Some countries provide better access to beaches, skiing, hiking, or other outdoor activities that might be appealing to expatriates. Some have less expensive or more accessible healthcare systems. And some expatriates may simply want to immerse themselves in another culture.
Tax benefits for expatriates
Some expats may be able to lower their tax liability by living abroad for most of the year.
Someone moving from a high-tax country to a low-tax country may find they can keep a greater percentage of their paycheck. They may have to renounce their citizenship, however, since many countries will tax citizens on their worldwide income, merely providing a credit for foreign taxes paid.
The U.S. offers a foreign earned income exclusion to its citizens living abroad. The rule allows U.S. expats to exclude a certain amount of income from their U.S. taxable income if they meet certain residency requirements. That can provide them with significant tax relief.
Additionally, the U.S. offers a foreign tax credit, which can be used to offset taxes owed in the United States. Although the credit cannot be combined with the foreign earned income exclusion, it prevents citizens from having to pay taxes twice on the same income.
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