10 things every American expat living in Germany needs to know about US taxes
By Swaroop Chandramohan
Understanding your US tax obligations from Germany can be challenging, but knowing the essentials helps you stay compliant and avoid unnecessary stress. With expert guidance from Taxbrella, managing your American tax responsibilities abroad becomes much simpler.
Living abroad in Germany comes with its own unique joys and challenges, but as an American expat, one challenge you can’t ignore is your ongoing obligation to file US taxes. Even when you're enjoying Kaffee und Kuchen or waiting for yet another delayed Deutsche Bahn train, Uncle Sam still expects you to stay compliant.
Fortunately, with the right knowledge and guidance, staying on top of your tax duties doesn’t need to be a struggle. Here are 10 key things US expats in Germany should know.
1. You must file your US taxes in addition to German taxes
All US citizens and Green Card holders must report their worldwide income, even if they live and work in Germany. You may end up owing nothing after exclusions and credits, but you still must file.
2. Be aware of the important filing and payment deadlines
- April 15: Standard tax filing and payment deadline
- June 15: Automatic extension for expats living abroad
- October 15: Extended filing deadline if you request it by April 15th
Not that payment is still due on April 15. You can file later, but interest will accrue if you owe taxes.
3. Use the Foreign Earned Income Exclusion (FEIE)
This is one of the most significant tax-saving tools available for expats. For the 2025 tax year, you can exclude up to $130.000 of foreign-earned income, such as salary or sole-proprietorship earnings, per filer on your US tax return, provided you meet the long-term foreign residence and tax home requirements. The FEIE election, once made, remains in effect for future years, so it’s important to carefully assess the potential benefits and drawbacks before proceeding.
4. Foreign Tax Credit (FTC) helps avoid double taxation
If you pay income taxes in Germany, you can use the Foreign Tax Credit (FTC) to offset US tax liability over the same income. This applies to income not excluded with the FEIE and is especially helpful for high earners.
5. Know your eligibility for IRA contributions
You cannot contribute to an IRA if all your earned income is excluded under the FEIE provision discussed previously. IRA contributions require taxable earned income, so please plan accordingly to avoid ineligibility and potential taxes.
6. You might need to file a Foreign Bank Account Reporting (FBAR) with the US Treasury
If your foreign accounts exceed $10.000 at any point in the year, you must file an FBAR by April 15 (extension beyond October 15 is not possible). This includes reporting all your non-US bank accounts and pensions. Penalties are steep for noncompliance.
7. You may benefit from the US-German tax treaty
The US–German tax treaty includes provisions for avoiding double taxation and clarifying the treatment of pensions, dividends, and self-employment income. It is not default; you often need to claim treaty benefits on your return.
8. Watch out for US social security taxes if you are self-employed
If you are self-employed in Germany and contribute to the German social security system, you may still be liable for US self-employment (social security) tax unless you formally claim an exemption under the US–Germany Totalization Agreement.
In most cases, you can elect to remain covered under the German GRV system instead of paying into US social security.
9. You may have a foreign corporation filing obligation
If you are a director of or own significant shares in a German GmbH or AG, you may need to file Form 5471 - a separate tax reporting with significant penalties for non-filing. Don't overlook this if you’re involved in a German business structure.
10. Behind on filings? An IRS amnesty program can help
US citizens living overseas who have non-willfully failed to file tax returns and FBARs may utilize the IRS Streamlined Foreign Offshore Procedures to regain compliance. This one-time amnesty program allows eligible individuals to catch up by submitting three years of overdue tax returns and six years of FBARs without incurring penalties, provided they are not currently under an IRS examination.
Taxbrella B.V. specialises in guiding Americans across the globe through the maze of US tax compliance. Whether you’re juggling foreign exclusions, corporate reporting requirements, or just trying to stay compliant, their experts are there to help.
Visit taxbrella.com to get started with a tax strategy tailored to expats, so you can stay focused on your life in Germany.
Swaroop Chandramohan
US Tax Advisor at Taxbrella