An estimated five and a half million Americans live abroad, and well over 100,000 are Americans living in Spain. However, US Expats in Spain are in a unique situation when it comes to filing their taxes. The IRS requires US citizens and Green Card holders to report their worldwide income to and file a federal tax return annually.
Fortunately, the IRS offers provisions that help prevent double taxation. If you’re an American in Spain, understanding the rules around Expat taxes is key to staying compliant, avoiding penalties, and maximizing benefits. In this guide, we’ll show you how to confidently file your US Expat Taxes in Spain.
Disclaimer: We wrote this article in collaboration with MyExpatTaxes. If you choose to use their services through our link, we may earn a small commission at no extra cost to you.
Filing Requirements for US Expat Taxes in Spain
The US is one of only two countries in the world with a citizen-based system, meaning your worldwide income is subject to US tax laws regardless of where you reside. This means that as a US citizen or Green Card holder, you must file a US federal income tax return if your income exceeds certain thresholds, even if you live abroad. For the 2024 tax year (amounts increase annually), the thresholds (Under 65) are:
- Single: $14,600
- Married Filing jointly: $29,200
- Married Filing separately: $5
- Widow(er): $29,200
- Head of household: $21,900
- Self-employed: $400
If you’re self-employed or running a business in Spain, you’re subject to US self-employment taxes on net income above $400, typically regardless of any foreign tax payments made. Fortunately, there is a Totalization Agreement between the US and Spain that you can use to offset this tax. We’ll dig into this more later.
Need Help with Your US Expat Taxes?
We recommend MyExpatTaxes, designed for Americans living overseas. You can choose the approach that suits you best, whether you want to file on your own or work with a tax professional. They also supports past-year filings if you’re behind.
US Expat Taxes in Spain >> Deadlines and Extensions
As you likely already know, the US standard filing deadline is April 15th. However, Americans abroad receive an automatic 2-month filing extension, so the US Expat deadline is June 15th. If you still need additional time to file, the IRS grants a further extension by filing Form 4868, pushing the deadline to October 15th. It’s important to note that you must still pay any taxes owed by April 15th to avoid interest charges.
Avoiding Double Taxation with IRS Tools
To avoid paying taxes twice on the same income, the IRS has several provisions in place that U.S. expats can take advantage of:
1. The Foreign Earned Income Exclusion
Use Form 2555 to exclude up to $130,000 for 2025 (this amount is adjusted annually) of foreign earned income if you meet either the Physical Presence Test or the Bona Fide Residence Test:
- The Physical Presence Test requires you to be outside the US for at least 330 full days in a 12-month period.
- The Bona Fide Residence Test requires you to be a resident of a foreign country for an entire calendar year and have established ties there.
2. Foreign Tax Credit (FTC):
Use Form 1116 to claim a dollar-for-dollar credit for income taxes paid to Spain. This credit is especially helpful if your income exceeds the FEIE limit, you don’t qualify for the FEIE, or you have other income sources such as dividends from passive investment income in Spain.
3. How the US-Spain Tax Treaty Impacts US Expats
While the US-Spain treaty doesn’t exempt most income from US taxes, it may resolve dual residency issues, assign taxing rights between the two countries, and outline how various income types, such as Social Security, are taxed. However, due to the Savings Clause, as a US citizen, you generally cannot benefit from the U.S.-Spain tax treaty and should rely on the Foreign Earned Income Exclusion and the Foreign Tax Credit.
Also Read: Spanish Tax System Guide >> Expat Essentials
The Beckham Law can lower your Spanish tax bill, but it doesn’t change your US tax duties. Americans must still file with the IRS and report global income, even if it’s taxed favorably in Spain. – MyExpatTaxes expert note
Reporting Foreign Financial Accounts: FBAR and FATCA
US Expats must report their foreign financial assets to stay compliant:
- FBAR (FinCEN Form 114): Required if your aggregate foreign account balances exceed $10,000 at any time during the year. It is due on April 15th with an automatic extension to October 15th.
