retirement Outside the US More Rhetoric than Reality

[nun]

Italy has retirement visas.

If you keep most of your retirement accounts in the US and sell shares for annual spending what taxes would Italy impose beyond what you're already paying Uncle Sam?

Italian residents are taxed on their worldwide income and you will have to pay taxes in both the US and Italy and use the double taxation relief of the tax treaty so that your total tax bill is the higher of what it would be in either the US or Italy. This is the case for most countries, however, there are some retirement tax havens. For example, Thailand has a retirement visa and tax laws that allow you to bring in overseas income free of Thai tax. Thai source income is taxed though.

 

[explanade]

Use the double taxation relief for Italian taxes or US taxes?

If your accounts are still in US institutions, you have to pay IRS.

For Italy you have to show them you've paid US taxes and pay the difference? I thought tax evasion was one of the problems they were having.

 

[Ed_The_Gypsy]

Associating with American expats currently living overseas you quickly learn they rarely criticize the USA. Instead, regardless how they appreciate their current life, they usually quickly learn a new appreciation for many things American.

Depends. Working expats, for sure. There are alienated expats with big chips on their shoulders, though.

The more I am out here in ****, the more I am appreciating Springfield, MO (and I ain't even been there).

****pick a country

 

[kcowan]

I pay taxes on Income in Canada (16%), all I pay in Mexico is IVA (16% on purchases). But then I am oficially a snowbird. Why people try to evade taxes escapes me. They must be much richer than we are.

 

[NYEXPAT]

I pay taxes on Income in Canada (16%), all I pay in Mexico is IVA (16% on purchases). But then I am oficially a snowbird. Why people try to evade taxes escapes me. They must be much richer than we are.

People who evade taxes usually do so because it is "ill gotten gains". People who avoid taxes do so because they can! Then you have the group that wants to pay more. So I guess you have "Tax Evaders/Tax Avoiders & Tax Lovers" and obviously the "Muppets"!

 

[MichaelB]

People who evade taxes usually do so because it is "ill gotten gains". People who avoid taxes do so because they can! Then you have the group that wants to pay more. So I guess you have "Tax Evaders/Tax Avoiders & Tax Lovers" and obviously the "Muppets"!

"Ill gotten gains" and " not paying tax because they can" are both equally unlawful and criminal. You forgot to mention the "honest people that comply with the law and pay their taxes".

 

[nun]

Use the double taxation relief for Italian taxes or US taxes?

If your accounts are still in US institutions, you have to pay IRS.

For Italy you have to show them you've paid US taxes and pay the difference? I thought tax evasion was one of the problems they were having.

For retirement accounts like IRAs and 401ks the US imposes a withholding tax on any overseas payments. You can take that as a FTC on you foreign taxes and pay the difference to your country of residence. Then you take the tax you paid overseas as a FTC on your US taxes. The end result is you pay the greater of the tax rates and the relative amounts you pay in each country depends on the US withholding and your relative tax rates.
There are separate treaty articles for Interest, Dividends and capital gains, that impose max tax rates on cross-border payments, but they are pretty much moot for US citizens because of the Treaty Saving Clause.

 

[explanade]

Hmm, so for the ability to stay as long as you want, you get to pay additional taxes, while not getting benefits such as being in their health care system.

Might as well just do the Schengen thing and stay up to 90 days at a time.

 

[nun]

Hmm, so for the ability to stay as long as you want, you get to pay additional taxes, while not getting benefits such as being in their health care system.

Might as well just do the Schengen thing and stay up to 90 days at a time.

I don't know much about the Italian health system, but for the UK if you are resident you qualify for the NHS and the total tax you pay will be the higher of the tax due in the US and the UK. So there is no additional tax burden. My initial estimates show that I will be taxed slightly less in the UK than in the US because of the UK's higher exemptions on certain types of income and gains and that the UK has no state tax. So I'll end up paing the same tax as I would if I lived in the US, but the cost of living where I plan to move in the UK is considerably less than where I live in the US.

 

[NYEXPAT]

"Ill gotten gains" and " not paying tax because they can" are both equally unlawful and criminal. You forgot to mention the "honest people that comply with the law and pay their taxes".

Michael, you are misconstruing my words! I highlighted the word AVOID. In the USA I used to live in TAX AVOIDANCE was clearly legal and elevated to an art form! I also had included a 4th catchall category. I do not mind Mod criticism, but please be accurate!

 

[MichaelB]

Michael, you are misconstruing my words! I highlighted the word AVOID. In the USA I used to live in TAX AVOIDANCE was clearly legal and elevated to an art form! I also had included a 4th catchall category. I do not mind Mod criticism, but please be accurate!

So sorry. This thread is about living abroad, I had no idea you were referring to the US, where avoidance and minimization often mean the same. Avoidance for overseas taxpayers has other implications which are not always so clear, or lawful. As for your catchall, tax lovers? Honest taxpayers do not love taxes, they pay the because it's the right thing to do. And if you were including us as Muppets, well, I will admit that part I did misunderstand.

 

[Ed_The_Gypsy]

Returning to the original issue, I have learned over the past year that certain things are very important to DW:
1) Reliable internet.
2) Reliable domestic water supply.
3) Reliable electricity.
4) Reliable natural gas for heat in the winter and hot water all year.

Combine that with
a) the increasing cost of living outside the US, including
b) more and more restrictions on health insurance as we get older, and
c) more realistic information on safety out there,
it appears that Plan B is getting less attractive.

