American MREs residing in the United States or in the US with Moroccan tax ties face a particular fiscal situation. The United States applies citizenship-based taxation: a US citizen or permanent resident (green card holder) must declare their worldwide income to the IRS, even when living in Morocco for 10 years. The US-Morocco tax treaty of 1 August 1977 (in force since 30 December 1981) allocates taxing rights to prevent double taxation, but does not eliminate the American declarative obligation. This guide details the complete 2026 mechanics: Form 1040 filing, FEIE Form 2555 exclusion, Foreign Tax Credit Form 1116, FATCA Form 8938 compliance, FBAR FinCEN 114.
Costs & fees
| Moroccan tax residence certificate (DGI) | Check on tax.gov.ma | With the DGI |
| US tax residence certificate (IRS Form 6166) | 105 USD for individuals from 1 October 2026 (IRS) | Application on Form 8802 |
| Expat US tax accountant fees (Forms 1040, 2555, 1116, 8938) | Check with the professional | FBAR not included |
| FBAR FinCEN 114 filing | Check on the FinCEN website | Online filing at bsaefiling.fincen.gov |
| Moroccan TPI on property sale | 20% of capital gain | Exemption if main residence for at least 5 years (CGI, art. 63-II-B) |
| Withholding on US dividends paid to Moroccan resident | 15% (10% for a company owning at least 10% of the voting shares, under conditions) | Article 10 treaty 1977, treaty cap |
Timeline
Citizenship-based taxation: the rule that changes everything (IRC §1)
The United States taxes its citizens and permanent residents (green card holders) on their worldwide income, regardless of physical residence. This is citizenship-based taxation. Consequence for an American MRE living in Morocco: annual Form 1040 filing with the IRS, even if all income comes from Morocco and you have not set foot in the US for 5 years. US tax residence status (Substantial Presence Test, IRC §7701(b)) adds another layer for non-citizens: 183 days of cumulative presence over 3 years using a weighted formula (1 + 1/3 + 1/6) triggers US tax residence. The 1977 treaty (article 3) provides tie-breaker rules (permanent home, centre of vital interests, habitual abode, nationality) to resolve dual residence conflicts.
💡 Tip: Green card holders who move back to Morocco retain their IRS filing obligation until they formally abandon their green card via Form I-407 (USCIS). Failing to file this form means a lifetime filing obligation.
⚠️ Warning: Renouncing US citizenship to escape taxation triggers the expatriation tax (IRC §877A) for covered expatriates: mark-to-market taxation on the value of all assets at renunciation date, plus exit tax.
Earned income: FEIE and Foreign Tax Credit (Forms 2555 and 1116)
Two tools to avoid double taxation on Moroccan salary. First, Foreign Earned Income Exclusion (FEIE) via Form 2555: exclusion up to an annual cap indexed to inflation (IRC §911), published by the IRS. Cumulative conditions: (1) have a tax home abroad, (2) pass the Bona Fide Residence Test (Moroccan tax resident for a full fiscal year) OR the Physical Presence Test (330 days over 12 consecutive months). Second, the Foreign Tax Credit (FTC) via Form 1116: tax credit for Moroccan IR already paid. Combination possible: FEIE up to the cap, then FTC on the excess. Article 15 of the 1977 treaty provides that salaries may be taxed in the State of residence and in the source State, with exemption in the source State if presence there is under 183 days, the employer is a resident of the other State and the remuneration is not borne by a permanent establishment.
⚠️ Warning: The Physical Presence Test counts 330 physical days in Morocco within a 12 consecutive-month window, not a calendar year.
Pensions, dividends and interest: 1977 treaty articles 10, 11, 19
Article 19 assigns private pensions paid in respect of past employment to the beneficiary's State of residence. US Social Security benefits are excluded from this definition: the IRS states that Morocco may tax its residents on these benefits, subject to a credit under Article 21. A US citizen declares this income on Form 1040. Public pensions paid by the US government to its citizens fall under Article 17 (governmental functions). For dividends: Article 10 limits withholding tax to 15%; 10% only if the beneficiary is a company owning at least 10% of the voting shares and meeting the other conditions. For interest: Article 11 caps withholding at 15%. The US bank or company withholds at source; any excess is recovered via Form 1116. For dividends and interest from Moroccan sources paid to a US person, Moroccan tax is capped at 15% by the treaty (the domestic Moroccan rate on dividends distributed in 2026 is 11.25%).
💡 Tip: Form 1042-S, issued by the US broker, certifies the US withholding paid.
