Things to know before moving abroad
Updated on March 12, 2026
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Things to know before moving abroad in 2026
Moving abroad can be life-changing in the best way. However, for Americans, it also comes with a layer of complexity that many people don’t see coming.
This guide focuses on the things you should know before moving abroad. It highlights the issues that most affect your first year overseas, especially taxes, work rights, and compliance rules that many Americans don’t realize still apply after leaving the US.
Be clear on why you’re moving abroad
Your reason for leaving shapes almost every legal and tax outcome that follows. Before choosing a country, visa, or job, pause and ask a harder question: What am I really trying to change by moving abroad?
Some people want lower living costs. Others want more predictable or affordable healthcare. Some want adventure. Others want stability for their kids. None of these is wrong. But they lead to very different decisions.
For example:
- A short-term adventure points toward temporary visas and flexible tax planning.
- A long-term relocation affects residency status, retirement planning, and even how difficult it is to leave or return later.
- Remote work creates different tax and visa issues than local employment.
Social media makes moving abroad look easier than it is
Online, moving abroad looks effortless. In reality, you’ll deal with:
- Government offices that move slowly
- Paperwork in another language
- International banking systems that don’t like US citizens
- Rules that are implied, not explained
Knowing this upfront makes the adjustment far less frustrating.
US tax rules that surprise new expats
Leaving the US does not end your US tax obligations. This is the single biggest surprise for new expats. As long as you are a US citizen, you generally must:
- File a US federal tax return if your worldwide income meets the normal filing thresholds
- Report worldwide income
- Disclose certain foreign accounts and assets
Even if:
- You live abroad full-time
- You earn no US income
- You already pay tax in another country
Note: The US uses citizenship-based taxation. Very few countries do. This is why US expat tax planning exists at all.
Thinking of relocating overseas? Reach out now for US tax guidance.
Tax relief exists, but you must claim it correctly
Many US expats legally reduce their US tax bill, sometimes to zero, but only if they file the correct forms in the right way every year. The US does offer tax relief for citizens living abroad. It just doesn’t apply automatically, and it doesn’t work the same for everyone.
The two main forms of US expat tax relief:
1. Foreign Earned Income Exclusion (FEIE)
The FEIE allows qualifying US citizens to exclude a portion of foreign-earned income from US taxation if they meet residency or physical presence tests. However, FEIE only applies to earned income (like wages or self-employment). It does not cover investment income, pensions, or rental income.
For the 2025 tax year (filed in 2026), the exclusion is US$130,000. The limit increases each year to account for inflation.
2. Foreign Tax Credit (FTC)
The Foreign Tax Credit allows you to offset US tax with income taxes paid to another country. FTC tends to preserve more flexibility over time, but it requires careful tracking of foreign taxes paid and when they were paid.
Foreign bank accounts trigger US reporting rules
Most expats open a foreign checking account within weeks of arriving. That’s normal. What’s less obvious is that US law requires reporting certain foreign financial accounts.
Two common disclosures:
- FBAR (Report of Foreign Bank and Financial Accounts)
- Form 8938 (FATCA reporting) may also apply, depending on the total value of your foreign financial assets.
These are not taxes. They’re information reports. However, penalties for missing them can be severe, even when no tax is owed.
Some “normal” foreign investments are a problem for US citizens
Many countries encourage residents to invest through local mutual funds, ETFs, or savings plans. For US taxpayers, foreign mutual funds and many non-US ETFs can trigger extra reporting and unfavorable tax rules.
This is where local advice sometimes falls short. A foreign advisor may be correct locally and still create US tax exposure you didn’t anticipate.
The takeaway isn’t “don’t invest.” It’s “check before you do.” Once you own certain assets, unwinding them can be painful.
How you earn money abroad is a visa question first
Many Americans approach working abroad from a US mindset: If I’m getting paid, I’ll sort out the tax later. Abroad, that logic flips. Immigration rules come first. Tax rules follow.
In most countries, your visa determines:
- Whether you’re allowed to work at all
- What type of work you can do
- Who you can work for
- Where the income is considered to come from
Common visa paths include:
- Employer transfer
- Local employment with sponsorship
- Self-employment or freelancing
- Remote work on specific visas
- Digital nomad visas
If your visa doesn’t allow an activity, paying tax on that income doesn’t make it legal.
Digital nomad and Golden visas are not long-term plans by default
Digital nomad visas are appealing because they feel flexible. Golden visas feel secure because they’re investment-based. Both can be useful. However, neither does not always automatically lead to permanent residency, long-term stability, or clear tax outcomes.
Your first year abroad is the most complicated
The first year often includes:
- Split tax years
- Partial residency in two countries
- Income earned before and after the move
- Overlapping filing deadlines
It’s also when people open accounts, start jobs, and make investment decisions without realizing how those actions trigger US reporting obligations.
If you plan carefully in year one, later years usually get simpler. If you don’t, the cleanup can last years.
Healthcare surprises for Americans abroad
Lower costs abroad don’t always mean lower total expenses. Many expats are pleasantly surprised by healthcare quality and affordability abroad. However:
- Medicare generally doesn’t cover care outside the US
- Access to public healthcare may depend on visa type
- Private insurance may be mandatory
Add in childcare, education, and currency fluctuations, and the “cheap country” narrative becomes more nuanced.
This doesn’t negate the benefits. It just means budgeting should be realistic, not aspirational.
State taxes can follow you abroad
Moving overseas does not automatically end state tax obligations. Some US states, such as California, New York, and Virginia, are aggressive about residency requirements. Ties like:
- Property ownership
- Driver’s licenses
- Voter registration
- Mailing addresses
Can keep you on the hook long after you leave.
This issue often surfaces years later, when states review old filings and demand back taxes, penalties, and interest. Planning your departure properly matters just as much as planning your arrival.
It’s okay if living abroad isn’t permanent
Leaving doesn’t lock you in forever. Many expats find that:
- The first year is the hardest
- Around year three, people either settle in or move on
- Returning to the US is not a failure
Even a temporary move can broaden your perspective, improve your finances, or clarify what you truly value. Planning well gives you flexibility, whether you stay abroad or not.
FAQs
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Do I need to tell the IRS when I move abroad?
No formal notification is required; instead, your change in address, foreign income, exclusions, credits, and disclosures on your tax return signal that you’re living abroad. Skipping filing altogether does not achieve the same result and often creates bigger problems later.
There’s no single ‘moving abroad’ form, but you should update your address with the IRS (Form 8822 or your next tax return) so you don’t miss IRS mail.
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If I pay tax in another country, can the IRS still tax me?
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Does living abroad change how my US retirement accounts are taxed?
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Will opening a foreign bank account trigger US taxes?
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Can I stop filing US taxes if I plan to live abroad permanently?
Prefer to talk it through? Schedule your free callback today.
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