If you are an American working and living outside your country, then there are some things you should know about expat taxes. The fact that you are living abroad doesn’t necessarily mean that you are not obliged to pay taxes in your country.
Earning foreign income means that you are either receiving some money in another country or some kind of allowances and salary. Being an expat means that you live in another country for more than 300 days a year; if you work on a six months basis outside the country, you cannot expect to have the full exclusions or deductions recognised to people who work and live abroad for a 12month period. Some of the expats can earn deductions and exclusions up to 70.000$, provided that they can prove to the IRS that they are applicable for these kind of tax deductions.
There is a rather prevailing feeling about expat taxes; people think that if they do not work in the country, they do not need to worry about taxes any more. This is partially true and depends on a lot of factors; if you are an expat in Germany for instance, but you are sent there by your US employer, then you might need to pay some taxes in the US. There are though several deductions due to the fact that the government recognises that you need to deal with the cost of living in Germany i.e.
In order to avail of the tax exclusion, you need to meet some particular prerequisites; you must live in a foreign country for more than 300 days per year, be a legally employed person and file the necessary documentation to the IRS on time. If you are self employed, you might be excluded from paying taxes, depending on your current status. Most people who are employed by foreigners or are self employed are not required to pay anything to the IRS.