U.S. Taxes in Costa Rica: Expat Rates, Forms, and Deadlines

Written by Mike Wallace

MBA

Mike Wallace

MBA

Mike Wallace, CEO at Greenback Expat Tax Services, has extensive experience in finance, operations, and strategic leadership. Mike has worked in numerous C-Level roles, including at large financial institutions. Mike holds a Master's in Business Administration (MBA) from the University of Chicago's Booth School of Business.

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Updated on April 14, 2026

15 minute read

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Wallace, M. (2026, April 14). U.S. Taxes in Costa Rica: Expat Rates, Forms, and Deadlines. GreenbackTaxServices.com. Retrieved , from https://www.greenbacktaxservices.com/country-guide/tax-guide-for-americans-living-in-costa-rica/

Americans in Costa Rica must file a U.S. federal tax return every year, reporting worldwide income regardless of where they live or how long they have been abroad. The IRS requires this of every U.S. citizen and Green Card holder, with filing thresholds starting as low as $5 for certain income types. For the 2025 tax year, the standard threshold for a single filer under 65 is $14,600 in gross income.

You are required to file a U.S. return if any of the following apply:

• You have earned income (wages, self-employment, or freelance) from any source worldwide
• You are self-employed with net earnings of $400 or more
• You hold foreign bank accounts with a combined total of $10,000 or more at any point during the year
• You receive pension, retirement, or investment income from U.S. or foreign sources above the threshold

The good news: most Americans in Costa Rica end up owing little or nothing to the IRS. Costa Rica’s territorial tax system means your U.S.-source income is not taxed by Costa Rica, and powerful IRS tools like the Foreign Earned Income Exclusion can eliminate much of your U.S. bill. This guide walks through both sides of your filing obligation, so you know exactly where you stand.

Living in Costa Rica? Here’s How to File U.S. Taxes Right

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Costa Rica at a Glance

Do U.S. Citizens Have to File a U.S. Tax Return While Living in Costa Rica?

Yes, the U.S. taxes based on citizenship, not residency. It is one of only two countries in the world with this approach. Every U.S. citizen and Green Card holder must file Form 1040 each year, no matter how long they have lived abroad or whether their income is already taxed in Costa Rica.

The 2025 filing thresholds are:

Expats receive an automatic two-month extension to June 15. A further extension to October 15 is available by filing Form 4868.

How can Americans in Costa Rica reduce their U.S. tax bill?

You have three primary IRS tools to reduce or eliminate your U.S. tax bill:

• Foreign Earned Income Exclusion (FEIE): For the 2025 tax year, you can exclude up to $130,000 of foreign-earned income from U.S. taxation if you pass the Physical Presence Test (330 full days outside the U.S. in any 12-month period) or the Bona Fide Residence Test (established as a legal resident of Costa Rica for a full tax year). The FEIE applies only to earned income: wages, salaries, and net self-employment earnings.
• Foreign Tax Credit (FTC): If you pay Costa Rican income taxes, you can apply those payments as a dollar-for-dollar credit against your U.S. tax liability. This is especially useful for higher earners whose income exceeds the FEIE limit, or for passive income like dividends and interest that the FEIE does not cover.
• Foreign Housing Exclusion or Deduction: If you use the FEIE, you may also be able to exclude or deduct housing costs above a base amount set by the IRS, adding meaningfully to your total exclusion.

Not sure which approach works best for your situation? Comparing the FEIE and the FTC is an important planning step, especially if you have both earned and passive income.

Example: Say you earn $85,000 working remotely for a U.S. company from your home in Escazú and you qualify under the Physical Presence Test. The FEIE covers your full salary. Your U.S. federal income tax on that $85,000 could be $0. If you also pay into Costa Rican income tax on any local earnings, the Foreign Tax Credit can offset your remaining U.S. liability dollar for dollar.

Who Has to File a Tax Return in Costa Rica?

For Americans in Costa Rica, the local tax system is relatively straightforward. Costa Rica operates on a territorial model, meaning it taxes only income earned within its borders. Both residents and non-residents owe Costa Rican tax on Costa Rica-source income, but neither category is taxed on income from foreign sources, including U.S. wages, freelance payments from U.S. clients, or investment returns from U.S. accounts.

If your only Costa Rican income is employment wages with tax withheld at source by your employer, you typically do not need to file a Costa Rican tax return. A return is generally required when you receive:

• Self-employment or freelance income earned in Costa Rica
• Rental income from Costa Rican property
• Fees, commissions, or royalties from Costa Rican sources
• Interest or dividends from Costa Rican financial institutions

One important note: Costa Rica does not allow joint filing. If both spouses earn non-employment income, each must file a separate return.

