Filing US taxes from Saudi Arabia: A complete guide for Americans abroad

Americans living and working in Saudi Arabia generally still need to file US tax returns and report worldwide income, even though Saudi Arabia does not impose personal income tax on ordinary employment earnings.

For tax year 2026, filed in 2027, US filing thresholds, the Foreign Earned Income Exclusion (FEIE), and standard foreign housing limits have increased. These changes may help qualifying Americans reduce their US income tax. However, Saudi employment income that is not subject to foreign income tax does not itself qualify for a Foreign Tax Credit (FTC).

Last updated October 28, 2026

Written by Aya Takriti, EA

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Aya Takriti, an IRS Enrolled Agent with 12 years of expat tax experience, specializes in US tax preparation, tax planning and tax advice for US citizens and Green Card holders living and working in the Middle East. *Schedule a consultation with Aya today.

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Do Americans living in Saudi Arabia have to file US taxes?

Yes. US citizens and Green Card holders living in Saudi Arabia generally remain subject to US federal tax rules because the United States taxes its citizens and resident aliens on worldwide income.

The IRS states that US citizens and Green Card holders abroad are generally subject to the same income tax rules as people living in the US. Foreign income must therefore be considered when determining whether a tax return is required.

Income that may need to appear on a US tax return includes Saudi employment salary, bonuses, allowances, self-employment earnings, rental income, dividends, interest, capital gains, pension distributions, and foreign investment income.
For most taxpayers under age 65, the general filing thresholds are:

Filing thresholds for tax year 2026

Filing status	Threshold
Single	US$16,100
Married Filing Jointly (both spouses under age 65)	US$32,200
Qualifying surviving spouse	US$32,200
Head of Household	US$24,150
Married Filing Separately	US$5

Higher thresholds apply to many taxpayers age 65 or older. Check thresholds before applying the FEIE. Separate filing rules also apply, including US$400 or more in net self-employment earnings.

Note: The crucial distinction is between filing a return and owing tax. Many Americans abroad still need to file even where exclusions, deductions, or credits ultimately reduce their US income tax.

How does Saudi Arabia tax US expats?

Saudi Arabia generally does not impose individual income tax on employment earnings, including salaries received by Americans working there.

However, its tax system includes corporate income tax, Zakat, VAT, withholding tax, and excise taxes. Business owners and non-Saudi individuals conducting business activities may face additional tax obligations.

How are different types of income taxed in Saudi Arabia?

Income type	Saudi Arabia treatment
Employment salary	Generally not taxed
Employment bonuses	Generally not taxed
Employment allowances and benefits	Generally not subject to personal income tax
Personal investment gains	Tax treatment depends on the investment and circumstances
Personal savings interest	Generally not taxed for individuals; exceptions apply
Personal dividends	Generally not taxed for residents; withholding tax may apply to non-residents

US tax system vs. the Saudi Arabian tax system

The US generally continues taxing citizens on worldwide income, while Saudi Arabia generally does not levy personal income tax on employment salary. That produces a very different cross-border tax relationship from the one Americans encounter in higher-tax countries.

Key differences: US and Saudi Arabian tax systems

Category	United States	Saudi Arabia
Tax basis	Citizenship-based taxation for US citizens and residency-based taxation for certain other taxpayers	Based on residency, income source, and business activity
Personal income tax	Yes	No personal income tax on employment salaries
Worldwide income reporting	Worldwide income is considered when determining US filing requirements	Generally not required for ordinary employment income
Individual tax return	Form 1040	No equivalent personal income tax return for employees
Employment salary taxation	Generally taxable, subject to available tax relief	Generally not taxed
Capital gains tax	Applies to many investments	Depends on the asset and circumstances; exemptions may apply
Dividend taxation	Generally taxable	Generally not taxed for individual residents; withholding tax may apply to non-residents
Foreign account reporting	FBAR and FATCA rules apply	Saudi financial institutions may report certain US accounts under FATCA
Business taxation	Federal income tax and possible state taxes	Income tax may apply to businesses and non-Saudi individuals conducting taxable activities; other taxes may also apply
Consumption tax	State sales taxes vary by location	VAT applies to goods and services
Social insurance	Social Security and Medicare taxes may apply	GOSI contributions may apply depending on eligibility

How does Saudi Arabia tax residency work for US expats?

An American can be considered a Saudi tax resident while remaining subject to US tax and worldwide income reporting. Saudi residency does not replace US citizenship-based tax obligations.

Under Saudi rules, an individual is generally treated as resident for a taxable year if either:

They have a permanent place of residence in Saudi Arabia and are present there for at least 30 days during the taxable year; or

They are present in Saudi Arabia for at least 183 days during the taxable year.

