-- If you are an US citizen - you are required to report all your worldwide income.
Filing requirements are based on total income are same - for all US persons.
As an US person living abroad - you may claim a foreign earned income exclusion.
The person may qualify for the foreign earned income exclusion - he/she should:
-- Work and reside outside the United States for at least 330 days during the year, or
-- Meet either the Bona Fide or Physical Presence tests.
If the person qualifies, he/she may exclude up to $91,500 (2010 in foreign wages -- plus housing allowances (limited to 30% of the earned income exclusion).
To receive that exclusion - the taxpayer should file either form 2555 or 2555EZ.
Here are forms you likely need: Form 2555 Instruction 2555
Please be aware that - the exclusion above will not affect self-employment taxes - only income taxes. Only earned income is excludable - income from wages and self-employment. For instance - dividends, investment income, rental income, etc - are not excludable.
Please also be aware that this credit is not granted automatically - you need to file a tax return and claim the credit.
Let me know if you need any help.