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US Tax Help for Americans in Italy
Short answer: Americans in Italy, including dual US and Italian citizens, file a US return on worldwide income. All State Tax Resolution, led by Sabih Shafi, an Enrolled Agent, prepares the US side. Italy has both an income tax treaty and a Social Security agreement with the US, and the Italy agreement works differently from most, so it deserves a close look.
Key takeaways
A US citizen or green card holder in Italy files a US return on worldwide income, and being an Italian citizen as well does not change that.
The exclusion is up to $130,000 for 2025 and $132,900 for 2026, per person. It does not cover pensions or Social Security benefits.
Italy is on the IRS treaty list, and its Social Security agreement with the US has no detached-worker rule. Most treaties also contain a saving clause.
Italian accounts can trigger an FBAR above $10,000 combined, and sometimes Form 8938.
If you missed filings, the streamlined procedures may fit when the failure was not willful.
Do Americans in Italy have to file a US return?
Yes, in most cases. The IRS says you are taxed on worldwide income from all sources, and the filing rules are generally the same abroad as at home. That applies in Rome, Milan, Florence, a small town in Puglia, or anywhere else, and it applies to a green card holder as well as a citizen.
Some Americans in Italy hold Italian citizenship too. A second citizenship does not remove your US filing duty. We often see dual citizens learn this late.
The regular due date is April 15. If you live outside the US and your main place of business or post of duty is outside the US on that date, you get an automatic two extra months, to June 15, by attaching a statement. Interest on tax you owe still runs from April 15. Form 4868 adds four more months, to October 15, for filing only.
The US and Italy have a treaty, so what does it do?
The IRS list of US income tax treaties includes Italy. The IRS also says most income tax treaties contain a saving clause that stops a US citizen or resident from using the treaty to avoid tax on US source income. So a treaty does not cancel your US filing, and we do not assume it lowers your US tax.
Specific articles can still matter for specific income. We read the treaty for your facts instead of assuming. We do not give Italian-law advice, and the Italian side belongs with an Italian professional.
The Italian Revenue Agency, the Agenzia delle Entrate, describes a regime for new residents that replaces ordinary Italian income tax on foreign income with a substitute tax. If you use it, tell us. The IRS says generally only income, war profits and excess profits taxes qualify for the foreign tax credit, so we check whether an Italian charge counts before we claim anything for it.
The Italy Social Security agreement is different
The Social Security Administration lists an agreement with Italy, in force since 1978. Such agreements are meant to stop dual Social Security tax on the same earnings. Most US agreements include a detached-worker rule for people sent abroad by an employer. The Social Security Administration says the Italy agreement has none. Coverage for expatriates rests mainly on nationality.
Under that agreement, a US citizen who would otherwise be covered by US Social Security stays covered and is exempt from Italian coverage and contributions. For the self-employed, the Social Security Administration says dual US and Italian nationals working in Italy may elect either US or Italian coverage. That choice matters for dual citizens who freelance or run a business in Italy.
For employees, the IRS says US social security and Medicare taxes generally do not apply to wages for work done outside the US unless an exception applies, such as working for an American employer. A self-employed US citizen who stays under US coverage owes US self-employment tax, and the exclusion does not reduce it. We look at your citizenship, your work and your certificate of coverage before we decide where your Social Security tax belongs.
Exclusion or credit
The foreign earned income exclusion, claimed on Form 2555, leaves up to $130,000 of foreign earnings out of US income tax for 2025, and up to $132,900 for 2026, per person. You need foreign earned income, a tax home abroad, and either the bona fide residence test or 330 full days in foreign countries in any 12 months in a row. A green card holder who is a citizen or national of a treaty country, Italy for example, can use the residence test.
The IRS says foreign earned income does not include pension or annuity payments, including social security benefits, or pay from the US government. A retiree in Italy cannot use the exclusion on that income. The foreign tax credit, claimed on Form 1116, reduces US tax by qualifying foreign income taxes, but you cannot take a credit for tax on income you exclude. We run both ways and show you the result.
Euros, bank accounts and FATCA
You must report amounts on a US return in US dollars. The IRS says you generally use the exchange rate in effect when you receive, pay or accrue the item, and it generally accepts any posted rate used consistently. The IRS yearly average rate table lists the euro.
FBAR (FinCEN Form 114). FinCEN says you must file if your foreign financial accounts together exceed $10,000 at any time in the calendar year. It is filed online with FinCEN, not with your return, and due April 15 with an automatic extension to October 15.
Form 8938. It is attached to your return. If you live abroad by the IRS definition, the thresholds are above $200,000 on the last day of the year or $300,000 at any time for a return that is not joint, and $400,000 or $600,000 for a joint return.
The US Treasury lists an intergovernmental agreement with Italy as in force. The IRS says FATCA generally requires foreign financial institutions to report on assets held by their US account holders. Treat your Italian accounts as visible to the IRS.
Behind on US filing from Italy?
The streamlined foreign offshore procedures are for people abroad whose failures were non-willful, meaning negligence, inadvertence, mistake or a good faith misunderstanding of the law. The IRS asks for returns for the most recent three years with a passed due date, FBARs for the most recent six years, all tax and interest paid with the returns, and Form 14653 certifying non-willful conduct. You need no US abode and at least 330 full days outside the US in one of the three years.
The IRS says a filer who qualifies and follows the instructions is not subject to failure-to-file, failure-to-pay, accuracy-related, information return or FBAR penalties, unless an exam finds fraud or a willful FBAR violation. A civil exam or criminal investigation already underway rules the procedures out. If your conduct may have been willful, talk to us before filing.
State taxes after you move
California's Franchise Tax Board treats you as a resident if you are domiciled in California but outside the state for a temporary or transitory purpose. Other states have their own tests. We check your last state's rules instead of guessing.
How we help
I am Sabih Shafi, an IRS Enrolled Agent, federally licensed to represent taxpayers before the IRS in all 50 states. We work by phone and video, in English or Spanish, with Americans anywhere in Italy.
Your US return: Form 1040 with Form 2555 or Form 1116, run both ways.
Dual citizens: we check how the Social Security agreement applies to your citizenship and work.
Foreign account reports: FBAR and Form 8938 checks.
Missed years: several unfiled years prepared, with a straight answer on whether streamlined fits.
A flat fee quoted in writing before work starts.
Frequently Asked Questions
I am a dual US and Italian citizen living in Italy. Do I file a US return?
Yes. You are taxed as a US citizen on worldwide income. Your Italian citizenship does not remove the US filing.
Does Italy have a tax treaty with the US?
Yes. Italy is on the IRS list of US income tax treaties. Most treaties contain a saving clause, so we check the specific article for your income.
Does the US have a Social Security agreement with Italy?
Yes, in force since 1978. The Italy agreement has no detached-worker rule, and coverage rests mainly on nationality. Dual citizens who are self-employed in Italy may elect either system.
Can I use the exclusion on my pension or Social Security?
No. The IRS says pension or annuity payments, including social security benefits, are not foreign earned income.
Do I need an FBAR for my Italian bank account?
If all your foreign accounts together exceed $10,000 at any time in the year, yes. Balances are added across accounts.
Can you prepare my Italian tax return?
No. We prepare the US side only, and work with the figures your Italian preparer gives us.
General information, not tax advice for your situation.
Related Reading
Talk to an Enrolled Agent
This article is general information, not individual tax advice. If you want to talk through your own IRS or state balance, book a free 20-minute review or call or text us directly.
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