Pope Leo XIV is American: Do Americans Living Abroad Pay U.S. Taxes? Understanding 5 Common Tax Rules

Pope Leo XIV is the first American to be head of the worldwide Catholic Church. Does he file a U.S. tax return every year? 

Yes, as an American citizen, Pope Leo XIV is required to file U.S. income taxes.

This article outlines five common tax scenarios for U.S. citizens living abroad, excluding those who are the Pope. 

At Tax Attorneys of America, we help businesses and individuals navigate complex tax rules with the IRS, regardless of the situation.

I don’t live in the U.S., do I still have to file a tax return?

Yes, you must report all foreign assets and worldwide income as an American citizen.

Worldwide Income Reporting

You must report all worldwide income earned annually to the IRS. Examples include:

• Foreign salaries and wages
• Rental income from property owned abroad
• Foreign investment income
• Foreign retirement distributions and pensions

Foreign Account Tax Compliance Act (FATCA)

Under FATCA, or the Foreign Account Tax Compliance Act, U.S. citizens are required to report additional financial assets exceeding the following thresholds for single filers:

• $200,000 in one fiscal year
• $300,000 during the fiscal year

Foreign Tax Credit (FTC)

To avoid double taxation, you can file a Foreign Tax Credit or FTC to avoid the financial burden.

• Form 1116
• Reduce your U.S. tax liability

This can minimize some of the strain from living abroad by lowering your overall U.S. tax bill.

Foreign Earned Income Exclusion (FEIE)

U.S. citizens are allowed an income exclusion on their return to ease the financial burden of double taxation. Some key things to note:

• Verify you were in a foreign country for 330 days
• Verify that you were a resident of a foreign country
• For 2024, $126,500 per person
• For 2025, $130,000 exclusion per person

Note: This exclusion only applies to earned income such as wages and self-employment income. Retirement, rental, and investment income are still taxable by the IRS.

When used together, the FTC and FEIC can help lower your overall tax bill. 

Foreign Financial Accounts (FBAR)

One of the potential additional tax forms you may have to file for this coming tax season is the FinCEN Form 114 or FBAR.

If your foreign bank accounts exceed $10,000 in a year, you must file an FBAR with the IRS. Any of the accounts below count toward filing the additional form:

File Form 114 if these accounts and funds exceed $10,000/yr:

• Foreign mutual funds
• Foreign retirement accounts 
• Investment accounts
• Checking and savings accounts

Note: Penalties for non-reporting can go beyond $10,000 in penalties, so it is important to know what you need to file. 

Other Tax Considerations

This article covered five of the more common tax rules, but there are plenty of other tax situations to be aware of:

• Foreign Housing Deduction/Exclusion
• Tax Treaties
• State Taxes
• Self-employment taxes
• Social Secuurity
• Medicare

Conclusion: Navigating Taxes While Living Abroad

If you live in the Vatican City or Mexico City, as a U.S. citizen, you are required to file taxes. 

U.S. citizens and resident aliens must report annual income and assets, no matter where they live in the world.

However, there are several incentives for citizens to file, including exclusions, credits, and deductions. 

Failing to report your income and assets to the IRS, even if abroad, does not make you exempt from the U.S. tax obligations or penalties. 

At Tax Attorneys of America, we are here to help you through all of your foreign tax situations and filings.

You don’t have to be the Pope to get tax help. Let TAA help you with your foreign tax situation.