Year-End Tax Moves for International Taxpayers
If you are a U.S. person living or investing abroad, December is your last chance to set yourself up for your FBAR filing. Below are practical year-end moves for U.S. citizens and green card holders abroad, recent arrivals who may meet the Substantial Presence Test, and globally mobile families with cross-border accounts and investments.
10 Year-End Moves
1) Nail your residency status now. Residency drives everything: which forms you file, whether you can claim the Foreign Earned Income Exclusion (FEIE) or the Foreign Tax Credit (FTC), and which treaty positions apply. If you were in the U.S. this year, check the Substantial Presence Test and count days across the three-year lookback rule. Correct residency classification avoids amended returns and penalties later.
2) Close FBAR and FATCA gaps. If your combined non-U.S. financial accounts topped $10,000 at any time in the year, you must file the Foreign Bank and Financial Accounts (FBAR). The FBAR is due April 15 with an automatic extension to October 15. The Foreign Account Tax Compliance Act (FATCA) Form 8938 may also apply and uses higher thresholds for taxpayers who live abroad, for example $200,000 at year-end for single filers abroad. Review your aggregate balances before December 31, so you can collect statements and valuations.
3) Decide between FEIE and FTC for earned income. Employees or self-employed individuals abroad often weigh the FEIE versus the FTC. If you expect high foreign tax, the FTC may deliver more value. Plus, unused credits can be carried back one year and forward up to 10 years. Track category buckets and remember Schedule B of Form 1116 is used to report carryovers. (IRS)
4) Harvest capital gains or losses with foreign holdings. If you hold foreign funds, check whether any position is a Passive foreign investment company (PFIC). PFICs usually require Form 8621 and can trigger expensive default tax and interest. Year-end is a good time to evaluate elections, consider exiting problem holdings, or gather the data your tax preparer will need.
5) Coordinate U.S. and foreign pensions, ISAs, and insurance. Some popular investment accounts and savings plans in other countries don’t get treated the same way by the U.S. tax system. Even though your home country may view them as simple investment accounts or retirement savings plans, the U.S. may classify them as complex investments that require extra tax forms and sometimes higher taxes. Before year-end, confirm whether your foreign retirement plan is treaty-qualified and whether annual information returns are required. This prevents late-file penalties and avoids double taxation when you take distributions.
6) Watch gifts from and to non-U.S. persons. Large gifts or inheritances from non-U.S. persons may require Form 3520 reporting, even when no U.S. tax is due. Identify any 2025 receipts and gather documentation now so you do not miss the reporting threshold.
7) Charitable giving and standard deduction changes under OBBBA. The One Big Beautiful Bill Act (H.R. 1, signed July 4, 2025) kept the 60 percent of adjusted gross income (AGI) limit for cash gifts to public charities. For 2025, the standard deduction increases, which can also affect whether you itemize this year. If you plan to itemize in 2025, complete gifts by December 31 and retain proper acknowledgements.
8) International business owners, CFCs, and OBBBA updates. If you own part of a company outside the U.S., recent OBBBA changes may affect your year-end tax planning. The Global Intangible Low-Taxed Income (GILTI) law, renamed Net CFC Tested Income, removed the QBAI deduction and updated how foreign tax credits work. The changes start applying after 2025. Individuals with CFC interests who make a Section 962 election may be affected. Review 2025 earnings, local tax payments, and distribution plans with your advisor.
9) Treaty positions and documentation. If you claim treaty benefits to reduce withholding or avoid double tax, get residency certificates and employer or custodian paperwork in order by year-end. Mismatches between W-8BEN forms, residency, and the location where services were performed often result in IRS notices.
10) Cash, crypto, and alternative assets abroad. Confirm whether foreign exchanges or wallets create reportable financial accounts. Keep detailed records on a transaction basis. If you realized gains, align sales dates with your overall capital gain and loss picture before December 31.
7 Steps Before December 31
Confirm residency: Count days, determine your 2025 status, and document any closer connection or treaty tiebreakers if applicable. Substantial Presence Test
Complete reporting inventory: List every non-U.S. bank, brokerage, pension, insurance, and fintech account with the highest-balance estimates, account numbers, and jurisdictions for FBAR and FATCA.
Choose your income strategy: Run a side-by-side FEIE versus FTC comparison, including projected carryovers, to decide which election gives the better outcome for 2025.
Tidy investment positions: Identify PFICs, consider elections or repositioning, and request year-end statements or annual PFIC reports if available.
Finalize charitable gifts: If you plan to itemize for 2025, finish cash gifts to qualified organizations and obtain contemporaneous receipts. Keep in mind the 2026 floor will change future bunching tactics.
Owners of foreign companies: If you hold CFC interests, schedule a review of 2025 tested income, local tax payments, and potential distributions in light of OBBBA’s international changes.
Set your filing calendar: FBAR due April 15 with an automatic extension to October 15. If you live abroad on April 15, your individual return gets an automatic two-month filing extension, yet tax is still due by April 15. Consider a formal extension if you need more time.
It’s tricky.
Cross-border returns are tricky because U.S. rules often treat foreign accounts and funds very differently from those in your local country. Our team builds a simple year-end checklist for your situation, models FEIE versus FTC choices, identifies PFIC and CFC exposures, and maps the exact forms and deadlines you will need to complete. That gives you clean documentation and fewer surprises at filing time.
Disclaimer
This article summarizes select rules for individuals. Corporate and trust rules are different. Treaties vary by country. Always apply the law to your specific facts with a qualified advisor.