Americans Earning Income Overseas

If you are retiring overseas and intend to live on Social Security or other retirement income alone, the move should be a tax-neutral event… and no tax planning is called for. Many jurisdictions don’t tax Social Security or pension income, so, again, if this is the extent of your retirement nest egg, you’ve got it easy on this front. You can skip this section.

If, however, you’ll be bringing anything beyond Social Security or pension income with you when you relocate overseas, then you need to address the question of taxation and you need to address it on two fronts—both back home and in your new jurisdiction of residence.

Note that we’re assuming full-time residence; if you’re planning to retire overseas only part-time, then, again, you’re off the hook for this part, because, again, no tax planning is necessary if you’re not in another country long enough to become a tax resident.

If, though, you’re planning to relocate full-time, and you’ll be bringing more than Social Security or pension income with you, then new tax issues can develop, depending on where your money will be coming from.

Earned income is just that—money you earn. Specifically, we’re talking about wages you receive for services you perform.

And here’s the exciting thing about earned income for the American abroad: The first US$108,700 (2021) of it can be tax-free… on the U.S. side.