A common concern raised by our clients departing the United States to reside abroad is what do they need to do about U.S. taxes. Furthermore, there are several misconceptions and misunderstandings that permeate the American expatriate community about U.S. taxes; especially about filing thresholds and some exclusion amounts. Allow us to provide insights — answers to address these questions and clarify the misconceptions.
U.S. taxes are the financial backbone of the U.S. economy. The tax system is essential to financing the activities of the federal, state and municipal governments including infrastructure, healthcare, education, military and consular services. Indeed, now a cliché, founding father Benjamin Franklin once said, “nothing can be said to be certain, except death and taxes.” Another notable thing about U.S. taxes is that an excerpt is noted right on the last page of one’s U.S. Passport, “All U.S. Citizens working and residing abroad are required to file and report on their worldwide income. Consult IRS Publication 54 …”
Therefore, the answer to what needs to be done about U.S. taxes when moving and residing outside the United States is that U.S. tax filings are still required. All U.S. Citizens and lawful permanent residents residing abroad should prepare and file IRS Form 1040 Individual Income Tax Return on an annual basis. However, in practice, U.S. tax professionals will go by filing requirement thresholds which differ from foreign earning exclusion thresholds. The filing requirement is based on the standard deduction amount (in 2024, single status filers claim $14,600). U.S. Citizens and lawful permanent residents are each entitled to a standard deduction. Accordingly, a U.S. taxpayer should file an individual income tax return when worldwide income exceeds the standard deduction. When in doubt, the best approach in complying with U.S. tax laws is to file an annual tax return.
The Foreign Earned Income Exclusion (“FEIE”) amount can be a benefit for American expatriates that is of particular interest. This exclusion benefit is filed with one’s annual tax filing and documented on Form 2555. In contrast to the standard deduction, the exclusion amount is not automatic. The exclusion amount is updated each tax year and in 2024, single filers can take a FEIE up to $126,500. Following are some facts about the foreign earned income exclusion:
- The FEIE is not automatic. The taxpayer must file Form 2555 with their Form 1040 in order to claim the exclusion. Without claiming the exclusion amount on Form 2555, foreign earnings in excess of the standard deduction may be deemed taxable in the United States.
- The FEIE can be applied to general income categories and cannot be used for passive income (i.e. foreign dividend income, foreign rental income, etc.) sources.
- The FEIE amount is updated annually and published by the IRS.
- Eligibility to take the FEIE must be demonstrated annually by filing Form 2555.
Quick Summary – The Most Important Points
| Question | Quick Answer |
| Must U.S. citizens living in Vietnam file U.S. taxes? | Yes – annual filing is required regardless of where you live |
| Income threshold to file (2024, single filer)? | Worldwide income exceeding $14,600 |
| Will I be double-taxed? | Not necessarily – FEIE and Foreign Tax Credit prevent it in most cases |
| Maximum FEIE for 2024? | Up to $126,500 of foreign earned income excluded |
| What forms are needed? | Form 1040 annually + Form 2555 to claim FEIE |
Frequently Asked Questions
Must U.S. citizens living in Vietnam file U.S. taxes every year?
Yes. The U.S. taxes based on citizenship, not residence. All U.S. citizens and lawful permanent residents must report worldwide income to the IRS annually using Form 1040, regardless of where they live — including Vietnam and the Philippines. However, most expats owe little or no additional U.S. tax when the FEIE and Foreign Tax Credit are properly applied.
What is the Foreign Earned Income Exclusion (FEIE)?
FEIE is a tax provision allowing U.S. citizens living abroad to exclude a portion of their foreign earned income from U.S. taxable income. In 2024, the maximum exclusion is $126,500. FEIE applies only to earned income (wages, salary, self-employment) — not passive income such as dividends, rental income, or pensions. It must be actively claimed each year by filing Form 2555 alongside Form 1040.
What is the U.S. tax filing deadline for Americans living abroad?
The standard deadline is April 15 annually. However, U.S. citizens and residents living abroad receive an automatic extension to June 15 without needing to request it. A further extension to October 15 may be requested by filing Form 4868 before June 15.
Will Americans living in Vietnam be double-taxed?
Not in most cases. Two tools prevent double taxation: (1) FEIE — excludes up to $126,500 of foreign earned income from U.S. taxable income in 2024; and (2) Foreign Tax Credit — credits taxes paid to Vietnam or the Philippines against U.S. tax liability. When properly applied, these provisions eliminate or significantly reduce additional U.S. tax owed for most expats in Vietnam and the Philippines.
Do Green Card holders living abroad have to file U.S. taxes?
Yes. Lawful permanent residents (Green Card holders) are subject to the same worldwide income reporting obligations as U.S. citizens. The Green Card confers the right to live and work in the U.S. but also carries full U.S. tax obligations on worldwide income until the Green Card is formally surrendered through proper legal procedures.
ABOUT ARANCEL CONSULTING
Arancel Consulting is a boutique U.S. Tax and Consultancy firm based in Manila, Philippines. The firm specializes in U.S. Expatriate Tax Compliance, Tax Consultancy, and Business Management Services. The firm partners with Enterline Partners for U.S. immigration referrals and consular services.
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Copyright 2025. This article is for information purposes only and does not constitute legal advice. This article may be changed with or without notice. The opinions expressed in this article are those of Enterline & Partners only.
