Is it true that the US will tax me on foreign investment income even if I move to a tax-free country as a US citizen?

Thanks for confirming, though that's pretty disappointing. Is there any way around this? I've heard some people mention renouncing citizenship, but that seems extreme just to avoid taxes. Are there any tax treaties with Cayman Islands that might help?

Renouncing citizenship is indeed an extreme step with significant consequences beyond just taxes - it's permanent and comes with an exit tax if your net worth exceeds certain thresholds. There isn't a tax treaty between the US and Cayman Islands that would help in your situation. However, you may qualify for the Foreign Earned Income Exclusion (FEIE) which allows you to exclude up to about $120,000 of foreign earned income from US taxation in 2025. Unfortunately, this doesn't apply to investment income like your dividends and capital gains - those remain fully taxable by the US.

Does this work with rental income too? I'm moving to Portugal next year but keeping my house in Denver to rent out, and I'm totally confused about how to handle the taxes on that income while living abroad.

I'm skeptical about tax AI tools. How does it handle things like the foreign tax credit? I've been living in Germany for years and my local accountant always says these online tools miss important details for expats.

Yes, it absolutely handles rental income! You input your rental details and it guides you through what's reportable on both US returns and any foreign reporting requirements. It even helps identify deductions you might qualify for as a foreign landlord. For foreign tax credits, that's actually where it really shines. It analyzes your foreign tax documents and identifies exactly which taxes qualify for the FTC, which was super helpful for me in Singapore where certain levies aren't considered "income taxes" by the IRS. It even creates the right supporting schedules for Form 1116. My situation was complex with multiple income sources across countries, and it handled everything correctly.

How exactly does this work? Like, are they just calling for you or what? I don't understand how they can get through when nobody else can.

This sounds like complete BS honestly. If nobody can get through to the IRS, how is some random company magically able to? Sounds like a scam to get desperate people's money.

They use an automated system that continually redials and navigates the IRS phone tree until it gets through, then it calls you and connects you directly to the agent. It's not that they have special access - they just have technology that handles the frustrating waiting and navigating for you. No, it's definitely not a scam. I was skeptical too, but I was desperate after trying for days. They don't ask for any personal tax information and they don't stay on the call - they literally just connect you directly to the IRS and then drop off. The conversation is just between you and the official IRS agent.

Do retirement accounts count toward the $10k FBAR threshold? I have a pension from when I worked in Australia that's worth about $22k but I've never reported it because I thought retirement accounts were exempt...am I in trouble??

Yes, retirement accounts absolutely count toward the FBAR threshold! Foreign pensions, investment accounts, bank accounts - basically any financial account you have signature authority over counts toward that $10k aggregate limit. You should file the delinquent FBARs as soon as possible. The IRS does have procedures for people who didn't know they needed to file. Generally, if you've reported all income from those accounts on your tax returns (even if you didn't file the FBAR), they tend to be more lenient with penalties. Don't panic, but do address it promptly.

I heard some expats are going heavy into crypto to avoid reporting but that seems super risky. Isn't the IRS cracking down on that now?

Using crypto to avoid reporting is an absolutely terrible idea. The IRS has massively increased enforcement in this area. Crypto exchanges are now required to report transactions, blockchain analytics are getting more sophisticated, and the penalties for willful non-compliance can include criminal charges. Remember that crypto transactions (including trading one crypto for another) are taxable events. The IRS considers crypto to be property, not currency, so each transaction can trigger capital gains tax. Some people mistakenly think crypto is "invisible" but that's becoming less true every year as reporting requirements expand.

Whoa I had no idea about this! Is this true even for index funds that just follow something like the S&P 500 but are based in another country? This is the kind of stuff that makes me wonder if the hassle is worth it...