Moroccan rental income: dual filing IRS and DGI
Article 6 of the 1977 treaty assigns rental income to the State where the property is located: your Moroccan rents are taxable in Morocco under domestic rules (Moroccan income tax after a 40% allowance, with withholding of 10% or 15% depending on gross rents when the tenant is a legal entity; the 5% withholding of the 2026 finance law concerns rental income paid to individuals under the actual or simplified net result regime). For a US person, this Moroccan income must also appear on Form 1040 (Schedule E) with Form 1116 for tax credit. Selling a Moroccan property triggers the Moroccan income tax on property profits at 20%, exempt if main residence for at least 5 years (CGI, art. 63-II-B). The capital gain is also taxable in the US via Form 1040 (Schedule D, long-term capital gains 0/15/20%) with FTC for the Moroccan tax. The seller declares the profit electronically and pays the tax within 30 days of the sale (DGI tax guide for MRE).
⚠️ Warning: The US PFIC (passive foreign investment company) regime applies to Moroccan mutual funds (OPCVM) held by a US person: mandatory Form 8621 filing and punitive annual mark-to-market taxation.
FATCA, FBAR and Moroccan accounts disclosure: heavy obligations
Any US person holding Moroccan bank accounts whose aggregate balance exceeds 10,000 USD at any time during the year must file FBAR (FinCEN Form 114) before 15 April, with automatic extension to 15 October. Civil penalties are adjusted for inflation each year (see the IRS). Additionally, if total foreign financial assets exceed the IRS thresholds, Form 8938 (FATCA) must be attached to Form 1040. For a single person living abroad, the thresholds are 200,000 USD on the last day of the year or 300,000 USD at any time during the year; for a married couple filing jointly, 400,000 USD and 600,000 USD; lower thresholds apply to people living in the United States.
💡 Tip: For FBARs not filed in past years, the IRS offers the Streamlined Filing Compliance Procedure; its conditions are published by the IRS.
⚠️ Warning: Form W-8BEN is for non-US persons; for US persons, Form W-9 is required.
In depth
The mechanism for eliminating double taxation in the United States is based on the tax credit method (article 21 of the 1977 treaty). In practice: you first pay the Moroccan tax (IR or TPI) on Moroccan-source income, then calculate your US tax on the same income, then offset the Moroccan tax paid up to the US tax due via Form 1116. If Moroccan tax exceeds US tax, the excess can be carried forward 10 years or carried back 1 year. Numerical example: an American MRE living in Morocco earns 80,000 USD Moroccan salary and pays 14,000 USD Moroccan IR. On their US return, they first apply FEIE (80,000 USD exclusion via Form 2555). Remaining taxable: 0 USD. No need for FTC on this income. If they additionally have 50,000 USD Moroccan dividends taxed 15% in Morocco (7,500 USD), they report these 50,000 USD to the US, calculate the US tax due (e.g. 7,000 USD at 14% effective rate), and offset 7,000 USD as FTC. 500 USD of unused credit remains carry-forwardable. FEIE only applies to earned income, not dividends, interest or capital gains: for passive income, only FTC works.
❌ Common mistakes to avoid
- ✕Thinking that an unused green card from years past has expired fiscally: it remains active until Form I-407 of abandonment is filed.
- ✕Signing a W-8BEN at your Moroccan bank as a US citizen: this form is for non-US persons only. For US persons, W-9 is the correct document.
- ✕Forgetting FBAR FinCEN 114 when aggregate balance exceeds 10,000 USD at any time of the year: civil penalties are possible.
- ✕Combining FEIE and FTC on the same income: forbidden. Either FEIE up to the cap, or FTC on the entire amount, never both on the same fraction.
- ✕Investing in Moroccan OPCVMs while a US tax person: punitive PFIC regime, annual mark-to-market taxation and mandatory Form 8621.
- ✕Renouncing US citizenship without planning: covered expatriate status triggers mark-to-market taxation on all assets at renunciation date.
🔗 Official links and resources
IRS - Publication 54 (US Citizens and Residents Abroad)
Official IRS guide for US citizens and residents abroad, updated annually
IRS - Form 2555 (Foreign Earned Income Exclusion)
Form and instructions for FEIE exclusion
IRS - Form 1116 (Foreign Tax Credit)
Form for foreign tax credit
FinCEN - FBAR BSA E-Filing
Online filing portal for FBAR FinCEN Form 114
IRS - Streamlined Filing Compliance Procedure
IRS regularisation programme for US persons abroad
Moroccan DGI
Moroccan General Tax Directorate
IRS - US-Morocco tax treaty 1977
Official text of the US-Morocco tax treaty
❓ Frequently asked questions
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