US Citizens Abroad: You Still Owe Taxes
The United States taxes its citizens and permanent residents on worldwide income, regardless of where they live. If you are a US citizen living in the UAE or Pakistan, you are required to file a US federal tax return every year.
Key Filing Requirements
Form 1040 — Annual Income Tax Return
Due April 15 each year, with an automatic extension to June 15 for taxpayers living abroad. A further extension to October 15 is available upon request.
FBAR — FinCEN Form 114
If you hold foreign financial accounts with an aggregate value exceeding $10,000 at any point during the year, you must file an FBAR. Due April 15, with an automatic extension to October 15. Penalties for wilful non-compliance can reach $100,000 or 50% of account value per violation.
FATCA — Form 8938
Taxpayers with specified foreign financial assets above threshold amounts must file Form 8938 with their tax return. Thresholds vary based on filing status and residency.
Foreign Earned Income Exclusion (FEIE)
US expats who meet the bona fide residence test or physical presence test can exclude up to $126,500 (2026) of foreign earned income from US taxation using Form 2555.
Foreign Tax Credit
If you pay taxes in the UAE, Pakistan, or another country, you may be able to claim a Foreign Tax Credit (Form 1116) to offset your US tax liability and avoid double taxation.
US Businesses with International Operations
US companies with foreign subsidiaries, controlled foreign corporations (CFCs), or foreign partners face additional reporting requirements including:
- Form 5471 — Information Return for CFCs
- Form 8865 — Foreign Partnerships
- GILTI — Global Intangible Low-Taxed Income inclusion
How MAK Advisory Group Can Help
Our US tax team specialises in expat tax returns, FBAR compliance, and international business structuring. We work with US citizens in the UAE and Pakistan to ensure full IRS compliance while minimising your tax burden legally.