Isn’t there a Social Security penalty for retiring overseas? - YouTube

hello I'm Kathleen the other cord I'm Lief Simon  welcome to the next edition of our podcast from  

Paris we continue in sequester here in our little  apartment in Paris we've stopped counting the  

weeks I couldn't tell you how long we've been here  and we still don't know when we'll be leaving but  

maybe macron is suggesting the middle of May  which means still a few weeks ahead of us so  

we continue to look for ways to fill our time I  did a very thorough deep spring cleaning of our  

apartment a most recent weekend and leaf on a line  and with bought for me which I really appreciate  

him some IV and lavender plants that I was able  to plant in our window boxes right so thankfully  

the mail service is still working in France we  can order online although my friend was shutting  

down that was on for non-essential stuff because  of some issues inside their concern yeah inside  

their Depot's so I think I got my lavender and  IB justice what they're exempt from Amazon so  

ok it came from a plant place in France Oh then so  there's a few for me I use Google Translate lookup  

what I want to find in English and put it in the  translator then put that into Google in French  

and I can find lots of websites that deliver okay  alright let's dive into our questions please keep  

them coming we really appreciate all the feedback  that we're getting all right from Mike B in the  

United States Kathleen and Leif we are planning a  move out of the United States possibly to believe  

our retirement will come from pension plans  in the US if we receive our checks in Belize  

we understand that we still will have to pay US  federal taxes however there is no domicile state  

that can collect taxes so doesn't that amount to a  tax break or am I missing something right it does  

if you're coming from a state the taxes pensions  so if there are several states in the US you as  

you may already know that don't text personal  income at all Texas and Florida and a few others  

I forget there's about five and then there are  other states that don't actually tax pensions on  

retirees and I think that list jumps to about  twelve so right if you're coming from a state  

that does tax attention once you move overseas  and break that chain of presidency or domicile  

is more someone used then you wouldn't be paying  that state tax anymore you still pay federal tax  

and in Belize it's not an issue because they tax  on a jurisdictional basis that would made tax on  

the retirement income there other countries you  might move to might tax a foreign pension most  

don't so it's a question to ask if you are text  in the country where you're residing you'd be  

able to get a tax credit on the US side or there  could be a double taxation treaty which basically  

tells which country it gets to tax which type of  income so if you're coming from a high tax state  

this is a nice bonus right if you're coming from  a place like California but California doesn't  

give up their hold on you very much tax easily  so a lot of Californians will make an interim  

move to a place like Texas or Florida that's a  good break that sequence with California cleanly  

before they leave the US so California could have  no claim right okay all right this question comes  

from Jeff F also in the United States isn't there  a social security penalty for retiring overseas  

many in my wife's family believe so they say that  you would get only two-thirds or three-quarters of  

your check if the Social Security Administration  knows that you have retired overseas for example  

to Mexico where I guess they are thinking of going  but I think part of the key is the family members  

aren't US citizens and presumably their green card  holders but know moving overseas doesn't hinder  

your right or ability to collect Social Security  especially if you're a US citizen or u.s. green  

card holder if you're then forget what the exact  term is but if you're not a green card holder but  

are eligible for Social Security we've been moved  overseas then you might depending on where you are  

and what your citizenship is there might be some  restrictions on that but generally speaking US  

citizens moving overseas there's no restrictions  on them collecting Social Security unless you're  

gonna move to Cuba or Iran or North Korea which I  don't think is an issue for most people but this  

is this is a good topic we get lots of questions  all the time about Social Security and so the  

fundamentals are you don't lose it by retiring  overseas you aren't penalized for retiring  

overseas and you can have it direct deposited  to an account in many countries overseas but  

you can't so that answers the question how do you  access it well you can have it delivered to your  

bank directly in any number of countries right  okay Gary C from the United States Kathleen thank  

you for everything I love reading your dispatches  and I'm enjoying the podcasts Thank You Kathleen  

I know that some income earned overseas can be  excluded from my US tax return but what about  

an internet business where the income is derived  from many different countries in other words if we  

move to Panama to run our business is the income  excluded regardless where it comes from even if  

it comes from the United States all right so what  Gary is asking about is the foreign earned income  

exclusion and so there's two ways to qualify for  that being a bona fide resident of another country  

or the day's test which means being in another  jurisdiction for 330 days or more the reverse of  

that is being outside of the US for at least 330  days although you have to be in another another  

jurisdiction interest international waters and if  you qualify then what matters is where the income  

was earned so even if you're a bona fide resident  of another country in your consultant and you go  

work two weeks in the US for one of your clients  those two weeks that you're in the US or won't  

fall under the foreign earned income exclusion  in other words it'll be taxable but if the if you  

have an internet business and you have people  buying from the US but you're in Panama doing  

the work you know keeping the website up doing  whatever work is necessary for your business  

you're doing the work in a in another country  outside the US and so it does qualify for the  

foreign earned income exclusion okay so this  can get complicated one of the fundamentals to  

understand with this in general because it's  another topic we get so many questions about  

is that it has to do with earned income firstly  right passive income no matter where you are what  

description or any there it's not relevant it's  not exactly we get the question a lot from people  

who want to move overseas and be day traders they  say day trading is work they're put there that's  

what they do every day but that's still just  investments so you can't qualify as a day trader  

for the foreign earned income exclusion okay  Kathleen if I move overseas could I ever return  

to the United States oh I have a great sarcastic  answer if you haven't met Leif at a conference  

yet you haven't had the privilege and the pleasure  of enjoying his no holds bar response is which he  

gives in person he's being a little I'll hold my  tongue and not get political today but of course  

if you're us and you have the right to return to  the US anytime you want and we talked about this  

in the context of getting multiple citizenships  and residency's for being allowed to be in a  

country Kathleen and I have Irish resident sorry  Irish citizenship which allows us to be in the EU  

and live in Ireland before we could get residency  and another EU country if we wanted to as well as  

our US citizenship and so during this coronavirus  lockdown question was okay well where do we want  

to be locked down we have Panama residency we were  trying to get back to Panama before it closed down  

but the country closed down so in the current  situation it's more difficult to get back to  

where you want to be or where you're allowed to be  but generally speaking if you're a US citizen have  

a US passport you can return to the US any time  okay we will call it a wrap there for another  

episode of our podcast from Paris please continue  to stay safe stay well stay comfortable and keep  

your imagination going during this period of  pause we'll be in touch again soon thank you