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Money & Taxes

Tax and Legal Complexities for US Expats Moving Abroad

Moving abroad permanently as a US citizen means navigating tax residency, FBAR, and citizenship rules—here's what you need to know.

Image: Seasoned Expat

US citizens moving abroad permanently face a tangle of tax obligations that don't disappear just because you leave. The US taxes citizens on worldwide income regardless of where they live, and you must file US tax returns even if you owe nothing. Failing to file can trigger penalties far larger than any tax bill.

Key rules: file Form 1040 and FBAR (FinCEN Form 114) if you have foreign bank accounts totaling over $10,000 at any point in the year. If you're self-employed abroad, you'll owe self-employment tax. Use the Foreign Earned Income Exclusion (FEIE) to exclude up to $120,000 of earned income, or the Foreign Tax Credit to offset taxes paid to your new country. Establish tax residency in your new country as soon as possible—most countries require this for favorable tax treatment.

US taxes follow you abroad; file FBAR and 1040 even if you owe nothing.

Before you move, consult a cross-border tax attorney or CPA. Understand your new country's tax residency rules, any totalization agreements between the US and that country (which can reduce double Social Security taxation), and whether you need to file state taxes. The cost of one consultation is far less than penalties for missed deadlines or incorrect filings.

Source: original report ↗

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