DWB

It depends on how much money you make and your status as either a resident in another country or how many physical days you have been outside of the USA, which is a minimum of 330 days of being abroad.

We have a thing called the foreign earned income exclusion, which basically gives Americans working and living abroad a tax break of $95,100 (for 2012). So if you make that or less, you don't pay taxes, but you still have to file. If you make more than that, you only pay on whatever income goes over that amount. It's also possible to deduct a housing expenses overseas if you meet certain criteria, which is in addition to the foreign earned income exclusion.

That amount rises a little every year. For example 2011 is $92,900, 2010 was $91,500, and so on.

However, there are a lot of little catches that could still have you paying State tax depending on your situation or self-employment tax, so it really depends on each persons situation.

So they give us a big break if we meet their criteria, and in some cases expats pay zero taxes. Either way, we pay significantly less.