CPA for US Expats in New York City

This is the question that catches most US expats from New York City off guard, and the answer is: it depends on whether you’ve properly severed your New York domicile. Unlike the federal system — where your citizenship or permanent residency determines your filing obligation regardless of where you live — New York State and New York City base their taxing authority on domicile and statutory residency. If you haven’t broken those ties completely, you’re still on the hook for NY taxes on your worldwide income, even if you’re living in London or Hong Kong.

Let’s start with how New York defines domicile. Your domicile is your permanent home — the place you intend to return to whenever you’re away. It’s a subjective determination backed by objective evidence. New York does not automatically change your domicile just because you moved abroad. You have to affirmatively abandon your New York domicile and establish a new one elsewhere. For US expats from New York City, this means taking concrete steps: giving up your apartment or selling your home, moving your belongings out of the state, changing your driver’s license and voter registration, closing or transferring bank accounts, and establishing ties in your new location (lease, utilities, local memberships, etc.).

A CPA for US expats in New York City will tell you that the biggest mistake people make is keeping a rent-stabilized apartment “just in case” or maintaining a storage unit with furniture in the city. These ties give New York ammunition to argue that you’re still domiciled there. The New York Department of Taxation and Finance audits domicile claims aggressively, particularly for high-income taxpayers who stand to save significant money by claiming non-residency. They look at five primary factors: home, active business involvement, time spent in New York, items of value (cars, safe deposit boxes, club memberships), and family connections.

Even if you successfully change your domicile, there’s a second trap: statutory residency. New York considers you a statutory resident if you maintain a “permanent place of abode” in the state and spend more than 183 days there during the tax year. For most US expats from New York City who are genuinely living abroad, the 183-day test isn’t an issue — you’re not spending half the year in New York. But if you come back for extended visits, those days count. And if you’re maintaining a family member’s apartment where you stay during visits, New York might argue that constitutes a permanent place of abode. A CPA for US expats in New York City will help you track your days in New York and advise you on how many days you can safely spend in the state without triggering statutory residency.

The financial stakes are real. New York State’s top marginal rate is 10.9%. New York City adds up to 3.876%. If you’re earning $300,000 abroad and New York claims you as a resident, you could owe $40,000+ in state and city taxes on top of your federal obligations (before credits). For US expats from New York City in high-tax foreign countries, the foreign tax credit may offset some of the New York tax — New York allows a credit for taxes paid to foreign governments, similar to the federal FTC — but the credit calculations are complex and don’t always eliminate the entire liability.

For US expats from New York City who have already moved but haven’t formally addressed the domicile question, the situation isn’t necessarily dire. A CPA for US expats in New York City can review your specific facts, assess whether New York would likely consider you still domiciled, and if so, help you take the steps needed to complete the break. If you’ve been filing as a non-resident but New York later challenges that position, having documented evidence of your domicile change from the time you moved is your best defense.

One more thing: if you moved mid-year, you’ll file a part-year resident return for New York for the year of your departure. The portion of income earned while you were a New York resident gets taxed by New York; the portion earned after you left (assuming clean domicile change) does not. A CPA for US expats in New York City will allocate your income correctly on the part-year return and make sure the transition is handled cleanly so future years are filed as a non-resident or not filed at all, depending on whether you have any remaining New York-source income.

The bottom line: moving abroad doesn’t automatically end your New York tax obligations. You need to actively sever domicile, avoid triggering statutory residency, and document everything. A CPA for US expats in New York City who handles these cases regularly knows exactly what the state auditors look for and how to build a defensible position.

The Foreign Earned Income Exclusion (FEIE) is one of the most valuable tax benefits available to US expats, and for those from New York City, it’s often the difference between owing significant US tax and owing little or nothing on foreign salary income. Here’s how it works, who qualifies, and how a CPA for US expats in New York City applies it.

