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Old 12-07-2014, 01:56 PM   #101
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You are always subject to US taxes. If you live in Europe you are also subject to taxes of European Country where you reside. But you don't have to pay any state tax and European real estate taxes are usually very small. Plus European countries provide inexpensive medical insurance for its residents. Good thing if you retire before 65....

It is exceptional to reside tax free in European Country (similar to Costa Rica or Panama).

Portugal provides exceptional quality of life and Medical facilities to its residents. This is not Philipines.
If you are a US citizen retiring outside the USA will you decide to still pay Medicare, do you know the consequences if you stop paying Medicare?

Some countries might have low taxes for retirees, others might tax you as a resident, whatever the case you have to navigate the taxes of two countries and I expect will become familiar with the IRS 1116 form. Make sure you avoid PFIC issues and if there is a tax treaty in place you must understand that as well and the ways things like IRAs, SS et are taxed when you need to meet the requirements of tax in two countries.
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Old 12-07-2014, 02:09 PM   #102
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If you are a US citizen retiring outside the USA will you decide to still pay Medicare, do you know the consequences if you stop paying Medicare?

Some countries might have low taxes for retirees, others might tax you as a resident, whatever the case you have to navigate the taxes of two countries and I expect will become familiar with the IRS 1116 form. Make sure you avoid PFIC issues and if there is a tax treaty in place you must understand that as well and the ways things like IRAs, SS et are taxed when you need to meet the requirements of tax in two countries.
I would continue paying medicare unless I was absolutely certain I will never return to US.

I know countries have tax treaties with US. Usually you end up with more taxes then if you lived in US.

I think it is fun / educational to retire in another country. One can learn another culture. But Philippines would not be for me. Portugal would do quite fine
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Old 12-07-2014, 02:30 PM   #103
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If you are a US citizen retiring outside the USA will you decide to still pay Medicare, do you know the consequences if you stop paying Medicare?
I'm not an expert but we've thought about this. I would not give up citizenship or stop paying Medicare, plus I estimated it might cost an extra $4k a year for tax help.

So if we move we'd might be paying for health insurance in two places plus the extra tax prep cost.
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Old 12-07-2014, 02:40 PM   #104
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I'm not an expert but we've thought about this. I would not give up citizenship or stop paying Medicare, plus I estimated it might cost an extra $4k a year for tax help.

So if we move we'd might be paying for health insurance in two places plus the extra tax prep cost.
What about opening a local bank account. As a US citizen you might find that difficult.
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Old 12-07-2014, 03:38 PM   #105
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What about opening a local bank account. As a US citizen you might find that difficult.
I don't know, but there are many ex-pats in the world so they pull it off somehow. If we move we'll find out what they do and do the same thing.

The reality is we'll probably not permanently move too far away from the kids if they stay in the area post college.
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Old 12-07-2014, 03:50 PM   #106
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I think it is fun / educational to retire in another country. One can learn another culture. But Philippines would not be for me. Portugal would do quite fine
Very true. Philippines would not work for me either. We have been considering Costa Rica, Malaysia, and even Puerto Rico. But the US text system is so complicated that we may just spend 3-5 months in the winter living in a foreign country instead of relocating.

Is Portugal (the beaches) warm in the winter, comparing to south FL?
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Old 12-07-2014, 04:06 PM   #107
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Very true. Philippines would not work for me either. We have been considering Costa Rica, Malaysia, and even Puerto Rico. But the US text system is so complicated that we may just spend 3-5 months in the winter living in a foreign country instead of relocating.

Is Portugal (the beaches) warm in the winter, comparing to south FL?
This is what we have done these last few years, except we leave in the summer to escape the Texas heat. This year we had 4 months in Australia plus 3 weeks elsewhere (New Zealand and Vanuatu). Last year we had 5 months in Europe.

