Expat Financial Planning: Key Considerations for a Cross-Border Move

The list below highlights some of the most important issues to consider when planning for your move abroad. While this list may appear intimidating, a little proactive preparation can go a long way in paving the road to a smooth (and financially efficient) transition.

1. Immigration

Ensuring that the necessary visas and other documentation are in order is an important first step when moving abroad. For most countries, 90 days is the longest stay allowed without a visa.  If your passport is close to expiration, renewal should be a priority, as certain countries require a passport valid for at least six months beyond the date of your planned time abroad.

Beginning in May, 2025 a special travel authorization for Europe, ETIAS (European Travel Information and Authorization System) will be required.

Other required documentation commonly includes proof of accommodation in your new country of residence, proof of health insurance, and financial record of your ability to support your household. Some embassies can take significant time to process the necessary documents, so the process is best begun as soon as feasible.

2. Investments

U.S. citizens or green card holders living internationally can keep their U.S. retirement plans, and may even be able to make additional contributions when living abroad. Currency exchange (see below) can present an added cost for these contributions, however, so it is important to reevaluate the most tax- and cost-efficient level of savings during your time abroad.

We take a deeper look at broader concerns for investments in the dedicated section on expat investing below.

3. Taxes

In general U.S. citizens are still required to file taxes when living abroad, but expat tax treatment internationally can vary widely (and may depend on whether the U.S. has a tax treaty in place with your new home country). 

We take a deeper look at common tax issues in the dedicated section below.

4. Finding a Home Abroad

Searching for a home in a country where you do not yet reside is never easy. In many cases, a short-term rental can offer convenient flexibility to search for the right long-term home and experience living in different neighborhoods.

Homeownership will make a substantial difference in your tax treatment in many different countries, a cost that is important to consider when purchasing or renting a residence. A residence abroad may or may not constitute a “domicile” (a permanent residence for tax and other legal purposes) depending on whether certain criteria are met (commonly living in a foreign country for 12 consecutive months).

5. Keeping or Parting With Your U.S. Home

If you plan on selling your U.S. real estate, it is particularly important to understand the potential capital gains taxes in your new country of residence: selling your U.S. home after you have established residency in a new country could incur an additional tax liability.

6. Currency Exchange

Many banks and other providers charge a substantial fee for money transfers, a fact that grows from an expensive inconvenience when traveling to a potentially serious financial impact when transferring large sums for a move abroad. Finding the right international currency broker can go a long way toward obtaining more favorable exchange rates and lower fees.

To the extent that you will need to move money between currencies on an ongoing basis, you can establish a recurring schedule for moving a set amount at a cadence of your choosing, an approach that can help mitigate currency risk and reduce worries over the timing of exchange rate fluctuations.

7. Banking

Many U.S. financial institutions limit their services for non-U.S. residents. It is prudent to contact your bank, brokerage, and other financial service providers to understand how your move might affect your accounts. You might need to transfer some accounts and establish a local banking relationship in your new country of residence.

Inform your U.S. financial institutions of your move and its duration to prevent your transactions abroad from being flagged as fraud. Additionally, you must annually report overseas bank and investment accounts to the IRS, particularly those with balances exceeding $10,000, to avoid significant penalties.

Establishing a local banking account often requires a permanent local address, so it may be difficult to establish an account in your new country of residence before your move. During this transition period, maintaining adequate funds in a bank with a global ATM network and rapid international transfers can provide a helpful solution. Expats may have difficulty obtaining credit in their new home country, and low-limit credit cards may be a necessary starting point. Large cash balances at local banks may help ensure quality service during this initial transition period.

8. Choosing a Credit Card

There are a few important considerations when planning for credit card use in another country. First, it is worth taking the time to familiarize yourself with the common financial practices in your new country of residence. Credit card acceptance is not as widespread in every country as you may be used to, and in some geographies, cash and/or prepaid cards may prove to be a more convenient alternative.

Second, take the time to understand any foreign transaction fees on your credit card. While these may be as low as 3%, they can still unnecessarily add to the expense of your time abroad. Inform your credit card issuer that you are moving abroad to avoid having legitimate transactions flagged as fraudulent.

If you are planning on giving up your US address, consult your credit card’s terms and conditions: some cards require a physical address in the United States.

9. Medical Care and Health Insurance

It is vital to be aware that many U.S. insurance plans (including Medicare) do not cover medical expenses incurred outside the U.S.

Some countries offer national healthcare programs which may be available to visa-holders for a monthly premium. Additionally, you will likely benefit from supplementary coverage during your time abroad, offered to expats via most major private insurers. 
Whenever possible, research whether any prescriptions or specialists you need are available in your new home (and if there are any important limitations or restrictions that may delay your ability to access this care).

10. Life Insurance, Disability Insurance, and Long-Term Care Insurance

Some life, disability, and long-term care insurance policies require that the holder maintain U.S. residency. If you plan to establish residency in a new country, we recommend reaching out to your insurance provider to understand how your coverage could be impacted by the move. Special insurance plans for expatriates can be an option if your existing coverage cannot be extended abroad.

