The 10 most common (and costly) U.S. expat tax risks in global mobility programmes
Below are the 10 most common tax pitfalls we see in corporate global mobility programmes involving U.S. assignees
10 February 2026 | Author: David Livitt
Tax season is here, and for the millions of Americans living overseas – and their employers – preparing to navigate another year of complex U.S. filing requirements means the stakes are high
As the 2026 tax season begins, employers with U.S. citizens and green card holders working in the UK and Europe face a familiar challenge: managing complex U.S. tax obligations within an already stretched global mobility programme.
With updated IRS thresholds, revised Foreign Earned Income Exclusion (FEIE) limits, and increasing scrutiny around payroll, equity, and reporting, the risk profile for internationally mobile U.S. employees continues to rise. A single oversight can lead to double taxation, employee dissatisfaction, unexpected employer costs, and compliance exposure.
Early planning is critical. For mobility, HR, tax and reward teams, now is the right time to review where programmes most commonly go wrong and how to mitigate those risks before filings begin.
Below are the 10 most common tax pitfalls we see in corporate global mobility programmes involving U.S. assignees, along with why they matter.
1. Misunderstanding FEIE eligibility
Many taxpayers assume the FEIE covers all foreign income. It doesn’t. The exclusion applies only to earned income, not passive income like dividends or rental income.
Why it matters: Claiming FEIE incorrectly can lead to underpayment, large back-tax bills and IRS scrutiny.
2. Overlooking the Foreign Tax Credit (FTC)
FTC is often beneficial for expats in higher tax countries, yet many automatically default to FEIE without analysis. The FTC can offset U.S. tax liability with foreign taxes paid but only if claimed correctly.
Why it matters: Choosing the wrong approach could result in double taxation or reduced available credits.
3. Ignoring State Residency Rules
Even if you’ve lived abroad for years, some states (like California, Virginia, or New York) may still consider you a resident for tax purposes. Expats often assume that moving abroad eliminates state tax obligations when, in reality, ties such as voter registration, property ownership, or having dependents may still establish a taxable presence.
Why it matters: Failing to address state obligations can result in unexpected tax bills.
4. Payroll Reporting Gaps
If you run a business abroad, or employ staff overseas, payroll reporting requirements can be complex.
Why it matters: Missing filings for social security, Medicare, or local compliance can trigger penalties.
5. Overlooking Pensions and Retirement Reporting
Foreign pensions and retirement plans often have unique reporting requirements and may not be treated the same way they are locally.
Why it matters: Misreporting or omitting these accounts can lead to significant compliance issues.
6. Equity Compensation Errors
Stock options, Restricted Stock Units (RSUs), and other equity plans are common for globally mobile employees but can remain a pain point.
Why it matters: Misunderstanding sourcing rules or timing of taxation can create double taxation risks.
7. Missing FBAR and FATCA Deadlines
Beyond income tax returns, expats must often file FBAR and FATCA reports for foreign accounts.
Why it matters: Missing these deadlines can result in some of the harshest penalties – even if no tax is owed.
8. Incorrect Filing Status
Choosing the wrong filing status (e.g., Married Filing Separately vs. Jointly) can impact deductions and credits.
Why it matters: For expats, this decision often has cross-border implications.
9. Overlooking Estimated Tax Payments
If you owe more than $1,000 in tax, estimated payments may be required. This is also an opportunity to review your estimated tax payment schedule.
Why it matters: Missing payments can lead to interest and penalties.
10. Filing too Late or Starting too Late
The biggest mistake? Leaving tax planning until the last minute. Early preparation is essential to avoid errors and secure documents from foreign employers, banks, or tax authorities.
Why it matters: Early engagement allows you to optimise elections, avoid surprises, and reduce stress.
What Global Mobility Teams Should Be Doing Now
A strong early-season review should include:
- Confirming FEIE vs. FTC strategy
- Reviewing U.S. state exposure
- Aligning payroll and equity data across jurisdictions
- Identifying pension and retirement reporting obligations
- Preparing FBAR/FATCA data early
- Setting clear internal timelines and ownership
Why this matters for employers
Managing U.S. taxpayers in Europe is not just an individual compliance issue it is a programme governance, cost control and risk management issue. Early engagement allows mobility teams to make informed elections, manage expectations, and reduce downstream cost and disruption.
If your organisation supports U.S. citizens or green card holders working in the UK or Europe, now is the right time to schedule an early season planning discussion to review risk areas, align stakeholders and set your programme up for a smoother 2026 tax cycle.
Would you like to know more?
If you would like to discuss any of the above, please speak to your usual Blick Rothenberg contact or David using there form below.
Contact David
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