The FEIE allows qualifying US citizens and permanent residents living abroad to exclude up to a specified amount of foreign earned income from their federal taxable income. For 2024, that amount is $126,500 per person. It adjusts annually for inflation. “Foreign earned income” means compensation for personal services performed in a foreign country — wages, salary, self-employment income, professional fees, and similar income. It does not include investment income (dividends, interest, capital gains), pension distributions, Social Security benefits, or income from US sources.

To claim the FEIE, a CPA for US expats in New York City will determine whether you meet one of two qualifying tests. The physical presence test requires that you be physically present in a foreign country or countries for at least 330 full days during a 12-month period. The 12-month period doesn’t have to match the calendar year — it can be any consecutive 12-month stretch. “Full day” means a complete 24-hour period; days of international travel where you’re in transit don’t count. This test is purely mathematical — it doesn’t matter why you’re abroad or whether you’ve established residency in the foreign country. You just need the days.

The bona fide residence test is more subjective. It requires that you be a bona fide resident of a foreign country for an uninterrupted period that includes an entire tax year. Factors include: whether you established a household abroad, whether you pay taxes in the foreign country, whether your visa allows indefinite stay, and your intention to remain abroad. US expats from New York City who’ve signed multi-year employment contracts abroad and set up genuine households in the foreign country usually qualify under this test. Those who are abroad temporarily or who frequently rotate back to the US have a harder time.

The FEIE is claimed on Form 2555, which is filed with your federal return. A CPA for US expats in New York City will prepare this form and calculate the exclusion based on your qualifying days and income. One important rule: the exclusion is pro-rated if you don’t qualify for the full year. If you moved abroad mid-year and only had 200 qualifying days, you’d exclude a proportional amount rather than the full $126,500.

For US expats from New York City, the FEIE can also be paired with the Foreign Housing Exclusion, which lets you exclude (or deduct, for self-employed expats) qualifying housing expenses above a base amount. Housing costs include rent, utilities, renter’s insurance, and parking — but not mortgage principal, furniture, or domestic labor. The base amount is 16% of the FEIE limit (about $20,240 for 2024), and there’s a cap that varies by city. High-cost cities like London, Tokyo, and Hong Kong have higher caps, which is good news for US expats from New York City who tend to relocate to expensive global cities.

A CPA for US expats in New York City will also explain the interaction between the FEIE and the Foreign Tax Credit. You cannot claim both the FEIE and the FTC on the same income — it’s one or the other for each dollar of foreign income. If you’re in a low-tax country (like the UAE, where there’s no income tax), the FEIE is almost always the better choice because there are no foreign taxes to credit. If you’re in a high-tax country (like France, where rates can exceed 45%), the FTC is usually better because it offsets your US tax dollar-for-dollar and can even generate carryforward credits for future years. A CPA for US expats in New York City will model both scenarios and choose the option that produces the lowest combined US tax liability.

One thing to be aware of: the FEIE exclusion is not automatic. You must file a US tax return and attach Form 2555 to claim it. If you don’t file, you don’t get the exclusion. US expats from New York City who haven’t been filing because they thought living abroad exempted them from US taxes need to catch up — and the Streamlined Filing Compliance Procedures can help you do that without facing penalties, as long as you can certify that your non-filing was not willful.

Self-employed US expats from New York City should know that the FEIE excludes income from federal income tax but does not exclude it from self-employment tax. Even if you exclude $126,500 of self-employment income under the FEIE, you still owe SE tax (15.3%) on that income. This surprises a lot of people. Some totalization agreements contain provisions that exempt self-employed individuals from US self-employment tax if they’re paying into a foreign social security system — a CPA for US expats in New York City will check whether your country has such a treaty provision and help you claim the exemption if it applies.

Finally, the FEIE has an important revocation rule. If you claim the FEIE one year and then revoke the election, you cannot reclaim it for five years without IRS approval. This matters because some expats bounce between the FEIE and the FTC as their circumstances change. Once you choose, you’re largely locked in for the near term. A CPA for US expats in New York City will consider your multi-year outlook before making the election, so you’re not trapped in a suboptimal position.

