American in the Netherlands: Do You Still Owe US Tax? (FEIE vs Foreign Tax Credit)
US citizens and green-card holders living in the Netherlands pay Dutch tax and still file a US return. See what you would owe the IRS on a Dutch salary under the Foreign Earned Income Exclusion and under the Foreign Tax Credit, which part of your Dutch tax counts, and which method leaves you better off, with 2026 rates for both countries.
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Result
| Foreign Earned Income Exclusion | Foreign Tax Credit | |
|---|---|---|
| US tax before credits | $0 | $12,649 |
| Salary excluded | $97,632 | — |
| Foreign tax credit used | $0 | $12,649 |
| Child tax credit (against tax) | $0 | $0 |
| Child tax credit paid out (refundable) | $0 | $0 |
| Unused Dutch tax to carry forward (10 years) | $0 | $14,694 |
| You pay the IRS | $0 | $0 |
Also on your list
- FBAR: report your Dutch accounts if their combined top balance went over USD 10,000 in the year (FinCEN 114, by 15 April, automatic extension to 15 October).
- Form 8938 (FATCA) for foreign financial assets above USD 200,000 at year end (single, living abroad; USD 400,000 married filing jointly).
- Dutch or European investment funds are PFICs for the IRS, with punitive US tax. Many Americans here hold US-domiciled funds through a broker that accepts US clients.
- Living abroad gives you an automatic extension to 15 June to file and pay; interest runs from 15 April.
An estimate for one Dutch salary, tax year 2026, with the IRS 2026 brackets, standard deduction, exclusion (USD 132,900) and child tax credit. Not included: the foreign housing exclusion, the 3.8% net investment income tax, state income tax, self-employment, Dutch pension contributions and Box 3. The AOW and Anw premiums inside Dutch tax are treated as non-creditable social security under the US–Dutch totalization agreement. Choosing between the exclusion and the credit has multi-year consequences (revoking the exclusion locks you out for 5 years): check with a US expat tax professional before you file.