US Tax Filing for American Retirees Living Abroad
Retiring abroad is increasingly popular among Americans, but it introduces a new layer of tax complexity beyond the standard expat picture. Retirees must navigate how Social Security benefits are taxed (and whether a tax treaty modifies this), how foreign pension income interacts with US tax, IRA distributions taken from abroad, potential FBAR obligations, and the reality that Medicare does not cover overseas healthcare. We provide calm, expert guidance through every aspect of the retiring-abroad tax picture.
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What this filing may involve
Every situation is different. The forms below commonly apply — your specific filing may vary.
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- ✓Automatic online filing
- ✓One federal + one state return
- ✓W-2, 1099 and basic deductions
- ✓Everything in Premier
- ✓Foreign Earned Income Exclusion (Form 2555)
- ✓Foreign Tax Credit (Form 1116)
- ✓FBAR filing (FinCEN 114) included
- ✓Everything in Expat
- ✓Schedules D & E for investments and rentals
- ✓Foreign asset reporting (Form 8938)
- ✓FBAR filing (FinCEN 114) included
Frequently asked questions about US Tax Filing for American Retirees Living Abroad
Is my Social Security income taxable if I live abroad?
For most retirees living abroad, up to 85% of Social Security benefits may be taxable at the US federal level using the standard income tax calculation. However, several US tax treaties (e.g. with Canada, Germany, Italy) contain provisions that can exempt or reduce the US tax on Social Security for residents of those countries. We check treaty applicability for your country.
Do I need to take Required Minimum Distributions while living abroad?
Yes. RMD rules apply to all US persons regardless of where they live. If you have a traditional IRA or employer retirement plan, you must begin taking RMDs at age 73. Failure to take RMDs results in a 25% excise tax (reduced to 10% if corrected within two years) on the amount not distributed.
I receive a pension from a foreign country — how is this taxed in the US?
Foreign pension income is generally taxable in the US for US citizens, but tax treaty provisions often provide relief. The correct treatment depends on the specific treaty and the type of pension. German, Canadian, and UK pensions, for example, each have treaty provisions that our CPAs assess on a case-by-case basis.
Can I still contribute to a Roth IRA if I live abroad and use the FEIE?
No. Roth IRA contributions require earned income not excluded by the FEIE. If you use Form 2555 to exclude all of your foreign earned income, you typically cannot make new Roth or traditional IRA contributions for that year. However, you can continue to hold existing IRA accounts and they continue to grow tax-free.
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