For US expats from New York City earning moderate salaries abroad in low-tax countries, the FEIE is usually the go-to strategy. For those in high-tax countries or with significant investment income, the FTC is typically better. And for those with complex situations — mixed income types, mid-year relocations, self-employment — the answer requires a CPA for US expats in New York City who can run the numbers both ways and advise accordingly.

FBAR and FATCA are two separate reporting requirements that apply to US persons — including US expats from New York City — who hold financial accounts or assets outside the United States. They’re not taxes; they’re disclosure forms. But the penalties for failing to file them are among the most severe in the entire tax code, which is why every CPA for US expats in New York City prioritizes them during return preparation.

Let’s start with FBAR, which stands for the Report of Foreign Bank and Financial Accounts. The legal citation is the Bank Secrecy Act (31 U.S.C. § 5314), and the form itself is FinCEN Form 114. You must file an FBAR if you have a financial interest in or signature authority over one or more foreign financial accounts and the aggregate value of all your foreign accounts exceeds $10,000 at any point during the calendar year. Note: it’s the aggregate value — if you have three accounts worth $4,000 each, the total is $12,000 and you must file. A CPA for US expats in New York City will check every foreign account you hold, including bank accounts, investment accounts, mutual funds, and even certain pension accounts in the foreign country.

The $10,000 threshold is based on the highest balance during the year, not the year-end balance. If your account peaked at $15,000 in March but ended the year at $5,000, you still need to file. For US expats from New York City living abroad, almost everyone with a local bank account in their country of residence will exceed this threshold — a single checking account for living expenses in London or Tokyo will easily pass $10,000 during the course of a year.

FBAR is filed electronically through the BSA E-Filing system. It’s separate from your tax return — it goes to FinCEN (the Financial Crimes Enforcement Network), not the IRS, though the IRS enforces the penalties. The deadline is April 15 with an automatic extension to October 15 (no need to file for the extension — it’s automatic). A CPA for US expats in New York City will prepare and file the FBAR alongside your tax return to make sure nothing gets missed.

The penalties for FBAR non-filing are what make this form so important. Non-willful failure to file carries a penalty of up to $10,000 per account per year. Willful failure carries a penalty of the greater of $100,000 or 50% of the account balance per year. These are not hypothetical — FinCEN and the IRS actively enforce FBAR penalties, and courts have upheld them even in cases where the taxpayer didn’t know about the filing requirement. For US expats from New York City with multiple foreign accounts, the potential penalties can exceed the value of the accounts themselves. A CPA for US expats in New York City takes FBAR seriously because the downside of missing it is catastrophic.

Now, FATCA — the Foreign Account Tax Compliance Act. FATCA has two components: one that applies to foreign financial institutions (they must report US account holders to the IRS) and one that applies to individual taxpayers. The individual component requires filing Form 8938 (Statement of Specified Foreign Financial Assets) if your foreign financial assets exceed certain thresholds.

For US expats from New York City filing as single and living abroad, the FATCA reporting threshold is $200,000 on the last day of the tax year or $300,000 at any point during the year. For married filing jointly, it’s $400,000 and $600,000 respectively. These thresholds are higher than the domestic thresholds (which are $50,000/$75,000), reflecting the reality that expats naturally hold more assets abroad. A CPA for US expats in New York City will determine which threshold applies based on your filing status and residence.

Form 8938 covers a broader range of assets than FBAR. In addition to bank and investment accounts, it includes: foreign stock and securities not held in a financial account, foreign partnership interests, foreign mutual funds, foreign hedge funds, foreign pension plans, and any other foreign financial instrument or contract held for investment. For US expats from New York City who’ve built financial lives abroad — local retirement accounts, company stock options in a foreign employer, investment accounts with foreign brokers — the Form 8938 disclosure can be extensive.

