Many USCs or LPRs who live outside the U.S. often make the erroneous assumptions that – (1) “I must have no U.S. federal tax owing, since I pay more taxes in my country of residence than the U.S. tax applicable; and (2) If I owe no U.S. federal taxes, I do not need to file a U.S. federal income tax return.”
Unfortunately, the federal tax law does not work in such a common sense manner. Any USC individual (and any LPR who does not live in a country with a U.S. income tax treaty) is obligated under the U.S. federal tax law to file a federal income tax return IRS Form Form 1040 if they meet minimum thresholds of income. The thresholds are low, and are reached once the gross income is at least the sum of (i) the “exemption” amount (currently US$3,900 per exemption) and (ii) the “standard deduction” amount.
Accordingly, even if a USC or LPR has even a modest sum of “gross income”, which equates to at least US$10,000 (in whatever currency earned), the USC or LPR will probably have a U.S. tax return filing requirement.
This is true, even if all of the income is earned income and eligible for the foreign earned income exclusion, which is US$97,600 for the year 2013. See, USCs and LPRs Living Outside the U.S. – Key Tax and BSA Forms