Bogleheads:Sandbox

US Person
For US tax purposes, US citizens and Permanent Residents (Green Card holders) living outside the US face the same filing requirements, as "US Persons."

Note for Green Card holders that even living outside the US long enough that the Green Card is considered to have become invalid by the US immigration authorities does NOT change their taxation status in the eyes of the IRS. To become released from US tax filing requirements as a resident alien, it is necessary to formally surrender the Green Card, a process typically requiring a trip to the nearest US embassy, and then filing Form 8854, "Initial and Annual Expatriation Statement." See "Expatriation tax," below, for further details.

Expatriate
"Expatriate," as defined by the IRS code, refers to someone who has given up US citizenship or Permanent Resident (Green Card) status. This is not to be confused with the common English meaning of the term "expatriate," which merely refers to a citizen of one country residing in another country. To avoid confusion in this web page, we will use the term "US person living abroad" to mean US citizens and Green Card holders living outside the US.

Form 1040
US persons living outside the US must still file tax returns with the IRS.

Report of Foreign Bank Accounts
If the aggregate contents of all financial accounts located outside the US exceeds $10,000 at any point in the year, one must file Report of Foreign Bank and Financial Accounts by June 30 of the following year. This form goes to the Treasury Department, but NOT the IRS -- it goes to a different branch of the Treasury. As of 2013, this form must, in general, be filed electronically, unless one calls and asks for permission to file on paper. Electronic filing is done through the following site: BSA E-Filing System. Note that not only accounts belonging to oneself must be reported, but also any accounts over which one has signature authority, such as company or other organizational accounts.

Expatriation tax for losing citizenship or permanent residency
There are two primary ways to lose one's US citizenship: Relinquishing US citizenship: If one takes the citizenship of another country with the intent of relinquishing US citizenship, one is considered to have "relinquished" US citizenship. The local US embassy still has to be notified in person for the loss to be recognized by the US government, however. Renouncing US citizenship: One can also "renounce" US citizenship, which is almost the same process as relinquishing, but costs an extra $450 processing fee and potentially subjects one to application of the Reed Amendment.

Relinquishing US permanent residency is similar to relinquishing US citizenship, if one has been a lawful permanent resident of the US for at least 8 of he past 15 years. A Form I-407 needs to be filed with the local embassy.

In any of the three above cases, the tax implications are similar. One needs to fill out Form 8854, "Initial and Annual Expatriation Statement," and potentially pay exit taxes based on a deemed disposition of assets.

The above are the most common general cases, but there are many special cases and exceptions, and different rules apply for those who lost citizenship or residency in previous years. For details, see Instructions for Form 8854.

This is also an area where the laws have been changing frequently in recent years, so due diligence is called for if contemplating taking any of the above steps.

Roth IRA considerations
If you use the FEIE, you cannot use any of the excluded income to contribute to an IRA. You can contribute if you have earned income above the FEIE limit, and below the IRA contribution cutoff. You can also contribute using earned income that it not excludable (for example, wages earned during a business trip to the US, which are considered US-source income even if paid by a non-US employer).

It is not mandatory to use the FEIE, but if one does use the FEIE, one has to use all of it, and exclude all income that is excludable up to the exclusion limit. It is NOT possible to partially exclude eligible earned income and leave some un-excluded for IRA contributions.