Advertisement
retirement

Tax Obligations If You Retire Abroad

Retiring abroad has lots of advantages, but reducing your tax bill isn’t one of them.

Retiring abroad has lots of advantages, but reducing your tax bill isn’t one of them. As long as you’re a U.S. citizen, you’ll still be required to pay U.S. taxes on income from your investments and other sources. And if you maintain a residence in the U.S., you may be subject to state taxes, too.

 

If you earn income in your adopted country, you may be able to exclude up to $97,600 from U.S. income taxes in 2013 by claiming the Foreign Earned Income Exclusion. This law enables you to avoid paying taxes to two countries on the same income.

Advertisement - Article continues below

You could face an unexpected tax bill from your adopted country as well. Many countries base their tax systems on residency, not citizenship, says Christine Ballard, a CPA in the international tax division of Moss Adams LLP. The U.S. has tax treaties with many foreign countries to prevent double taxation, but you may still have to file a tax return. Moreover, if you die while living outside the U.S., property you purchased in your adopted country could be subject to that jurisdiction’s estate taxes. Even if you’ve usually done your own taxes, you should get advice from a tax professional who is well grounded in foreign tax laws.

Advertisement
Advertisement

Most Popular

What Trump's Payroll Tax Cut Will Mean for You
Tax Breaks

What Trump's Payroll Tax Cut Will Mean for You

President Trump issued an executive order to suspend the collection of Social Security payroll taxes. How much will it save you?
August 10, 2020
7 Surprisingly Valuable Assets for a Happy Retirement
happy retirement

7 Surprisingly Valuable Assets for a Happy Retirement

If you want a long and fulfilling retirement, you need more than money. Here are the most valuable retirement assets to have (besides money), and how …
August 3, 2020
Kip ETF 20: The Best Cheap ETFs
ETFs

Kip ETF 20: The Best Cheap ETFs

You can build a solid core for your portfolio and explore new opportunities with our favorite low-cost exchange-traded funds.
July 28, 2020

Recommended

How a Second Stimulus Check Could Differ from Your First One
Tax Breaks

How a Second Stimulus Check Could Differ from Your First One

The HEROES Act, which the House passed in May, would authorize another round of stimulus checks. While the new payments would be similar to the first …
August 11, 2020
What Trump's Payroll Tax Cut Will Mean for You
Tax Breaks

What Trump's Payroll Tax Cut Will Mean for You

President Trump issued an executive order to suspend the collection of Social Security payroll taxes. How much will it save you?
August 10, 2020
Calculating Taxes on Social Security Benefits
social security

Calculating Taxes on Social Security Benefits

Uncle Sam can tax up to 85% of your Social Security benefits if you have other sources of income, such as earnings from work or withdrawals from tax-d…
August 4, 2020
Understanding Tax Planning
tax planning

Understanding Tax Planning

The importance of tax planning goes beyond keeping cash out of Uncle Sam’s hands. You’re also preparing yourself for a secure retirement. Here are a c…
August 3, 2020