- FATCA (Form 8938): Required if your specified foreign assets exceed $200,000 on the last day of the year or $300,000 at any time during the year (for individuals abroad, the thresholds are lower for Americans living in the US). You should file this form with your tax return.
Failure to file these forms can result in hefty penalties for U.S. Expats, even if the oversight is unintentional.
Child Tax Credit and Additional Child Tax Credit (ACTC) for 2025
Americans living in Spain with qualifying children can benefit from significant tax savings through the Child Tax Credit (CTC), which has been enhanced for 2025 under recent tax legislation.
2025 Child Tax Credit Changes
The One Big Beautiful Bill Act, enacted in July 2025, has adjusted the Child Tax Credit and made the following key changes:
- Increased Credit Amount: Up to $2,200 per qualifying child (increased from $2,000)
- Inflation Protection: Credit amounts will now increase annually with inflation
- Enhanced Refundable Portion: Up to $1,400 per child can be received as a refund through the Additional Child Tax Credit (ACTC)
- New Eligibility Requirements: Stricter Social Security Number requirements (see below)
Qualifying Requirements
To claim the Child Tax Credit for 2025, your child must be under 17 years old at the end of the tax year and be a US citizen, US national, or US resident alien with a work-eligible Social Security Number (a new requirement for 2025). The child must be your son, daughter, stepchild, foster child, sibling, or descendant of any of these relationships, live with you for more than half the tax year, and be claimed as your dependent on your return.
As the taxpayer, you and your spouse (if filing jointly) must have work-eligible Social Security Numbers and cannot be claimed as dependents on another person’s tax return. To qualify for the refundable Additional Child Tax Credit portion, you must have at least $2,500 in earned income during the tax year.
Income Phase-Out Limits
The Child Tax Credit begins to phase out based on your modified adjusted gross income (MAGI):
- Single filers: Phase-out starts at $200,000
- Married filing jointly: Phase-out starts at $400,000
- Married filing separately: Phase-out starts at $200,000
The credit reduces by $50 for every $1,000 of income over these thresholds.
The Additional Child Tax Credit (ACTC) – Refundable Portion
The ACTC allows families to receive up to $1,400 per qualifying child as a refund in 2025, even if they don’t owe any federal taxes. This refundable portion is calculated as 15% of your earned income over $2,500, up to the maximum amount per child.
Critical Issue: FEIE vs. Child Tax Credit Strategy
Important Planning Consideration: If you claim the Foreign Earned Income Exclusion (FEIE), the excluded income does not count toward the $2,500 earned income requirement for the ACTC. This can eliminate your eligibility for the refundable portion.
If the ACTC provides more value than the tax savings from the FEIE, strategically using the Foreign Tax Credit may yield better overall results. This approach is especially true for families with multiple children – MyExpatTaxes expert note
Do You Need to File State Taxes While Living Abroad?
Certain states still require U.S. Expats to file state tax returns based on their ties to the state, such as voter registration, property ownership, and even maintaining a state driver’s license. For example, states like New York and California may require you to sever ties completely to avoid owing state income tax.
To sever ties, you may need to:
- Close your bank accounts
- Sell property
- Obtain foreign residency in Spain
Remember that each state has different domicile rules. These rules mean it is essential to review the specific requirements of your home state. Contact MyExpatTaxes to ensure compliance and avoid penalties on your state tax obligations; you can’t assume you’ll have the same tax obligations as other U.S. citizens in other states. – MyExpatTaxes expert note
Self-Employment Tax and Totalization Agreements
Self-employed Expats earning $400 or more must pay US self-employment tax, which includes Social Security and Medicare taxes (15.3% combined). We mentioned earlier that this tax applies regardless of foreign tax payments. Here’s where that changes: the Totalization Agreement between the US and Spain offers relief.
If you work in Spain, you may be exempt from paying into the US system thanks to the US-Spain Totalization Agreement. This agreement prevents double contributions and helps determine which country has coverage responsibility:
- If a Spanish company employs you, you pay into Spain’s system.
- If you’re self-employed, you may be able to avoid US self-employment tax by obtaining a certificate of coverage from the Spanish authorities.