Saudi tax residency can matter for local documentation and obtaining a Tax Residency Certificate. From the US side, however, the more important question is usually whether the taxpayer meets the separate IRS requirements for benefits such as the FEIE or Foreign Housing Exclusion.

The two residency systems should not be treated as interchangeable.

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When are US tax deadlines for Americans living in Saudi Arabia?

Qualifying Americans abroad generally receive an automatic extension to June 15, 2027, for their 2026 return, with further extensions potentially available.

The relevant dates are:

2027 US tax filing deadlines for Americans in Saudi Arabia

Filing requirement	Deadline
US federal income tax return (Form 1040)	April 15, 2027
Automatic extension for qualifying Americans abroad	June 15, 2027
Additional extension (Form 4868)	October 15, 2027
FBAR (FinCEN Form 114)	April 15, 2027, automatically extended to October 15

The automatic overseas extension also allows additional time to pay, but interest on unpaid tax generally starts April 15, 2027. Taxpayers using this extension must attach a statement explaining their eligibility.

If more time is needed to file, qualifying taxpayers can request an extension to October 15 by submitting Form 4868 by June 15. This does not further extend the time to pay.

FBAR follows a separate process. It is due April 15 but automatically extends to October 15 without a separate extension request.

Does Saudi Arabia have a tax treaty with the United States?

No. Saudi Arabia does not currently have a comprehensive income tax treaty with the United States. Saudi Arabia is not included on the IRS’s current list of US income tax treaty countries.

In practice, this makes domestic US expat provisions more significant, particularly:

Foreign Earned Income Exclusion
Foreign Housing Exclusion or Deduction
Foreign Tax Credit where qualifying foreign tax has actually been paid

This matters particularly for self-employed Americans. Saudi Arabia is not on the SSA’s list of countries with a US Social Security Totalization Agreement.

How can Americans in Saudi Arabia reduce their US tax?

Qualifying Americans in Saudi Arabia commonly look to the FEIE, foreign housing provisions, and, where foreign tax has actually been paid, the Foreign Tax Credit.

These benefits work differently, so the best approach depends on the taxpayer’s income, housing costs, and circumstances.

Foreign Earned Income Exclusion
The FEIE allows qualifying taxpayers to exclude up to US$132,900 of foreign earned income for tax year 2026. To qualify, taxpayers must have a foreign tax home and meet either the bona fide residence test or physical presence test.

Foreign Housing Exclusion
Qualifying taxpayers may exclude or deduct eligible housing expenses, including rent, certain utilities, and insurance, through Form 2555.

For 2026, the standard full-year housing expense limit increased to US$39,870, while Riyadh’s limit remains US$40,000. The base housing amount is US$21,264, which must be subtracted from eligible expenses when calculating the housing benefit.

Foreign Tax Credit

The FTC can reduce US income tax using qualifying foreign income taxes paid or accrued. However, Saudi employment income generally does not generate an FTC because Saudi Arabia does not impose personal income tax on ordinary salaries. The credit may still apply if qualifying foreign income tax has been paid or accrued on other income.

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How to file US taxes from Saudi Arabia

Filing from Saudi Arabia usually involves gathering Saudi records, identifying applicable expat tax benefits, preparing Form 1040, and checking whether foreign-account or investment forms are also required.

A practical filing process looks like this:

Step 1: Collect Saudi income and financial records

Gather salary statements, employment contracts, bonus information, housing allowances, bank statements, investment records, rental-income documents, business records, and information about retirement or end-of-service arrangements.

Convert amounts reported in Saudi riyals to US dollars using the appropriate exchange rates.

Step 2: Determine which US expat tax benefits apply

Tax benefit	What it does	Commonly used by
Foreign Earned Income Exclusion (FEIE)	Allows qualifying taxpayers to exclude foreign earned income up to the annual limit	Qualifying employees and self-employed taxpayers
Foreign Housing Exclusion or Deduction	Allows certain housing expenses to reduce taxable income	Employees may use the exclusion; self-employed taxpayers may use the deduction
Foreign Tax Credit (FTC)	Provides a credit for qualifying foreign income taxes paid or accrued	Expats paying qualifying income taxes overseas

Foreign tax credits generally cannot be claimed for taxes attributable to income excluded under the FEIE.

Step 3: Prepare Form 1040 and relevant international forms

US expats generally use the same Form 1040 as taxpayers in the United States, but foreign accounts, assets, investments, and businesses can add additional reporting.

Step 4: Check Saudi accounts and assets

Review bank accounts, brokerage accounts, foreign funds, company ownership, and other financial interests for FBAR, Form 8938, and other international reporting forms.

