The law is that if you're a US citizen, you pay income tax, period. As I understand it, it's income no matter where it is earned. There are some loop holes, you can get out of paying it up to some amount (I think it's in the $90k range) if you claim it as living expenses or something and then the foreign banks and businesses may not report your income to the US but that doesn't oblige you not to pay it. You have to file the return to show that you own nothing and claim the deductions to make that so, and that may well be the case. If you don't file and they can determine your income then can't it be taxed at whatever the rate is for your income? Moreover, there are penalties for not filing, such that it's in your best interest to actually file.