Glossary

Expat tax terms, in plain English

U.S. tax for Americans abroad comes with its own vocabulary. Here's what each term means, in a sentence or two, with a link to the page that explains it properly.

Reviewed by Lewis Grunfeld, CPA

A

Abode: Your home base: where your family, economic and personal ties are. With an abode in the U.S., you can't have a foreign tax home or meet the Streamlined non-residency test. More.
Accidental American: Someone who is a U.S. citizen without really having lived in the U.S., usually by being born there or born abroad to an American parent. More.
Additional child tax credit: The part of the child tax credit paid to you as a refund: up to $1,700 per child for 2025 and 2026. More.

B

Bona fide residence test: One of two ways to qualify for the foreign earned income exclusion: being a genuine resident of a foreign country for a full calendar year. More.

C

Certificate of coverage: A document from a social security system showing which country covers you under a social security agreement. It's how you stop paying into both. More.
CFC (controlled foreign corporation): A foreign company more than half owned by U.S. shareholders who each hold at least 10%. Its owners may be taxed on some of its income each year. More.
Covered expatriate: Someone giving up citizenship, or a green card held in 8 of the last 15 years, who meets the net worth, average tax or compliance test. Covered expatriates can owe the exit tax. Check it.

D

Delinquent FBAR Submission Procedures: The IRS route for filing late FBARs when your income was all reported. More, and what the statement should say.
Delinquent international information returns: The route for filing late forms like 5471, 3520 or 8938 when your income was all reported, with a reasonable cause statement. More.
Domicile: For state taxes, your true, fixed home: the place you intend to come back to. You keep it until you clearly set up a new one. More.
Dual-status return: A return for a year in which you were a U.S. resident for part of the year and a nonresident for the rest, such as the year a green card ends. More.

E

Exit tax: Tax on covered expatriates, as if they sold everything the day before expatriating, on gains above an exclusion ($910,000 for 2026). More.

F

FATCA: The Foreign Account Tax Compliance Act. It makes banks abroad report accounts held by Americans, and it created Form 8938. More.
FBAR (FinCEN Form 114): A yearly report of your foreign accounts, once they add up to more than $10,000 at any time in the year. Filed online with FinCEN, not with your tax return. More.
Foreign earned income exclusion: Lets you leave foreign wages and self-employment income off your U.S. taxable income, up to $132,900 for 2026. Claimed on Form 2555. More.
Foreign tax credit: A credit against U.S. tax for income tax you paid abroad on the same income. Claimed on Form 1116. More.
Form 14653 and Form 14654: The signed certifications for the Streamlined Foreign and Domestic procedures, with your non-willful statement. 14653, 14654.
Form 3520: Reports large gifts and inheritances from abroad, and dealings with foreign trusts. More.
Form 5471: Reports a foreign company you own part of or run. More.
Form 8621: Reports a PFIC, such as a foreign mutual fund or ETF. More.
Form 8833: Discloses a treaty position that reduces your U.S. tax. More.
Form 8854: The expatriation statement, filed when you renounce, or give up a green card held in 8 of the last 15 years. More.
Form 8938: Reports foreign financial assets with your tax return, above higher limits than the FBAR. More.

G

GILTI (net CFC tested income): Income of a controlled foreign corporation that its U.S. shareholders are taxed on each year. Called net CFC tested income from 2026. More.
Green card holder: A lawful permanent resident, taxed by the U.S. on worldwide income until the status formally ends, wherever they live. More.

I

IGA (intergovernmental agreement): A FATCA agreement between the U.S. and another country. Under Model 1, banks report to their own tax authority, which passes the data to the IRS; under Model 2, banks report to the IRS directly. By country.
ITIN: An IRS tax number for people who can't get a Social Security number, such as many non-American spouses. U.S. citizens can't use one. More.

L

Long-term resident: Someone who held a green card in at least 8 of the last 15 years. Giving it up can bring in the exit tax rules. More.

N

Non-residency test: The Streamlined Foreign test: in one of the last three years, no U.S. abode and 330 full days outside the U.S. More.
Non-willful: Conduct due to negligence, inadvertence, mistake or a good-faith misunderstanding of the law. It's what the Streamlined procedures require. More.

P

PFIC (passive foreign investment company): Most foreign mutual funds and ETFs. They carry heavy U.S. tax unless an election applies, and a Form 8621 each year. More.
Physical presence test: 330 full days in foreign countries during any 12 months in a row: one way to qualify for the foreign earned income exclusion. Count yours.

Q

QEF election: A PFIC election to be taxed each year on your share of the fund's income, keeping capital gains rates. The fund has to provide an annual statement. More.
Quiet disclosure: Fixing past years without using an IRS program, or just starting to file from now on. Why it's risky.

R

Reasonable cause: A good reason for not filing or paying on time, which can lead the IRS to waive a penalty. More.

S

Saving clause: The treaty clause that lets the U.S. tax its citizens as if the treaty didn't exist, except for the articles it lists. More.
Self-employment tax: The self-employed version of Social Security and Medicare tax: 15.3% of most net earnings, owed even when your income tax is zero. More.
Signature authority: The power to move money in an account you don't own, such as an employer's or a parent's. It can put that account on your FBAR. More.
Social security agreement: Also called a totalization agreement. It stops you paying into two countries' social security systems for the same work. The U.S. has 31. More.
SSN: Your Social Security number: the tax number for U.S. citizens, needed for every return. Getting one from abroad.
Streamlined Domestic Offshore Procedures: The catch-up route for people living in the U.S.: three amended returns, six FBARs and a 5% penalty. More, and how the 5% is calculated.
Streamlined Foreign Offshore Procedures: The catch-up route for people abroad: three returns, six FBARs and no penalty, if you qualify. More.
Substantial presence test: The day-count test that can make someone who isn't a citizen or green card holder a U.S. tax resident.

T

Tax home: The general area of your main place of work. For the foreign earned income exclusion, it has to be in a foreign country. More.
Totalization agreement: See social security agreement.

V

Voluntary Disclosure Practice: The IRS route for people whose conduct was willful, with set penalties instead of open-ended risk. More.

W

Willful: Knowing about a filing or reporting requirement and choosing not to follow it, or deliberately avoiding finding out. More.

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Reviewed by Lewis Grunfeld, CPA. General information, not advice for your specific situation.