Yes, Americans who live abroad are still requir
Yes, Americans who live abroad are still required to file a U.S. tax return, even if there's no tax due. In fact, filing an annual U.S. tax return is actually MORE important once you live abroad. Here's why:
You may be familiar with the Foreign Earned Income Exclusion (the "FEIE")--that's the rule that allows Americans living abroad to make up to about $100,000 from working without paying any U.S. income tax. Some people think that it's not important to file a return if their income is below the FEIE cap.
However, the FEIE can ONLY be claimed on a filed tax return. So, if you were to fail to file a U.S. tax return and the IRS were to audit you, you would lose the ability to claim the FEIE. You couldn't tell the IRS at that point that your income was below the FEIE cap each year. You'd have to pay U.S. tax on amounts that you would have been able to earn tax-free if you'd only filed a return. So, failing to file a return could cause you to lose the golden opportunity provided by the FEIE.
For Americans who are behind on U.S. tax returns, the IRS has several amnesty programs that will allow you to catch up easily without having to pay any penalties. Talk to an experienced tax attorney to determine which amnesty program is right for you.
(Pictured: hotel Bora Bora)