A key difference between FBAR and FATCA: FBAR goes to FinCEN; Form 8938 is filed with your tax return and goes to the IRS. You might need to file both, one, or neither, depending on your account values and the types of assets you hold. There’s overlap — a foreign bank account worth $50,000 would be reported on both the FBAR and Form 8938 if you meet both thresholds. A CPA for US expats in New York City will prepare both forms and make sure the information is consistent between them.

FATCA penalties for failure to file are $10,000 per form, with additional penalties of up to $50,000 for continued non-filing after IRS notification. There’s also a 40% accuracy-related penalty on underpayments attributable to undisclosed foreign financial assets. For US expats from New York City, these penalties stack on top of any FBAR penalties for the same accounts — you could be penalized under both regimes for the same unreported account.

For US expats from New York City who haven’t been filing FBARs or Form 8938 — or who haven’t been filing US tax returns at all — there are remediation programs available. The Streamlined Filing Compliance Procedures allow non-willful taxpayers to come into compliance by filing three years of delinquent tax returns and six years of FBARs, paying any tax and interest owed, and certifying that the non-compliance was not willful. For qualifying taxpayers living abroad, all penalties are waived under this program. A CPA for US expats in New York City can evaluate whether you qualify for Streamlined and walk you through the process.

The bottom line: FBAR and FATCA are not optional for US expats from New York City who hold foreign accounts and assets. The filing itself isn’t difficult — it’s mostly gathering account numbers, names of institutions, and maximum balances — but the consequences of not filing are disproportionately harsh. A CPA for US expats in New York City handles these filings routinely and makes sure you’re compliant every year.

Foreign tax credits are the primary mechanism the US tax system uses to prevent double taxation of income that’s taxed by both the United States and a foreign country. For US expats from New York City, understanding how FTCs work — and how to claim them correctly — is often the difference between owing thousands in US tax and owing nothing. A CPA for US expats in New York City deals with these credits on almost every expat return.

The basic concept: if you paid income tax to a foreign government on income that’s also subject to US tax, you can claim a credit on your US return for the foreign tax paid. The credit reduces your US tax dollar-for-dollar, up to the amount of US tax attributable to that foreign income. If you paid $30,000 in UK income tax and your US tax on that same income would be $25,000, you get a $25,000 credit (capped at the US tax amount) and owe $0 to the IRS on that income. The extra $5,000 in UK tax doesn’t generate a US refund, but it does create a carryforward credit you can use in future years.

The FTC is claimed on Form 1116, which is attached to your federal return. The form requires you to separate your income into categories — general category income (most wages and business income), passive category income (investment income, rental income), and a few others. Each category has its own FTC limitation, calculated separately. A CPA for US expats in New York City will classify your income correctly because mixing categories can reduce your overall credit.

The FTC limitation is where most of the complexity lives. The credit for each category is limited to: (your US tax) multiplied by (your foreign source income in that category divided by your total worldwide income). This fraction determines the maximum credit you can take. If your foreign source income is a high percentage of your total income (common for US expats from New York City working abroad full-time), the limitation is generous and you can usually credit most or all of your foreign taxes. If you also have significant US-source income (investment income from US accounts, rental income from US property), the foreign-source fraction shrinks and the limitation tightens.

For US expats from New York City in high-tax countries — the UK, France, Germany, Japan, Australia, Scandinavia — the FTC is usually the better choice over the Foreign Earned Income Exclusion. Here’s why: in a country with a 40% marginal rate, you’re paying more in foreign tax than you’d owe in US tax on the same income. The FTC credits the entire US liability on that income, and the excess carries forward for up to 10 years. The FEIE excludes the income from tax altogether, which sounds good but means you can’t take a credit for the foreign tax paid on the excluded income — and you may end up with excess foreign taxes that produce no benefit. A CPA for US expats in New York City will run both calculations to confirm which approach saves more over a multi-year period.

