A clear, practical guide to U.S. tax obligations for Americans living in Spain. The United States taxes its citizens on worldwide income wherever they live, and moving to Spain does not change that. This section explains what Americans in Spain may still have to file each year: the federal return, the FBAR for foreign accounts above the threshold, Form 8938 under FATCA, and Form 2555 or Form 1116 depending on whether the foreign earned income exclusion or the foreign tax credit works better in your case. We explain how the U.S.-Spain tax treaty reduces double taxation without eliminating it, and where the totalization agreement on Social Security fits.
We also cover the Spanish side that interacts with your U.S. filings: becoming a Spanish tax resident once you spend more than 183 days in Spain in a calendar year, the Modelo 720 declaration of foreign assets, wealth tax and the regional differences, the Beckham regime for new arrivals, U.S. retirement accounts seen from Spain, selling a U.S. home after the move, and breaking state tax residency before you leave.
Once you are a Spanish tax resident, the treaty hands your 401(k) and IRA withdrawals to Spain. The United States taxes you anyway and credits the Spanish tax; rollovers and Roths follow other rules.
The costly mistakes after a move to Spain come from rules that apply on a date. Eight of them, from tax residency to the padrón, with the official rule and the fix.
Sell before you become a Spanish tax resident and only the IRS looks at the gain. Sell after, and Spain taxes it too, with a credit for the U.S. tax. The order of the dates decides the bill.
A wire funded from your U.S. bank account is outside the 1 percent remittance tax. The exchange-rate margin is the cost that matters, and Spain declares cash, not wires, from 10,000 euros.
Your broker's policy decides what you can still buy, the PFIC rules make a European fund an expensive fix, and Spain reports the account on Modelo 720 and counts it for the wealth tax.
The Streamlined Foreign Offshore Procedures let Americans in Spain file three years of returns and six years of FBARs without penalties. Eligibility turns on 330 days abroad, and the window moves.
Payments continue for U.S. citizens in Spain and can land in a Spanish euro account. Spain taxes the benefit and deducts the U.S. tax, and the 1988 agreement still governs totalization.
Federal tax follows your citizenship to Spain. State tax follows your domicile, and California and New York keep former residents on the books unless the move is documented. What each state tests.
