Collecting Social Security Benefits As An American Abroad

I’ve been on the road four of the past six weeks. Back in the office in Panama City, the mail has piled up. Thought I’d share some of it today…

“Lief, I am a big-time fan of you and Kathleen and will be moving to Cuenca very soon thanks to your good data.

“But I have a problem with both you that I once mentioned to your good wife and that is why in the world do you both persist in not including the full name for people whose comments you publish? Can you not understand that anyone you have helped would/should be most willing for you to use their full name? I, and many others, automatically discount what a ‘Martha P.’ and ‘C.T.,’ etc., have to say because it seems for all the world as if you’re just making up those ‘names.’

“Suggest you and Kathleen at least come up with an explanation about why you do this. I personally know quite a few people who automatically turn off whenever these bogus-sounding quotes are used.

“Happy day and take good care.”

Taber McMordie (and you may absolutely use my full name for whatever is honest)

We figure our readers value their privacy.

For the record, we’ve never invented or embellished a reader comment we’ve published. No need to. Our inboxes overflow with real reader mail. We receive hundreds of reader emails every day.

“Lief, we missed you in January at your Belize conference we were supposed to attend and were disappointed. But since God is in charge of the weather (and happily not Al Gore), many folks were stranded or delayed.

“In any case, we have invested in Belize. We have opted to purchase a River Club casita through Phil Hahn as well as a plot at Maya Springs from Amma Carry, so it looks like we may be neighbors.

“The reason I am writing is that if you do manage to get a hold of some neem trees, keep us in mind. Order more than you think you’ll need or want. We’ll take the rest.

“Hope to meet you soon.”

M.C.

We are, indeed, in the process of planting 100 neem trees on our land at Maya Spring. I’ll introduce you personally to the man who’s managing that project for us.

“Great article, Lief! One of the biggest disappointments we’ve had in moving out of the United States is the expats themselves. Getting to the truth in a foreign country is already difficult at best. When fellow expats join in with their rumors, lies, and complaints, it makes getting to the truth that much harder.

“When I meet someone who only complains and runs others down they lose all credibility to me. It makes me wonder what kind of person it is that only sees the negative in everything. Why are they so bitter that the only way they feel better is to tear everyone else down?

“In the end, I can’t change them so I don’t even try. But I can eliminate them from my life, and I do that very quickly. Life is too short and precious to spend with people who live for negativity.

“Good job!”

J.S.

“Lief, I have to reply to your comments on gossip and expats. I’m so glad you are discussing it because new expats go to wherever with marvelous intentions to meet nice people, maybe throw a party or two so neighbors can come over and they can all enjoy themselves.

“Case in point, my husband and I purchased two years ago a sweet one-bedroom with a palapa. I was excited to get to know our neighbors. Instead when we would go out to mingle with them, they were backstabbing each other, the developer, and whoever crossed their paths. Now, we didn’t even open our curtains onto a beautiful balcony. Now I’m just waiting for the value of the condo to go up and will possibly rent it out in the meantime.

“Meanwhile I went to Paris this year. Loved it! Can’t wait to purchase there. And Italy. Loved it, too.

“I don’t wish to be around gossip. Way too much to see, do, and experience in our beautiful though challenging world!”

P.M.

“Lief, in a recent edition you ‘answered’ a question about Americans retiring overseas and Social Security. However, you seem to have guessed at the answer as your sentence starts with ‘I believe.’

“I live out of the United States and have been researching this question, as I am 62 and would like to retire early. However, all information that I have come across indicates that you will lose Social Security if you live in certain places, if you’re out of the country for more than six months, if you do not report living out of country, etc. Both are included in this, both non-U.S. citizens and nationals.

“Before you answer without properly researching or having a reference for your information to such an important, life-changing subject, and perhaps be responsible for people making the wrong decision, please verify your subject matter.

“It is very frustrating to me to know that, perhaps thousands of Americans seem to be doing and managing this, but the information I can pull up is so vague that one comes away with no clear-cut answer!

“If you can manage, please find a thorough clear-cut answer to this and one that we can reference to.”

J.G.

In fact, our response was specific, to the point, and confident. However, one more time, to clarify, as an American citizen (or that of a fairly long list of countries) you do not lose your U.S. Social Security payments if you move overseas.

The six-month restriction we mentioned has to do with noncitizens.

Again, here’s the section of the Social Security website that addresses payments to nonresident Americans.

“Lief, seriously, you are advocating people move to Ukraine? Have you seen the news? That kind of shoots your credibility in the ass.

“Thanks, I prefer to not move to a war zone. I hear Northern Iraq has some low-cost property now.”

B.S.

Well, I’m not advocating someone move to Ukraine; our correspondent Paul Terhorst is, based on his recent experience spending time in Lviv, Ukraine, which he liked very much. As Paul reports from the ground, this part of Ukraine is far from the current crisis, which is 800 miles west, near the Polish border.

While it’s not the same scale of trouble, suggesting that you should avoid Lviv because of the crisis 800 miles away on the other side of the country is something akin to thinking it’s too risky right now to visit Chicago because of the situation in St. Louis.

“Lief, I am trying to locate your reference material on state taxes and filing requirements.

“I have an associate who says he does not need to file a state income tax return. Yes, he has cut all ties to all States (he has been an expat for 10 years). But I want to back up his claim.

“I currently live, when I am not overseas, in Marietta, Georgia.”

B.L.

Whether or not you need to file a state tax return as an American overseas depends on the state and your “intent” when you relocate out of the country.

Essentially, if you move overseas, sell everything in your home state, and don’t intend to move back, then you are no longer a tax resident of that state. The burden is on you, though, to show this, and it’s more difficult to convince some states than others. (The most difficult to persuade seem to be those most in need of tax revenue…California, for example.)

The easiest way to address this can be to move to a state that doesn’t impose income tax—Florida, for example—and, then, after having established residency in the tax-free state, make your move overseas. It’s a more complicated strategy but guarantees that you won’t have a state-tax liability in your new situation overseas.

Lief Simon