Moving Abroad: What Happens to Your Taxes, Accounts and Pension

Moving abroad: what changes and what does not#

People plan an international move around the visible things — the visa, the flights, the shipping quote, the school — and meet the financial half of it afterwards, usually by letter. Moving abroad does not automatically end your relationship with the tax authority you are leaving, it does not automatically start a clean one with the country you are entering, and the gap between those two facts is where the expensive mistakes live.

Three questions decide almost everything. Which country has the right to tax your worldwide income, what the country you left can still tax even once you have gone, and what you are obliged to report about the accounts you now hold abroad. The answers differ enormously by nationality, and Americans face a rule that has no real equivalent anywhere else. This is general education rather than tax advice, and the final sections cover Canada, Spain, France and Russia separately because none of them work like the United States.

• US citizens keep filing wherever they live — residence does not end the obligation.
• Reporting is a separate duty from paying — and the penalties attach to the reporting.
• The state you left may still claim you even when the federal picture is clear.
• Tell your bank and your broker before you go, not after the account is frozen.

The American exception: citizenship, not residence#

Almost every country in the world taxes on the basis of residence: live there, pay there. The United States is the outlier. It taxes its citizens and green-card holders on their worldwide income no matter where they live, so an American who moves to Lisbon or Seoul and never sets foot in the United States again still has an annual filing obligation. A short overview of international taxation shows how unusual that is.

Two practical consequences follow immediately. First, filing and owing are different things: most Americans abroad file every year and owe nothing, because of the mechanisms in the next section — but not filing is its own problem with its own penalties. And the trap inside that is worth stating in the tax authority’s own words: in working out whether you must file at all, you must count as gross income any income you exclude as foreign earned income. The exclusion does not lower the filing threshold; it only exists once you claim it on a filed return. Second, the deadline shifts. Taxpayers living outside the country get an automatic extension of the filing date, though interest on anything actually owed runs from the ordinary spring deadline regardless. The tax authority maintains a dedicated page on filing requirements for citizens abroad that is the least commercial starting point available.

The two ways to avoid being taxed twice#

Nobody seriously expects to pay full tax twice on the same income, and two separate mechanisms prevent it. The Foreign Earned Income Exclusion lets you exclude foreign earned income from US tax up to an annually indexed ceiling — 132,900 dollars for tax year 2026, and each spouse can claim it separately — provided you pass one of two tests: bona fide residence in another country for an uninterrupted tax year, or physical presence abroad for 330 full days in a twelve-month period. It applies to earned income, meaning salary and self-employment, and not to dividends, interest, capital gains or pensions. It also does nothing about self-employment tax or the 3.8 percent investment income tax.

The Foreign Tax Credit works differently and is often the better choice: it credits the income tax you paid to your new country against what you would have owed at home. In a high-tax country the credit frequently wipes out the US liability entirely and leaves you with carryforward to spare, while the exclusion caps out. You cannot use both on the same income, and choosing between them has long consequences: switching away from the exclusion counts as revoking it, and coming back within five years needs the tax authority’s permission. If your own return is unfamiliar territory, our guide on how to file your taxes covers the mechanics.

• Exclusion — best for moderate salaries in low-tax countries.
• Credit — usually better in high-tax countries, and it covers unearned income too.
• Neither is automatic — both require the return to be filed and the election to be made.
• Switching away from the exclusion bars you from using it again for several years.

The state you left may keep taxing you after you move abroad#

This catches people who did everything right federally. State tax residence is decided by state law, not by federal rules or by a treaty, and a handful of states are notoriously reluctant to release former residents. They look at where your driving licence is, where you vote, where your property is, where your family lives and whether you show any intention to return.

California is the one to know about, because it allows neither the foreign earned income exclusion nor a foreign tax credit — the exclusion is added straight back on the state return, which makes it the rare place where moving abroad can produce real double taxation with no relief. Virginia puts its position in writing just as bluntly: living abroad does not end Virginia residence, and it says so even for people who have been away for years. Note too that the list of states with no income tax is not frozen — Washington has legislated a new tax on very high incomes starting in 2028. The fix is documentary and it is easier done before you leave than after. Close or change the address on the things that anchor you: the licence, the voter registration, the mailing address, the local bank branch, any professional registration. Establishing residence somewhere else — even another state — helps far more than simply being absent. If you keep a property in the old state, expect it to keep generating filings whether or not you rent it out.

