International Tax Planning: A Guide to Foreign Income, Accounts, and Assets

How to use this International Tax Planning guide

Start with the four-question selector

International tax planning for a U.S. person often becomes clearer once you separate your situation into four areas: income, foreign taxes, accounts, and assets. Rather than reading everything at once, use this selector to route yourself to the most relevant next page. You can revisit the selector as facts change during the year or as you gather documents.

How to use this mobile-friendly selector:

• Read each question.
• If your answer is “Yes,” tap the linked guide to learn more.
• If your answer is “No” or “Not sure,” continue to the next question and return later if new facts emerge.

1. Do you have foreign earned income?

• What it means: Wages, salaries, or self-employment income earned from working in a foreign country. This is about where you performed services, not just where a payer is located.
• If “Yes”: Review the Foreign Earned Income Exclusion path. It may apply when you have foreign earned income, a foreign tax home, and you meet a residence or physical presence route. Start here: Foreign Earned Income Exclusion guide
• If “No” or “Not sure”: Continue to Question 2.

1. Did you pay or accrue foreign income taxes on income that may also be taxed by the United States?

• What it means: Withholding or payments to a foreign country that are income taxes (or in lieu of income taxes) on the same income that could appear on a U.S. return.
• If “Yes”: Review the Foreign Tax Credit path. It may be relevant when qualifying foreign tax applies to the same income that is subject to U.S. tax. Start here: Foreign Tax Credit guide
• If “No” or “Not sure”: Continue to Question 3.

1. Did the total of your foreign financial accounts exceed $10,000 at any time during the calendar year?

• What it means: The aggregate of your reportable foreign financial accounts, viewed together, at the highest point in the year.
• If “Yes”: Review the FBAR path. A U.S. person may need to file a FinCEN Form 114 (FBAR) when the aggregate of reportable foreign accounts exceeds $10,000 at any time during the year. Start here: FBAR guide
• If “No” or “Not sure”: Continue to Question 4.

1. Do you hold foreign assets that may be reportable on Form 8938?

• What it means: Certain non-U.S. financial assets can require reporting when total values exceed thresholds that depend on your filing status and where you live.
• If “Yes” or “Maybe”: Review the Form 8938 path. Form 8938 does not replace FBAR; some situations call for both. Start here: Form 8938 guide

Why the selector matters:

• It reduces guesswork by segmenting your facts.
• It aligns with how official guidance is organized. For example, Publication 54 confirms that U.S. citizens and resident aliens living abroad are generally taxed on worldwide income, then discusses routes such as the Foreign Earned Income Exclusion. See: https://www.irs.gov/publications/p54
• The IRS comparison page explains that Form 8938 does not replace FBAR and outlines how they differ: https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

What to do next:

• Open your primary path now, then return here after reading it.
• If more than one “Yes” applies to you, visit each relevant path in turn, because no single form resolves every international question.

Worldwide income and the U.S. filing starting point

Worldwide income and the role of U.S. filing

A strong international tax plan for a U.S. person starts with a simple organizing principle: the United States generally taxes U.S. citizens and resident aliens on worldwide income. Publication 54 explains this baseline and serves as a starting point for understanding how work performed abroad, foreign taxes paid, and overseas accounts and assets fit into a U.S. filing. See: https://www.irs.gov/publications/p54

What “worldwide income” means in practice:

• Income scope: Employment income, self-employment income, interest, dividends, rents, royalties, capital gains, and other items may be relevant even if earned or received outside the United States.
• Location of work: Where you performed services can be central for questions involving foreign earned income.
• Timing: The year in which income is recognized under U.S. rules may matter when coordinating with foreign tax periods.

