Taxation of Persian Americans Living in Iran
Disclaimer: The information below is provided for general information purposes only and does not constitute legal or tax advice. Please consult a qualified professional regarding your specific situation.
Understanding Taxation for Persian Americans Living in Iran, U.S. Tax Responsibilities While Living in Iran
If you are a U.S. citizen, green card holder, or meet the substantial presence test (as defined in IRC §7701(b)), you are considered a U.S. person for tax purposes. This means you are required to report and pay U.S. taxes on your worldwide income, regardless of where that income is earned—even if you reside in Iran.
International Tax Reporting Requirements
As a U.S. person abroad, you must also comply with key international tax reporting rules, including:
- FBAR (Report of Foreign Bank and Financial Accounts)
- FATCA (Foreign Account Tax Compliance Act)
- Other applicable U.S. Treasury and IRS disclosures
Foreign Earned Income Exclusion (FEIE)
The Foreign Earned Income Exclusion (FEIE) under IRC §911 may allow you to exclude a portion of your earned income from U.S. taxation—if you qualify.
FEIE Annual Limits (Adjusted for Inflation)
| Year | Maximum Exclusion |
| 2021 | $108,700 |
| 2022 | $112,000 |
| 2023 | $120,000 |
| 2024 | $126,500 |
| 2025 | $130,000 |
FEIE Eligibility Requirements
To qualify for FEIE, you must:
- Live and work outside the U.S.
- Meet one of the following:
- Physical Presence Test: Be present in a foreign country at least 330 days in any 12-month period, or
- Bona Fide Residence Test: Be a resident of a foreign country for an entire tax year
⚠️ Important: The FEIE applies only to earned income (e.g., wages, salaries). It does not cover unearned income such as dividends or capital gains, nor does it exempt you from FBAR or FATCA filing requirements.
Types of Foreign Income
U.S. taxpayers abroad may earn various types of income. These are classified as:
I. Earned Income
Income from active work:
- Salaries & wages
- Commissions
- Bonuses
- Tips & professional fees
II. Unearned Income
Income from investments or passive sources:
- Dividends
- Interest
- Capital gains
- Gambling winnings
- Alimony
- Social Security benefits
- Annuities
III. Variable Income
Income that may include both earned and unearned components:
- Business income
- Royalties
- Rental income
Iran Sanctions and OFAC Compliance- Persian Speaking Clients Welcome
Employment in Iran and Sanctions Risk
Working in Iran may violate U.S. sanctions laws, specifically the Iranian Transactions and Sanctions Regulations (ITSR) administered by the Office of Foreign Assets Control (OFAC).
Permissible Employment
Limited exceptions exist for employment with organizations such as:
- The World Bank
- The International Monetary Fund (IMF)
- United Nations and affiliated entities
✅ Before accepting employment in Iran, confirm with the employer and seek legal advice to ensure compliance with OFAC regulations.
If You May Have Violated OFAC Regulations
If you’ve worked or conducted financial transactions in Iran without an OFAC license, you may be in violation of U.S. law. Seek legal counsel immediately.
Our firm can assist with:
- Voluntary Self-Disclosure (VSD) to OFAC
- IRS Voluntary Disclosure Practice (VDP)
- Tax compliance for income earned in Iran
- Foreign bank account reporting
- Foreign gifts and inheritance
Contact Zaher Fallahi, Tax Attorney, CPA
As one of the limited U.S. firms with a dual focus on OFAC regulations and international tax matters, we are uniquely equipped to help Persian Americans navigate these complex issues.
📞 Schedule a Nationwide Consultation- Farsi Speaking OFAC Iran Sanction:
- Toll-Free: 1 (877) 687-7558
- Los Angeles: (310) 719-1040
- Orange County: (714) 546-4272
- Email: taxattorney@zfcpa.com
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