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.
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.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
-
Stock Market Today: Stocks Gain on Tech, Auto Tariff TalkThe Trump administration said late Friday that it will temporarily halt tariffs on some Chinese tech imports.
-
Sam's Club Plans Aggressive Expansion: Discover Its New LocationsSam's Club expansion plans will open up to 15 new stores each year. Learn where they plan to open in 2025.
-
Tax Time: Does Your Kid Influencer Owe Taxes?State Tax Some minors are making big money on social media. Here’s how to know if they need to file taxes.
-
Free IRS Tax Filing for 30 Million People: Will It Continue Under Trump?Tax Filing Direct File was piloted last year in 12 states and has since expanded to 25. But some wonder whether the program will last under the Trump administration.
-
How Caregivers for Adults Can Save on Taxes in 2025Tax Breaks Caring for your parent or spouse can be stressful, but the IRS offers tax breaks for qualifying taxpayers. Here they are.
-
U.S. Treasury to Eliminate Paper Checks: What It Means for Tax Refunds, Social SecurityTreasury President Trump signed an executive order forcing the federal government to phase out paper check disbursements by the fall.
-
IRS Layoffs Spark Delays, Doubt This Tax Season
Tax Season Tax experts say Trump’s downsizing of the IRS is already causing problems.
-
States with the Highest Income Tax Rates for RetireesState Tax You may reconsider living and retiring in one of these states due to high taxes.
-
AI Tax Scams Target Middle and Older Adults: What to KnowScams Whether you’re a retiree or Gen Z, scammers can gouge big financial losses with the help of artificial intelligence.
-
Tax-Deductible Home Improvements for Retirement in 2025Retirement Taxes Your aging-in-place plan could benefit from the medical expense tax deduction. But watch out for capital gains and property taxes.