The FTC carryforward and carryback rules add a planning dimension. If your foreign taxes exceed the FTC limitation in a given year (because foreign rates are higher than US rates), the excess can be carried forward for 10 years and carried back 1 year. This is useful for US expats from New York City who move between high-tax and low-tax countries or whose income fluctuates. A CPA for US expats in New York City tracks carryforward balances year over year and applies them in the years where they produce the most benefit.

One complication that US expats from New York City frequently encounter: what qualifies as a creditable foreign tax. Not all payments to foreign governments are creditable. The tax must be an income tax (or a tax in lieu of an income tax) imposed by a foreign country or US possession. Social security-type contributions, value-added tax (VAT), property taxes, and consumption taxes generally don’t qualify. Some countries impose taxes that look like income taxes but don’t meet the US definition — a CPA for US expats in New York City will analyze the foreign tax to determine whether it’s creditable and, if so, in which Form 1116 category it belongs.

Treaty-based modifications can affect FTC calculations. Some US tax treaties reduce foreign withholding rates on dividends, interest, and royalties. If you paid foreign tax at a rate higher than the treaty rate (because you didn’t claim the treaty benefit with the foreign government), the US may limit your FTC to the treaty rate. A CPA for US expats in New York City will identify these situations and advise you on claiming treaty benefits in the foreign country to make sure your FTC is maximized on the US side.

For US expats from New York City who also owe New York State taxes (because they haven’t broken domicile), New York allows its own credit for taxes paid to foreign governments. The mechanics are similar to the federal FTC but applied to your New York tax liability. This credit can further reduce your NY tax — in many cases to zero if you’re in a high-tax foreign country. But the calculation is done separately from the federal credit, using New York’s own limitation formula. A CPA for US expats in New York City handles both the federal and state credits in a coordinated way to make sure you’re getting the full benefit at each level.

Self-employed US expats from New York City face an additional consideration. The FTC offsets income tax but does not offset self-employment tax. If you’re running a business abroad and paying foreign social security taxes, you may be able to claim an exemption from US self-employment tax under a totalization agreement — the US has these agreements with about 30 countries. If your country has a totalization agreement, you can get a certificate of coverage showing that you’re subject to the foreign country’s social security system and exempt from US SE tax. Without the agreement, you’re paying into both systems. A CPA for US expats in New York City will check your country’s agreement status and help you claim the exemption if available.

The bottom line: the foreign tax credit is a powerful tool for US expats from New York City, but claiming it correctly requires careful income categorization, limitation calculations, and coordination with treaty positions and state credits. Done right, it eliminates double taxation entirely for most expats. Done wrong, it leaves money on the table or — worse — creates an audit risk. A CPA for US expats in New York City who specializes in international returns will get this right every year.

This situation is more common than most people realize. US expats from New York City move abroad, assume they no longer owe US taxes because they’re paying taxes in their new country, and stop filing. Five or ten years go by before they discover — usually through a bank inquiry, a mortgage application, or a panicked conversation with another expat — that the US requires them to file regardless of where they live. The good news: there are formal IRS programs designed to help you catch up without facing the most severe penalties. The bad news: the longer you wait, the more complicated it gets.

First, the legal reality. Every US citizen and permanent resident is required to file a federal tax return if their income exceeds the filing threshold (roughly $14,600 for a single filer under 65 in 2024, less for self-employed individuals). Living abroad doesn’t change this. The US is one of only two countries in the world (the other is Eritrea) that taxes citizens on worldwide income regardless of residence — a principle rooted in 26 U.S.C. § 1. For US expats from New York City, there may also be unfiled New York State and City returns if domicile was never properly broken. A CPA for US expats in New York City will assess your full filing picture — federal, state, city, FBAR, FATCA — and determine how many years of returns are outstanding.

The primary catch-up program is the Streamlined Filing Compliance Procedures. This program is specifically designed for US expats from New York City (and other US taxpayers abroad) who failed to file out of ignorance or negligence rather than willful intent to evade taxes. To qualify, you must certify under penalty of perjury that your non-compliance was not willful. “Non-willful” means you didn’t know you had a filing obligation, or you knew but didn’t act due to negligence, inadvertence, or mistake — not that you deliberately chose to hide income or evade taxes.

