5 Ways To Avoid Tax Surprises When Retiring Abroad

Retiring abroad should be exciting and satisfying. Luckily, it can be exactly that with careful planning. For instance, do you know how your tax planning and requirements will change when living abroad? If not, we can help you learn the essentials right now. Check the list below to find five effective ways to avoid tax surprises when retiring abroad.

Never Assume You’re Exempt From US Taxes

If you remain a US citizen when retiring to another country, you will probably still need to file US taxes there. More specifically, you must file if your international income surpasses any of the current filing thresholds. Assuming you are free from taxes when leaving the country can lead to you running into frustrating penalties down the road.

Work With a Tax Advisor

Work with a tax advisor who specializes in expats retiring to another country. That way, you can ensure you’re working with someone who is already aware of the situation you’re in. For example, at Accutax Business Center, we can provide you with an expat tax advisor who understands how to complete your taxes accurately. The learning curve of expat tax filing can appear daunting at first. Once you have a trained expat tax specialist at your side, you can have more peace of mind when filing.

Look at Your Destination’s Tax Laws

Working with a tax expert takes a lot of research off your plate. Simply put, you won’t have to become a tax expert because the professional on your side has already done that. That said, a critical way to avoid tax surprises when retiring abroad is to research your destination’s filing requirements.

Unfortunately, we can’t compile all the world’s tax filing guidelines into one blog, and such details may change over time. Therefore, taking the time to look up your specific destination’s current tax requirements ensures accurate results. Plus, taking this step means you can bring more specific questions and concerns to a tax expert during your first meeting. Not having specific questions makes it easier to overlook critical details that may become concerns later.

Always Remember Social Security

It’s understandable to assume that Social Security is not taxable income if you’re moving to another country. It doesn’t quite work that easily, but that doesn’t mean you can’t reach that result. For instance, if your only income is your Social Security, then those benefits may not be taxable income. Of course, tax laws vary in other countries, but your primary concern with this section is the US tax return. Talk with your tax advisor about your Social Security to learn whether you need to consider Social Security payments taxable income while overseas.

Don’t Wait To Prepare

Even if you’re many years away from your retirement date, you should still plan the logistics carefully. If you know where you want to go, don’t wait until the last minute to learn the relevant tax information for anyone moving abroad. Waiting until the last minute can result in unforeseen tax requirements making your move more complicated. If you’re serious about retiring, use all the information above to put your plan into motion today.