Contributions to Spain’s system can often count toward future US Social Security benefits, depending on your work history in both countries.
Retirement and Social Security Benefits
Americans in Spain can collect US Social Security benefits. You’ll need to keep your foreign address up to date with the Social Security Administration, and your benefits may still be subject to US taxes depending on your overall income and filing status. Under the US-Spain tax treaty, the United States retains the right to tax US Social Security payments. Since this benefit is not exempt from the savings clause, it is also subject to tax on Spanish Social Security payments.
Also Read: How Does Spain Tax Social Security Benefits and Pensions?
Choosing the Right Filing Status
Your filing status affects your tax rate, standard deduction, and eligibility for credits. Below are your options when filing your US tax return from Spain with standard deduction rates:
- Single: For unmarried individuals or those who are not eligible to file jointly or as head of household.
- Married Filing jointly: Available whether your spouse is a US citizen or a non-resident alien (e.g., a foreign spouse). If your spouse is not a US person, you must elect to treat them as a US resident for tax purposes. This election allows you to file jointly and access a higher standard deduction.
- Married Filing Separately: Used when each spouse files their own return. This approach is common when one spouse is a non-resident alien and you choose not to file jointly. It avoids reporting their income but limits their credits, often resulting in higher taxes.
- Head of household: For unmarried individuals who support a qualifying child or dependent. You may also qualify if you are married to a non-resident alien and not filing jointly, provided you meet the household support requirements.
Choosing the correct status is key to minimizing your tax bill and claiming credits such as the Child Tax Credit and the Additional Child Tax Credit. If you’re unsure which status is best, especially when married to a foreign spouse, MyExpatTaxes can help you make the right choice.
How to File US Expat Taxes in Spain
There are two ways to file your US taxes from abroad.
Electronic Filing (e-file)
Use IRS-approved software like MyExpatTaxes to file your return securely online. Filing electronically is the most efficient way to file your US taxes from abroad.
There are three main reasons to file your US taxes electronically as an Expat in Spain:
1. Faster Processing & Refunds
Electronic filing drastically reduces processing time, typically from weeks to months. If you’re due a refund (e.g., from the Additional Child Tax Credit), e-filing gets your money back faster.
2. Immediate Confirmation of Receipt
E-filing provides instant confirmation that the IRS received your return. This is critical for expats who need proof of timely filing to avoid penalties or satisfy compliance deadlines.
3. Fewer Errors & Better Accuracy
IRS-approved e-filing software (like MyExpatTaxes) automatically checks for missing forms, math mistakes, and compliance issues, reducing the risk of IRS rejection or audit triggers.
Mailing Paper Returns to the IRS
You can send a paper return to the IRS, but it may delay your refund or result in fines for late filing. Electronic filing also helps minimize errors.
If no payment is enclosed (or you’re requesting a refund), mail to:
- Department of the Treasury
- Internal Revenue Service
- Austin, TX 73301-0215
If you are enclosing a check or money order:
- Internal Revenue Service
- P.O. Box 1303
- Charlotte, NC 28201-1303
Streamlined Filing Compliance Procedures
If you weren’t aware of your US tax obligations since moving to Spain, you’re not alone. The IRS has one last Hail Mary for US Expats in your situation. A provision called Streamlined Filing Compliance Procedures aims to help Americans abroad who had no willful intent to avoid their filing obligations catch up without penalties. You must file the last 3 years on federal returns and submit 6 years of Foreign Bank Account Reports (FBARs). This process also allows you to retroactively claim key benefits, such as the Foreign Earned Income Exclusion (FEIE), the Foreign Tax Credit, and the Additional Child Tax Credit (ACTC), helping reduce or eliminate what you may owe.
It aims to help Americans abroad who had no willful intent to avoid their filing obligations catch up without penalties.
Now You Know How to Handle US Expat Taxes in Spain
For Americans living in Spain, staying compliant with US taxes while navigating Spanish requirements can feel overwhelming. MyExpatTaxes simplifies the process with one-on-one support from our trusted Tax Professionals and easy-to-use software built specifically for Expats. Get started today and file your US Expat Taxes in Spain with confidence.
