“Kathleen, my main sources of income are a federal civil service retirement pension and Social Security. Are there tax benefits to becoming an expat?”
–Harley M., United States
Not for retirees. As we explained to attendees of last week’s Retire Overseas Conference in Nashville, a retiree’s Social Security and pension income will be taxed either by the United States (as it would be taxed if you remained retired in the United States) or by your new country of residence. You won’t pay anymore as a retiree with retirement income only overseas, but you won’t pay any less either.
In other words, moving overseas for the retiree should be a tax-neutral event. The possible exception can be to do with state taxes. You shouldn’t have to pay any state tax as a retiree overseas if you’ve organized yourself properly in advance of your move.
The tax benefits associated with relocating overseas come into play with non-“retirement” income (earned and investment income, for example).
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