My son is a Marine, stationed in Japan. How do I answer the question "I live outside the US?"

No.

But you will need to verify some other input sections to ensure everything is reported correctly.

In the My Info section, select Edit to the right of his name and make sure you have selected his state of legal residence.

Also answer the question indicating that he is an active duty military member.  You will have follow up questions.  

Once you go through those questions, you will be taken back to the Personal Info Summary page. 

1. Scroll down to the bottom where it says Other State Income. 
2. Select Edit here.
3. Under the question that asks Where were you stationed? - select Foreign or U.S. Possession.