TL;DR — Key Takeaways
- →Living abroad does not by itself end a US W-2 or US filing for citizens and green-card holders.
- →The employer may keep withholding; FEIE or FTC is claimed on your return, not by the visa stamp.
- →Once you are tax resident in the host country, that country may tax the same wages.
- →Totalization agreements can change FICA; state domicile can continue even when federal FEIE works.
Short answer
Working for a US employer from abroad is still a US payroll story plus a host-country residency story. The move does not convert a W-2 into "foreign income the IRS ignores."
What usually stays in place
- US withholding. Many employers keep federal (and sometimes state) withholding until payroll is formally changed. That is a cash-flow fact, not proof of where you are tax resident.
- Your US return. Citizens and green-card holders still file. FEIE vs FTC is an election on qualifying income, with a day log — the 2026 FEIE cap used on this site is $132,900.
- Social Security. A totalization agreement may exempt you from US FICA if you are paying into the host system. Without one, US payroll taxes often continue. FEIE does not cancel self-employment tax, and it does not automatically cancel FICA on a W-2.
- State domicile. California and other states can keep a claim if ties remain. See California domicile abroad.
What the host country adds
If domestic tests make you tax resident where you live, that country may tax the wages even though a US company paid them. Your employer's permanent-establishment exposure is their problem, but it is why some employers will not allow a long stay in a country where they have no entity.
Next steps
- Read US digital nomad taxes (W-2 vs contractor).
- Check physical presence on the FEIE calculator.
- Model host take-home on the calculator.
Educational planning only — not tax advice. Payroll, totalization, and state exit are fact-specific.