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Hello all,
I tried doing a search but really couldn’t find the info. So here it goes…What is the pro/cons retiring in CR with a US pension? Would my pension be taxed? I am so fed up with the US taxes and am nearing retirement.
I would not be one of the people just ‘looking’ to be a resident coming in and out every few months. Just want to make sure the money I have coming to me would be there. CR taxing it and/or US taxing it.
Thank you for any help you may be.
As a foreign resident or retired person living in Costa Rica…
- You will NOT pay any income taxes in Costa Rica on the U.S. pension income you receive in Costa Rica.
- You will NOT pay any income taxes in Costa Rica on your Social Security payments which you might choose to receive in Costa Rica and…
- You will NOT pay income taxes in Costa Rica on any other investment income from outside of Costa Rica.
Scott Oliver – Founder
WeLoveCostaRica.com – Home of stunning scenery, sunshine & smiles.But Scott, what you failed to include is . . .
– You WILL pay U.S. income taxes on all your U.S.-taxable income received from any source in the world (but subject to the “Earned Income Tax Credit” which probably won’t apply in this case).
– The IRS Code DOES provide for the taxability of ALL income from any source in the world and paid to a U.S. citizen regardless of his or her country of residence.
– Your taxable income WILL include taxable pensions, the taxable part of your Social Security, taxable withdrawals from tax-deferred saving plans (IRAs, 401ks, etc). And . . .
– As a practical matter, you WILL NOT be able to avoid these U.S. taxes or we’da already done it.
HAHA!!!! So see if there’s an answer to this:
I was born in Germany of German mother and American father. They were not married at the time. They married several years later so that for the 1st 3 or 4 years of my life I was a German citizen and then became a naturalized U.S. citizen after they married. I believe….if I wanted to….I could reclaim my German citizenship. I assume if I renounced my US citizenship for German that would not affect my US Social Security Benefits. So in that scenario if I retired to CR as a German citizen would my US Social Security benefits be taxable and if so by whom?
[quote=”bogino”]HAHA!!!! So see if there’s an answer to this:
I was born in Germany of German mother and American father. They were not married at the time. They married several years later so that for the 1st 3 or 4 years of my life I was a German citizen and then became a naturalized U.S. citizen after they married. I believe….if I wanted to….I could reclaim my German citizenship. I assume if I renounced my US citizenship for German that would not affect my US Social Security Benefits. So in that scenario if I retired to CR as a German citizen would my US Social Security benefits be taxable and if so by whom?[/quote]
I believe the US govt can charge you with tax evasion if you renounce your US citizenship in order to avoid paying income tax. I also believe that you cannot collect Social Security income if you live outside of the US and are not a US citizen.
Bogino,
I am in exactly the same situation, born in Germany, mother German; father American; naturalized U.S. citizen. I am also in the legal profession, do some homework, regarding German citizenship requirements, and U.S. tax laws, regarding tax evasion and citizenship renouncement. You will be shocked! So, I continue to pay U.S. taxes on two pensions and social security, thankfully, I do not pay U.S. taxes on my VA disability compensation!renouncing U.S. citizenship is NOT easy 🙂 its like that famous song hotel california
you check in but you cannot leave
smkuly
ps. truthfully though it really saddens me the predicament of the U.S. right now.
[quote=”DavidCMurray”]But Scott, what you failed to include is . . .
– You WILL pay U.S. income taxes on all your U.S.-taxable income received from any source in the world (but subject to the “Earned Income Tax Credit” which probably won’t apply in this case).
– The IRS Code DOES provide for the taxability of ALL income from any source in the world and paid to a U.S. citizen regardless of his or her country of residence.
– Your taxable income WILL include taxable pensions, the taxable part of your Social Security, taxable withdrawals from tax-deferred saving plans (IRAs, 401ks, etc). And . . .
– As a practical matter, you WILL NOT be able to avoid these U.S. taxes or we’da already done it.[/quote]
Which is the “taxable part” of social security?
[quote=”sprite”]Which is the “taxable part” of social security?[/quote]
sprite, I can’t give you a definitive answer to that, but what I know is that if your total taxable income falls above some limit or another, then part of your Social Security becomes taxable under the IRS Code. And the higher that other taxable income is the more tax liability you’ll have for your Social Security.
In a very direct sense, then, Social Security is already means tested and has been so for years.
[quote=”laika”] I also believe that you cannot collect Social Security income if you live outside of the US and are not a US citizen.[/quote]
That is absolutely NOT the case. In fact, there are non-U.S. citizens living all over the world who collect U.S. Social Security because they worked in the U.S. and paid into the Social Security system thereby earning the credits necessary for an Old Age or Disability pension.
Your eligibility for Social Security has nothing whatsoever to do with either your citizenship or your country of residence. A worker working “on the books” in the U.S. and paying into the Social Security system earns the exact same benefits whether s/he is a U.S. citizen or resident or not.
that’s true, David, for the most part. my husband is an Italian citizen and collects SS, but there are stringent rules about certain countries that are a party to a certain treaty and if you are a citizen of one of THOSE countries, you can’t get your SS. Even if one DID renounce US citizenship, you are still on the tax hook for TEN YEARS just to make sure that you aren’t doing this to evade taxes.
Right, maravilla, but you’re talking about a short list of countries that probably includes Cuba, North Korea, Iran, and just a few others, no?
yes, david, those countries. there are several other lists of countries and the guidelines for whether your are eligible for benefits if you are out of the country. if you are a citizen of a country which is not part of the SSA agreements, a whole new set of rules kick in as they did for my husband when they cut his benefits because they thought he was a citizen of a country NOT a party to the agreement, when in fact he holds a passport for a country that IS!!! it’s very confusing.
[quote=”sprite”] Which is the “taxable part” of social security?[/quote]
Go to [url=http://www.ssa.gov/planners/taxes.htm]Taxes and your Social Security benefits[/url] on the Social Security website.
If you have income other than Social Security you may be liable to pay taxes on the Social Security portion.
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