Foreign Taxes

Each country will have its own ideas about taxing you. Some, in an effort to spur investment in their economy, take a light touch to taxes on temporary residents. Other nations hit you up pretty good. You will also have obligations to the U.S. Government (see above), as U.S. Citizens are taxed on their world-wide incomes.

In some places a tax treaty may be in effect between the host nation and the U.S., sparing you the burden of double taxation. You may also be able to deduct some or all of your foreign paid taxes on your U.S. return. Be sure to talk with an accountant or tax advisor before heading out.

Another area to look into are the foreign equivalents of Social Security. In many countries you will be required to pay into these funds, but would only see benefits should you live for a length of time in the host country and retire there. Some nations have reciprocal agreements with the U.S. that may allow you to recover some of your money, but many do not.

If you have not yet worked a significant number of quarters in the U.S. and have thus not paid fully into Social Security, you may wish to focus on whether or not your employment overseas (during which time you likely won't pay into U.S. Social Security) would inhibit your Social Security benefits later on in the U.S.

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