Americans Working Abroad
U.S. taxes are complex for all Americans abroad, but this is especially true for those who are civilian contractors, as complexity increases dramatically.
The first challenge is the limitation of foreign earned income exclusion test choices to Physical Presence only.
The second challenge is living on employer provided premises, which preclude them from using the Foreign Housing exclusion. The third reason is the absence of Foreign Tax Credit (FTC) as they almost never pay tax in the country of foreign employment. The biggest and most expensive challenge is they always file a state tax return unless their home of record is in tax-free U.S. state.