S. citizen generally must file a federal income tax return for any year in which worldwide gross income is at least the filing threshold for his or her filing status, as listed in the Form 1040 instructions. For this test, gross income includes foreign earned income even if it can later be excluded. A person with net earnings from self-employment of $400 or more must file regardless of gross income.
Returns are due April 15 for calendar-year taxpayers. A citizen whose tax home and abode are both outside the United States and Puerto Rico on that date receives an automatic two-month extension to June 15, although interest runs on unpaid tax from April 15.
Common Foreign Reporting Forms
FBAR (FinCEN Form 114): required for a person with a financial interest in, or signature or other authority over, foreign financial accounts, unless the combined value was $10,000 or less throughout the year. It is filed electronically with FinCEN, due April 15, with an automatic extension to October 15.
Form 8938: filed with the income tax return to report specified foreign financial assets above a threshold. For taxpayers who live abroad and meet the presence abroad test, the threshold is more than $200,000 on the last day of the year or more than $300,000 at any time during the year for unmarried taxpayers, and more than $400,000 or $600,000, respectively, for married couples filing jointly.
Other forms: depending on the investments held, a dual citizen may also need Form 8621 for foreign mutual funds and other PFICs, Form 5471 for interests in foreign corporations, or Form 3520 for foreign trusts and certain foreign gifts.
Limiting Double Taxation
Foreign earned income exclusion: a citizen with foreign earned income and a tax home in a foreign country who meets the bona fide residence test, or is physically present abroad for at least 330 full days in a 12-month period, may exclude foreign earned income up to an annual limit, which is $132,900 for 2026. The exclusion is claimed on Form 2555. It does not reduce self-employment tax, and other income is taxed at the rates that would apply without the exclusion.
Foreign tax credit: a credit against U.S. tax for qualifying foreign income taxes, subject to limitations. It is often relevant for income the exclusion does not cover, such as investment income or earnings above the exclusion amount.
The foreign earned income exclusion and foreign tax credit can reduce, and in some cases eliminate, U.S. income tax, but they do not eliminate the filing and reporting requirements once the thresholds are met.
Catching Up and Considering Renunciation
Dual citizens living abroad who missed returns or FBARs because of non-willful conduct may be eligible for the IRS Streamlined Foreign Offshore Procedures, which are discussed in our article on Accidental Americans.
Some dual citizens consider renouncing U.S. citizenship. Renunciation requires filing Form 8854, and individuals who are “covered expatriates” may owe an exit tax. Certain individuals who were dual citizens at birth are excepted from the income tax and net worth tests for covered expatriate status if statutory conditions are met, but they must still certify five years of tax compliance. See our overview of renouncing U.S. citizenship.
The Bottom Line
Dual citizens have the same federal filing and reporting obligations as other U.S. citizens. Understanding the filing thresholds, the foreign reporting forms, and the available exclusion and credit makes it possible to comply while limiting double taxation.
Questions about your U.S. filing obligations?
Tax attorney Cassra Minai, Esq. can review your situation as a dual citizen in a confidential consultation.