Under the Streamlined Foreign Offshore Procedures (for taxpayers living abroad), you file three years of delinquent tax returns and six years of delinquent FBARs. You pay any tax and interest owed for those years. And here’s the key benefit: all penalties are waived — no failure-to-file penalty, no failure-to-pay penalty, no FBAR penalties, no accuracy-related penalties. For US expats from New York City who might owe significant FBAR penalties (up to $10,000 per account per year for non-willful violations), this penalty waiver alone can save tens or hundreds of thousands of dollars.

A CPA for US expats in New York City will walk you through the Streamlined process step by step. The first step is gathering information: income records, foreign bank account statements, foreign tax returns, and any other documentation needed to prepare the delinquent returns. For US expats from New York City who’ve been abroad for many years, some of these records may be hard to locate — foreign employers may no longer exist, bank statements may not go back far enough. A CPA for US expats in New York City has experience reconstructing records from available sources and working with foreign institutions to obtain historical statements.

The second step is preparing the returns themselves. Each year’s return includes the tax form (Form 1040), any applicable foreign income forms (Form 2555 for FEIE, Form 1116 for FTC), FBAR filings, Form 8938 if required, and the non-willful certification statement. The CPA will apply the FEIE or FTC to each year, calculate the tax owed (which is often zero or minimal for expats in high-tax countries), and determine the interest due on any outstanding balance. A CPA for US expats in New York City will also check whether New York returns need to be filed for any of the catch-up years based on your domicile status during those periods.

What if you actually owe money on the delinquent returns? Many US expats from New York City in high-tax countries end up owing little or nothing because the FTC wipes out their US liability. But if you were in a low-tax country (like the UAE or Singapore), the FEIE excludes a portion of your income but you may still owe tax on the excess. Interest accrues from the original due date of each return, which can add up over many years. The IRS doesn’t charge a failure-to-file penalty under Streamlined, but the interest is not waived — it compounds from the date the tax was originally due.

For US expats from New York City who are not eligible for Streamlined — because their non-compliance was willful, or because they have specific criminal exposure — there are other programs, including the Voluntary Disclosure Practice (the successor to the now-closed OVDP). This program involves working directly with IRS Criminal Investigation and typically results in significant penalties, but it provides protection from criminal prosecution. A CPA for US expats in New York City can assess which program is appropriate based on your specific facts and refer you to a tax attorney if criminal exposure is a concern.

What about doing nothing? Some US expats from New York City wonder whether it’s better to just stay quiet and hope the IRS doesn’t notice. This is increasingly risky. FATCA has forced foreign banks to report US account holders to the IRS. Most major financial institutions now ask for your Social Security number and country of citizenship when you open an account. The information-sharing infrastructure is much more developed than it was 10 years ago, and the IRS’s ability to identify non-filers abroad has improved significantly. Getting caught through a FATCA disclosure — rather than coming forward voluntarily — exposes you to willful penalties, which are dramatically higher. A CPA for US expats in New York City will strongly advise coming into compliance proactively rather than waiting to be caught.

The practical timeline for catching up through Streamlined is usually 4 to 8 weeks from start to finish, depending on how quickly you can gather records. A CPA for US expats in New York City will handle all the preparation and filing. Once the returns are submitted and accepted, you’re back in compliance — and going forward, you file normally each year. Many US expats from New York City feel enormous relief once the catch-up is done, because the anxiety of being out of compliance is often worse than the actual tax owed.

One final note: if you’ve renounced US citizenship or abandoned your green card, there’s a separate set of rules (the “expatriation tax” or “exit tax” under IRC § 877A) that may apply, including potential filing obligations for the year of expatriation. A CPA for US expats in New York City can advise on the exit tax implications and make sure you’ve filed the required Form 8854.