Moving abroad doesn't mean you stop being a U.S. taxpayer. You'll file annually no matter where you live, and Social Security income follows the same rules it always did. What changes is how other countries might tax you, and whether you qualify for certain breaks.
Most retirees won't owe double taxes thanks to treaties and exclusions, but you need to understand what applies to your situation.
You're Still Filing With the IRS
U.S. citizens file federal tax returns regardless of where they live. You'll report your worldwide income, including Social Security, pensions, retirement account withdrawals, and investment income. The deadline is usually June 15 if you're abroad, with an automatic extension to October 15 if you need it.
You'll also file an FBAR if your foreign bank accounts total more than $10,000 at any point during the year. This is separate from your tax return and has its own deadline in April.
Local Taxes Depend on the Country
Some countries don't tax foreign retirement income at all. Others tax everything. Here's how it breaks down for popular retirement destinations based on current data:
- Mexico: Your U.S. retirement income isn't taxed locally
- Panama: No local tax on foreign-sourced retirement income
- Portugal: Retirement income is taxed locally, but the U.S. has a tax treaty
- Spain: Partial taxation on retirement income with a U.S. tax treaty
- Thailand: Partial taxation with a U.S. tax treaty in place
- Costa Rica: Your foreign retirement income isn't taxed there
The U.S. has tax treaties with many countries that prevent you from paying twice on the same income. If your new country taxes your Social Security or pension, you can usually claim a foreign tax credit on your U.S. return.
What About Property and Sales Tax
You'll pay local property taxes if you buy a home abroad, just like you would in the U.S. Rates vary widely but are often lower than what you're used to. You'll also pay VAT on purchases, which ranges from 7% in Thailand to 23% in Portugal.
State taxes are trickier. Some states let you go when you establish residency elsewhere. Others, like California and Virginia, can claim you still owe them if you maintain ties there. Talk to a tax pro before you leave to make sure you've properly severed state tax residency.
Get Professional Help for Your First Year
Filing from abroad isn't complicated, but your first year involves decisions that affect you long-term. An expat tax specialist can help you establish residency correctly, claim the right credits, and set up reporting for foreign accounts. After that, many retirees handle their own filings or use affordable online services designed for expats.
Ready for the next step?
Check out our country-specific guides to see exactly how to apply these steps in your dream destination.
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