Taxes Living Overseas Filing Paying Taxes Abroad

Retirees who are planning to move abroad often have questions about filing taxes overseas. If you are a U.S. citizen paying U.S. income taxes, living overseas will not exempt you from this obligation. You will need to file income tax returns and pay your U.S. taxes even while abroad.

Taxes Living Overseas: Filing

Paying taxes abroad is usually fairly simple for those living on investment income and pensions distributed to a U.S. or international bank account. You must claim this investment income, and all taxable distributions on your pension, when you file annually to pay your U.S. taxes. When abroad, maintaining contact with a tax professional in the United States can make this process easier.

Paying Local Taxes

Paying taxes abroad may become more complicated if you’re working and collecting a local income. First, this locally earned money will need to be reported to the IRS as well as the local tax authority. Second, the details of your work visa and residency status may obligate you to pay local taxes while living overseas.

The United States has established tax treaties with many countries around the world. Find out if your country of residence is one of the nations on this list. Paying taxes abroad will be easier on your paycheck if you qualify for a tax deduction in the United States, an option made possible by these treaties. Contact a tax advisor with experience in this area to help you prepare for filing your taxes overseas.

Paying Taxes Abroad: Additional Financial Considerations

In addition to paying U.S. taxes abroad, you will need to account for the overall effect living overseas has on your finances. Stay up-to-date on currency rate fluctuations, and investigate the details of all your insurance policies before you leave to make sure that you will have adequate coverage while living overseas. This will include property and health insurance. Remember that Medicare probably will not cover expenses you incur while living outside the country. If you rely on Medicare in the United States, consider purchasing a private health insurance policy before you leave.