Non-Resident Retirees
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The PositiveLights.org Web Site |
An increasing number of U.S. retirees are choosing to live outside the U.S. due to limited financial resources and continuing inflation of medical costs for those who are retired, Many are moving to Mexico, Costa Rica, Belize and other Central American countries where living costs are less than in the U.S.
For income tax purposes, there are few advantages in living outside the U.S. because the U.S. tax system imposes income taxes on the worldwide income of a citizen or a permanent resident. This means that the retiree continues to be subject to the same tax rules as a U.S. resident retiree but may also become subject to the tax rules of the country of residence and therefore subject to dual taxation.
There are some countries that offer attractive incentives for U.S. retirees. One with which I'm familiar is Belize, where a citizen of another country with a retirement income is exempt from Belize income taxes on that income.
The foreign tax credit is the primary method by which the U.S. government attempts to alleviate the possibility of paying taxes on the same income to two different countries, but that credit is subject to a variety of complications and limitations.
To escape from the U.S. income tax, a citizen or permanent resident must "expatriate" by becoming a citizen of another country and becoming a permanent resident of countries other than the U.S. Most U.S. retirees are reluctant to lose their citizenship and U.S. passport so they then have to cope with the complications of being subject to the tax systems of two different countries.
Extensive further details about the income tax aspects of living outside the U.S. and of investing outside the U.S. are available at www.offshorepress.com/offshoretax/index.htm
Copyright, 2003, Vernon K. Jacobs
Vernon Jacobs is the Editor/Publisher of The International Wealth Protection Reports, which are a collection of research reports on legal methods of asset protection and tax avoidance. Further information on this subject is available at http://www.offshorepress.com/ Jacobs is a CPA who has worked as a free lance tax and financial author/editor since 1977. Details about his credentials and experience are online at http://www.offshorepress.com/vkjcpa/
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