Before You Leave the US for the UAE: You Still Pay US Taxes (Here's What to Do About It)

Before you leave the US for the UAE: the financial decisions organized by what has hard deadlines, what's irreversible, and what most people miss until the first April 15 in Dubai.

The UAE levies no personal income tax. For US citizens and green card holders, that eliminates the UAE tax bill. It doesn't reduce the US one. This checklist assumes you've already decided to go. It covers what to do before the moving truck arrives.

Before You Accept the Offer

Model your actual net income

The Foreign Earned Income Exclusion shelters $132,900 (2026) of your salary from US federal tax. If your UAE salary is $350K, approximately $132,900 is excluded and $217,100 is US-taxable at your marginal rate. With no Foreign Tax Credit available (the UAE imposes no tax to credit), you pay the full US federal rate on the excess.

Model this before you accept, not after you arrive. The actual take-home depends on: (1) your salary level vs. the FEIE cap, (2) your state of departure and whether you successfully terminate state residency, and (3) your unvested RSU position if you have equity.

Check your employment structure

Will you be employed by a UAE entity or remain on a US payroll? The answer affects your FICA obligation, your 401K contribution eligibility, and your FEIE eligibility. Confirm in writing before signing.

6-12 Months Before Departure

Terminate state tax residency (if applicable)

If you're departing from California, New York, New Jersey, or Illinois, this is likely the highest-value financial action on this list. California taxes income at up to 13.3% and will pursue out-of-state residents who have meaningful California ties. Steps to terminate California residency: surrender your California driver's license, update your voter registration, change your banking address, close any California-specific club memberships, and establish a non-California domicile (UAE counts). If your spouse stays in California, residency termination is significantly harder to establish.

Do this work well in advance of departure. A last-minute address change doesn't establish domicile change under California's analysis.

Maximize 401K contributions before your last US paycheck

If you're moving to a UAE entity payroll, contributions to your US 401K likely stop. In the period leading up to departure, maximize your contributions if your cash flow allows. The 401K stays in the US, keeps growing tax-deferred, and you access it at retirement regardless of where you are. Don't close it or cash it out.

30 Days Before Departure

Sell vested shares (non-citizens)

If you're not a US citizen — H-1B, L-1, green card holder — selling US securities after you become a non-resident alien triggers 30% withholding on proceeds. US capital gains rates (15-20%) apply while you're still a resident. If you have a concentrated vested position you plan to liquidate, do it before you leave. The window is your last day as a US resident.

US citizens: no 30% withholding regardless of residency. Sell based on the tax basis, not on the departure deadline.

Do not close your US brokerage account

Keep your US brokerage account open. Some brokerages restrict trading for accounts with non-US addresses — let your brokerage know you're relocating and confirm you can maintain the account. Do not open a UAE brokerage and start buying UAE-listed or UAE-domiciled investments. International funds are PFICs for US persons. Use US-listed ETFs in your US accounts.

Document your departure date

Your departure date matters for FEIE eligibility (330-day physical presence test) and for state residency termination. Keep your flight records and entry/exit stamps. The IRS may ask for proof of physical presence abroad when you claim the FEIE.

First 90 Days in the UAE

Open a UAE bank account

Emirates NBD, ADCB, and First Abu Dhabi Bank are the primary UAE retail banks. Your employer may require a specific bank. Once your account is active and receives salary deposits, it triggers FBAR reporting. A UAE bank account with a balance exceeding $10,000 at any point in the year must be reported on FinCEN 114. This is separate from your tax return and has its own June 15 deadline for Americans abroad.

FEIE election planning

If you arrive in the UAE in mid-year 2026, you have two options for claiming the FEIE for 2026. The physical presence test requires 330 days outside the US in any 12-month period — if you arrived September 1, 2026, your 330 days don't complete until July 27, 2027. You can still claim the FEIE for the 2026 return by extending your return to October 2027 and waiting until the physical presence test is satisfied. This is normal for first-year expats. Your CPA handles the extension filing.

The bona fide residence test is cleaner for permanent relocations — if you establish yourself as a bona fide UAE resident, you can claim FEIE for the full year of arrival.

Ongoing: What Doesn't Change When You're in Dubai

Form 1040: Annual, regardless of where you live. Americans abroad get an automatic filing extension to June 15 (not a payment extension — estimated taxes are still due April 15).

FBAR (FinCEN 114): Annual, for any foreign financial account exceeding $10,000 aggregate.

RSU vests: US-sourced income on the US workday portion. FEIE does not apply. No FTC to claim. Full US marginal rate on that portion.

Estimated quarterly payments: If your UAE employer doesn't withhold US taxes (most UAE employers don't), you're responsible for estimated quarterly payments to the IRS. Missing these creates underpayment penalties. Your CPA can set up the quarterly payment schedule.