As a U.S. citizen living in the UAE, you may also be subject to UAE taxes. The UAE does not have a federal income tax, but there may be other taxes, such as value-added tax (VAT) and local taxes. It is essential to understand the tax laws in the UAE and how they may affect you.

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Understanding the Foreign Earned Income
Exclusion
The Foreign Earned Income Exclusion (FEIE) is a tax provision that allows U.S. citizens living
abroad to exclude up to a certain amount of their foreign-earned income from U.S. taxation. For
the tax year 2021, the maximum exclusion amount is $108,700. To qualify for the FEIE, you must
meet either the physical presence test or the bona fide residence test.
Reporting Foreign Bank Accounts
If you have a foreign bank account in the UAE with a balance of $10,000 or more at any point
during the year, you must report it on your U.S. tax return. This is done through the Foreign Bank
Account Report (FBAR), which is filed separately from your tax return. Failure to report a foreign
bank account can result in severe penalties.
Reporting Foreign Assets
In addition to reporting foreign bank accounts, you may also need to report other foreign assets,
such as real estate, investments, and business interests. The Foreign Account Tax Compliance
Act (FATCA) requires foreign financial institutions to report information about their U.S. account
holders to the Internal Revenue Service (IRS). This means that if you have foreign assets, the IRS
may already have information about them.
Paying Taxes in the UAE
As a U.S. citizen living in the UAE, you may also be subject to UAE taxes. The UAE does not have a
federal income tax, but there may be other taxes, such as value-added tax (VAT) and local
taxes. It is essential to understand the tax laws in the UAE and how they may affect you.
Conclusion
Living in the UAE as a U.S. citizen comes with tax responsibilities. It is crucial to understand your
tax liabilities and to stay compliant with both U.S. and UAE tax laws. If you need help navigating
these tax issues, consider consulting with a tax professional who has experience working with
expatriates. By staying informed and taking the necessary steps to remain compliant, you can
avoid penalties and ensure your financial well-being.