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

Moving to Sweden does not end your relationship with the IRS. The United States taxes its citizens on worldwide income wherever they live, and Sweden taxes residents on worldwide income too. The two systems are made to work together through the foreign earned income exclusion, the foreign tax credit and the US-Sweden income tax treaty, but each country also has its own reporting. This guide sets out the US obligations for Americans living in Sweden, using IRS guidance, and shows where Swedish rules from the Swedish Tax Agency (Skatteverket) intersect.

You still file a US return

The IRS states that if you are a US citizen or resident alien living abroad, you are taxed on your worldwide income. Living in Stockholm or Gothenburg does not remove the filing requirement.

### Deadlines when you live abroad

For a calendar-year taxpayer, the regular due date is April 15. If you live abroad and qualify, you get an automatic two-month extension to June 15, without requesting it. If you cannot file by June 15, you can request a further extension to October 15. When a due date falls on a weekend or legal holiday, it moves to the next business day.

Option 1: The foreign earned income exclusion

### Who qualifies

To claim the foreign earned income exclusion (FEIE), your tax home must be in a foreign country and you must meet one of two tests:

• the bona fide residence test: a bona fide resident of a foreign country for an uninterrupted period that includes an entire tax year; or
• the physical presence test: present in a foreign country for at least 330 full days during any 12 consecutive months.

### How much

The maximum exclusion is adjusted annually. The IRS gives $130,000 for tax year 2025 and $132,900 for tax year 2026, per qualifying person. If you qualify for only part of a year, the maximum is prorated by your qualifying days.

### Housing

There is also a foreign housing exclusion or deduction. The housing expense limit is generally 30% of the maximum exclusion: $39,000 for 2025 and $39,870 for 2026. The IRS notes the limit can differ in some cases.

### Pay for earlier years

Income is excluded in the year the work was done. The IRS example: pay received in 2025 for work done in 2023 cannot be excluded under the 2025 limit.

Option 2: The foreign tax credit

### Credit or deduction

If you paid foreign income taxes and are subject to US tax on the same income, you may take either a credit or an itemized deduction. A credit reduces your US tax liability; a deduction reduces taxable income. The IRS states that in most cases the credit is the better choice.

### What qualifies

Generally only foreign income taxes qualify. If a treaty gives you a reduced foreign rate, only that reduced tax qualifies. Individuals claim the credit with Form 1116.

### No double benefit

You cannot take a foreign tax credit for taxes on income you exclude under the FEIE. If you claim both on the same income, the exclusion election may be treated as revoked.

### How it fits Sweden

Swedish taxes on Swedish pay are a foreign income tax from the IRS perspective. Under SINK, Sweden's special income tax for non-residents, a final tax of 22.5% applies with no Swedish return. With unlimited Swedish tax liability, Skatteverket deducts preliminary A-tax and you file a Swedish return the next year. Either way, keep the Swedish tax decisions and statements as proof of tax paid.

### Refund window

Individuals generally have ten years to claim a refund of US tax if they find they paid more creditable foreign taxes than they claimed. The period starts the day after the regular due date of the return.

FBAR: Swedish bank accounts

Under the Bank Secrecy Act, you must file FinCEN Form 114, the FBAR, if you had a financial interest in or signature authority over foreign financial accounts whose combined value exceeded $10,000 at any time during the year. The IRS lists bank accounts, brokerage accounts and mutual funds as examples, so Swedish accounts of these types count.

• The FBAR is due April 15, with an automatic extension to October 15. No request is needed.
• It is filed electronically through FinCEN's BSA E-Filing System, not with your tax return.
• A spouse can file for jointly owned accounts with Form 114a authorisation.

### Records and paper filing

The Bank Secrecy Act also requires you to keep certain records of the reported accounts. You must report the accounts even if they generate no taxable income. If you want to file the FBAR on paper, you must call FinCEN's Resource Center to request an exemption from e-filing; if approved, FinCEN sends a paper form to mail to the IRS. When a spouse files for jointly owned accounts, you keep the signed Form 114a for your records rather than submitting it, and make it available to FinCEN or the IRS on request.

Form 8938: FATCA reporting

Form 8938 is filed with your tax return. Thresholds are higher for taxpayers living abroad:

• single or 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 on the last day or more than $600,000 at any time.

The FBAR and Form 8938 are separate, and you may need both.

The US-Sweden treaty

The United States and Sweden have an income tax treaty, and the IRS publishes the treaty documents. The treaty and Sweden's own rules can affect how pensions and other income are taxed, and Skatteverket notes that income exempt under a tax convention still has to be reported in the Swedish return.

Reporting US income to Sweden

If you have unlimited Swedish tax liability, Skatteverket's general rule is that you declare all foreign income, including US interest, dividends and pensions, in the Swedish return, converted to kronor. For periodic payments such as a monthly US pension, you can use the Riksbank's average annual exchange rate. If you paid final tax abroad and are entitled to a settlement, enter it and be ready to show proof.

Gifts and trusts

US citizens receiving more than $100,000 in gifts or bequests from a nonresident alien or foreign estate must report them on Form 3520. Penalties for late or incomplete Form 3520 filings start at the greater of $10,000 or a percentage of the amount.

Your identification numbers

Every person filing or claimed as a dependent on a US return needs an SSN or ITIN. A child born in Sweden needs one to be claimed. In Sweden, your Swedish personal identity number is your identifier with Skatteverket.

Common questions

Can I use both the FEIE and the foreign tax credit? Not on the same income. The IRS says you cannot claim a foreign tax credit for taxes on income you exclude.

What is the FEIE limit? $130,000 for tax year 2025 and $132,900 for tax year 2026, per qualifying person.

Do I need to file an FBAR for my Swedish account? Yes, if your foreign accounts together exceeded $10,000 at any time in the year. File FinCEN Form 114 electronically.

When is my US return due if I live in Sweden? April 15, with an automatic extension to June 15 for those living abroad, and a further extension to October 15 on request.