Thinking About Leaving the US? What Americans Need to Know Before Moving Abroad
More Americans are moving abroad than at any point since 1935. Over 180,000 US citizens relocated internationally in 2025 alone, driven by rising costs of living, a desire for better work-life balance, and increasing interest in what life looks like outside American borders. If you're among the many considering a move, there's a lot to plan — and more than a few legal and tax obligations that follow you no matter where you land.
Here's what you need to know.
Where Americans Are Going
The most popular destinations depend heavily on your profile — retiree, remote worker, young professional, or family — but a few consistently rise to the top.
Europe has become the most sought-after region, with more than 1.5 million Americans now living there. Portugal leads the pack for retirees and remote workers: the cost of living is roughly 39% lower than in the US, rent is about 54% cheaper, and the country has earned a reputation for welcoming expats. Spain, France, Germany, and Ireland round out the most common European destinations, each drawing Americans for different reasons — culture and climate in Spain, world-class healthcare in France, career opportunities in Germany, and English-language familiarity in Ireland.
Latin America remains the most accessible option for many. Mexico hosts an estimated 1.2 million US citizens and offers the longest tourist stay without a visa — up to 180 days — plus a cost of living significantly lower than the US. Panama is particularly attractive for retirees due to its US-dollar economy, territorial tax system (foreign income is generally not taxed locally), and a well-known "Pensionado" program that offers discounts on healthcare and utilities for those receiving at least $1,000/month in pension income. Costa Rica and Ecuador are also popular, especially for those prioritizing affordability and natural beauty.
Asia and the Pacific offer different trade-offs. Thailand is a top choice for digital nomads and retirees, with a very low cost of living, established expat communities in Bangkok and Chiang Mai, and even a 10-year long-stay visa for qualifying applicants. Singapore, on the other end of the cost spectrum, is a hub for finance and technology professionals and consistently ranks among the world's most stable and livable cities.
For those seeking faster pathways to a second citizenship, Caribbean nations like Antigua and Barbuda and St. Kitts and Nevis offer Citizenship by Investment programs, with no personal income, capital gains, or inheritance taxes.
Visa and Residency Pathways
Every country has its own rules, but most offer Americans one or more of the following pathways:
Retirement/pension visas — for those with a fixed monthly income meeting a minimum threshold
Digital nomad visas — for remote workers employed by foreign companies or self-employed
Investor visas — tied to a minimum financial investment in real estate or a local business
Skilled worker visas — employer-sponsored, for those with in-demand professional credentials
Most countries require a temporary residency period before you can apply for permanent residency, typically ranging from two to five years. Permanent residency is usually a prerequisite for naturalization and citizenship.
The Tax Obligation That Follows You
This is where many Americans are caught off guard: moving abroad does not end your obligation to file US taxes.
The United States is one of only two countries in the world — the other being Eritrea — that taxes citizens based on citizenship rather than residence. No matter where you live or work, if you hold a US passport or green card, you must file a federal tax return each year reporting your worldwide income.
The two main tools to avoid double taxation:
The Foreign Earned Income Exclusion (FEIE) allows you to exclude up to $132,900 in foreign earned income from your US taxes for 2026, provided you meet either the Physical Presence Test (330 days abroad in a 12-month period) or the Bona Fide Residency Test. It applies only to earned income — wages and self-employment — not to investment income, rental income, or pensions.
The Foreign Tax Credit (FTC) gives you a dollar-for-dollar credit for taxes paid to a foreign government, and can apply to income types the FEIE doesn't cover. In high-tax countries like Germany, France, or the UK, the FTC often eliminates your US tax bill entirely. In low-tax countries like the UAE or Singapore, the FEIE is typically the better tool.
FBAR — the reporting requirement most people miss:
If the combined balance of all your foreign bank and financial accounts exceeds $10,000 at any point during the year — across all accounts, not per account — you must file an FBAR (FinCEN Form 114) separately from your tax return. Non-willful violations can result in penalties of over $16,000 per filing. Willful violations carry far steeper consequences, including criminal exposure.
State taxes don't automatically go away either. States like California, New York, Virginia, and New Mexico may continue taxing your worldwide income even after you've moved abroad, and most states don't recognize the FEIE.
Filing deadlines for Americans abroad:
April 15 — any taxes owed are due (interest accrues from this date even if you file later)
June 15 — automatic extension for expats to file (no form required)
October 15 — extended filing deadline with Form 4868
Renouncing US Citizenship
Some Americans living abroad eventually consider renouncing their citizenship to exit the US tax system entirely. This is an irreversible decision with significant legal implications.
As of April 2026, the fee to renounce citizenship dropped from $2,350 to $450. However, if your net worth exceeds $2 million or your average annual tax liability exceeds $211,000, an "Exit Tax" applies — the IRS treats your assets as if they were sold on the day before you renounce, and taxes the unrealized gains.
This is a decision that warrants careful legal and financial counsel before proceeding.
Practical Considerations Before You Go
A few non-tax factors to evaluate before finalizing any move:
Healthcare. The US does not provide health coverage for citizens living abroad. You'll need to research the destination country's system and whether you qualify — and budget for private international health insurance in the interim.
Safety. The US State Department maintains travel advisories for every country on a four-level scale. Portugal, Canada, Australia, and most of Western Europe are currently Level 1 (exercise normal precautions). Some regions of Mexico, Thailand, and others carry higher advisory levels. Check the current advisories at travel.state.gov and enroll in the Smart Traveler Enrollment Program (STEP) for embassy alerts.
Legal systems. Every country operates under its own legal framework. What's routine in the US may be regulated differently abroad — from employment contracts to property ownership to family law matters.
Document preparation. Most countries require certified translations of key documents, including birth certificates, marriage certificates, and academic or professional credentials.
The Bottom Line
Moving abroad is a significant life decision, and the legal and financial dimensions are easy to underestimate. US tax obligations don't end at the border, residency requirements vary widely by country, and the consequences of missed reporting can be severe.
If you're exploring international relocation or have questions about how US immigration or tax law may affect your plans, our office is here to help you navigate the process. Contact us today.