Last-Minute Tax Moves for US Non-Residents: Save Big Before the Deadline

US citizens and Green Card holders are taxed on their worldwide income, no matter where they live. If you’re a US non-resident, you must still file an annual tax return with the IRS, even if you pay taxes in your country of residence.

Don’t panic right away, as there are double taxation treaties and specific rules that generally mean you don’t have to pay full levels of tax in both the US and your country of residence. More on that below.

The standard tax filing deadline is 15th April, but non-residents automatically get an extension to 16th June. However, if you owe any tax, payment is still due by 15th April to avoid interest charges.

Depending on your circumstances, you might also have additional reporting requirements such as: 

• Foreign Bank Account Report (FBAR) – If you had a total of $10,000 or more in non-US bank accounts at any point during the year, you must file FinCEN Form 114.
• FATCA Reporting (Form 8938) – If your foreign financial assets exceed certain thresholds, you must report them using Form 8938. These thresholds are typically $200,000 per person if you live outside the US, but they can differ depending on your specific circumstances.

As you can see, there are some significant filing requirements for US citizens and Green Card holders, even if you’ve lived outside of the US for many years. You should also be aware that not all investment providers comply with FATCA reporting requirements, so your investment options may be more limited for foreign investments than non-US citizens or Green Card holders.

Fortunately, there are several ways US non-residents can reduce their tax liability. Understanding how these work can help you plan your movements and strategies for the years ahead, as they can have strict criteria.

Foreign Earned Income Exclusion (FEIE)

One of the most valuable tools is the FEIE, which allows you to exclude foreign earned income from US tax, up to $126,500 in 2024, rising to $130,000 in 2025.

To claim this exclusion, you have to pass either the Physical Presence Test (resident in a foreign country for at least 330 days in the year) or the Bona Fide Residence Test (you have more economic and social ties to your country of residence than the US).

Foreign Tax Credit (FTC)

Another key relief is the FTC. If you’ve paid income tax in your country of residence, you can claim a credit to offset your US tax liability. This is particularly useful for non-residents living in countries with higher tax rates than the US.

It’s important to note that this doesn’t mean you are able to avoid filing with the IRS, but it can help you reduce your tax liability. Tax planning for US non-residents becomes much more important and complex in this situation, as financial strategies need to take into account both the tax you’ll pay in your country of residence, as well as the US. 

Finding professional advisors with a presence in both countries can go a long way to ensure your income and investments are as tax-efficient as possible.

Using tax-advantaged accounts

One benefit of being tied to the US tax system is that you can continue to use tax-efficient accounts you hold within the US. You can also contribute to certain tax-advantaged accounts before the deadline.

Depending on your income level and filing status, contributions to an IRA or 401(k) may reduce your taxable income. For self-employed non-residents, contributions to a Solo 401(k) or SEP IRA could offer additional savings.

 However, the rules around these contributions are complex, and if you’re not careful you could end up paying much higher levels of tax, completely negating the benefits of using the accounts. Taking advice in this area is a must, and be sure to work with advisors who understand the implications of cross-border financial planning.

With complex filing requirements to stick to, the most common (and understandable) mistake that US non-residents make is simply not following them.

• Many non-residents assume they don’t need to file because they live abroad or already pay local taxes. This is one of the biggest mistakes and can lead to hefty penalties. Others miss out on key exclusions and credits because they don’t know what they’re entitled to.
• Another common issue is failing to report all foreign accounts. Even small accounts need to be declared if your total exceeds the threshold. Forgetting to file FBAR or FATCA forms can lead to large fines.
• One of the most avoidable mistakes is leaving tax planning until the last minute, missing out on retirement contributions or failing to gather the right documentation to claim exclusions and credits.

Even though non-residents get an automatic extension to 16th June, interest still starts accruing on any unpaid tax after 15th April.

This might seem obvious, but the best way to avoid penalties and interest is to file on time. The best way to ensure this happens is to plan in advance.  

Ideally, you should be thinking about how you’re going to file your taxes as soon as the last tax year ends. So, you should be starting on setting your strategy for the 2026 tax year on the 16th April 2025. That way not only can you be sure to get all the paperwork finished in time, but you can plan your income and investments in the most tax efficient way.

You can also speed up the process by keeping good records throughout the year. Then, you won’t have to spend hours trawling through financial records at the final hour.

But if you know you need more time, you can file Form 4868 for an additional extension to 15th October. But remember, extensions don’t apply to tax payments, only to filing paperwork, and late filing of FBAR or FATCA forms can trigger significant fines.

Filing early can give you more options and likely a lot less stress. Planning and filing before the deadline gives you more time to make informed decisions, allows you to spot mistakes, gather missing documents, and plan for payments without stress.

Early filing also helps if you’re claiming refunds or credits, ensuring you receive any money owed as soon as possible. For those with complex finances, it gives more time to coordinate between US tax obligations and your local tax filing deadlines.

US non-resident tax laws are notoriously complex. Between cross-border tax treaties, foreign tax credits, FATCA reporting, and retirement planning, it’s easy to make costly mistakes. Working with a financial planner can be a huge advantage, but not every financial planner will have the knowledge or experience to deal with cross-border issues specific to US non-residents.

At Hoxton Wealth, we understand the unique challenges faced by US non-residents. Whether it’s structuring investments tax-efficiently, claiming exclusions properly, or managing reporting obligations, we have teams in the US, UK, Australia, UAE, South Africa and Cyprus who can provide a coordinated approach to your tax and financial planning strategy.

Get in touch now to maximise the efficiency of your global tax affairs.