For U.S. taxpayers living abroad, what does dual taxation imply?

Dual taxation for U.S. taxpayers living abroad means that these individuals may be liable to pay taxes on their worldwide income both in the United States and in the foreign country where they reside or earn income. This situation arises because the U.S. follows a citizenship-based taxation system, meaning that U.S. citizens and residents must report and pay taxes on their income irrespective of where it is earned.

Given this framework, the correct answer indicates that taxpayers can face tax obligations in both jurisdictions, which might lead to what is often termed "double taxation." However, to mitigate this issue, the U.S. has tax treaties with various countries and provisions like the Foreign Tax Credit, which can offset the tax liability in the U.S. against taxes paid to a foreign government. Nevertheless, the fundamental principle remains that the taxpayer may be subject to tax in both the U.S. and their country of residence.

In contrast, the other choices either imply a lack of obligation in the U.S. or suggest only paying taxes in the foreign country, which does not accurately reflect the tax liability for U.S. citizens abroad who must comply with tax obligations on their income in multiple jurisdictions.