It gets even worse if you try to incorporate a business abroad and own more than 50% of it. Form 5471 and 8832. Wrangling with the definition of a CFC, qualifie

It gets even worse if you try to incorporate a business abroad and own more than 50% of it. Form 5471 and 8832. Wrangling with the definition of a CFC, qualified dividends, etc. Subpart F (the rules for when the U.S. government considers your company's income as if it was just plain old personal income). Etc. All these laws were designed to catch rich U.S.-resident tax evaders, but they have the side effect of making life miserable for U.S. expatriates. And probably it won't change, because no one in the U.S. really thinks about expatriates anyway ... maybe because of the ingrained mental image that the U.S. is supposed to be a sink, not a source, of migrants. And for everyone else, it makes for a very strong incentive NOT to partner with an American when you start a company, because of all the accountants' fees you'll need to keep up with the paperwork, or worse, the danger that you simply don't know about any of these draconian requirements and it hits you like a truck years later when you have some serious income. Another really perverse incentive created by U.S. taxes on expats is the housing exemption. Basically, if you have a dollar, you can either spend that whole dollar on renting a nicer apartment, or pay 35 cents to the U.S. government and be left with 65 cents to save or spend. Hence lots of American expats keep spending more and more on housing, up until the point where the marginal utility of $1 more square footage or $1 swankier address drops below 65 cents ... and of course, driving up prices for everyone else.