How this baseline interacts with the four pathways:

• Foreign earned income: If you performed services abroad, Publication 54 outlines the Foreign Earned Income Exclusion (FEIE) pathway. FEIE may be available when you have foreign earned income, a foreign tax home, and you meet either a residence or a physical presence route. Because this depends on your facts, review the FEIE guide and current IRS instructions before making any decision. Start here: Foreign Earned Income Exclusion guide and see Publication 54: https://www.irs.gov/publications/p54
• Foreign taxes paid: When a foreign country taxes the same income also subject to U.S. tax, the Foreign Tax Credit may be relevant. This path can reduce double taxation in appropriate cases, but the rules hinge on the type of tax and type of income. See the international taxpayers hub for orientation: https://www.irs.gov/individuals/international-taxpayers and open our FTC guide: Foreign Tax Credit guide
• Foreign accounts: If your foreign financial accounts collectively exceeded $10,000 at any time during the year, you may need to e-file FinCEN Form 114 (FBAR). FBAR is not filed with your federal income tax return. Learn more in our FBAR guide: FBAR guide. For comparisons with Form 8938, see the IRS page: https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements
• Foreign assets: Some non-U.S. assets require Form 8938 reporting, depending on thresholds that vary by filing status and whether you live abroad. Form 8938 does not replace FBAR; some situations can require both. See: https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements and our Form 8938 guide: Form 8938 guide

Key takeaways for building your plan:

• Map your facts to the selector first. This shows which questions to study and which forms may be involved.
• Use the official pages linked above when you encounter a rule. They offer definitions, scope, and examples that can clarify edge cases.
• Recognize when one path affects another. For example, FEIE can interact with how much income remains available for a Foreign Tax Credit calculation. The best route can depend on your overall facts, so caution is appropriate before choosing an approach.

Your next step:

• Confirm whether you have foreign earned income, foreign taxes paid, foreign accounts above the $10,000 aggregate threshold at any point in the year, or foreign assets that might fall under Form 8938.
• Follow the linked path from the selector to read details that align with your situation, and keep Publication 54 and the IRS international taxpayers hub open for cross-reference.

Foreign earned income and the FEIE path

Foreign income and the FEIE pathway

If you earned income from services performed in a foreign country, the Foreign Earned Income Exclusion (FEIE) may be part of your planning toolkit. Publication 54 explains the FEIE framework and the conditions that must be satisfied. In general, FEIE focuses on foreign earned income, a foreign tax home, and a residence or physical presence route that you must meet based on your facts. See: https://www.irs.gov/publications/p54

What belongs in this pathway:

• Earned income from services: Wages, salaries, or self-employment income attributable to work you performed outside the United States.
• Where you worked: The location where services were performed is central to whether income can be considered “foreign earned.”
• Foreign tax home: FEIE interacts with where your main place of business or employment is located. Publication 54 discusses this concept.
• Qualifying route: You generally must meet either a residence-based route or a physical presence route. Each route has distinct criteria explained in Publication 54.

What FEIE is not designed for:

• Passive income such as interest or dividends. These items may be addressed elsewhere in your return and can interact with a Foreign Tax Credit rather than FEIE, depending on your facts.
• Income that is not considered earned from services performed abroad.

Why careful review matters:

• The FEIE route involves tests that depend on timelines and ties to a foreign country. Small changes in facts can affect eligibility.
• FEIE can interact with other provisions. For instance, electing FEIE may change how much income remains for other calculations. Publication 54 offers important context on these interactions.
• Some individuals have both earned and unearned foreign-source items; you may need to pair FEIE analysis with a Foreign Tax Credit review to account for foreign taxes applied to other categories of income.

How to proceed with the FEIE path:

• Step 1: Confirm you have foreign earned income and a foreign tax home.
• Step 2: Determine which qualifying route—residence or physical presence—you believe may apply; then verify the details in Publication 54.
• Step 3: Review how FEIE could affect your broader return, including the possible presence of foreign taxes paid on other income.
• Step 4: Keep account and asset questions separate. FEIE does not replace FBAR or Form 8938 obligations.

