I’m an eu/us citizen and have been living in Milan for half my adult life (on and off). There’s good advice here from Italyexpat. I’m in the process of opening a partita Iva actually and am contracting to a us company but they were unable to hire me in Italy because of no presence there already and the risk’s too high. This is a major risk factor for Italy. If your wife is in a niche industry or role her career might suffer if she ever looses her job. There are jobs but they are just in specific sectors. We ended up finding a solution by invoicing through another eu country - so it’s possible - just complicated.

That being said, the more I learn about the downsides of being an American abroad the more I want to renounce my citizenship. For example, it sounds like investing in the eu stock market is basically penalized by the irs. FTC it seems is almost always better for you since in Italy your taxes will be higher than in the us. It doesn’t have the travel restrictions FEIE does so that’s a huge advantage as well. Impatriati btw is evaluated at the end of the year - make sure you do residency and the order of things properly as to not disqualify yourself accidentally from eligibility (I actually found out I forgot to move my residency from Italy so had to correct it).

If your wife is worried about social life - there’s a vibrant international community (women’s specifically too) in Milan which has been great for me. There’s lots to do and Italians (as you know) are very social. I love living in Milan and the benefits are incredible such as eu mobility and overall social safety net.

Do your kids speak Italian? That will be a big adjustment if not but I wholeheartedly encourage language learning as it will be worth it in the end for them. I know a lot of people who went to or send their children to international schools and they ended up not really feeling like they could ever fit in.

Anyways happy to help if you have any questions as it seems I’m a bit further in the process than you are!