Working for an American Company Abroad: Filing Rules Every Expat Must Know

Your laptop says “New York,” your laundry says “Lisbon.” Welcome to the club. Thanks to remote everything, plenty of people now work for a U.S. company while living in Spain, Japan, Canada—or wherever the Wi-Fi behaves.

Here’s the catch: who you are (U.S. citizen, green card holder, non-U.S. hire, or freelancer) changes the rules. Payroll, visas, social insurance, even which country gets first crack at your income—all of it shifts based on your status and where you physically do the work.

Let’s break it down without the legalese: how the IRS treats your pay, when FEIE and tax credits help, what paperwork your employer should handle (but might not), and where labor and immigration rules sneak into the picture for employees, contractors, and digital nomads.

Can you work remotely for a U.S. company abroad?

Remote work isn’t a loophole; it’s a checklist. Before you log in from Lisbon or the Philippines, make sure the country you’re in is okay with you working there, your arrangement with the U.S. employer is set up correctly, and the taxes line up. Do it in this order and you’ll sleep fine.

• Immigration status: A tourist stamp isn’t work permission—secure a work visa, digital nomad visa, or be a permanent resident before earning.
• Engagement model: Decide if you’re an employee or an independent contractor; employees are often hired via an Employer of Record (EOR), while contractors register and file locally.
• Where law applies: Your host country’s employment laws, social insurance, and payroll rules apply because that’s where the work happens.
• U.S. person tax implications: U.S. persons owe U.S. income taxes on worldwide income; use FEIE/housing (Form 2555) and the Foreign Tax Credit (Form 1116) to reduce the bill.
• Non-U.S. person tax implications: If you’re not a U.S. taxpayer, you’re generally taxed where you physically work; being paid by a U.S. company doesn’t automatically make you U.S.-taxable.
• Company exposure: Your role can create “permanent establishment” risk for the employer; EOR setups help contain this.
• Country nuance: Local rules differ—e.g., the Philippines typically requires proper work authorization and local tax registration for ongoing remote work.

Do you still owe U.S. taxes if you work abroad?

Remote job in Tokyo, paycheck from Texas? You’re still on the IRS’s radar. U.S. tax follows citizens and green card holders wherever they live—your time zone doesn’t change your filing duty, and your type of visa abroad doesn’t, either.

• You still file a U.S. return: If you’re a U.S. citizen or green card holder, you file Form 1040 every year—period. Remote employee, contractor, or founder, the income is reportable.
• Your U.S.-sourced gigs still count: Salary from a U.S. employer and fees from U.S. clients are taxable to you; report them even if they land in a foreign bank account.
• You may also be taxed locally: Live long enough in another country and you can become a tax resident there, too—hello, dual obligations.
• Relief exists to avoid double tax: Use the Foreign Earned Income Exclusion (Form 2555) and, where foreign tax is paid, the Foreign Tax Credit (Form 1116). Smart coordination matters: exclude what makes sense, credit what’s left.
• Visas don’t override tax rules: A work visa, digital nomad visa, or residency permit may make local work legal, but it doesn’t exempt you from U.S. filing or tax.
• Deadlines and details still apply: You generally get an automatic June 15 filing extension when living abroad (interest still accrues), and you must handle any required foreign account disclosures (FBAR/FATCA) separately.

Tax breaks for expats and remote employees

If you’re earning abroad for a U.S. company, you’ve got two powerful cushions (and a handy sidekick) to keep double taxation from chewing through your paycheck. Use them in the right order and most returns go from “uh-oh” to “under control.”

• Foreign Earned Income Exclusion (Form 2555): Exclude up to $132,900 for 2026 of foreign earned income if you meet the physical-presence or bona-fide-residence test; housing relief can stack on top.
• Foreign Housing Exclusion/Deduction (Form 2555): Shaves eligible rent/utility costs above the base amount, with higher caps in pricey cities (think Tokyo or Madrid).
• Foreign Tax Credit (Form 1116): A dollar-for-dollar credit for foreign taxes paid on income that’s still in your U.S. tax base—especially useful for income the FEIE doesn’t (or shouldn’t) cover.

What forms do expats and remote workers need to file?

Think of your filing stack as three lanes: your main return, your “reduce-the-tax” add-ons, and your “tell-the-Treasury” disclosures. If you’re working for a U.S. company from abroad, you’ll likely touch one from each lane.

• Form 1040: Your main U.S. income tax return (employees and freelancers who clear the filing threshold).
• Form 2555: Claim the Foreign Earned Income Exclusion and, if eligible, the foreign housing exclusion/deduction.
• Form 1116: Claim the Foreign Tax Credit for foreign taxes paid on income still in your U.S. tax base. (For 2026, the OBBB reduced the FTC “haircut” from 20% to 10%, making tax credits significantly more valuable for residents in high-tax countries like Germany or Japan.)
• FBAR (FinCEN 114): Disclose foreign bank/investment accounts if your aggregate balance tops $10,000 at any point in the year.
• Form 8938 (FATCA): Disclose specified foreign financial assets if you exceed the IRS thresholds for your filing status/residency.
• Additional forms: Self-employment schedules (Schedule C/SE), state returns (if you still have ties), or country-specific/treaty paperwork tied to your work visa or residence.

