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Recently Answered Questions

What are the advantages and disadvantages of having a Mexico passport?

SONIA DIAZ - Sonia Diaz

Festival with lit tree in front of parroquia in San Miguel de Allende – Best Places In The World To Retire – International Living

I don’t advise my clients one way or the other to obtain a Mexican passport because it is a personal decision.

Being a permanent resident gives you the almost the same rights as a Mexican citizen except mostly for voting, being involved in the political process and owning property in your name along the coast. Not being involved in politics as a visa holder means rfelated to elections etc. You may still raise issues of civil rights, etc.

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How do I open up a bank account in Portugal?

Duncan MacGregor - Duncan MacGregor Accounting

Novo Banco (formerly Banco Espírito Santo, Lisbon, Portugal – Best Places In The World To Retire – International Living

To open a bank account in Portugal, the first thing that you have to do is get a Portuguese fiscal tax number as an individual. A US citizen would apply for a tax number directly from the tax office or they could appoint a tax representative, which is a service that we offer whereby we are nominated as the tax representative for a non-resident. If this is set up, all tax correspondence are sent between the tax office and the tax representative.

Some of the...

Do I lower my US income tax liabilities if I retire or work abroad?

John Ohe - Hola Expat Tax Services

Mazunte, Oaxaca,Mexico – Best Places In The World To Retire – International Living

When you retire abroad and you have just pension or Social Security income, your tax liability will not change because there's nothing that the US government offers you as a retiree that allows exempting retirement income from taxation. Your US taxes will be basically the same as if you were living in the US if your only source of income is retirement or pension income.

However, if you are working abroad, whether you are working for a company...

However, if you are working abroad, whether you are working for a company abroad or working for yourself, there are ways to eliminate or dramatically lower your tax burden because the IRS allows you a couple of different options on the tax return itself.

One is something called the Foreign Earned Income Exclusion whereby approximately US $100,000 worth of foreign earned income could be excluded from your tax return. Let's say you make $100,000 working for some foreign or US company and you're physically working abroad. The $100,000 shows up on your tax return as a wage, while a minus $100,000 would appear further down on that tax return to wipe it out so that you basically have no tax liability.

There are certain tests that you must qualify for to be able to utilize the Foreign Earned Income Exclusion. For most expats who are permanently living abroad, qualifying is quite easy.

There are people who live abroad in higher tax jurisdictions where the effective tax rate that they are paying in that country is higher than it would be in the US. Even in Third World countries like Peru, for example, if you're making a modest income, you're paying more taxes in Peru than you would in the US. In this case, the preferred way to avoid or eliminate tax on the US tax return would be to utilize foreign tax credits.

The reason I say that the foreign tax credit is preferable in this situation is that it could potentially wipe away all US taxes because every dollar paid in foreign taxes is offset in the US. If you have foreign tax credits left over, which means you paid more taxes locally than you would have in the US, these get carried over.

The same expat who then moves from a high tax jurisdiction to a lower tax jurisdiction country, could use his or her carry over tax credits in a place where he or she would be paying less taxes than in the US. These carry over credits could be bankable.

Another reason why foreign tax credits are great for people who have children is that the child tax credit was eliminated a couple of years ago when one utilizes the Foreign Earned Income Exclusion on the tax return. Now, if you're using the foreign tax credit to eliminate your tax liability and you've got two kids under the age of 17, you could potentially get $2,000 in tax refund from the IRS without having paid any taxes to the IRS. This is why utilizing foreign tax credits can be the preferred way of taking care of your US tax return.

If you're using the Foreign Earned Income Exclusion and you qualify via either one of the two tests, it is possible to still pay no taxes in the country in which you are making the money if that country utilizes what's called a territorial tax system or has a zero tax rate. There are many countries in the world that have a zero tax rate or a territorial tax system. One example of a country with a territorial tax system is Panama.

If you are a US tax payer working in Panama and/or making money in Panama, it could be possible that you make $100,000 in Panama, utilize the Foreign Earned Income Exclusion to exclude out that $100,000 from the US tax return, and pay Panama zero taxes.

There are many expats who have local businesses or work for a local company and they pay taxes. There are people who work online and they are off the radar screen. If you're off the radar screen in a foreign country and you're not paying any taxes locally, you would not utilize the foreign tax credit because you haven't paid any taxes. You would clearly use the Foreign Earned Income Exclusion.

The tax situation mentioned in Panama as an example, I would bucket this more generally as a situation wherein if you are not paying taxes locally, then clearly the Foreign Earned Income Exclusion would be the preferred method.

For those with dual citizenship who have businesses in the country that they're in and paying local taxes that are higher than what they would pay in the US, it would be better to utilize the foreign tax credits.

