Know The Rules

Equipped with the know-how you need to stay compliant, it’s likely your move will be a tax-neutral event. Plunge your head in the sand and bumble through and you’re sure to reap nasty penalties.

You don’t want to organize your life around tax code, but, no question, controlling your tax liability can make a big difference in your standard of living. Reduce your tax bill from, say, 40% a year to, say, 20% a year and it’s like giving yourself a raise and super-charging your investment portfolios. You’re earning no more, but you’ve got a whole lot more disposable income.

We Americans have it double tough. No matter where we go, our obligations to Uncle Sam follow. When we take up residence in a foreign jurisdiction, therefore, we’ve got double the tax masters. We’re beholden to both the IRS and the local tax collector.

We must understand the tax requirements on both sides, and we must file annual tax returns in both jurisdictions… but that is not to say we owe double the taxes.

On the contrary. As an American abroad, you can reduce your annual tax burden, even significantly, from what you were paying when you were residing full-time within U.S. borders.

This is where things get interesting… and complicated.