We plan on moving to the UK in 2016, and the tax system is very complicated so it is very important to understand what to expect. We've been making various financial moves to minimize taxes and don't expect much extra in taxes. I've had an estimate from a UK/US dual qualified firm in London to prepare tax filings for us both in the UK and joint in the US. Total cost would be around 800 GBP ($1,300).
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Old 12-07-2014, 06:18 PM   #108
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Tax regime for non-habitual residents - Living in Portugal

Tax free 10 years in beautiful European Country.
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The site states:



This doesn't help for retirees who are unlikely to gain labor income in Portugal. Plus, their pensions/SS/capital gains obtained from the US are still subject to US taxes, no?
I don't know what happened, but the posts are consistent with eta2020 stopping reading after seeing 'tax free' on the linked page and ER1070 stopping reading after seeing the '10 years tax free' applied to labour income in Portugal.

I read until I finished the part about 'pensioners and retired people'. I invite y'all to read it again.
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Old 12-07-2014, 11:40 PM   #109
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Yes, I think researching tax issues if you become a permanent resident or even citizen of your chosen country is very important. In the past, I think everyone just assumed they could fudge that issue since information was not widely shared. But with FATCA and information sharing agreements becoming the norm among governments, this issue can no longer be minimized.

Luckily, in the Philippines where I have residency, I am only taxed on income derived in the Philippines, not worldwide income.

Re: Medicare
Medicare Part A is free. Medicare Parts B and D cost money. Personally, if my situation does not change, I will probably participate in Medicare Part B for a few years after I turn 65. Longer term, I am undecided.
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Old 12-08-2014, 03:37 AM   #110
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I've had an estimate from a UK/US dual qualified firm in London to prepare tax filings for us both in the UK and joint in the US. Total cost would be around 800 GBP ($1,300).
Given your situation, that's a very good quote. I assume most funds will remain in the States, and few 8938's will be required. Advisors have been taking advantage of permanent residents with most of their funds abroad by charging for each 8938. The price escalates quite quickly. I also assume you'll be doing your own FBAR?
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Old 12-08-2014, 03:46 AM   #111
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Yes, I think researching tax issues if you become a permanent resident or even citizen of your chosen country is very important. In the past, I think everyone just assumed they could fudge that issue since information was not widely shared. But with FATCA and information sharing agreements becoming the norm among governments, this issue can no longer be minimized.

Luckily, in the Philippines where I have residency, I am only taxed on income derived in the Philippines, not worldwide income.

Re: Medicare
Medicare Part A is free. Medicare Parts B and D cost money. Personally, if my situation does not change, I will probably participate in Medicare Part B for a few years after I turn 65. Longer term, I am undecided.
As a dual USA / EU citizen retiring outside of US often crosses my mind often.

I think taxation and access to high quality medical care are two most important things to consider.

It is no pleasure to live in for example France and pay Wealth Tax.

Finding safe country with cheap taxes and good medical insurance/care is way more important then worrying about retirement visa.

If you have enough money and no Criminal Record almost every country will give you long term residency That includes fancy places like Switzerland.

And do not expect giving up US citizenship as a solution. If you have a bit more then million dollars you will have to pay exit tax....
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Old 12-08-2014, 04:01 AM   #112
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Lifetime global nomad here and have run into many pensioners and retired people ... As with everything its location location location. Very few countries are as tax repressive as the good ole USA . I think only North Korea and Syria have similar global taxation.

In my case, I paid into FICA and SS every pay check regardless where I was a resident. That is important if you had a working career abroad - once retired you no longer need to pay in if you don't have earned income. But you also are hosed if you don't have enough SS credits etc.

A trend I see - most countries that are geared toward attracting and welcoming (boomer and younger) retirees tend to have favorable "pension distribution" tax situations as has been pointed out in the Portugal discussion. Philippines and Thailand are also similar iirc.

Puerto Rico was mentioned and that is actually a US protectorate so much much easier.

So unless you are working (your retirement visa often does not allow work in fact) then you don't have to worry about paying income tax in the new country of residence most of the time.

As well In those retirement friendly places, there are banks which are compliant to FATCA although getting a little trickier it is not impossible to manage.

