US taxes while living in Austria: FBAR, FEIE and foreign tax credits

Moving to Austria does not end your relationship with the IRS. The United States taxes its citizens on worldwide income wherever they live, and the US-Austria tax treaty explicitly preserves that right. At the same time, Austria taxes you once you live there. The system for avoiding double tax works well for most people, but only if you file correctly in both countries. This guide covers the US side for Americans living in Austria, with references to the Austrian rules where they interact.

You still file a US return

US citizens and resident aliens living abroad are subject to the same filing requirements as those living in the US if their income is above the filing threshold. Your Austrian salary, Austrian interest, rent from a US property and US investment income all go on the same Form 1040.

### The treaty does not change this

The US-Austria income tax treaty, in force since January 1, 1999, contains what is called a saving clause in Article 1. It says each country may tax its residents, and the United States may tax its citizens, as if the treaty had not come into effect. The clause even extends for 10 years to former citizens who gave up citizenship mainly to avoid tax. There are important exceptions, discussed below, but the starting point is that the treaty does not exempt Americans from US tax.

Deadlines

• April 15 is the regular due date for calendar-year returns.
• June 15 is the automatic extended date for US citizens living abroad. The IRS gives an automatic two-month extension to file and pay if, on the regular due date, your tax home and abode are outside the US and Puerto Rico. Attach a statement to your return explaining that you qualify. Interest still runs on unpaid tax from April 15.
• October 15 is available with a further extension request.

If the date falls on a weekend or holiday, it moves to the next business day.

Avoiding double tax

### The foreign tax credit

Austrian income tax is substantial. The Ministry of Finance's Tax Book lists 2025 rates of zero on the first €13,308 of taxable income, then 20, 30, 40, 48 and 50 percent bands, with 55 percent above €1 million. Because these rates are often higher than US rates on the same salary, many Americans in Austria rely on the foreign tax credit.

The IRS explains that the credit is for income taxes you paid or accrued to a foreign country on income that is also subject to US tax. Article 22 of the treaty confirms that the US will allow a credit against US tax for income tax paid to Austria by or on behalf of a US citizen, under the limits of US law. The credit is claimed on Form 1116.

### The foreign earned income exclusion

The alternative is to exclude your Austrian earnings. The IRS allows qualifying individuals to exclude foreign earned income up to a yearly maximum, $130,000 for 2025, if their tax home is abroad and they meet one of two tests:

• Bona fide residence: you are a bona fide resident of a foreign country for an uninterrupted period that includes an entire tax year.
• Physical presence: you are physically present in foreign countries for at least 330 full days during any period of 12 consecutive months.

The exclusion covers earned income only, such as wages and self-employment income. It does not cover pensions, Social Security, interest or dividends.

### Which to choose

With Austrian tax rates high, the foreign tax credit often eliminates US tax on Austrian wages and can create excess credits to carry over. The exclusion can be simpler for people with low Austrian tax. Because the choice has long-term effects, run the numbers both ways before you elect the exclusion.

Treaty provisions that do help

The saving clause has exceptions. Article 1 lists provisions that apply to US citizens despite the clause, including parts of Article 18 on pensions and Article 22 on relief from double taxation.

One matters especially for retirees. Article 18 provides that social security payments and other public pensions paid by one country to a resident of the other, or to a US citizen, are taxable only in the paying country. This rule is among those preserved for citizens. In practice, US Social Security paid to an American living in Austria is taxable only in the US, and an Austrian state pension stays with Austria.

Austrian residency for tax

Austria considers you an unlimited taxpayer if you have a domicile or habitual abode there, and in any event after six months, with that status applying retroactively from the start, according to the Tax Book. Unlimited liability covers worldwide income. So once you move, Austria will expect to tax your worldwide income too, and the treaty's credit rules decide which country gives way on each item.

Reporting your Austrian accounts

Two separate reports apply to foreign financial assets:

• FBAR (FinCEN Form 114). Required if the combined value of your foreign financial accounts exceeds $10,000 at any time during the calendar year. It is due April 15 with an automatic extension to October 15, and it is filed with FinCEN, not with your return.
• Form 8938. Required with your return if your specified foreign financial assets pass higher thresholds. For taxpayers living abroad, the IRS gives them as more than $200,000 on the last day of the year or $300,000 at any time for single filers, and $400,000 or $600,000 for married couples filing jointly.

Your Austrian bank will also report your account to the IRS under FATCA, so assume the IRS knows it exists.

Social security taxes

The US and Austria have a totalization agreement. Under it, you generally pay social security contributions to only one country. Employees working in Austria for an Austrian employer pay into the Austrian system. A worker sent temporarily to Austria by a US employer, for up to five years, can stay in US Social Security with a certificate of coverage. Self-employed people are covered by the country where they live, and the SSA notes that a self-employed person covered by Austria should attach the Austrian certificate of coverage to the US return each year to prove the exemption from US self-employment tax.

A filing checklist

1. Collect your Austrian annual pay statement and any Austrian tax assessment.
2. Convert income and tax to dollars using a consistent method.
3. Decide between the foreign tax credit and the earned income exclusion.
4. File by June 15 with a statement if you rely on the automatic extension.
5. File the FBAR if your Austrian accounts topped $10,000 combined.
6. Check Form 8938 thresholds.
7. If self-employed in Austria, attach the Austrian certificate of coverage.

Common questions

Do I have to file US taxes if I live in Austria? Yes, if your income is above the filing threshold. The US taxes citizens on worldwide income, and the treaty's saving clause preserves that right.

When is my US return due if I live in Austria? April 15, with an automatic extension to June 15 for citizens whose tax home and abode are abroad. Interest runs from April 15 on unpaid tax.

Is my US Social Security taxed in Austria? Under Article 18 of the treaty, US social security payments to a resident of Austria or a US citizen are taxable only in the United States.

Should I use the foreign tax credit or the exclusion? With Austria's high rates, the foreign tax credit often eliminates US tax on Austrian wages. Compare both before electing the exclusion.