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Can I Gain a Tax Advantage By Taking My Social Security and Investment Income and Retiring to a Foreign Country

If you are receiving Social Security, and you have investment income here in the United States you will still be required to file a US tax return and pay appropriate income taxes to the IRS. Yes, it is possible to move to some foreign countries and enjoy a much better standard of living on $1500 or $2000 a month than you would here in San Diego. You will be known as a US expatriate. But you will still owe US taxes on several sources of income, and you will still be required to file a tax return with the IRS. You earned the right to Social Security in the US, so Social Security income will always be taxed in the US. Anything you earn above the “Foreign Earned Income Exclusion” will be taxed in the US as well. The only income that might be shielded is foreign earned income below the exclusion level.

Let’s say you transfer your investments from your banks and institutions here in San Diego to a bank in that local country. You still are required to report that income on your FBAR and pay appropriate US taxes. Income that is earned may not be taxable (if it falls below the exclusion) but it is still declarable. You still need to file a US tax return.

Related Posts: US Expatriates Should File a Return with the IRS – Even if They Don’t Believe They Owe any Tax