An American working in Lagos, Abuja, or Port Harcourt reports the same income to two different tax authorities: the state internal revenue service that administers Personal Income Tax Act filings for individuals, and the IRS. The detail that catches even seasoned expats off guard is that Nigeria and the United States have never negotiated an income tax treaty, so the relief mechanisms that treaty-country expats lean on, coordinated residency tie-breakers, reduced withholding, treaty-based pension deferral, simply are not available. Nigerian residency triggers worldwide income tax under the Personal Income Tax Act, and separately, US citizenship or green card status pulls in worldwide income tax on its own regardless of where the person actually lives, which leaves the Foreign Tax Credit and the Foreign Earned Income Exclusion to do all the double-tax prevention on their own, year after year.
Do US Citizens Living in Nigeria Have to File Both Nigerian and US Tax Returns?
Yes, almost without exception. A resident individual's Personal Income Tax Act return goes to the internal revenue service of whichever state that person lives in, since individual PIT is a state-administered tax, while the Federal Inland Revenue Service handles federal taxes and the national tax framework rather than individual filings. On the US side, the trigger is citizenship rather than location: an American citizen or green card holder owes the IRS on worldwide income no matter which country they call home.
Because no treaty links the two systems, these two filing obligations run on entirely separate tracks with nothing to reconcile them the way a treaty reconciles filings for Americans in many other countries. Settling the Nigerian tax bill does not touch the US Form 1040 requirement, and filing that Form 1040 does not touch the Nigerian obligation either. All of the double-tax planning work therefore falls on the Foreign Tax Credit and Foreign Earned Income Exclusion, since there is no treaty mechanism standing by to help.
How Does Nigeria Tax Residents on Worldwide Income?
Nigeria determines individual tax residency primarily through a physical presence test and the location of an individual's usual place of abode, and residents are taxed on worldwide income once that threshold is met. Nonresidents are generally taxed only on Nigeria-source income instead, which makes the residency determination the starting point for figuring out what an American living there actually owes locally before turning to the US return.
Nigerian personal income tax rates and filing rules should always be confirmed for the current year with a Nigerian tax advisor, since foreign tax figures change and a stale number can throw off the US Foreign Tax Credit that depends on it. Employers in Nigeria commonly withhold tax from salary through the Pay As You Earn system, similar to US wage withholding, with an annual return still generally required to reconcile other income and confirm the final liability.
Should You Claim the FEIE or the Foreign Tax Credit on Nigerian Income?
Picking between the Foreign Tax Credit and the Foreign Earned Income Exclusion is a Nigeria-specific math problem that changes with income level and household situation, so it is worth running the comparison fresh each filing season instead of sticking with whatever was elected the year before. Whether either one comes out ahead depends on the actual Nigerian tax paid for the year and on whether the family needs the refundable Child Tax Credit intact.
The Foreign Tax Credit on Form 1116, computed by income category under IRC Sections 901 and 904, credits Nigerian income tax against US tax dollar for dollar, and unused credit does not simply disappear (see the carryover row below). The Foreign Earned Income Exclusion on Form 2555 takes a different path under IRC Section 911: it exempts Nigeria-based earned income outright, up to $130,000 for 2025, a ceiling that absorbs a large share of what a corporate or professional salary in Lagos or Abuja actually pays, though it leaves self-employment tax untouched and can knock the refundable Additional Child Tax Credit out of reach for a family with kids. Choosing to drop it later also means a five-year wait before it can be re-elected without IRS consent, a lock-in that pushes many higher earners in Nigeria toward the credit route from the start. Our FEIE versus Foreign Tax Credit comparison walks through the tradeoffs in more detail.
Is There a US-Nigeria Tax Treaty, and What If There Isn't?
No, and this is the single most important fact for anyone handling US expat taxes in Nigeria. The United States and Nigeria have never signed a comprehensive income tax treaty, so there is no treaty text to reduce withholding on cross-border payments, no treaty-based tie-breaker for someone who could be considered a tax resident of both countries at once, and no treaty provision to look to for anything else.