Payroll, social security, and health insurance

Remote work changes your view, not the rules. How payroll, Social Security, and health coverage shake out depends on how you’re engaged (employee vs self-employed), where you sit, and which country’s systems claim you.

• If you’re a U.S. employee on payroll: Your U.S. company may keep withholding Social Security and Medicare (FICA) and still offer health insurance through its plan. Local law can still bite (e.g., work-permit, local benefits), but your paycheck often looks “U.S.-normal.”
• If you’re self-employed: Expect U.S. self-employment tax (Social Security/Medicare) on your net profit unless a totalization agreement says the other country’s system covers you. With an agreement, you typically pay into one system and request a certificate of coverage to prove it.
• If you’re a non-U.S. citizen hired abroad: You’re usually under local labor law and local payroll/withholding—not U.S. FICA—because the work is performed where you live.
• Benefits aren’t one-size-fits-all: Employer health insurance, retirement contributions, paid leave, and even working hours can differ for in-office vs fully remote abroad. Contractors handle these solo; employees get what their employer (or local law) provides.

Local taxes, visas, and compliance

Working for a U.S.-based company doesn’t put you in a legal bubble; the country under your feet calls the shots on right-to-work, payroll, and taxes. Treat this as one system—immigration, employment, and tax—all moving together.

• Work authorization first: A tourist stamp isn’t work permission. Countries like Mexico, Spain, Canada, and Japan expect the correct work or digital-nomad visa before you earn a cent.
• Tax residency follows presence: Stay long enough and you’re likely a local tax resident, with returns and possibly advance payments due—regardless of who signs your paycheck.
• Payroll may go local: Many jurisdictions require in-country payroll, withholding, benefits, and compliant contracts; employers often use an Employer of Record (EOR) to meet those rules.
• Social insurance is part of the deal: Expect contributions into the local system unless a totalization agreement says otherwise—and you have a certificate of coverage to prove it.
• Company exposure matters: Certain roles and decision-making can create permanent establishment risk for your employer, triggering local corporate taxes and filings.
• Digital nomad visas aren’t tax force fields: Helpful, yes—but most have limits on who you can work for, how long you can stay, and whether you become tax resident.
• Non-compliance hurts: Wrong visa or missed filings can mean fines, back taxes, and immigration headaches that cost more than doing it right the first time.

Time zones, teams, and work-life balance

Working for a U.S.-based team from a foreign country is part calendar math, part sanity management. The farther you are from U.S. time, the more your day shifts—so build a schedule that keeps projects moving and lets you sleep like a human.

• Set the ground rules early: Agree on core overlap hours, response-time expectations, and which meetings are sacred vs. async. Put it in writing so 2 a.m. surprises don’t become “the culture.”
• Work async by default: Use clean briefs, recorded Looms, and clear checklists so progress doesn’t depend on everyone being awake. Your future self (and your team) will thank you.
• Batch the brutal hours: If you’re in Asia or Europe, cluster late-night calls into two or three days, then keep the others meeting-light for deep work.
• Travel smart for face time: If quarterly in-person sessions matter, pick a hub with direct flights to North America; don’t volunteer to be a permanent red-eye.
• Balance cost of living with calendar pain: Cheaper rent in Mexico may offset odd hours; pricier cities nearer U.S. time zones can pay you back in sleep.
• Mind the tax clock too: Long stays can trigger local tax laws and residency tests; the calendar you plan for meetings also affects the tax calendar where you live.

Common mistakes expats make

Going abroad doesn’t erase the rulebook; it hands you a second one. Most headaches come from tiny assumptions—about visas, payroll, or “surely the IRS won’t notice me in Bali”—that snowball into fines and 2 a.m. admin. Fix these up front and your move feels like freedom, not paperwork cosplay.

• Assuming the IRS forgets you once you leave: U.S. citizens and green card holders still file a U.S. return, even if every paycheck lands in your new country of residence.
• Working on a tourist visa: “I’m just on Slack” is still work. Get the right status first; immigration doesn’t care about your time zone differences.
• Mixing up employee vs. freelancer rules: Payroll, benefits, and taxes change completely if you’re a contractor—don’t wing it and hope HR looks the other way.
• Ignoring FBAR/FATCA: Foreign accounts and assets often require separate disclosures; missing them is a penalty magnet.
• Skipping host-country labor and payroll rules: Local law may require in-country payroll, social insurance, or specific contracts—even if your paycheck says “U.S.”
• Not coordinating U.S. tax breaks: FEIE, housing, and the Foreign Tax Credit need modeling, not guessing, or you’ll strand credits or overexclude income.

Work anywhere, file everywhere

The dream is simple—laptop, passport, paycheck. The reality: you answer to your home country (hello, IRS), the country you’re standing in (visas, local regulations, payroll), and a team that still runs on U.S. time. Get those three playing nicely and remote life stops being chaos and starts being a system.

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