[culturestate]

The tax system for overseas income is complicated, especially if you hold foreign assets (bank accounts or corporate interest), but the short version is that any income earned as an employee up to ~$95,000 can be excluded. It's called the foreign earned income exclusion.

[refurb]

Don't forget that if you live in a country that has a tax treaty with the US, any taxes paid to your home gov't counts towards any taxes you would pay to the US.

So if you live in a higher tax jurisdiction (i.e. the majority of the countries in the world), your US tax bill ends up being $0. However, you still have the hassle of filing your US tax return each year.

[refurb]

I didn't think it was that complicated at all. I held assets in Canada while working in the US and all I had to do was declare what they were and how much.

i.e. Mutual fund account - $32K

[jarek]

To add to this, you legally have to declare to the U.S. government all foreign cash in excess of $10k. You may not pay tax but you definitely have to file regardless.