And less necessary (always good).

Time will tell.

 

[MichaelB]

Returning to the original issue, I have learned over the past year that certain things are very important to DW:
1) Reliable internet.
2) Reliable domestic water supply.
3) Reliable electricity.
4) Reliable natural gas for heat in the winter and hot water all year.

That is a list that brings back fond memories. Add regular supply of fresh food. I was thinking telephone service, but cell phones have really changed that. Beer also, but hard as I try, I can recall regular shortages in all of the things you listed, but never beer. There's a lesson here somewhere...

Combine that with
a) the increasing cost of living outside the US, including
b) more and more restrictions on health insurance as we get older, and
c) more realistic information on safety out there,
it appears that Plan B is getting less attractive.

And less necessary (always good).

Time will tell.

Maybe plan B was never as good it seemed. Its always best to keep your options open...

 

[Koogie]

Returning to the original issue, I have learned over the past year that certain things are very important to DW:
1) Reliable internet.
2) Reliable domestic water supply.
3) Reliable electricity.
4) Reliable natural gas for heat in the winter and hot water all year.

Combine that with
a) the increasing cost of living outside the US, including
b) more and more restrictions on health insurance as we get older, and
c) more realistic information on safety out there,
it appears that Plan B is getting less attractive.

And less necessary (always good).

Time will tell.

From our travels overseas, I can say that my DW would add that a Western Style toilet is essential too... She's not a big fan of squat toilets..

 

[W2R]

Returning to the original issue, I have learned over the past year that certain things are very important to DW:
1) Reliable internet.
2) Reliable domestic water supply.
3) Reliable electricity.
4) Reliable natural gas for heat in the winter and hot water all year.

I would second all of the above, and add

5) city sewage service
6) reliable trash pick-up

YMMV. F. wouldn't mind living in the country with a septic system but, well, I am more picky and such a pampered city girl....

 

[haha]

I would second all of the above, and add

5) city sewage service
6) reliable trash pick-up

YMMV. F. wouldn't mind living in the country with a septic system but, well, I am more picky and such a pampered city girl....

Unless the soil is perfect, septic systems stink! (Literally sometimes, and figuratively always.)

I think added to Ed's list should also be public transit, at least for anyone past 55 or so who is making a move. Even if you rarely use it, it is there for you when or if needed. A number of things cansideline a person if s/he is dependent on driving to do the basics of life.

Ha

 

[Ed_The_Gypsy]

Maybe plan B was never as good it seemed. Its always best to keep your options open...

You speak sooth. Still, gotta have one.

 

[Ed_The_Gypsy]

From our travels overseas, I can say that my DW would add that a Western Style toilet is essential too... She's not a big fan of squat toilets..

OHyeah. Actually, that is my basic requirement, even if it is an outhouse, if I have nothing else.

 

[Ed_The_Gypsy]

Guys, my Plan B is for survival in case of dire straights. We can live in the woods, but it has to be safe and we have to have solid health care available. I am working on keeping us alive (no, I am not a survivalist). She has these additional requirements, though. We will muddle through.

 

[NYEXPAT]

Unless the soil is perfect, septic systems stink! (Literally sometimes, and figuratively always.)

I think added to Ed's list should also be public transit, at least for anyone past 55 or so who is making a move. Even if you rarely use it, it is there for you when or if needed. A number of things cansideline a person if s/he is dependent on driving to do the basics of life.

Ha

I second public transit!

 

[kcowan]

I would hate to see the size of baggies that those drivers carry!

 

[ratto]

From our travels overseas, I can say that my DW would add that a Western Style toilet is essential too... She's not a big fan of squat toilets..

Hey, nothing is wrong with the squat toilet. It will make your legs and back strong. It's probably even more effective than some fitness equipments sold on TV.

 

[Ed_The_Gypsy]

Sorry, ratto. Not on the program.

Now I learn that she is not happy with noisy neighbors.

The 3rd world looks further and further away.

Or is that farther and farther.

 

[ItDontMeanAThing]

Returning to the original issue, I have learned over the past year that certain things are very important to DW:

Everybody has their own list, I found mine changed after living in Thailand for 2 years and the Phils for 1.5:

Some cultural features are tolerable, but I'd never settle in a place unless the following were far enough from my residence that if I noticed them, it would be barely. From what I've seen of Thailand, that means living in a walled expat community.
- The concept of 'too loud' doesn't exist.
- Packs of street dogs.
- Daily trash burning.
- Land use zoning.


Other criteria:
- High standard of medical facilities within an hour travel time.
- Airport within 4 hours travel. I expect that time will shrink if my health declines.
- An active local expat forum so I can ask 'where can I buy X' type questions.
- A visa with permission to stay in chunks no shorter than a year, where the continuation of this privilege is routine for those who have kept their nose out of trouble.
- A noticeable population of European or American expats.
- In or within an hour of a regional travel hub, be it air, rail, ferry or bus, or on a mainline between hubs.

I don't use squat toilets but do squat to do my hand laundry and dishes in tubs on the balcony (I don't have a kitchen). I think the squatting helps my back.

 

[MichaelB]

Sorry, ratto. Not on the program.

Now I learn that she is not happy with noisy neighbors.

The 3rd world looks further and further away.

Or is that farther and farther.

Ed, noisy neighbors are a problem everywhere. Where are you going to go?