(The beach town of Mazunte, near Oaxaca,Mexico, pictured.)

How are the schools in Belize?

Christian Burn

Kids buying juice before school in Belize City, Belize – Best Places In The World To Retire – International Living

They have a British-based school system here in Belize so it is based on standards and forms as opposed to grades. They are quite significant here. The kids who graduate from the schools, especially the primary schools, have a very high level of aptitude and comprehension. From what I understand, the primary school system is very good.

In Ambergris Caye, you have the option of a public school or a private school. Even the private schools are absolutely gorgeous. There is a big private school called the Island Academy. The church funds the public schools. There is an Anglican school and a Roman Catholic school, which are free for the kids. The parents do not have to pay for the books or for the food because I believe there's a program at all the schools for breakfasts and lunches. From my understanding, they are all very well run.

The high school is quite an issue for people because there is only one high school in Ambergris Caye. It is not particularly great. Without a rival high school, there is no team spirit. The teams do not have anyone to play and no one to compete against. That rivalry is what was so much fun in high school. That bonding experience for the teens attending whichever school does not exist in Belize. From my understanding, many parents send their kids to high school on the mainland. In Belize City, there are several high schools from which they can choose. Often the local people send their teenagers to go live with their relatives in Belize while their teenagers attend high school there. The expats tend to bring their kids back to North America from what I have seen, or one of the parents will move back to North America with the teenager.

The elementary schools in Ambergris Caye here are all church-run. There is an Adventist primary school, there is a Roman Catholic school, and an Anglican school. There is no government-run school. The churches fund the primary schools that are free and the private schools are out of pocket. There is no “San Pedro Primary School” that is government run. There is nothing like that.

The schools here in Belize are bursting. There are something like 500 kids, but the schools are meant for only about 350 kids. So the need is there, but they don't refuse children, which something that I really like. Some Guatemalans and Hondurans live here because this is the only place somebody can get any work and the kids are accepted into schools. Even though some of them are here illegally, the children should not be punished, and the children should be educated.

How much does food cost in Coronado, Panama?

Sandy Williamson

After recently spending a month in Coronado, Panama, I can tell you that we spent around US $1,000 for a month of groceries, wine and eating out about twice a week. This amount does not include gas, rent, or electric.

How much is it to build a house in Nicaragua?

Brett DeGreen - Century Twenty One Gold Coast Realty Nicaragua

Price of building a house in Nicaragua can vary dramatically depending on the location of the home. In the Chinandega region new homes built over the last year range from $55-85 per square foot, depending on the finishing. Over the past few years, building quality has increased in the Chinandega area, and there is a great selection of quality contractors. Managua is still a destination for higher quality appliances and fixtures.

Recently Posted Expat Stories

ALL EXPATS LIVING IN SAN MIGUEL DE ALLENDE ARE NOT WEALTHY

A large percentage of Mexicans in San Miguel de Allende perceive that all expats (Gringos) living in the blissful hamlet of San Miguel de Allende are wealthy.

This is so far from the truth!

Many expats, and in particular Americans, live here on their monthly Social Security check. Most can live exceedingly well while others truly perish and must live like the locals in the marginalized communities.

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It Is Important To Keep Your Eyes Wide Open When You Move To Panama

I have lived in Panama for nearly seven years with my wife Any. We have a beautiful home on the Caribbean side (known as the Gold Coast), near the town of Portobello, Colon.

I spent three years researching Panama before my first visit and I brought six people to Panama on my first visit. I thought the people who came here with me were interested in moving to Panama, but they were much more interested in golfing than discovering the country.

My...

I first came to Panama City in the fall of 1997. Even then the city was vibrant, bustling and full of life. The towering skyscrapers that now dominate Avenida Balboa were a distant vision and the high end residential districts of Punta Pacifica and Costa del Este had yet to be built. Just getting into the city from Tocumen International Airport could be a nightmare. The toll road leading from the airport wasn’t complete and the notorious city traffic jams were...

Best Places In The World To Retire

Recently Answered Questions

What are the advantages and disadvantages of having a Mexico passport?

How do I open up a bank account in Portugal?

Do I lower my US income tax liabilities if I retire or work abroad?

How are the schools in Belize?

How much does food cost in Coronado, Panama?

How much is it to build a house in Nicaragua?

Recently Posted Expat Stories

ALL EXPATS LIVING IN SAN MIGUEL DE ALLENDE ARE NOT WEALTHY

It Is Important To Keep Your Eyes Wide Open When You Move To Panama

What is the price (or value) of freedom?

Best Places In The World To Retire