Taxes when your life spans Germany and the United States

A practical overview of the issues that make German–U.S. tax life different: worldwide income, residency, foreign accounts, investments, pensions and treaty coordination.

Updated September 2026

U.S. worldwide taxation

U.S. citizens and U.S. tax residents are generally subject to U.S. federal tax reporting on worldwide income even while living abroad. Foreign earned income exclusions, foreign tax credits and treaty provisions can reduce double taxation, but they do not automatically eliminate filing obligations.

German tax residency

Germany applies its own residence and source rules. Maintaining a home, spending substantial time in Germany or receiving German-source income can keep German tax obligations alive after a move. The exact result depends on facts and the type of income.

The U.S.–Germany tax treaty

The treaty allocates taxing rights and contains rules for specific categories such as employment, pensions and business income. Treaty outcomes can differ from the domestic-law starting point and may require disclosure on a U.S. return.

Foreign tax credits

The U.S. foreign tax credit is a common mechanism for reducing double taxation, but timing, income baskets and sourcing rules matter. A German tax bill and a U.S. tax bill do not always offset one another dollar-for-dollar.

FBAR and FATCA

Foreign bank and investment accounts can trigger separate information reporting. FBAR is filed with FinCEN rather than with the income-tax return. FATCA-related Form 8938 has different thresholds and rules, and some taxpayers may have both obligations.

Pensions and investments

German pensions, retirement products, investment funds and insurance-based investments can receive very different treatment under U.S. rules. Non-U.S. investment funds are especially important to review because PFIC rules can create complex reporting and unfavorable outcomes.

Businesses and self-employment

Owning a German company, U.S. LLC or self-employed business across borders can add entity-classification, payroll, social-security and information-return issues. Do not assume an entity has the same tax classification in both countries.

German property

Rental income, depreciation and sale gains on German real estate may have reporting consequences in both countries. Keep purchase, improvement, mortgage and rental records in both original currency and enough detail to calculate U.S.-dollar amounts later.

When to hire a specialist

Professional cross-border help is particularly useful when you have investments, pensions, businesses, multiple states or countries, late foreign-account reporting, a major move, an inheritance or a property sale.

Official and primary sources

• IRS — U.S. tax treaties
• IRS — International taxpayers
• FinCEN — FBAR
• German Missions — Taxes