“I am contemplating a move to Belize. I have read from you and others about living tax-free and about the idea of forming a corporation to defer taxes, but I’m confused.
“My wife and I will have around US$100,000 per annum retirement income from the state of California and Social Security. The retirement is from the California system, and, of course, the Social Security is federal. Are there ways to avoid or defer taxes on this income by moving to Belize?”
–Alan S., United States
Lief Simon replies:
You can’t do anything about the U.S. tax side no matter where you live. As an American, you carry your U.S. tax obligations with you everywhere. That said, you’d have to check with a California tax accountant to confirm if your California pension would become non-taxable if you’re no longer resident in that state.
The good news is that pensions aren’t taxed in Belize, so, living there, you’d have no local tax burden.
Remember, the big tax savings associated with living overseas are to do with earned income…not non-earned income like that from a pension or Social Security. This kind of “retirement” income is typically unaffected by a move to another country.