US Expat Taxes for Americans in Colombia – A Guide

Americans living in Colombia enjoy vibrant cities, welcoming people, and beautiful beaches. Yet as a US tax citizen, you still have to file a US tax return each year, no matter where in the world you live. Filing as an expat differs from filing in the US, and it’s important to understand the rules for expats to avoid penalties and to minimize your tax bill. In this article, we provide an overview of what Americans in Colombia need to know about filing taxes and reporting foreign accounts and business activities.

Who must file US taxes from abroad

All US citizens and green card holders must file annual tax returns, regardless of their country of residence. The IRS taxes worldwide income, meaning expats have to report their income earned in both Colombia and in the US, even if they pay Colombian taxes too. All foreign income must be converted into US dollars using the yearly average exchange rate.

Deadlines and extensions for expats

US expats benefit from automatic filing extensions. Americans living abroad have until June 15th to file, compared with April 15th for residents in the US. You can also claim an additional extension to October 15th if you need it. Taxes owed accrue interest starting April 15th, so if you owe any US tax, you should at least pay an estimated amount before April 15th.

The Foreign Earned Income Exclusion

The US doesn’t have a tax treaty with Colombia, but expats can claim some IRS provisions to reduce their tax bill and avoid double taxation. One of the most important ways Americans achieve this is by claiming the Foreign Earned Income Exclusion (FEIE). This IRS provision lets expats exclude their earned (but not passive) income from US taxation up to a threshold that changes each year. For 2025, the exclusion is up to $130,000 per person. To qualify, you must file Form 2555 with your tax return and meet either the Bona Fide Residence Test or the Physical Presence Test, proving residency or presence in Colombia for specified periods.

The Foreign Housing Exclusion

If you rent a home in Colombia and earn more than the FEIE limit, you can exclude an extra portion of your earned income by claiming the Foreign Housing Exclusion. Eligible expenses include rent, utilities, and insurance. Claiming this exclusion, also on Form 2555, can significantly reduce taxable income for Americans living in high-rent cities like Bogotá or Medellín.

The Foreign Tax Credit

The Foreign Tax Credit lets expats claim US tax credits for the same value as income taxes they’ve paid in Colombia. It is claimed on Form 1116, and it can be applied to both earned and passive income such as rents, interest and dividends. If you pay more tax in Colombia than in the US, you can carry the excess US tax credits forward or back. Expats can’t apply both the Foreign Tax Credit and the FEIE to the same income though, and there can be certain benefits to applying one of the other, so discuss your situation with a US expat tax pro to establish the best strategy for you.

Social security and self-employment taxes

If you’re employed by a Colombian company, you’ll have to contribute to Colombia’s social security system, whereas if you’re working remotely as an employee of a US company, you may have to pay into both the US and Colombian systems. Self-employed Americans may owe self-employment taxes in both countries, too. Currently, the US and Colombia don’t have a social security tax treaty, so planning ahead and potentially setting up a new employment structure can help avoid paying double social security taxes.

Reporting foreign bank accounts

US law requires Americans with foreign financial accounts such as bank or brokerage accounts to report them annually using the FBAR (Foreign Bank Account Form). Expats have to file an FBAR if the combined total of their foreign account balances exceeds $10,000 at any time during a year. This includes Colombian checking, savings, and investment accounts, as well as joint or business accounts you have signatory control of, even if they’re not in your name. While FBAR filing doesn’t trigger new taxes, penalties for non-filing can reach tens of thousands of dollars, so seek advice if you’re not sure whether you need to file an FBAR or how to file.

FATCA reporting

As well as FBAR, a US law called the Foreign Account Tax Compliance Act (FATCA) requires expats to report their foreign financial assets (e.g. bank and investment accounts) on IRS Form 8938. The minimum reporting thresholds are higher for expats, starting at $200,000 at year end, or $300,000 at any time during the year. Missing FATCA filings can also trigger penalties, so seek advice.

Retirement accounts, pension distributions, and business interests

Americans living in Colombia must report their IRA, 401(k), and pension distributions. Note that Colombia doesn’t recognize the tax benefits of US retirement accounts, neither does the US recognize Colombian plans.

If you have overseas business interests, you’ll probably have to report them to the IRS. There are numerous forms relating to overseas businesses, including Form 5471 for reporting foreign corporations, so it’s important to structure your businesses and investments to optimize your taxes and reporting burden.

Colombian taxes overview

Americans living in Colombia must also comply with local tax laws. The Colombian tax authority is the Dirección de Impuestos y Aduanas Nacionales (DIAN). Whether you owe Colombian taxes depends on your residency status. If you spend more than 183 days in Colombia during a rolling 365-day period, the authorities consider you a Colombian tax resident. Residents pay Colombian tax on worldwide income, while non-residents only pay local taxes on Colombia-source income.

Colombian tax rates range from 0% to 39% for residents. Non-residents typically pay 35% on Colombian-source income. Taxable income includes salaries, business earnings, and investment income, with certain deductions allowed, such as mandatory social security contributions.

Colombian filing deadlines vary by the last two digits of your tax ID (NIT) but generally fall between August and October each year for individuals. Late filing or payment can trigger penalties and interest, so keeping track of deadlines is essential. Most Americans living in Colombia hire a local accountant with experience working with expats to ensure compliance and to optimize their Colombian tax position.

Tax planning strategies for expats in summary

Strategic planning with an expat tax specialist helps to reduce overall tax liability. Key strategies include:

• Timing income to maximize FEIE and Foreign Tax Credits
• Structuring freelance income to minimize double social security taxes
• Contributing to US retirement accounts for deductions and long-term growth
• Maintaining detailed records of Colombian tax payments and exchange rates

FAQs

Do Americans in Colombia have to pay US taxes?

Yes, all US citizens and green card holders must report worldwide income to the IRS.

What is the Foreign Earned Income Exclusion?

The FEIE is an IRS provision that lets qualifying Americans exclude up to $130,000 (in 2025) of income earned outside the US from US taxes.

Do I need to report Colombian bank accounts?

Yes. Americans with foreign financial accounts have to file an FBAR if their combined foreign account balances exceed $10,000 at any time in a year.

Can I avoid double taxation in Colombia?

Most expats avoid double taxation by claiming foreign tax credits and exclusions. Seek advice to optimize your US taxes as an expat.

Are US retirement accounts taxed in Colombia?

The tax benefits of US retirement accounts aren’t recognized by the Colombian tax system.

When is the US tax filing deadline for expats?

June 15, though expats can claim an additional extension to October 15.

Filing US taxes as an American in Colombia

US taxes feel complicated for Americans living in Colombia, but careful planning aligned with expert advice simplifies the process and lets you keep compliant and avoid penalties. Americans can claim different exclusions and tax credits penalties, and structure their business activities and investments to reduce their tax bill.

If you’ve been living in Colombia for a while without filing US taxes, you may qualify for an IRS amnesty program called the Streamlined Procedure.