The next challenging issue is health insurance and much more so if you are back and forth to the usa regularly and not a true foreign resident ( there is a physical presence test ...I think it's 283 days in your country of choice). You would need usa compliant insurance coverage as well as new country coverage (or self insure when outside the usa depending where you live etc).

People are doing this every day though so regardless how complex it is or becomes, it seems to be a lifestyle choice and people can and do manage it successfully. I guess wanderlust is hard to overcome. And for some, just sitting on the porch is no life at all ...
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Old 12-08-2014, 04:07 AM   #113
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So unless you are working (your retirement visa often does not allow work in fact) then you don't have to worry about paying income tax in the new country of residence most of the time.
What if you do not work and get 50k in US Dividends?

If you live in Austria you will pay 25% taxes on those dividends. First USA will take something and then Austria will take what remains to get you to 25%. (According to tax treaty between USA and Austria)

Same applies to earned interest (US Bond Yield) except you are looking at higher rate.

If you have more then SS check you will have to worry about taxation and if you have only SS check your list of countries will be indeed limited
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List of countries offering retirement visas?
Old 12-08-2014, 04:20 AM   #114
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List of countries offering retirement visas?

this thread is about countries offering retirement visas. Typically the countries listed have favorable tax laws And "investment income" earned on assets held outside-country - dividends, rental income etc are generally not taxed.

That's not to imply black or white. Some countries do impose certain levels of tax. But the rates tend to be zero or low in most cases.
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Old 12-08-2014, 04:31 AM   #115
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this thread is about countries offering retirement visas. Typically the countries listed have favorable tax laws And "investment income" earned on assets held outside-country - dividends, rental income etc are generally not taxed.

That's not to imply black or white. Some countries do impose certain levels of tax. But the rates tend to be zero or low in most cases.
OK I got you.... I think those (tax free heavens) are very few in this world : Panama, Costa Rica, Uruguay come to my mind.

With high investment income (a bit more then 100k) even Switzerland will give you retirement residency but you will have to pay them taxes.

It is easy to find place that will allow you to reside, but hard to find place where you do not have to pay taxes.
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Old 12-08-2014, 07:15 AM   #116
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If you have more then SS check you will have to worry about taxation and if you have only SS check your list of countries will be indeed limited
The treaty convention is to tax SS in the country of residence.....
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Old 12-08-2014, 07:20 AM   #117
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In my case, I paid into FICA and SS every pay check regardless where I was a resident. That is important if you had a working career abroad - once retired you no longer need to pay in if you don't have earned income. But you also are hosed if you don't have enough SS credits etc.
Were you self-employed?
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List of countries offering retirement visas?
Old 12-08-2014, 09:28 AM   #118
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List of countries offering retirement visas?

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The treaty convention is to tax SS in the country of residence.....
Keep in mind the Foreign income tax paid on SS becomes creditable and thus applied dollar for dollar to reduce usa tax liability. You would likely never pay more than your effective federal tax rate in usa. Further you will most likely avoid state income tax when living abroad
That is, if you live in a country where pension income is locally taxable.
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Old 12-08-2014, 09:33 AM   #119
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Were you self-employed?

No.

In my case i Worked for mega corp and company uses a procedure called "tax equalization" while employees are on non-usa assignment.
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Old 12-08-2014, 10:45 AM   #120
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Keep in mind the Foreign income tax paid on SS becomes creditable and thus applied dollar for dollar to reduce usa tax liability. You would likely never pay more than your effective federal tax rate in usa. Further you will most likely avoid state income tax when living abroad That is, if you live in a country where pension income is locally taxable.
How the SS is taxed will depend on the treaty. US SS when paid to a non US resident is usually only taxable in the country of residence and NOT in the US. So I would not claim a FTC for it. I would only claim a FTC if the income was taxable in the US. You might try to hide it with other money in the "other income resourced by treaty" basket, but you'd have some questions to answer if audited. Alternatively you might not elect the treaty and then you can use the FTC, but you'll have to pay the right amounts to both countries.
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