If you are U.S. citizen with foreign earned inc
If you are U.S. citizen with foreign earned income and are (or will be) a bona fide resident of a foreign country for any entire year, or physically present in a foreign country for no less than 330 days during a year, then you may qualify for the "Foreign Earned Income Exclusion" as allowed by the Internal Revenue Service (IRS):
Advantage to Working Abroad - The Foreign Earned Income Exclusion
If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to an amount of your foreign earnings that is now adjusted for inflation:
- $91,400 for 2009
- $91,500 for 2010
- $92,900 for 2011
- $95,100 for 2012
In addition, you can exclude or deduct certain foreign housing amounts. You may want to research or inquire about IRS form 2555 for more information.
Disadvantage to Retiring Abroad - Receiving SSI and Medicare
Although you should still be eligible to receive Social Security (SS) irrespective of where you live, if you are a U.S. citizen and move offshore Supplemental Security Income (SSI) and Medicare payments will cease to be paid. SSI is taxpayer funded program which assists the blind, elderly, low income and disabled and is not available to U.S. citizens living abroad. Likewise, Medicare provides no coverage overseas but may be available for those who are living in a foreign country for an undetermined period of time and have plans to return.
As with any tax matter, it is always advisable to seek the competent advise of a tax professional.