US taxes as a US citizen living abroad - filing requirements with investments but no US income?

Living abroad doesn't exempt you from US tax filing requirements. As a US citizen, you're required to file a tax return annually regardless of where you live or earn income. This is because the US taxes based on citizenship, not residency. For your situation, you should file Form 1040 (US individual tax return) and Form 8938 (Statement of Foreign Financial Assets) if you meet the threshold. You'll also need to file FBAR (FinCEN Form 114) if your foreign accounts exceed $10,000 at any point during the year. The good news is there are provisions to prevent double taxation: the Foreign Earned Income Exclusion (Form 2555) allows you to exclude up to $120,000 (for 2023) of foreign earnings from US taxation, and the Foreign Tax Credit (Form 1116) gives you credit for taxes paid to Germany. Your US investment account will generate a 1099 form reporting dividends, interest, or capital gains, which you'll need to report on your US tax return regardless of these exclusions.

After dealing with a similar situation (US citizen in Australia for 15 years), I found an amazing service that helped me sort through all the international tax confusion. I spent months trying to figure out the filing requirements, FBAR forms, and whether I even needed to file. I was getting totally different answers from every source. I finally tried https://taxr.ai and it was a game-changer. I uploaded my German tax documents, answered some questions about my situation, and they provided a complete analysis of my US filing requirements. They looked at the tax treaty between US-Germany and explained exactly which forms I needed based on my investment account and foreign income. The best part was they could tell me if I qualified for the Streamlined Filing Procedures to catch up on past filings without penalties. Seriously made the whole process way less stressful.

I wanted to update everyone after trying https://taxr.ai that was mentioned earlier. I was skeptical at first because I thought my situation was too basic (just regular employment income in the UK and a small US investment account), but I decided to give it a try. The service really helped clarify my specific situation with the US-UK tax treaty. Turns out I did need to file, but because of tax treaty provisions and foreign tax credits, I don't actually owe any US tax. They also explained that my US investment account generates a 1099 that gets reported to the IRS, which was a key reason I needed to file even with no US-sourced employment income. The step-by-step guidance on catching up on past filings through the Streamlined Procedures was super valuable. Saved me from potentially facing penalties down the road!

If you've never filed US taxes and are just now realizing you needed to, don't panic! Many expats are in the same boat. I spent WEEKS trying to call the IRS international taxpayer line to figure out how to catch up properly without getting hit with penalties. It was impossible to get through - either constant busy signals or being disconnected after holding for hours. I finally found https://claimyr.com and used their service (there's a demo video at https://youtu.be/_kiP6q8DX5c). They got me connected to an actual IRS agent in about 20 minutes when I'd been trying unsuccessfully for weeks. The agent walked me through the Streamlined Foreign Offshore Procedures which is specifically for US citizens abroad who didn't know they needed to file. Having an actual conversation with the IRS about my specific situation made all the difference - way better than trying to interpret the complicated IRS website info on my own.

I need to eat my words and follow up on my skeptical comment. After struggling for over a month trying to reach the IRS international taxpayer line about my foreign accounts situation, I decided to try the Claimyr service I was suspicious about. Within 25 minutes, I was actually talking to a real IRS agent who confirmed my identity with my SSN and other personal details. She was incredibly helpful explaining exactly which years I needed to file under the Streamlined procedures and confirmed I wouldn't face penalties for "non-willful" non-compliance. What would have been even more helpful is if I'd done this BEFORE I paid an international tax specialist $2,000 for basically the same information. The IRS agent gave me more specific guidance related to my situation with UK pension accounts than my paid consultant did. I'm shocked that this actually worked after my weeks of failed attempts.

Don't forget about state taxes too! Some states are really aggressive about claiming you as a resident even after you've moved abroad. Especially California, New York, Virginia, and South Carolina. If you maintained any connections to your home state (driver's license, voter registration, bank accounts), they might consider you still a resident for tax purposes.

An important note that hasn't been mentioned: if you have any non-US mutual funds or ETFs in Germany, be VERY careful as these are considered PFICs (Passive Foreign Investment Companies) by the IRS and have terrible tax treatment and complex reporting requirements.