Reporting your foreign accounts is a separate obligation#

This is where the real penalties sit, and it surprises people because it is not about tax at all. If the combined balance of your foreign financial accounts tops 10,000 dollars at any point in the year — including accounts you do not own but can sign on — you must file a separate report with the financial crimes bureau, not with the tax authority. It is an information filing and no money is due on it. Missing it is nonetheless expensive: the inflation-adjusted maximum is about 16,500 dollars for a non-wilful failure and, for a wilful one, the greater of roughly 165,000 dollars or half the account balance.

A second, different form goes with your tax return for foreign financial assets, and its thresholds are far higher — 200,000 dollars at year end or 300,000 at any point for someone living abroad and filing alone, doubled for a couple filing jointly. The two overlap but neither replaces the other, and they catch different things: foreign shares held directly rather than through an account go on the tax form and not on the account report. If you have been abroad for years and filed none of this in good faith, there is a formal amnesty route designed precisely for that situation — and for people genuinely living abroad it carries no penalty at all, not a reduced one, provided the failure was not wilful. It is open as of this writing with no announced end date. Using it voluntarily is enormously cheaper than being found, and since foreign banks now report account holders automatically, being found has become the likelier outcome. Our guide on what to do if you cannot pay your taxes covers the wider principle: the system punishes silence far more than shortfall.

What happens to your 401(k), IRA and brokerage account#

Retirement accounts generally survive the move intact. A 401(k) or an IRA stays where it is, keeps growing, and is taxed when you draw on it — though which country gets to tax the withdrawal depends on the treaty with your new home, and a few treaties produce genuinely surprising results. You usually cannot keep contributing, because contributions require earned income that has not been excluded from US tax.

Two things catch people who keep a US property. Selling it does not trigger the 15 percent withholding that applies to foreign sellers, because a citizen is never a foreign person for that rule — but the closing agent will withhold anyway unless you hand over a signed non-foreign affidavit, and recovering it then takes until the following year’s refund. And the exclusion on the gain from selling a former home requires you to have lived in it for two of the five years before the sale, so renting it out for more than about three years after you leave destroys the exclusion entirely rather than reducing it. The brokerage account is the other fragile piece. Many US firms restrict or close accounts held by customers with a foreign address, not because of any law against it but because of the licensing rules in the country you have moved to. The time to find out is before you go: ask your provider in writing what changes when your registered address does. Worth knowing if you are pushed around: the federal identification rules require a street address, not a US one. And whatever a form says, a US citizen abroad always certifies status on a W-9, never on the W-8BEN meant for foreign persons. Our guide on how to switch bank accounts explains how to move a financial life without losing direct debits along the way, and how to send money abroad covers the transfers you will now be making regularly.

Pensions and social security across borders#

State pension rights are not lost when you leave, but they do fragment. The United States has bilateral agreements with 31 countries — Romania joined in September 2026 — that stop you paying into two systems at once and, crucially, let you add periods of coverage together so that neither country leaves you short of the minimum needed to qualify. Mexico, despite a signed agreement, is not among them. Without such an agreement, years spent abroad are simply years you did not contribute.

There is also a change that has not filtered through and that matters enormously to anyone with a foreign pension: the two rules that used to cut American benefits for people receiving a pension from work not covered by US social security — the windfall elimination provision and the government pension offset — were repealed in January 2025, retroactively to 2024. A foreign pension no longer reduces your US benefit. Payment abroad is generally possible, with only a couple of countries excluded outright, and there is a periodic proof-of-life requirement that people forget until the payments stop. The federal government publishes a plain-language page on getting Social Security benefits abroad that lists who can be paid where. And if you are still building the entitlement rather than drawing it, our guide on how social security works sets out how the credits accumulate in the first place.

Health cover abroad: the gap nobody plans for#

Domestic health cover almost never travels. American Medicare does not pay for care received abroad except in narrow circumstances, and employer plans typically stop at the border too. In practice you are buying into your new country’s system — public, private or a combination — from the day you arrive, and the waiting periods matter more than the premiums.

Two specific traps recur. The first is the gap between leaving one system and qualifying for the next, which often runs for months and is the only stretch where a single accident can be genuinely ruinous; a short-term international policy exists precisely for that window. The second is specific to Americans approaching 65: the Medicare late-enrolment clock keeps running while you are abroad, and the penalty is 10 percent of the premium for every twelve months you could have enrolled and did not — charged for life. There is an important exception that is easy to miss: if you are still working and covered by a foreign employer’s plan, or even by a national health system where you live, that generally counts as group coverage and preserves your right to enrol later without the surcharge. A retiree abroad gets no such protection. The second is the assumption that you can go home for treatment, which works only if you kept a cover that still applies there. Our explainer on how health insurance works covers the vocabulary you will need to compare policies in a new market.

