Earlier this year, The Wall Street Journal reported that more people moved out of the U.S. than moved in during 2025. Not since the Great Depression has the United States experienced a net negative migration rate. Immigration policies and the high cost of living and health care could leave the U.S. with serious, hard-to-reverse issues like a shrinking tax base and workforce. Before leaving those cares behind, however, doing your homework is important for any move, especially out of the country.
American expats take many forms, from digital nomads, couples and families with children to established adults looking for a better way. Consider these issues:
A recent article in The New York Times details the life experiences of different expats. Americans abroad are often attracted to countries with lower costs of living, relative safety, affordable health care, and sometimes, other expats. Top choices for expat communities include Canada, Mexico, Portugal, Japan, Ireland, and Vietnam, among others. Working locally or remotely, expats find that lower salaries go much further than in the U.S. and enjoy amenities like eating out regularly, traveling more, and household help that they might not be able to afford in the U.S.
For the most part, U.S. citizens living abroad are still required to file routine tax returns, including income tax returns, estate, and gift tax returns. One of the most common misconceptions among Americans moving abroad is that leaving the United States ends their filing obligations with the IRS. In reality, U.S. citizens living abroad may still need to report worldwide income and comply with ongoing tax reporting requirements. To take advantage of the foreign tax credit and the foreign earned income exclusion, you must file a U.S. income tax return. If you are a U.S. citizen living abroad or in the military, you have an automatic two-month filing extension to June 15.
A bank account is important anywhere that you live. While global financial services and payment systems have become more sophisticated, U.S. regulatory requirements create a significant burden for foreign banking institutions that cater to U.S. interests. Because of U.S. banking compliance requirements for American account holders, some foreign banks charge higher fees, impose stricter onboarding procedures, or limit services available to U.S. citizens.
U.S. regulations around offshore bank accounts apply to U.S. persons living domestically or abroad. The requirement to file a Report of Foreign Bank and Financial Account (FBAR) applies to any account or accounts that reach $10,000 during any calendar year, a relatively low threshold. Many taxpayers are surprised to learn that FBAR filing obligations can arise from routine checking, savings, or investment accounts held overseas. Before choosing your landing destination, consider researching available banking options. You may need to contact a special unit or branch of a bank that caters to U.S. citizens. Be sure to have personal documents, including a passport, driver’s license, or residency documents. Because of the high cost to banks of being accused of tax fraud by the Internal Revenue Service (IRS), stringent account applications may apply.
To learn more about offshore accounts and gain a perspective on offshore matters, review our guide, Offshore Tax Matters Explained.
A common refrain from expats is the near-term benefits of living abroad, lower living and health care costs, and exposure to diverse cultures. Longer term, a common difficulty is the challenge of saving for retirement given U.S. tax rules and limited coordination with foreign retirement systems. While some expats move abroad permanently, some relocate for a period of time or years before returning to be closer to family.
Before making any move, carefully evaluate your financial goals and aims. Speak with an experienced tax attorney to better understand the challenges of foreign bank accounts, FBAR filing, and moving your assets abroad. Be prepared before you pack your bags.
Thinking of moving abroad?
Our tax lawyers can answer your questions regarding tax compliance, FBAR filing requirements, offshore bank accounts, tips on compliance and minimizing audit risk while abroad, and map out a good plan for the movement and protection of your assets. Contact Robert J. Fedor, Esq., L.L.C at 440-250-9709. We serve clients abroad and across the U.S. from offices in Chicago and Cleveland.