What Income Tax Rate Do Americans Pay in Costa Rica?

Costa Rica’s rates depend on residency status and income type.

For tax residents (those spending more than 183 days in Costa Rica during the October 1 to September 30 tax year), local earnings are taxed at progressive rates:

For non-residents, Costa Rica-source income is taxed at flat withholding rates based on payment type:

Capital gains are generally exempt from Costa Rican tax. For residents, dividend and interest income is typically taxed at a flat 15%.

How Do I Qualify as a Tax Resident in Costa Rica?

You become a tax resident of Costa Rica when you spend more than 183 days in the country during the tax year (October 1 to September 30). Below that threshold, you are treated as a non-resident for Costa Rican tax purposes.

For digital nomads: Costa Rica offers a Remote Work Visa that allows U.S. remote workers earning at least $3,000 per month from foreign employers or clients to live in Costa Rica for up to two years, with the option to renew. Because their income comes from outside Costa Rica, the territorial tax system means they generally owe no Costa Rican income tax regardless of residency classification. Their full U.S. tax obligations remain in place, however. Our guide to digital nomad taxes covers how the FEIE and tax home rules apply when you work remotely from abroad.

Is Foreign Income Taxed in Costa Rica?

No, Costa Rica taxes only income generated within its borders. Income you earn from U.S. employers, U.S. clients, U.S. investment accounts, or any other non-Costa Rica source is completely exempt from Costa Rican income tax.

This territorial approach is one of the most significant features of Costa Rica’s tax system for American expats. If your income comes primarily from U.S. sources (which is common for retirees drawing Social Security, remote workers employed by U.S. companies, and digital nomads with U.S. clients), your Costa Rican tax liability could be zero. Your main reporting obligation will remain the annual U.S. return.

What Are the Tax Filing Deadlines for Americans in Costa Rica?

Costa Rica’s tax year runs from October 1 to September 30, not the calendar year. The annual return is due February 15.

Your U.S. return follows a separate calendar:

For a full breakdown of every U.S. expat deadline, see our tax deadline guide for Americans abroad.

What Other Taxes Does Costa Rica Have?

Costa Rica’s tax system is simpler than most. Beyond income tax, these are the taxes Americans there are most likely to encounter:

• Property Tax: An annual rate of 0.25% of the assessed property value, which is notably lower than most U.S. property tax rates.
• Property Transfer Tax: When property changes hands, a 1.5% tax is applied to the declared value. This cost is typically split 50/50 between buyer and seller. For guidance on the U.S. reporting side, see our guide on buying and selling real estate abroad.
• Value-Added Tax (VAT): A 13% VAT applies to most goods and services. Basic food items, medicines, and medical services are generally exempt or taxed at reduced rates.
• Corporate Tax: Companies with income exceeding 112,170,000 CRC pay a flat 30% corporate rate.
• For self-employed Americans: If you operate a business or freelance within Costa Rica, you may owe Costa Rican self-employment contributions in addition to U.S. self-employment tax (15.3% on net earnings up to $176,100 for 2025). Because no totalization agreement exists between the two countries, you could face obligations to both systems simultaneously. Our guide to self-employment tax for U.S. expats covers your options.
• For rental property owners: Rental income from Costa Rican property is subject to local income tax and must also be reported on your U.S. return. Our guide to reporting foreign rental income covers the U.S. reporting requirements in full.

Is Retirement Income Taxable for Americans in Costa Rica?

Costa Rica is one of the most popular retirement destinations for Americans, and for good reason. Its pensionado visa program and favorable treatment of foreign-source income make it an attractive base for Americans in Costa Rica who are drawing down retirement savings.

If your retirement income comes from U.S. Social Security, a U.S. pension, 401(k) distributions, or IRA withdrawals, that income originates outside Costa Rica and is completely exempt from Costa Rican income tax. You will still need to report it on your U.S. return, but Costa Rica will not tax it.

Interest income from Costa Rican bank accounts is subject to local withholding tax, currently 5.5%, which will rise to 15% over time. If you hold significant savings in local banks, that interest is taxable in Costa Rica.

Social Security and double taxation: Because there is no U.S.-Costa Rica tax treaty and no totalization agreement, Social Security benefits are governed solely by U.S. rules. Up to 85% of your Social Security income may be includable in your U.S. taxable income, depending on your combined income level. Costa Rica does not tax it separately. For a full explanation, see our guide on Social Security taxes for U.S. expats.