Helpful links:

• Publication 54 overview of worldwide income and FEIE: https://www.irs.gov/publications/p54
• Our deeper overview: Foreign Earned Income Exclusion guide

Practical notes:

• If you moved during the year, worked in multiple countries, or have short-term assignments, the route you use may differ from year to year.
• If you are unsure whether compensation components (such as allowances or reimbursements) qualify as foreign earned income, compare your facts to the Publication 54 discussions and examples.
• Recordkeeping can make FEIE analysis smoother. Track where you worked, dates, and the nature of your duties so you can align them to the Publication 54 criteria.

Foreign taxes and the Foreign Tax Credit path

Foreign taxes and the foreign tax credit pathway

When a foreign country taxes income that is also subject to U.S. tax, the Foreign Tax Credit (FTC) may become relevant. The goal is to reduce double taxation where qualifying foreign income taxes apply to the same income included in a U.S. return. This is a fact-driven path, and the details matter, including the type of foreign tax and the type of income involved. For orientation, see the IRS international taxpayers hub: https://www.irs.gov/individuals/international-taxpayers

What belongs in this pathway:

• You paid or accrued foreign income taxes (or a tax in lieu of an income tax) on income that is also taxed by the United States.
• You want to explore whether you can claim a credit for some or all of those foreign taxes.

What to consider as you review:

• The same income: The credit path generally focuses on the overlap—foreign tax paid on income that is also part of your U.S. taxable base.
• Qualifying taxes: Foreign levies must meet certain characteristics to be creditable. The IRS international taxpayers hub provides a starting point for understanding what types of taxes can qualify.
• Interactions with other paths: If you exclude income using FEIE, there may be less or no U.S.-taxed income left in that category to match with foreign taxes. Planning can depend on the mix of earned and unearned income and where foreign taxes were imposed.

Process tips:

• Separate your facts by income type. For example, wages, self-employment income, interest, and dividends can behave differently under the FTC framework.
• Gather documentation that shows the nature of the foreign tax, the period it applies to, and the income it relates to.
• Avoid assuming a one-size-fits-all outcome. The credit can involve limits and carry concepts that depend on your overall tax picture and the category of income.

How this path differs from the account and asset paths:

• The FTC is about foreign taxes paid on income, not about whether you held accounts or owned certain assets.
• Even if you have no foreign taxes, you may still have reporting needs for accounts (FBAR) or assets (Form 8938) if their thresholds are met.

Where to learn more:

• IRS international taxpayers hub: https://www.irs.gov/individuals/international-taxpayers
• Our overview of the FTC path: Foreign Tax Credit guide

Practical notes:

• Timing differences between foreign and U.S. tax years can affect how you coordinate documentation and calculations.
• If foreign withholding was applied at source (such as by a payor), verify what income it relates to and whether that income appears on your U.S. return.
• Keep the FEIE and FTC paths distinct as you evaluate them, then consider how they interact based on your final numbers.

Foreign accounts and the FBAR path

Foreign accounts and FBAR pathway

Foreign financial accounts are a separate planning area from income and foreign taxes. A U.S. person may need to file a FinCEN Form 114—commonly called “FBAR”—if the aggregate value of reportable foreign financial accounts exceeded $10,000 at any time during the calendar year. The FBAR is not filed with a federal income tax return. These points are central to how you organize your account-related tasks. For an IRS comparison of FBAR and Form 8938, see: https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

What belongs in this pathway:

• You had foreign financial accounts during the year, such as bank or other financial accounts located outside the United States.
• When you add the highest values together across all reportable foreign accounts, the total exceeded $10,000 at some point in the year.

Key characteristics of FBAR:

• Filing platform: FBAR is filed electronically with FinCEN and is separate from your federal income tax return.
• Scope: The focus is on foreign financial accounts rather than foreign income or foreign income taxes.
• Independence from Form 8938: Form 8938 does not replace FBAR. Some situations require both. The IRS comparison page linked above provides additional context.