Step 5: File by the applicable deadline and retain records

Keep copies of returns, statements, and supporting foreign documents. Saudi financial records may not resemble US tax documents, so keeping the underlying evidence can be particularly useful.

What forms do Americans in Saudi Arabia need to file?

Form 1040 is the core US return, but Saudi income, accounts, investments or business interests can trigger additional US forms.

Core US forms

Form	What it does
Form 1040	Main US tax return
Form 1116	Claims Foreign Tax Credit
Form 2555	Claims FEIE and foreign housing exclusion or deduction
Schedule B	Reports interest and ordinary dividends where required; Part III asks about foreign accounts and trusts

Reporting forms often missed

Form	When it applies
FBAR	Foreign accounts over US$10,000 combined
Form 8938	Higher-value foreign assets
Form 8621	Certain interests in foreign corporations classified as PFICs, including some non-US funds

Depending on circumstances, Americans may also encounter Forms 5471, 8858, 3520, or 3520-A. The IRS’s Publication 54 highlights Form 8938 and Form 5471 among the international forms that can accompany Form 1040.

Not every expat needs every form. Determine which reporting requirements apply based on your accounts, investments, and transactions.

Core Saudi tax forms

Saudi form/filing	Who may need it
Tax Residency Certificate (TRC) application	Individuals or businesses proving Saudi tax residency through ZATCA
Income Tax filings	Taxable companies and non-Saudi individuals conducting business in Saudi Arabia
Zakat declarations	Saudi/GCC-owned entities subject to Zakat rules
VAT Registration	Businesses exceeding VAT registration thresholds
VAT Returns	VAT-registered businesses
Withholding Tax filings	Businesses making certain payments to non-residents

Ordinary employees generally do not file a Saudi income tax return solely for their employment salary. However, non-Saudi individuals conducting taxable business activities may have income tax and filing obligations.

Do Americans in Saudi Arabia need to report Saudi bank accounts?

Yes, potentially. Saudi checking, savings, and investment accounts can trigger US reporting even when no US income tax is due. Two main reporting requirements are FBAR and Form 8938 under FATCA.

FBAR

An FBAR is generally required when you have a financial interest in, or signature authority over, foreign financial accounts whose combined value exceeds US$10,000 at any time during the year.

The threshold applies across accounts, not to each account separately. This can include accounts used only for salary deposits or household spending.

Form 8938 and FATCA

Form 8938 is a separate IRS filing for certain foreign financial assets, with higher thresholds for taxpayers who meet the IRS requirements for living abroad.

For qualifying taxpayers abroad, the thresholds are:

Non-joint filers: More than US$200,000 at year-end or US$300,000 at any time.

Joint filers: More than US$400,000 at year-end or US$600,000 at any time.

These higher thresholds require a foreign tax home and meeting the applicable residence or physical presence test. Form 8938 is not required if you are not required to file a US income tax return.

FBAR vs Form 8938

Feature	FBAR	Form 8938
Filed with	FinCEN	IRS
Part of the tax return?	No	Yes
Threshold	More than US$10,000 combined	Higher thresholds based on filing status and residence
What it covers	Foreign financial accounts	Specified foreign financial assets

Note: Some assets may need to be reported on both forms. Filing one does not replace the other.

Also read: FBAR vs FATCA

What should Americans know before investing in Saudi Arabia?

Saudi investments may receive straightforward local treatment but can still create US income tax and reporting obligations. Americans in Saudi Arabia may hold Saudi shares, brokerage accounts, Sukuk, real estate, ETFs, mutual funds, or other pooled products.

From the IRS’s perspective, foreign does not mean exempt. Dividends, interest, gains, and other investment income generally remain part of worldwide income.

PFIC rules can make foreign funds more complicated

Some non-US mutual funds, ETFs, and pooled investment companies may fall under the Passive Foreign Investment Company rules. The IRS defines PFIC status using income and asset tests, and US shareholders can be required to file Form 8621.

That is why a Saudi or other non-US fund that looks simple locally may be much less simple on a US return.

How are retirement benefits in Saudi Arabia treated for US tax?

Saudi employment benefits do not map neatly onto US accounts such as a 401(k) or IRA, so their US treatment depends heavily on how the arrangement is structured.

Common Saudi arrangements include:

Benefit or savings arrangement	Description
GOSI	Saudi social insurance system. Non-Saudi workers are generally covered for occupational hazards rather than retirement pensions.
End-of-Service Benefit (EOSB)	Employer-funded benefit commonly provided to expatriate employees based on employment terms and length of service
Employer savings plans	Additional workplace retirement or savings arrangements, depending on employer
Personal investments	Brokerage accounts, real estate, and other private savings strategies

Do US expats in Saudi Arabia have to pay self-employment tax?

