The exemption amount isn't exactly a windfall level ($120K). Amounts earned over that are taxed in both countries - the US and the foreign country - and the only way to avoid double-taxation on that is if the US has a tax treaty with the country [1]. But that treaty generally means you end up having to pay whichever rate is higher: the US rate or the local rate, in aggregate.
More importantly you're not exempt from filing even if you have no net tax obligation to the US.
These returns are not easy to prepare, and so you may end up spending thousands of dollars per year paying one of the likely very few people with experience filing returns to both countries and properly attributing income and deductions.
It gets much, much worse if you want to start a business in the foreign country in which you live because then you're the owner of what the IRS considers a Controlled Foreign Corporation. The paperwork for this is a waking nightmare and will cost you thousands more per year, if you're even in a position to complete it. [2] Notice in [2] the US definitely on of a CFC is also different than the rest of the world.
The exemption amount isn't exactly a windfall level ($120K). Amounts earned over that are taxed in both countries - the US and the foreign country - and the only way to avoid double-taxation on that is if the US has a tax treaty with the country [1]. But that treaty generally means you end up having to pay whichever rate is higher: the US rate or the local rate, in aggregate.
More importantly you're not exempt from filing even if you have no net tax obligation to the US.
These returns are not easy to prepare, and so you may end up spending thousands of dollars per year paying one of the likely very few people with experience filing returns to both countries and properly attributing income and deductions.
It gets much, much worse if you want to start a business in the foreign country in which you live because then you're the owner of what the IRS considers a Controlled Foreign Corporation. The paperwork for this is a waking nightmare and will cost you thousands more per year, if you're even in a position to complete it. [2] Notice in [2] the US definitely on of a CFC is also different than the rest of the world.
[1] https://www.irs.gov/businesses/international-businesses/unit...
[2] https://www.investopedia.com/terms/c/cfc.asp