Top-5 Destinations – And Their Taxation Policies – for US Expats

Whatever your reason for wanting to join the ranks among the growing US expatriate population, your destination of choice needs to be the result of comprehensive consideration.

What sort of lifestyle, climate, culture, tax structure, etc. are you looking for? Those are just the basic questions; there’s lots more to consider.

Before we get into the top destinations for US expats, there are a few things you need to understand as far as taxes go. If you’ve already moved abroad, these will serve as good pointers to make sure you’re on track.

Run Out the Clock On Your Tax Responsibilities
The US has tax treaties with a host of countries that encourage the trading of banking on US citizens. You may think that because you’re earning money in another country and paying that country’s taxes, you’re not required to pay US taxes. You couldn’t be more wrong. You’ll be double-taxed.

If you’re not earning income in your new destination, you should still file a return with the US. You’re not required to but it’s the smart move because it acts as a blocking measure. See, there is a statute of limitations on tax disputes, and if there is a dispute over back taxes, your filing starts running out the clock on the statute of limitations.

Pretty slick, ‘eh?

Some US states are easier to work with than others when it comes to proving your non-resident status and avoiding their state tax requirements. The worst of the lot are California, South Carolina, Virginia and New Mexico.

Ok, enough of that; let’s talk about a few possible destinations for you that are at the top of most lists for US expats.

Top Destinations

  1. Singapore

With a thriving local economy and high quality of life, Singapore tops many lists of favorites for expats. Many expats there rave about a combination of financial and career advantages that they just can’t find in the US. As for family life, most expats say they’ve enjoyed a smooth and safe transition.

Personal income tax rates in Singapore are among the lowest in the world. Their progressive tax rate starts at 0% and ends at 20% for earners above $320,000.

  1. New Zealand

A recent survey found that 3 in 5 expats living in New Zealand are more physically active than they were in the US and report significant improvements in their health. New Zealand seemingly has it all: adventure, a strong social scene, incredible natural landscape and a culture centered upon being family friendly.

Income tax and a Goods & Services Tax fund the infrastructure. Key features of New Zealand’s tax system include:

  • No inheritance tax
  • No social security tax
  • No healthcare tax
  • No local or state taxes except for property taxes
  • No capital gains tax
  1. Sweden
    With a society and culture viewed as being excellent for raising a family, Sweden is a popular destination. For factors including childcare quality, overall cost of raising children and work/life balance, Sweden ranks tops.

The taxation rate for Sweden is commonly regarded as among the highest in the world, so beware. Taxation is at three different levels of government: the municipality, county council and central government.

4. Belize

This little English-speaking country is a top choice for just about any US citizen considering becoming an expat. It’s less than two hours from Houston, Texas; lists English as its official language and its laws are based upon those of the UK, which should make them familiar to Americans.

The Belize government isn’t going to tax you excessively. In fact, taxes are quite low, and depending on how you earn your income, you could have a zero tax liability.

5. Costa Rica

There are more than 20,000 US expats living in Costa Rica. Clearly, they know something. The standard of living there is high; the economy caters to the middle class; there’s hillside villages, Caribbean beaches, rain forests, thriving valleys and mountains.

Taxation in Costa Rica is based on where the money comes from. Only revenue earned within Costa Rica is subject to taxes. You will not have to pay taxes on your US social security income, pension, investments, etc. But you will be responsible for paying taxes to the IRS.

Wherever You Decide to Call Home, Put Our Expertise to Work For You

We’d hate to see you go, but we understand you’ve got your reasons. Decisions like this are life-changing ones, and it’s important to have someone who knows all the ins and outs on your side.

Get in touch with us today, and let us start working for you. Send an email to Eric Stuhler at info@efilefbar.com.

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