Why careful review matters:

• People often assume that if no interest or dividends were earned, no action is needed. That assumption may be incorrect. The FBAR pathway is about account values and locations, not just about whether income was generated.
• Joint or shared accounts can raise additional questions. Who is a U.S. person for FBAR purposes and whether an account is reportable depends on facts. The comparison page and IRS international taxpayers hub offer orientation if your situation is unusual. See: https://www.irs.gov/individuals/international-taxpayers

How to proceed with the FBAR path:

• Step 1: Make a list of your foreign financial accounts and determine the highest value reached by each during the year.
• Step 2: Add those highest values together to determine whether the $10,000 aggregate threshold was exceeded at any point in the calendar year.
• Step 3: If “Yes,” open our FBAR guide for next steps: FBAR guide
• Step 4: Check whether your facts also point to Form 8938; if so, review that guide as well. Remember, Form 8938 does not replace FBAR.

Practical notes:

• Account statements and year-end summaries can help you identify high points during the year. If exchange rates are involved, review official instructions for guidance on conversions.
• If you opened or closed accounts midyear, include them in your aggregate review for the portion of the year they existed.
• Keep your FBAR review separate from income items. Accounts with no income may still appear in the FBAR analysis if the value threshold is met.

Foreign assets and the Form 8938 path

Foreign assets and Form 8938 pathway

Form 8938 focuses on specified foreign financial assets and applies when the total value of those assets exceeds thresholds that vary based on your filing status and whether you live in the United States or abroad. This form does not replace the FBAR; they are separate frameworks that may both apply to the same person in the same year. For the IRS comparison of Form 8938 and FBAR, see: https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

What belongs in this pathway:

• You own or have an interest in foreign financial assets that may fall within the Form 8938 definition.
• Your asset totals may exceed the applicable thresholds, which differ depending on your filing status and where you live.

How this path fits with the others:

• Distinct from FBAR: FBAR looks at foreign financial accounts and uses the $10,000 aggregate-at-any-time standard. Form 8938 has its own asset definitions and threshold levels. Because the frameworks differ, some people need to consider both.
• Distinct from income and foreign taxes: Form 8938 is a reporting path about assets, not a credit or exclusion. It works alongside your income reporting and any Foreign Tax Credit or FEIE decisions rather than replacing them.

Process tips:

• Inventory your non-U.S. financial assets and note their values at relevant dates as instructed by the official guidance.
• Identify where each item sits: Is it a foreign account (potentially relevant to FBAR), a foreign asset (potentially relevant to Form 8938), or both?
• If you are unsure whether an item is a “specified foreign financial asset,” compare it against the IRS discussion and examples provided through the comparison page and the international taxpayers hub. See: https://www.irs.gov/individuals/international-taxpayers

Common planning questions:

• “I already file an FBAR; am I done?” Not necessarily. Form 8938 does not replace FBAR. Your facts may call for one, the other, or both.
• “My asset did not produce income; does that matter?” Income production is separate from reporting. Even assets that generated no income during the year can still be reportable on Form 8938 if thresholds are met. Always review current instructions.
• “I hold interests through multiple platforms or custodians; how should I think about totals?” Tallying across platforms can be important. Keep separate tallies for FBAR and Form 8938 because their definitions and thresholds differ.

When facts require individual review:

• Blended scenarios—such as a partial-year move, multiple employers, or accounts tied to multiple countries—can make general explanations feel incomplete.
• If your situation spans more than one “Yes” in the selector, expect to open multiple guides. A single form does not resolve every international tax or reporting question.
• When in doubt, review the official pages linked in this hub and consider booking a session to discuss your facts: /book-tax-session/

Where to learn more:

• IRS comparison of Form 8938 and FBAR requirements: https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements
• IRS international taxpayers hub: https://www.irs.gov/individuals/international-taxpayers
• Our Form 8938 overview: Form 8938 guide

International Tax Planning: A Guide to Foreign Income, Accounts, and Assets FAQs