Bitcoin and taxes
for Americans living abroad.
Americans are taxed on worldwide income regardless of where they live. Bitcoin doesn't make that simpler. Here's what expats and digital nomads need to know about Bitcoin, the FEIE, FBARs, and capital gains abroad.
This page covers US citizens and permanent residents living outside the US. International tax law is extremely complex and varies significantly by country and individual situation. Use this as a starting point only. Consult a licensed expat tax professional before making decisions.
The basics
US citizens and permanent residents are taxed on worldwide income. Always. Regardless of where they live. This is unusual globally, most countries only tax residents verify×DON'T TRUST, VERIFYClaim: US citizens are subject to US tax on worldwide income.Verify at: IRS Publication 54 ↗The US and Eritrea are the two primary countries that tax citizens globally..
Bitcoin held outside the US: still subject to US capital gains tax. Still requires reporting. The asset's physical location (or lack thereof) is irrelevant.
FBAR (Foreign Bank Account Reporting)
If you hold Bitcoin on a foreign exchange (not US-based), you may need to file an FBAR. Threshold: $10,000 in foreign financial accounts at any point during the year verify×DON'T TRUST, VERIFYClaim: FBAR (FinCEN Form 114) required if aggregate foreign account value exceeds $10,000.Verify at: FinCEN FBAR ↗Threshold is aggregate, not per-account..
Does Bitcoin on a foreign exchange require FBAR? Currently, yes. Foreign exchanges holding Bitcoin on your behalf are reportable.
Self-custody Bitcoin: no FBAR requirement. You're not holding through a foreign institution.
FATCA (Form 8938): required at higher thresholds ($50,000 single, $100,000 married filing jointly for foreign-residing taxpayers at year-end, higher for joint filers). See IRS Form 8938 ↗.
Foreign Earned Income Exclusion (FEIE)
The FEIE lets qualifying expats exclude a portion of earned income from US taxation. 2026 exclusion: approximately $130,000 verify×DON'T TRUST, VERIFYClaim: 2026 FEIE limit is approximately $130,000.Verify at: IRS FEIE ↗Indexed annually for inflation..
Bitcoin capital gains are NOT earned income. FEIE does not reduce capital gains tax on Bitcoin. Someone qualifying for the FEIE and selling Bitcoin in the same year owes US capital gains tax on the Bitcoin gain regardless.
Countries with Bitcoin-specific tax advantages
Some countries offer genuinely favorable treatment for Bitcoin holders:
Previously taxed long-term crypto gains at 0%. Changed in 2023 to include some crypto taxation. Verify current Portuguese rules before relocating.
Bitcoin held over 1 year: 0% capital gains tax for German residents. US citizens still owe US capital gains tax. The German benefit applies to the German tax, not the US tax.
No capital gains tax on Bitcoin. US citizens still owe US tax. Note: El Salvador's Bitcoin legal-tender mandate was substantially softened in 2025 under IMF agreement, though treasury accumulation continues.
Even if you live somewhere with favorable Bitcoin taxation, you still owe US capital gains tax on Bitcoin profits. The only legal exit from US worldwide taxation is renouncing US citizenship. This triggers the "exit tax," a deemed sale of all assets at fair market value verify×DON'T TRUST, VERIFYClaim: US expatriation triggers an exit tax on deemed asset sales.Verify at: IRS Expatriation Tax ↗Extremely complex. Applies only to "covered expatriates" above income/asset thresholds.. Extremely complex. Only relevant for very high net worth people.
Practical guidance
Get a CPA who specializes in US expat taxation. Not a regular US CPA. Not a local tax professional. A specifically expat-focused firm.
Key questions to ask:
- How are my Bitcoin gains reported?
- Do I need to file FBAR and if so, for what?
- Do I need Form 8938?
- How does the FEIE interact with my other income?
- Is my country of residence a treaty country? IRS tax treaties ↗
Last updated 2026-04-22. Not financial, tax, or legal advice. Consult a licensed expat tax professional.
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