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Tax Law (Questions About Taxes)/Planning for taxes when retiring abroad


Hello Mr. Brody and thanks for taking the time to answer my question.  Almost 6 years ago my wife and I took our honeymoon to Belize (currently living in the USA).  We've never been into going on trips where we're pampered day and night or looking to stay in a resort sipping drinks poolside.  We're explorers and Belize offers nothing short of an endless sea of adventure and places to explore.  We absolutely fell in love with the country and the people and have thought of nothing better than retiring there someday.  While most of our family says it's nothing more than a pipe dream, I'm wondering if you could give me ideas of how to plan for it now and more importantly how to prepare for the tax consequences of retiring abroad.  We don't have any children and don't make a ton but I do sock away as much as I can in 401k's from two jobs and a roth.  We'd like to retire by 60 at the latest which would not be possible here in the states.  Once in a while I'll hear online about horror stories of people getting hammered by thousands of dollars on taxes due to not filing at all or not filing properly.  Belize seems really friendly to expats as far as taxes are concerned, but what things do we need to consider as far as taxes paid to the US when retiring abroad.  Thanks again for your time.

Hi Brad, the main thing to consider is that as a US citizen, irrespective of your residence in the world, you will continue to be subject to taxation on your worldwide income. There are additional tax reporting and disclosure rules that may apply if you have foreign bank accounts, assets, etc. But the main thing is to expect no change in the bottom line tax that is due, whether residing in the US or overseas, if your sole income is retirement income.

The main benefit of living overseas in a country, such as Belize, of course, is the significantly lower cost of living.

All the best,

Tax Law (Questions About Taxes)

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Randall Brody, EA, MBA, CCP


Tax Samaritan is a boutique firm specializing in the preparation of taxes and the resolution of tax problems for Americans living abroad, as well as the unique tax issues that apply to taxpayers that are gamblers, teachers, nurses and military.


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