US Expat Taxes for Americans in the UAE and Dubai – A Guide

Dubai is a top destination for ambitious, global-minded Americans looking for low local taxes and life growth. 

The UAE offers one of the most financially favorable environments on the planet. It has no personal income tax, capital gains tax, estate tax, or wealth tax.

However, if you’re a US citizen or Green Card holder, you are still required to file US taxes and report your worldwide income to the US, though. So if you move to Dubai, Abu Dhabi, or anywhere else in the UAE, you still have to file an annual US tax return. This also applies even if you don’t owe any US tax! Besides your regular filings with the IRS, you may have additional reporting and obligations now that you are an expat.

In this article, we provide key insights for the over 50,000 Americans living in the UAE on local tax rules and their continuing US tax obligations.

• The UAE tax advantage
• US taxes expats in the UAE need to know
• US tax benefits for expats in the UAE
• Additional US filing requirements for Americans in the UAE
• A tax calendar for American expats in the UAE
• Can you skip filing if you don’t owe?
• Seek advice

The UAE tax advantage

Let’s start with the good news: the UAE doesn’t tax personal income. That means your income in Dubai or Abu Dhabi isn’t subject to local tax rates, whether you’re employed by a local or US firm or self-employed. There’s also no tax on capital gains, dividends, interest, or rental income for individuals.

For most expats, this creates a powerful financial advantage. What you earn, you keep!. And if your employer provides extra benefits such as housing, bonuses or school fees, those too are tax-free locally.

There is, however, a 5 percent VAT (value-added tax) on most goods and services.

On the business side of things, the UAE introduced a federal corporate tax in 2023 of 9 percent for UAE businesses earning over AED 375,000 (around $102,000). Larger multinational companies may face a 15 percent rate under global minimum tax rules. However, this doesn’t affect most individual expats unless you own or hold shares in a UAE entity.

US taxes expats in the UAE need to know

As long as you’re a US citizen or Green Card holder, you’re required to file a US federal income tax return every year.

US citizens and Green Card holders living overseas receive an automatic two-month extension to file their federal taxes – expats have until June 15 instead of April 15. That said, the IRS only allows you extra time to file, not to pay, so if you owe tax, interest starts accruing from April 15. This means that even if you’re not ready to file, you should make an estimated payment by April 15 to avoid accumulating interest. It’s also pretty common for expats, as they wait for their foreign documents, to need more time beyond June 15. If that is your case, be reassured that you can request an additional extension to October 15 if needed.

What if you’ve missed returns from prior years or you just were not aware you had to file? Don’t panic. The IRS has a program called the Streamlined Foreign Offshore Procedures, a tax amnesty program for expats who weren’t aware of their filing requirements. If you qualify, you can catch up without penalties.

US tax benefits for expats in the UAE

Some IRS provisions help reduce or eliminate US tax for Americans living abroad:

The Foreign Earned Income Exclusion (FEIE)

The Foreign Earned Income Exclusion allows you to exclude  a certain amount of your earned income (not passive income) from US tax. For the 2025 tax year, you can exclude up to $130,000.

To claim it, you must pass either:

• The Physical Presence Test – demonstrate that you were outside the US for at least 330 full days in a 12-month period
• The Bona Fide Residence Test – demonstrate that you’ve established residency in the UAE for a full calendar year, with strong ties and intention to stay

To claim the FEIE, you need to file IRS Form 2555 when you file your US tax return.

The Foreign Housing Exclusion or Deduction

If you claim the FEIE, earn over the threshold and rent your home in the UAE, you may also qualify for the Foreign Housing Exclusion or Deduction. This lets you exclude more of your income relating to the amount you pay in housing costs. You also claim the Foreign Housing Exclusion on Form 2555. 

Rent in Dubai is notoriously high, but whether your employer provides housing, or you rent your own apartment or villa, these costs can increase your exclusion. Expenses such as utilities, insurance, and furnishing may also qualify.

The US Foreign Tax Credit

If you pay UAE corporate tax on a business you own, you can claim a dollar-for-dollar credit on your US taxes.

The US Child Tax Credit

If you have qualifying children under age 17 with US Social Security numbers, you may be eligible for the US Child Tax Credit, which lets you claim tax credits of up to $2,000 per child. Up to $1,700 of this amount may be refundable, so that even if you owe no tax, you can receive the refund. You cannot claim the refundable portion if you claim the, however.

Additional US filing requirements for Americans in the UAE

FBAR (FinCEN Form 114)

If the total value of the balances of your foreign financial accounts exceeds $10,000 at any point during the year, you must file an FBAR (Foreign Bank Account Report). This isn’t a tax form, it’s a reporting requirement filed electronically with the Financial Crimes Enforcement Network.

Qualifying foreign financial accounts include checking, savings, brokerage, pension, business, and even joint accounts where you have signature authority registered outside the US. Penalties for missing this are steep, so don’t neglect this requirement.

FATCA (Form 8938)

Under the 2010 Foreign Account Tax Compliance Act law, Americans abroad may also need to report their foreign assets. If you’re single and your total foreign assets exceed $200,000 at year-end or $300,000 at any time, you must file Form 8938 with your tax return.

FBAR and FATCA cover similar ground, but they’re separate requirements, and many expats need to file both.

Reporting foreign businesses

If you own at least 10 percent of a foreign-registered corporation, partnership, or other business entity, the IRS wants to know. This often triggers Form 5471 (for foreign corporations) or Form 8865 (for partnerships). These forms are complex and carry large penalties for failure to file, regardless of whether the business made money.

This applies even if your UAE business is a side hustle or free zone entity. Speak with an expat tax advisor if you own anything abroad beyond a personal bank account, or ideally before you establish a business entity abroad.

State tax filing requirements

Even after leaving the US, you may still owe state taxes if your former state considers you a resident. States like California, New York, and Virginia are aggressive in claiming that you have ongoing tax residency unless you formally sever ties.

This means you may have to file a state return, even if you live 7,000 miles away in Dubai! If you still own a home, maintain a driver’s license, vote in state elections, or receive income from that state, or there is a possibility that you’ll return in the future, you may have to file.

A tax calendar for American expats in the UAE

• April 15 – Tax payment due (interest starts if unpaid)
• June 15 – Filing deadline for Americans abroad
• October 15 – Final deadline if you requested an extension
• April to October – FBAR is due by April 15 but has an automatic extension to October 15

Can you skip filing if you don’t owe?

No. You must file even if you owe nothing.

This is a common myth among expats in Dubai and elsewhere in the Gulf. Many think that no tax due equals no need to file. Unfortunately, that’s not how the US tax system works.

The only way to benefit from the FEIE or foreign tax credit is to file the forms. No return, no exclusion.

Seek advice

Living in Dubai or anywhere in the UAE comes with financial advantages, including high salaries, low taxes, modern infrastructure, and global opportunities. It doesn’t reduce your US tax and reporting obligations though, in fact it often increases them.

Filing as an American living abroad is more complex, so seek advice from a firm that specializes in expat taxes rather than a US accountant. 

That way, you’ll unlock the real benefit of being an American in the Emirates – tax-efficient wealth creation in one of the world’s fastest-moving economies.