Living Abroad? What Americans Need to Know About Taxes, Digital Nomad Rules, and Cross-Border Financial Planning

More Americans are living abroad than ever before.

Some are retiring overseas. Others are embracing the digital nomad lifestyle, following a partner’s career, reconnecting with family roots, or simply looking for a different pace of life.

But moving abroad is more than a lifestyle decision.

It’s a financial decision.

And one of the biggest surprises for many Americans is that leaving the United States does not necessarily mean leaving the U.S. tax system behind.

At Purse Strings, we believe women deserve to understand the financial side of life’s biggest transitions. If you’re considering living, working, or retiring abroad, here are some of the most important financial planning considerations to understand before you go.

The Tax Surprise Most Americans Don’t Expect

Most countries tax people based on where they live.

The United States is different.

In fact, the United States and Eritrea are the only two countries in the world that generally tax based on citizenship rather than residency.

That means U.S. citizens and many Green Card holders may still have U.S. tax filing obligations even while living and working overseas.

For some Americans, this means managing two tax systems at the same time.

Understanding that reality before moving abroad can prevent expensive surprises later.

Taxes are only one piece of an international move. If you’re still building the overall plan, start with our financial checklist for moving abroad, including healthcare, banking, Social Security, housing, visas and exchange rates.

Tourist, Digital Nomad, or Tax Resident? The Difference Matters

A common misconception is that working remotely from another country automatically falls under tourism.

It often doesn’t.

Many countries distinguish between tourism and economic activity.

You may be visiting on a tourist visa, but if you’re earning income while physically present in that country, local tax rules may still apply.

This is particularly important for remote workers and digital nomads.

Before accepting a remote work arrangement overseas, it is worth understanding how the destination country views foreign workers and whether special visa or tax rules apply.

Why the 183-Day Rule Matters

Many countries use some version of the 183-day rule when determining tax residency.

While rules vary by country, spending more than approximately six months in one location may trigger tax residency status.

Once that happens, you may become subject to local tax laws even if you still consider the United States your primary home.

This is why tracking travel dates becomes more important than many people realize.

A few extra weeks in a country could potentially change your reporting requirements or tax obligations.

How Americans Avoid Double Taxation

The good news is that there are tools designed to help prevent Americans from paying taxes twice on the same income.

Two of the most common are the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC).

The Foreign Earned Income Exclusion allows qualifying individuals to exclude a portion of foreign-earned income from U.S. taxation if certain requirements are met.

The Foreign Tax Credit may allow taxpayers to receive credit for taxes paid to another country.

The right strategy depends heavily on your income level, residency status, and the country involved.

This is one reason why working with a financial professional who understands cross-border planning can be invaluable.

FBAR and FATCA: The Reporting Rules Many Expats Miss

One of the most common mistakes Americans make when living abroad involves foreign bank accounts.

If the combined balance of your foreign financial accounts exceeds $10,000 at any point during the year, you may be required to file an FBAR (Foreign Bank Account Report).

This requirement often surprises people because it applies to ordinary checking and savings accounts, not just investment accounts.

In addition, FATCA (Foreign Account Tax Compliance Act) rules may require reporting certain foreign assets once specific thresholds are reached.

These reporting requirements are separate from your tax return and can carry significant penalties if ignored.

Can You Collect Social Security While Living Abroad?

One of the most common questions among retirees is whether Social Security benefits stop if you move overseas.

In many situations, Americans can continue receiving Social Security benefits while living abroad.

However, eligibility and payment rules can vary depending on citizenship, residency, and the country involved.

If retirement abroad is part of your future plans, it is worth reviewing these rules before making a permanent move.

Should You Consider Dual Citizenship?

For some people, dual citizenship creates greater flexibility and opportunities.

It can simplify travel, residency rights, healthcare access, and employment opportunities in certain countries.

However, citizenship decisions should never be made solely for tax reasons.

They can affect inheritance planning, estate planning, access to government benefits, and long-term financial strategies.

Why Finding the Right Advisor Matters

Cross-border planning sits at the intersection of taxes, investments, retirement planning, estate planning, and international law.

Unfortunately, many financial professionals only work within one country’s system.

Before making a major move, consider working with professionals experienced in:

• Cross-border tax planning
• Expat financial planning
• International retirement planning
• Estate planning across jurisdictions
• U.S. expat compliance

Having the right team can save both money and stress.

Frequently Asked Questions

Do Americans still pay taxes if they live abroad?

In many cases, yes. U.S. citizens generally remain subject to U.S. tax filing requirements regardless of where they live.

What is the 183-day rule?

Many countries use a version of the 183-day rule to determine tax residency. Spending enough time in a country may trigger local tax obligations.

What is FBAR?

FBAR is a reporting requirement for certain foreign financial accounts. Filing may be required when combined foreign account balances exceed $10,000 during the year.

What is the difference between FEIE and the Foreign Tax Credit?

The Foreign Earned Income Exclusion excludes qualifying foreign-earned income from U.S. taxation, while the Foreign Tax Credit may offset taxes already paid to another country.

Can I receive Social Security while living abroad?

Many Americans can continue receiving Social Security benefits overseas, although rules vary based on individual circumstances and country of residence.

The Bottom Line

Living abroad can be an incredible opportunity.

But successful international living requires more than choosing a destination.

Understanding tax residency, reporting requirements, retirement considerations, banking rules, and cross-border financial planning can help you avoid costly mistakes and build a life that works both financially and personally.

What Is It Really Like to Move Abroad?

Hear Cepee’s experience with starting over abroad and what women should consider before making the leap.

Moving Abroad Financial Checklist
What to know about visas, budgeting, healthcare, banking, Social Security, housing and exchange rates before you go. Click here to learn more.

U.S. Taxes When Living Abroad
Here’s a deeper look at U.S. taxes, Foreign Tax Credits, FEIE, FBAR, FATCA and cross-border financial planning.

Grab The American’s Financial Checklist for Moving Abroad from Mindful Wealth Planning

At Purse Strings, we believe women deserve financial guidance that reflects real life—including international careers, retirement abroad, digital nomad lifestyles, and global families.

Because wherever life takes you, your financial plan should be ready to go there too.