Five Tax Moves Worth Making Before December 31

There's a stretch of the calendar, roughly now until the leaves turn, when nothing is due and nobody from either tax authority is asking for anything. It's also the last window in the year where we can still change the outcome instead of just reporting it.

By filing season most of the decisions have already been made, and the return becomes an exercise in describing what happened. Here are five things still open, roughly in order of how much money they tend to move.

Re-run the FEIE versus Foreign Tax Credit question, especially if there are kids involved

Most of us picked an approach in our first year abroad and never revisited it. That made sense then. It makes less sense now, because the One Big Beautiful Bill Act raised the Child Tax Credit to $2,200 per child and the refundable portion to $1,700.

Here's where the two approaches diverge. The Foreign Earned Income Exclusion removes foreign salary from the return entirely, which feels clean and often is for a single filer with no children. But the refundable portion of the Child Tax Credit is calculated as 15% of earned income above $2,500, and excluded income doesn't count as earned income for that purpose. Exclude the whole salary and the refundable credit goes to zero.

The Foreign Tax Credit leaves the German salary on the return and offsets the US liability with German tax already paid. At a normal German salary that credit is usually more than enough to wipe out the US tax, and the income still counts toward the refundable credit.

Take a family in Hamburg with two children and a household salary in the EUR mid-80,000s range. Under the FEIE, US tax owed is zero and the refundable credit is zero. Under the Foreign Tax Credit, US tax owed is generally still zero, and up to $1,700 per child may be refundable. Same family, same income, meaningfully different result.

Two things to know before anyone rushes to switch. Under the new rules, the taxpayer or at least one spouse must have a work-eligible Social Security number, and so must each qualifying child. Families with children born in Germany who haven't sorted out consular birth reports and SSNs should start now, because consulate timelines are not quick.

The second is the one that catches people. Revoking the FEIE election isn't casually reversible: once revoked, it generally can't be elected again until the sixth tax year afterward, unless the IRS consents through a private letter ruling. Switching is worth doing when the numbers support it. It isn't worth doing on a hunch.

Make the September 15 estimated payment if you owe one

The third-quarter estimated payment for 2026 is due September 15. This mostly catches freelancers and Selbstständige, but also plenty of people who don't consider themselves self-employed: anyone with US-source income nobody is withholding on. Rental income from a house back home. A US brokerage account. A consulting arrangement with a US client that started as a favour and turned into real money.

Doesn't the June 15 expat extension cover this? No, and it's one of the most persistent misunderstandings we run into. The extension moves the filing deadline. It does nothing to the payment obligation, which was due in April regardless, and interest accrues from that original date.

The practical protection is the safe harbour. Paying in at least as much as last year's total tax liability generally shields against underpayment penalties even if this year's liability lands higher. For anyone whose income swings, that's an easier target than forecasting the current year precisely.

Write down your highest account balances while you can still find them

Every March, someone comes to us trying to reconstruct the peak balance on a German account that closed the previous August. German banks are inconsistent about producing historical statements, and the ones that will tend to charge for the privilege.

The FBAR threshold is $10,000 across all foreign accounts combined, measured at the highest point during the year rather than at year-end. That aggregate framing catches more people than expected. A bonus landing in October, property sale proceeds sitting briefly in a current account, or money counted twice during a transfer can push the total over the line for a matter of days and still trigger the requirement.

"Account" is broader than most people assume. It covers current and savings accounts, a Depot holding securities, some insurance products with cash value, and accounts where we have signature authority without owning the money. Joint accounts with a non-American spouse count in full, not by half.

Get the German investment paperwork in order now

Anything in a German Depot carries more US reporting than the German side would suggest. German funds and ETFs are frequently classified as Passive Foreign Investment Companies, and PFIC reporting is its own world: Form 8621, per-fund calculations, and a default regime that is deliberately unfavourable. The German broker has no reason to provide what those calculations require, because none of it matters to the Finanzamt. Assembling it is manageable in August and genuinely unpleasant in the week before the October deadline.

Look at German pension contributions with American eyes

The statutory pension sits on reasonably settled ground for US purposes, with the Totalization Agreement governing how the two systems coordinate. Private and supplementary arrangements are less tidy. Riester and Rürup contributions receive favourable treatment under German law, and the IRS does not automatically extend the same. How the treaty applies depends heavily on the specific product and how it's structured, and some arrangements carry foreign trust reporting implications on top of the income question.

None of this argues against contributing. It argues for knowing what the US side of the ledger looks like before another decade stacks up on top of it.

The bottom line

None of these are urgent, which is precisely why they get postponed. All five are easier in August than in the week before a deadline, and the first two can change what we actually owe rather than just how we describe it.

If the FEIE and Child Tax Credit interaction raised a question, that's the one we field most often, and it's worth working through with your actual numbers rather than a rule of thumb. Reach out and we'll take a look.

This post is intended for general informational purposes and does not constitute tax advice. Please consult a qualified tax professional (like us!) regarding your specific situation.