She is far from alone as there are estimated 8 million US Persons citizens orGreen Card holders who reside outside of the US. The vast majority are notwealthy individuals.She may not distinguish between the obligation to FILE and being assessed aTAX BILL the first is unavoidable the second may often not exist. You friend is obliged to FILE reports to two different agencies a US Federal Income tax to the IRS AND b Foreign Accounts reporting to FinCEN every year. In most cases the tax bill to the IRS is zero due to tax treaties to avoid double taxation. However US taxation is very complex and on a schedule that is usually not in sync with foreign taxation so complying under threat of severe penalty is very onerous to the ordinary expatriate.FILING OBLIGATIONS TO IRS AND TO FinCEN paperworkRegardless of location of residency Americans have worldwide lifelongobligation to officially provide worldwide financial information to twoseparate US Federal entities to FILE US income tax to the IRS every year even if your US tax would be zero and to REPORT on any nonUS bank accounts to FinCen if at any point your total nonUS holdings reached 10k or more. FATCAUS FEDERAL TAX OFTEN ZERO DUE TO FOREIGN INCOME TREATMENT rarely a tax billHowever the tax due to the IRS may be reduced even to nil if you are anofficial resident of another country and are eligible to either one of two taxregimes Either Foreign Earned Income Exclusion. You choose not the be subject to US taxes for income under a threshold prorated for any period physically present in the US in any given year. This amount is currently around 90k maximum. Note that this is best for salaried expatriates as nonearned income foreign fund investments foreign capital gain on real estate foreign pensions ARE NOT eligible for the FEIE Or Foreign Tax Credit. This regime allow you to apply the income tax paid to a foreign tax authority as a credit to the calculated US income tax. This is a better choice if most of your income is NOT from salary. If your foreign income tax in a treatylinked country is greater than the calculated US income tax your US tax is reduced to zero. If your foreign tax is less than the USu2023 then you have to pay the IRS the difference.ProblemsUnfairness for US Expatriates and Dual Nationals 1. Unearned foreign income from foreign investments may be taxed by both the foreign tax authority AND the IRS. Thus foreign pensions capital gains and investments may suffer from the cumulative taxation of two countries 2. NonUS investments such as in collective investment instruments are dissuasively taxed relative to mutual and stock funds in the US. Foreign capital gains are taxed at higher u201cordinary incomeu201d rates. If one wishes to invest in foreign stocks itu2019s best to use a USbased fund investing in ADRs of foreign companies. One can also invest in individual foreign stocks but you would have to deal with the multiplicity of reporting and accounting tasks. 3. It costs to prepare US taxes sometimes over a thousand dollars depending upon the complexity of your US tax situation. For Americans resident overseas of limited means the actual cost of complying may be in the hundreds to thousands of dollars even if the net IRS tax bill is zero 4. In some countries access to timely and relevant US tax information and advice is poor. 5. Out of sight out of mind is NOT an option as the US has forced foreign banks to comply with warrantless financial information reporting arising from FATCA 6. Accidental u201cUS Personsu201d are targeted not just people with a US SS or passport. Israelis Indians etc. have received penalty notices only to find out that one parent may have been an American or that they had been born in the US but left as a baby. 7. Sanctions are drastic on foreign banks who donu2019t comply with acting as screeners for the IRS in identifying US Persons. Americans and their spouses have had their foreign bank accounts blocked until they provide proof that they are not subject to US taxation or compliant with FATCA reporting requirements 8. Tax evasion is a Federal felony in the US versus an administrative infraction in other countries. The IRS is the best resourced fiscal agency in the world and never forgets. 9. If an American wishes to give up US citizenship it is not easy or free of cost or fiscally definitive Your tax compliance status with the IRS must be complete. All your US assets would be subject to an Exit Tax tantamount to a tax on gifting to a foreigner If the IRS deems unilaterally that you will have renounced your US citizenship mainly for the purpose of avoiding US taxes it may pursue you for up to 10 years after renunciation10. Expatriate American taxpayers have little effective politicalrepresentation. Unlike some countries that have a specific parliamentariangroup for expatriate voters Americans can ONLY vote in the most recent USlocal district. Thus their concerns are usually submerged by their formerlocal US communitiesu2023 concerns. Even though the vast majority of expatriateAmericans are not wealthy many are stressed out by the cost and complexity offiling US taxes as well as local taxes the populist inaccurate politicalpropaganda that they are wealthy tax cheats. In fact there are far higherlevels of tax u201coptimizationu201d by US corporation using tax havens than by themillions of ordinary expatriates.