« Mexico? Nicaragua? The Carnival of Latin America Is Up Now! | Costa Rica Mail: I Hope You’re Not In A Hurry »
Mexico, Costa Rica, Panama. . . Great Tax Deals!
By Jane Goodwin | November 7, 2007
American retirees and expats living in Central America often have questions about taxes. These are legitimate and reasonable questions.
In Mexico, Costa Rica, and Panama, American retirees are GENERALLY not taxed on pensions, Social Security, and similar income earned in the States.
HOWEVER, the IRS insists that US citizens must file US tax returns, even if they’re not living in the States and even if they have no tax liability. If a retiree earns income while likving abroad, the IRS will exclude as much as $85,000 from federal taxes in 2007 (double that for dual-income couples), but if you earn money from sources in your host country, that income is usually taxable there.
In Central America, property taxes are usually much lower than in the States, but other taxes can be steep, especially on vehicles brought into Costa Rica.
The best advice is to hire a good tax advisor: get one in both countries if you can.
Whatever the outcome, however, an American retiree is pretty much guaranteed a lower cost of living and a better tax deal in Mexico, Costa Rica, or Panama.
Sphere ItTopics: Mexico, Costa Rica, Central America, Panama, Laws, Lifestyle, Government Incentives, Money and Taxes |
