US tax form (illustrative).
The USA and Eritrea are the only countries in the world that tax their citizens based on two things: on residence and on citizenship. Wherever their citizens live, US (and Eritrean) citizens have to file tax forms to their governments. If you are an American living outside the country, you have to collect your financial data from your country of residence, overseas banks and investment houses and send it to the IRS.One might ask, “Why should I pay taxes to another country? I pay taxes in the country where I live.” The IRS would probably answer, “You, as an American citizen, have to be aware of and observe our tax laws even if you do not live here.”