The U.S. is one of just two countries that taxes one’s global income – even if you live in another country full time, you are responsible for paying taxes to the U.S. government.
- If you are abroad for at least 330 days out of 365, you may be able to exempt up to US$108,700 in income from the U.S. taxes that you may owe. You may, however, still owe capital gains taxes to the U.S. government, the country you are then living in, and possibly the last U.S. state where you lived.
- Some U.S. states will tax your abroad income – unless you can persuade them you really are not a resident of that state anymore. If you still have a driver’s license from the state, or own property in the state, they will likely make you pay state taxes too.
Moving Abroad As A US Citizen? Five Things To Do Before Making The Jump (forbes.com)
If you are 65 and older and on Medicare, know that Medicare does not provide health care in other countries. You’ll need a separate private insurance policy for that. Further, if you choose not to pay your Medicare Part B premium, you will be assessed a permanent +10% penalty on future premiums (if you move back to the U.S.), for each year you are gone. For example, if at age 65 you move abroad and stop paying Medicare Part B, and then move back ten years later, your Medicare Part B premium will then be 100% (double) what it would have been if you stayed in the U.S. and/or kept paying Part B while out of the country.
These are some of the reasons relatively few Americans move to other countries, permanently, and especially why few Americans retiree overseas. Only about 1% of those 65 and up retire abroad, contrary to the endless media B.S. stories about Americans retiring abroad. Only about 12% have considered doing it – most do not do so due to the logistics, complexities, tax and health care issues and sometimes because of their personal family situation. Of those that do move abroad, surveys suggest about half already had dual citizenship, a right of descent immigration privilege, or already had family living abroad.