It is estimated that some 4.5 million Americans and dual citizens are living, working and retiring abroad. The United States taxes worldwide income and worldwide assets (for estate tax purposes) of all its citizens.

All the rest of you readers can now put down this article and thank your lucky stars you aren't paying more than 40 percent of your income (in some cases) and working exclusively for Uncle Sam until tax independence day at the end of May 2000.

While the US taxpayer filing is a purely voluntary system, increasingly, Internal Revenue Service with the help of the US Government is finding powerful ways to `encourage us all to stay on the filing track'.

For instance, foreign financial institutions may be requested to share certain financial information with the US Government, if it involves US citizens.

Only last year, the Controller of the State of New York brought the mighty Swiss banking industry to a halt by cutting off their access to the New York financial markets. Up to that point, the Swiss had declined to supply old banking records on Holocaust victims to their survivors living in the United States. In another case, a private bank in Caymans was forced to provide the names of thousands of US taxpayers owning offshore accounts.

Certainly, it is important to note that the global sharing of information now reaches every shore. Americans and dual-citizens living abroad that assume that they do not need to file may be in for a shock.

Years, later when collecting a pension, for instance, they will find they have failed to meet filing requirements and may now owe big sums in interest, penalties and perhaps, back taxes. Or their heirs may discover an IRS problem after losing a beloved relative which may result in receiving a substantially reduced inheritance.

On Thursday mornings until June 1, 2000, the US Consulate (16 Middle Road, Devonshire 295-1342) offers free tax advice (15 minute appointments) to US Citizens, Dual-citizens and Non-Residents -- inbound/outbound from the United States, using the voluntary services of a US federally authorised tax practitioner.

Here is a list of the most frequently asked questions: Q: Do I have to file at tax return; I don't owe anything after deducting the foreign earned exclusion? A: Yes, there are very, very few exceptions.

Q: What is the exclusion amount? A: $74,000 per individual taxpayer for 1999, $76,000 for tax year 2000.

Yes, Bermuda is expensive, but impute your gross income by your US federal tax bracket, social security taxes and state income tax! This is a tremendous opportunity to save a nest egg to take home! Do it now.

Q: What about if I have only been here a few months, can I still take the exclusion? A: Depends on the length of your work contract, when you file and a couple of other conditions. Consult your tax advisor.

Q: What about the housing allowance, can I take that, too? A: If you meet the other tests, you may exclude from income a housing allowance and other non-cash benefits, subject to certain limits.

Q: I'm moving back to the US to work. I haven't filed any tax returns for a while because I didn't owe anything, what should I do? A: Sharpen that pencil. You are now required to show three years of filed tax returns when renewing your United States Passport or repatriating to the US after a number of years away. If your spouse is a non-resident alien, you must have three years of filed returns along with other requirements.

Q: I don't have to renew my passport.

A: It is up to you, but you get to explain to IRS why there is a large gap in filing years under your social security number when you do return.

Q: Should I invest in offshore funds? A: It is up to you. You must file IRS from 8621-Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund with your tax return each or face a $10,000 fine. Offshore funds reports are tougher to comprehend when it comes to computing yearly appreciation, gains and losses.

And here are lots of reasons that crop up at parties: I have rental property here, so I don't have to declare it; my business only pays dividends here; my friend, my local accountant, my local attorney, my US broker, they all said I don't need to file/report this income; I won't be taxed on my real estate; a foreign BVI trust will avoid tax; I won't have any estate tax issues, etc etc.

It is up to you. Ask yourself this? Can any of these well intended people (and some not so well intended -- the ones who want to sell you something) represent you before the United States Internal Revenue Service when you run into problems? You may be faced with burdensome expenses while your F.A.T.

racks up significant hours defending your position.

If you have a unique tax or income situation, spend the time and the money to consult with a US federally authorised tax practitioner (F.A.T.) who understands US domestic and international estate and income tax law. There are a number of them here at; Ernst & Young, KPMG, Deloitte Touche, First Bermuda Securities, Mazar Neville Russell.

Martha Myron CPA CA is a Bermudian, holds a Series 7 NASD license and is a United States federally authorized tax practitioner. She is Programming Chair for the International Association for Financial Planning/Bermuda. Questions regarding this article may be sent to her at 234-0290 or Email: mpmyron ynorthrock.bm TAXES TAX