Yes. Self-employed Americans in Saudi Arabia may still owe US self-employment tax even when the FEIE reduces their US income tax.

The FEIE does not eliminate self-employment tax, which generally applies to 92.35% of net self-employment earnings.

For 2026:

Component	Rate	What it funds
Social Security	12.4% (up to annual limit)	Retirement and disability benefits
Medicare	2.9%	Healthcare
Total	15.3%	Social Security and Medicare

The Social Security earnings ceiling increased from US$176,100 in 2025 to US$184,500 in 2026. Medicare tax has no equivalent earnings ceiling, and higher earners may owe an additional 0.9% Medicare Tax.

Saudi Arabia has no US Social Security Totalization Agreement, so self-employed Americans generally cannot claim an exemption under such an agreement.

What happens if you don’t file US taxes from Saudi Arabia?

Missing US returns, FBARs, or international information forms can create penalties, but some non-willful taxpayers living abroad may qualify for formal catch-up procedures.

The IRS Streamlined Filing Compliance Procedures may help eligible taxpayers whose filing failures resulted from non-willful conduct, such as negligence, inadvertent mistakes, or a good-faith misunderstanding of their tax obligations.

A late income tax return is different from an omitted FBAR, Form 8938, foreign-company form or foreign-trust filing. International information-return penalties can apply even where the underlying income tax due is small or zero.

Can Americans abroad catch up under the Streamlined procedures?

Eligible taxpayers abroad generally submit three years of required tax returns and six years of delinquent FBARs, based on the most recent filing deadlines that have passed.

US citizens and Green Card holders must have spent at least 330 full days outside the US, without a US abode, in at least one of the three relevant tax years. Both spouses must qualify for a joint submission.

Taxpayers must also submit Form 14653 certifying non-willful conduct and pay any tax and interest due.

Those who meet all requirements generally receive relief from the penalties covered by the program. However, taxpayers already under an IRS civil examination or criminal investigation are ineligible, and submissions may still be reviewed by the IRS.

When should Americans in Saudi Arabia consider professional tax help?

Professional US expat tax advice becomes more useful as the taxpayer moves beyond a straightforward salary and basic Saudi bank account.

A relatively simple Saudi employment situation can become much more technical when it includes foreign mutual funds or PFICs, business ownership, self-employment, employer savings plans, end-of-service benefits, multiple foreign accounts, large foreign assets or missed prior-year filings.

There is also a broader point specific to Saudi Arabia: the absence of local personal income tax can make an expat’s finances look simpler than they really are from the US side.

Frequently Asked Questions

Do Americans pay US taxes while living in Saudi Arabia?

Americans living in Saudi Arabia generally remain subject to US tax rules on worldwide income. Whether they ultimately owe income tax depends on their income, deductions, credits and eligibility for expat tax provisions such as the FEIE.

Is salary tax-free in Saudi Arabia for Americans?

Saudi Arabia generally does not impose individual income tax on ordinary employment earnings, but the salary still generally needs to be considered for US tax purposes.

Does Saudi Arabia have a US income tax treaty?

No. Saudi Arabia does not have a comprehensive income tax treaty with the United States. The FATCA agreement and a separate tax information exchange agreement signed in April 2026 concern information sharing, not general relief from double taxation.

Can an American in Saudi Arabia claim the FEIE?

Yes, if the taxpayer meets the applicable tax-home and residence or physical-presence requirements. The maximum FEIE for 2026 is US$132,900 per qualifying taxpayer.

Do Saudi bank accounts need to be reported to the US?

Potentially. An FBAR is generally required if reportable foreign accounts exceed US$10,000 in aggregate at any time during the year, while Form 8938 has separate and higher thresholds.

Does Saudi Arabia have a Totalization Agreement with the US?

No. Saudi Arabia is not currently listed among the countries with US Social Security Totalization Agreements. This can be especially relevant to Americans who are self-employed abroad.

Do self-employed Americans in Saudi Arabia pay US self-employment tax?

Yes. The FEIE does not eliminate US self-employment tax. The standard rate is 15.3%, generally calculated on 92.35% of net business earnings, subject to the Social Security earnings limit. Higher earners may also owe Additional Medicare Tax.

What if an American in Saudi Arabia has not filed US taxes for several years?

Some non-willful taxpayers may qualify for the IRS Streamlined Filing Compliance Procedures. Eligibility should be checked against the person’s residence, filing history and circumstances before submitting delinquent returns.

Getting ready to file your US taxes from Saudi Arabia?

There’s a lot to consider, but don’t worry! We’ve got you covered.

Download our FREE US Tax Guide for Americans in Saudi Arabia: A more in-depth guide to taxes for US expats in Saudi Arabia. This will help you understand what to file, when, and how to stay compliant with the IRS.

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