Courtesy Costa Rica Living

I'm a US citizen and have been living and working abroad for about 14 years now. All of the info can be found in Publication 54 from the IRS:

http://www.irs.gov/formspubs/index.html

The $80,000 exemption is for foreign earned income only as most have said. To quailify for this there are tests that must be met. The one most often referred to and misquoted is the physical presence test. To meet this, one must be physically present in a foreign country for 330 days of a full calendar year. After that, ammendments can be made for partial periods of the prior year. Partial days travelling in international waters or airspace do not count towards the 330 days.

The other test is called the bonafide residence test. Basically if you maintain your abode in a foreign country and consider your tax home (defined in pub 54) in a foreign country (for a calendar year at first) then you qualify. This is how I file and I can visit the US as often as I like during the year as long as my principal abode does not change.

Most every US citizen still needs to file with the IRS regardless of where they live. I strongly recommend reading the publiction mentioned above, beginning to end. I have done so several times over the years.