Tax Tips for Americans Living Abroad

For Americans residing outside of the country, tax headaches await.

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A drastic option. There is one way to avoid paying U.S. income tax: Give up U.S. citizenship and acquire citizenship of the other country. The downside to this move if that a person loses all the benefits of being an American abroad. The upside is that the IRS no longer has jurisdiction.

According to Koroghlanian, this could be an option for retirees who have settled elsewhere. "During retirement, it's going to be much the same system as long as the retiree is keeping U.S. citizenship," she says. "Some decide to give up U.S. citizenship, but as long as they keep it, they have the responsibility to file and pay U.S. income tax on their worldwide income."

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