Because no treaty exists, double-tax relief rests entirely on domestic US law: the Foreign Tax Credit under IRC Sections 901 and 904, and the Foreign Earned Income Exclusion under IRC Section 911. Nigerian income tax paid is generally still creditable on Form 1116 as a matter of ordinary Foreign Tax Credit rules even with no treaty behind it, so the absence of a treaty does not by itself guarantee double taxation, provided the return is prepared correctly. What it does remove is every planning tool that depends specifically on treaty language, from a saving clause analysis to a treaty-based residency tie-breaker to a treaty article deferring tax on a Nigerian pension. Even in treaty countries, the saving clause lets the United States tax its own citizens as though the treaty did not exist for most purposes, so Nigeria's lack of a treaty mainly removes benefits that would otherwise have applied to non-citizens or to specific income categories.
Are Nigerian Investment Funds Taxed as PFICs?
This is one of the more expensive surprises waiting for Americans who invest through a Nigerian bank, brokerage, or asset manager. Naira mutual funds, money market funds, and unit trusts, the everyday savings products Nigerian banks and asset managers push to retail clients, almost always fit the IRC Section 1297 definition of a passive foreign investment company, and that single classification drags the fund into the Section 1291/1298 regime with a Form 8621 required for each one held. Nigeria's own tax treatment of the fund has no bearing on this outcome, and the missing treaty does nothing to soften it either.
Without the available election in place, the default treatment is punishing: gains and certain distributions from the fund get spread ratably across the entire holding period, taxed at the highest rate that applied in any of those years, and charged interest for the deferral, with a Form 8621 required for every single fund even in a year that owes no additional tax. That is the calculation that pushes a lot of Americans in Nigeria to keep their long-term savings in a US-domiciled brokerage account instead of a fund sold by a Nigerian bank or investment platform.
How Are Nigerian Pensions and Retirement Accounts Taxed by the US?
The misconception that trips up expats in Nigeria specifically: since the Contributory Pension Scheme makes Retirement Savings Account contributions mandatory and the Nigerian tax code goes easy on them, the IRS must go easy too. It does not work that way, and with no treaty on the books there is no override clause to invoke on the account's behalf. Favorable Nigerian tax treatment of a Retirement Savings Account, or of an employer-sponsored or private pension on top of it, does not translate into US tax deferral by itself.
The default rule sits in IRC Sections 401(a) and 402(b): income building up inside a foreign retirement arrangement gets taxed to a US person as it accrues unless a treaty article specifically defers it, and Nigeria has no treaty to supply that article. So a Retirement Savings Account, an employer pension scheme, or a private retirement product each needs its own fact-specific review under that default rule rather than an assumption that it works like a US 401(k). Our foreign pension US tax treatment guide covers the questions that decide the answer for any foreign plan, including whether growth is taxed as it accrues and how distributions get taxed down the line.
What Foreign Accounts and Assets Must You Report?
Nigerian financial accounts and investments come with reporting duties that sit completely apart from the income tax return, apply regardless of whether any US tax is actually owed, and get no relief from a treaty that was never signed. These are Treasury and IRS filings enforced on their own schedules, and missing one usually costs far more in penalties than the tax underneath it ever would.
A lone naira savings account at a Nigerian bank often stays under the radar, but add a domiciliary dollar account, a brokerage account holding Nigerian securities, or a Retirement Savings Account balance to the mix, and an American frequently crosses into FBAR territory on FinCEN Form 114, required once the combined balance across all foreign accounts tops $10,000 at any point during the year; see our FBAR filing guide. A separate, generally higher, dollar threshold under FATCA can additionally pull those same accounts onto Form 8938 attached to the federal return itself, on top of the standalone Treasury filing; see our Form 8938 guide. And since the US and Nigeria never entered into a totalization agreement, a self-employed American working in Nigeria cannot assume Nigerian pension contributions offset US self-employment tax; our guide to totalization agreements and self-employment tax abroad covers why that coordination simply is not there.
Bottom Line
The costliest mistake in US expat taxes in Nigeria is assuming a tax treaty is quietly doing some of the work, when the United States and Nigeria have never signed one. The state tax authority, operating under the Personal Income Tax Act alongside the Federal Inland Revenue Service's federal framework, and the IRS run on completely separate tracks, so the Foreign Tax Credit and the Foreign Earned Income Exclusion have to carry the entire double-taxation problem alone. Layer on a missing totalization agreement, PFIC treatment for locally sold funds, and a mandatory pension system that gets no treaty deferral, and Nigerian investment accounts and retirement savings each bring their own separate US tax and reporting obligations on top of the regular income tax return. Any one of those pieces handled wrong tends to cost far more in penalties than the underlying tax bill ever would.
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