The exit charge: what leaving can cost you#

Several countries treat departure itself as a taxable event, on the theory that gains built up while you lived there should be taxed there even if you sell later from somewhere else. The United States applies this only to people who formally give up citizenship or a long-held green card, and only to those who cross defined thresholds: a net worth of 2 million dollars, or an average annual income tax bill above roughly 211,000 dollars over the previous five years, or a failure to certify five years of tax compliance. For those who do cross them the charge is calculated as though they had sold everything the day before expatriation, with the first 910,000 dollars of gain excluded for 2026. One piece of news that has barely circulated: the administrative fee for renouncing citizenship was cut from 2,350 dollars to 450 in April 2026, with no refunds for anyone who had already paid.

This matters even if you have no intention of renouncing, because it explains a pattern you will see across the comparison below: the richer the departing taxpayer and the more concentrated their holdings, the more likely their country applies some version of this. If you hold a substantial stake in a company and you are leaving Spain, France or Canada, this is the single provision to check before booking anything, and our guide on how capital gains tax works explains what the underlying calculation is doing.

If you are leaving Canada#

Canada does not count days. Residence is a factual question about where your life is, weighed on significant ties — a home available to you, a spouse or partner, dependants — and secondary ties such as licences, memberships and accounts. Cutting the primary ties is what ends residence, and the date you choose matters because it splits the tax year.

The distinctive feature is the departure tax: on the day you cease residence you are deemed to have sold most of your property at market value and are taxed on the gain, whether or not anything was actually sold. The exclusions run the opposite way to most people’s intuition. Canadian real property is excluded — Canada simply keeps the right to tax the gain whenever you eventually sell it — while foreign real estate is fully caught, so the flat you already own in Lisbon is deemed sold on the day you leave. Registered retirement savings, a tax-free savings account and pension entitlements are all outside it too. Payment can be deferred by posting security, and there is a free band before security is needed at all: roughly the first 16,500 dollars of federal tax. Separately, any property worth more than 25,000 dollars has to be listed on a departure form, with a penalty of 25 dollars a day for filing it late. Registered accounts behave differently from one another too: a retirement plan can stay as it is, while a tax-free savings account can be kept and drawn on but must not receive further contributions once you are non-resident, because they attract 1 percent a month with no minimum and regardless of how much room you have — and a foreign tax authority will usually tax the account anyway, since nobody else recognises it. Canadian-source income paid to a non-resident is then subject to withholding at a flat 25 percent, commonly reduced by treaty — though ordinary arm’s-length interest, the kind a bank or a bond pays, falls outside the regime entirely and is not taxed at all. On pensions the rule everyone should check before assuming: the state pension travels anywhere, but the old-age security benefit is suspended after six months abroad unless you accumulated 20 years of Canadian residence after turning 18, in which case it continues indefinitely. The income-tested supplement that sits alongside it stops after six months with no such escape.

If you are leaving Spain, France or Russia#

In Spain residence turns principally on spending more than 183 days in the country in a calendar year, on having your main centre of economic interests there, and on a presumption that applies if your spouse and minor children live there. Deregistering at the consulate is an administrative act and does not by itself change your tax residence. Once you are non-resident, Spanish-source income is taxed under a separate regime, a property you keep generates an imputed income even if empty, and residents must report foreign assets above a threshold on a dedicated form.

In France residence is decided by four alternative criteria — home, principal place of stay, main professional activity, centre of economic interests — and meeting any one of them is enough, which is why leaving physically is not always sufficient. Non-residents face a minimum tax rate on French-source income unless they prove their worldwide average rate is lower, and there is an exit charge on large shareholdings. In Russia the test is 183 days within twelve consecutive months, the non-resident rate on Russian-source income is much higher than the resident rate, and there is a significant modern exception for people working remotely for Russian employers. Russia also distinguishes tax residence from currency residence, which are separate statuses with separate reporting duties, and confusing them is the most common error there.

The bottom line#

Do five things before the flight. Establish exactly when your tax residence ends under the rules of the country you are leaving, in writing if a certificate is available. Find out whether departure triggers a charge on unrealised gains. Tell your bank, your broker and your pension provider your new address and ask what changes. Work out which reporting obligations follow you across the border, since those carry the harshest penalties for the least money. And keep the paperwork proving where you were and when, because residence disputes are decided on evidence years later.

The honest summary is that moving countries is an administrative project with a financial layer that nobody warns you about, and almost all of it is manageable if handled before rather than after. Build the costs into the plan the way you would any other major expense — our guide on how to make a budget is a reasonable place to start — and treat the first year abroad as one where you keep every receipt and every dated document.