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

Moving to Malta does not end your US tax obligations. The United States taxes its citizens on worldwide income wherever they live, so Americans in Malta usually file in both countries every year. The two systems fit together through the foreign earned income exclusion, the foreign tax credit and the US-Malta income tax treaty. On top of the return, you report foreign bank accounts and assets. This guide covers what to file and when, with figures from the IRS and FinCEN.

The basic rule

The IRS page for US citizens and resident aliens abroad states that the rules for filing income, estate and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. You are taxed on worldwide income from all sources. A Maltese salary, Maltese rental income, interest from a Maltese bank and income from a US employer all go on your US return.

### Filing deadline abroad

If you live outside the US on the regular due date, the IRS gives an automatic two-month extension to file, from April 15 to June 15 for calendar-year filers. Interest still runs on any tax unpaid after April 15. If you need more time, you can request a further extension on Form 4868.

The foreign earned income exclusion (FEIE)

The FEIE lets you exclude foreign earned income up to an annual limit: $130,000 for 2025 and $132,900 for 2026. To claim it, the IRS says you must have foreign earned income, a tax home in a foreign country, and meet one of two tests:

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

You claim it on Form 2555.

### What counts as earned income

The IRS defines foreign earned income as wages, salaries, professional fees and other pay for personal services. It does not include pensions or annuities, including Social Security benefits, or pay as a US government employee. Investment income, rent and capital gains are not earned income either.

### Self-employed Americans

The IRS notes that the FEIE reduces regular income tax on self-employment income but does not reduce self-employment tax. Its self-employment tax page says the rules are generally the same abroad, and you owe the tax if net self-employment earnings are at least $400. The SSA explains that totalization agreements exist to stop dual Social Security taxation, so check the SSA's list of agreement countries before assuming any relief applies in Malta.

The foreign tax credit

The foreign tax credit (FTC) lets you reduce US tax by the foreign income tax you paid on the same income. The IRS explains:

• You can take foreign income taxes as a credit or as an itemized deduction. In most cases, the credit is better.
• Individuals claim it on Form 1116.
• You cannot take a credit for tax on income you excluded under the FEIE.
• If a treaty entitles you to a reduced foreign tax rate, only the reduced tax qualifies for the credit.

### FEIE or FTC?

For Americans with Maltese salaries, Maltese tax may be higher than US tax on the same income, so the FTC can wipe out the US tax and leave unused credits to carry forward. The FEIE is simpler but limited to earned income and to the annual cap. Some people use both, on different income. Run the numbers each year, because the choice can affect later years.

The US-Malta income tax treaty

The IRS lists a US-Malta income tax treaty with a technical explanation on its Malta treaty documents page. The Treasury announced that the treaty entered into force on 23 November 2010, with its provisions generally effective from 1 January 2011.

The treaty sets rules on which country taxes wages, business profits, dividends, interest, pensions and other income, and on relief from double taxation. Like most US treaties, it contains a "saving clause" that lets the US keep taxing its citizens as if the treaty did not exist, with listed exceptions. Read the relevant article, or ask a cross-border adviser, before relying on a treaty position. Treaty-based positions that reduce US tax are generally disclosed on Form 8833.

FBAR: reporting Maltese accounts

FinCEN requires a US person with a financial interest in, or signature authority over, foreign financial accounts to file an FBAR (FinCEN Form 114) if the aggregate value exceeds $10,000 at any time during the calendar year.

• The threshold is cumulative. Two accounts that together top $10,000 at any point both need reporting.
• The FBAR is filed electronically through the BSA E-Filing System, not with your tax return.
• It is due April 15, with an automatic six-month extension to October 15.
• Report the maximum value of each account during the year, converted to dollars at the year-end Treasury rate.

Form 8938: specified foreign financial assets

Form 8938, under FATCA, overlaps with the FBAR but has higher thresholds for people living abroad. From the IRS comparison table, for taxpayers living abroad:

• Single or married filing separately: more than $200,000 on the last day of the year or more than $300,000 at any time.
• Married filing jointly: more than $400,000 at year end or more than $600,000 at any time.

Form 8938 is attached to your return and due with it, including extensions. If you are over both thresholds, you file both the FBAR and Form 8938.

FATCA and your Maltese bank

FATCA also requires foreign financial institutions to report on accounts held by US persons. That is why Maltese banks ask Americans for a self-certification form and a US taxpayer identification number. Expect this at account opening.

Other forms to know

• Form 3520: the IRS requires it if you receive more than $100,000 in gifts or bequests from a nonresident alien individual or foreign estate, among other cases.
• Form 5471 or 8865: if you own a Maltese company or partnership.
• Form 8621: for interests in Maltese or other foreign investment funds, which are often treated as PFICs.

State taxes

Some US states continue to treat you as a resident after you move abroad if you keep a home, a driver's licence or other ties there. Check your state's rules before you leave.

Annual calendar

• April 15: US return due date; tax payment due; FBAR due.
• June 15: automatic extended return due date for Americans abroad.
• June 30 and July 31: Maltese tax return dates (the MTCA's return cycle page gives 30 June, with online submission by 31 July).
• October 15: FBAR automatic extension and Form 4868 extended return deadline.

Common questions

Do I still file a US tax return if I live in Malta? Yes. The IRS taxes US citizens on worldwide income wherever they live. Americans abroad get an automatic two-month extension to June 15 to file.

What is the FEIE limit? $130,000 for 2025 and $132,900 for 2026. You must meet the bona fide residence test or be present abroad for 330 full days in 12 consecutive months.

When do I need to file an FBAR? When the combined value of your foreign accounts exceeds $10,000 at any time in the year. It is due April 15 with an automatic extension to October 15.

Is there a US-Malta tax treaty? Yes. It entered into force on 23 November 2010 and has applied generally since 1 January 2011. The IRS publishes the treaty and technical explanation.