The United States taxes citizens by citizenship, not just residence
Most countries rely mainly on residence to decide who owes tax on income earned around the world. The United States also treats citizenship as a tax connection: an American citizen generally must report worldwide income to the IRS even while living and working abroad. Eritrea is commonly cited as the other country with a comparable claim on citizens overseas, though its diaspora tax operates differently.
That does not mean every American abroad pays U.S. income tax on every dollar. The tax system has provisions that can reduce or eliminate a bill, including credits for income taxes paid to another country and an exclusion for certain foreign-earned income. The central distinction is that filing obligations can remain even when the final U.S. tax owed is small or zero.
Why the rule can follow someone overseas
A person who moves abroad may become a tax resident of the new country and owe taxes there, while still remaining a U.S. citizen. The two systems can therefore overlap. Credits and other provisions are meant to limit double taxation, but they do not make the paperwork disappear: taxpayers may need to report income, claim the relevant relief, and meet separate disclosure requirements for certain foreign assets or accounts.
The rule reaches beyond people who deliberately moved away. It can also affect Americans who have lived abroad since childhood, including people who may not think of themselves as U.S. taxpayers. For them, learning about the filing system can be an administrative problem before it is a tax bill.
The tradeoff behind the burden
Citizenship-based taxation lets the United States maintain a claim on citizens’ income regardless of where they live, rather than relying solely on the country where they reside. The cost is that citizens abroad must navigate two tax systems and determine how the rules interact. A move across a border can change where someone lives and works—but, by itself, it does not end the U.S. reporting connection.