11. Estate Planning

You may need to update your estate planning documents to align with the legal requirements of your new country. This could involve creating wills both in the U.S. and in your new country of residence. Some countries may not recognize U.S. trusts or might impose higher taxes on them. Additionally, if your new country has hereditary laws, they may override other estate arrangements.

It is also crucial to understand the distinction between an estate tax, which the U.S. imposes on the deceased's estate, and an inheritance tax, which many other countries impose on the beneficiaries of an estate.

U.S. citizens are required to file a U.S. tax return wherever they live. Taxable foreign income for U.S. citizens living internationally includes wages, interest, dividends, and rental income. In this context, avoiding unnecessary additional taxes abroad is important for keeping your tax liability to a minimum. We cover some important exclusions below.

How the U.S. Treats Citizens and Green Card Holders Who Move Abroad

While the tax treatment of international earnings for expats can become incredibly complex, it can be helpful to keep this fundamental concept in mind: the U.S. tax system is based on citizenship, not residency. Consequently, U.S. citizens and green card holders will generally be subject to US tax on global income, whatever their current place of residence. 

Purchasing real estate abroad generally does not impact your U.S. taxes directly. However, any rental income earned from these properties must be reported on your U.S. tax return. When you sell, any gains are subject to U.S. capital gains tax. Additionally, if you have a mortgage, the amounts must be converted to USD for your U.S. tax filings. Finally, certain tax advantages available under U.S. law may not be available while living abroad. Some important examples include:

1. The tax exemption for municipal bond interest
2. Tax-advantaged Roth IRA savings
3. Tax-free retirement account rollovers
4. Tax advantages for pensions and other retirement distributions

How to Know When You Are Subject to Tax in Your Destination Country

Additionally, your destination country will have its own tax laws and filing requirements, and you may need to file taxes in both the U.S. and your new country of residence. Particularly important details to confirm about your destination country include:

• Whether it calculates taxes based on worldwide income or a territorial tax system (only income earned within their borders is subject to tax).
• Local or regional taxes which may be due in addition to national taxes in the target country.
• Whether your employer offers any kind of tax mitigation program, if relevant.

Tax Treaties: How to Know if You Could Face Double Taxation

Depending on the laws in your destination, double taxation is a real risk to be aware of. Fortunately, the U.S. maintains tax treaties with over 70 different countries that can help avoid double taxation issues. However, the specifics of these agreements vary substantially; we recommend consulting an international tax expert, even if you have heard a treaty is in place for the destination country.

The IRS maintains a helpful listing of active income tax treaties with other countries here.

Notably, most income tax treaties include a "saving clause," which ensures that U.S. citizens or residents cannot use the treaty's provisions to avoid paying taxes on income sourced from the United States.

Tax Opportunities for Expats

Several provisions of the U.S. tax code can help mitigate the costs associated with living abroad.

1. An IRS provision, the Foreign Tax Credit, can help reduce your tax liability in the U.S. by crediting taxes paid to foreign governments. This credit is designed to prevent double taxation on the same income and can be applied to various types of foreign income, including wages, interest, and dividends.
2. For long-term expatriates, the IRS offers the Foreign Earned Income Exclusion (FEIE). This allows U.S. citizens who can demonstrate they were abroad for 330 full days in a consecutive 12-month period to exclude up to $120,000 in foreign earnings per individual from U.S. taxes for the 2023 tax year and up to $126,500 for 2024.
3. The Foreign Housing Exclusion allows U.S. citizens living abroad to exclude certain housing expenses from their taxable income. These expenses include rent, utilities, and other housing-related costs, up to a specified limit.

The Net Investment Income Tax (NIIT) is a tax surcharge of 3.8% on investment income, triggered when your total gross income exceeds certain levels. Notably, the IRS has explicitly disallowed applying foreign tax credits to reduce the NIIT, with rare exceptions. As a result, if subject to the NIIT you are much more likely to face a double-tax issue.

U.S. State Taxes

State taxes present another important complexity to consider. Many U.S. states tax income earned within their borders. It's essential to check with the tax authorities of the state where your income originates to determine if state tax applies to any portion of your earnings. Additionally, some states do not recognize the provisions of tax treaties.

Mismatched Tax-Filing Periods and Deadlines

Prospective expats should be aware of the potential challenges posed by mismatched tax filing periods and deadlines between their home country and destination country. Different countries often have varying fiscal years, tax filing dates, and deadlines, which can complicate the tax compliance process and at worst risk a missed deadline that imposes additional penalties.

While the United States follows a calendar year for tax purposes, some countries employ different fiscal years and corresponding deadlines. Working with a professional tax advisor is the best way to coordinate filings efficiently, leverage any available extensions if necessary, and prepare fully compliant filings in both countries.