 Taxes
and the retired expatriate
Tax Talk by George
Saenz • Bankrate.com
 Dear
Tax Talk,
My wife and I are 61 years of age and live in
California. Can we avoid federal and state income taxes on our retirement
income if we move to Costa Rica at retirement? If so, what requirements
do we have to meet to qualify? Thank you.
-- Lee
 Dear
Lee,
So you want to move from a state full of bananas to a country full
of bananas? Well don't count on saving on taxes unless you want
to give up your U.S. citizenship. And even then, the tax savings
are fraught with complex rules.
U.S. citizens are taxed on their worldwide income
wherever they live or earn their living. A U.S. citizen residing
abroad can exclude up to $80,000 of earned income if he or she meets
certain rules.
However, retirement income such as pensions and Social
Security benefits are not considered earned income. Earned income
would be wages or self-employment income.
Of course, if you're residing in Costa Rica, then
you would no longer be taxed in California. If you're required to
pay taxes in Costa Rica, some of these taxes may be credited against
your U.S. income.
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