For those planning a move to Costa Rica in retirement, our retiring abroad tax planning guide walks through pension treatment, IRA and 401(k) considerations, and strategies to organize your income before you make the move.

What U.S. Tax Forms Do Americans in Costa Rica Need to File?

Even if you owe no U.S. taxes, you may still have filing requirements. The most common forms for Americans in Costa Rica include:

FBAR: If the combined value of all your foreign financial accounts exceeded $10,000 at any point during 2025, you must file an FBAR. It is filed separately through FinCEN, not the IRS, and is due April 15 with an automatic extension to October 15. See our FBAR guide for full details.

Form 8938 thresholds for Americans living abroad: $200,000 at year-end or $300,000 at any point during the year (single filers); $400,000 at year-end or $600,000 at any point (married filing jointly). If you are unsure whether you need to file both the FBAR and Form 8938, our comparison explains the key differences.

Many Americans in Costa Rica are surprised to learn they should have been filing U.S. returns all along. The IRS offers the Streamlined Foreign Offshore Procedures, a program specifically designed for expats who did not know they had to file. It lets you catch up on three years of returns and six years of FBARs, generally without the penalties that would otherwise apply. If you are behind on your filings, this program is worth knowing about before you decide how to proceed.

Does the U.S. Have a Tax Treaty with Costa Rica?

No, the U.S. and Costa Rica do not have an income tax treaty. There is no formal treaty mechanism to allocate taxing rights or provide specific exemptions on cross-border income.

In practice, this rarely creates a major problem for most expats. Because Costa Rica taxes only local-source income, the main overlap occurs on earnings from Costa Rican employment, local business activity, or Costa Rican investment income. The Foreign Tax Credit is the primary tool for applying Costa Rican taxes paid as a credit against your U.S. bill. For a broader explanation of how U.S. tax treaties work and which countries have them, see our U.S. tax treaty guide.

Does the U.S. Have a Totalization Agreement with Costa Rica?

No, the U.S. and Costa Rica do not have a totalization agreement, which means Americans living and working in Costa Rica may face social security obligations to both countries simultaneously.

Costa Rica’s social security contributions (Caja Costarricense de Seguro Social):

This applies to both residents and non-residents working within Costa Rica. If you are self-employed or run your own operation in Costa Rica, you are responsible for the combined contribution.

Americans also owe a U.S. self-employment tax of 15.3% on net self-employment earnings up to $176,100 for the 2025 tax year, regardless of where they live. Without a totalization agreement, there is no mechanism to exempt you from one country’s system based on contributions to the other.

If you are a digital nomad working remotely for a U.S. employer or U.S.-based clients, you are generally subject to U.S. payroll or self-employment taxes only, since you are not performing work within Costa Rica’s labor system. For a full explanation of how these agreements work, see our totalization agreements guide.

File With Confidence, Move Forward With Peace of Mind

Greenback helps you handle FBAR and FATCA from start to finish with a dedicated CPA or Enrolled Agent who knows the U.S. expat tax picture inside out. Whether you are filing on time from San José, catching up on missed years, or claiming every exclusion your situation allows, you will have direct one-on-one accountant access and flat-fee pricing with no surprises.

File Your U.S. Taxes From Costa Rica With Confidence

Greenback helps you move through tax season smoothly with a dedicated accountant guiding every step.

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The information in this guide is provided for general educational purposes only and reflects U.S. and Costa Rican tax law. Tax laws change frequently, and individual circumstances vary. This content does not constitute tax, legal, or financial advice. Please consult a qualified tax professional before making decisions based on this information.

Related Resources

• Foreign Earned Income Exclusion: Eligibility, Limits, and How to Claim It
• Foreign Tax Credit: How Expats Can Reduce U.S. Taxes
• FEIE vs. Foreign Tax Credit: Which Is Better for Your Situation?
• FBAR Explained: Filing Requirements, Deadlines, and Penalties
• Digital Nomad Taxes for U.S. Citizens: FEIE, Tax Home, and Filing From Anywhere
• Retiring Abroad as an American: U.S. Tax Rules and Planning Strategies
• Double Taxation for U.S. Expats: Why It Happens and How to Avoid It
• U.S. Tax Treaties Explained: How Treaty Benefits Work
• Totalization Agreements: How Expats Avoid Paying Double Social Security Tax
• U.S. Tax Filing Deadlines for Americans Living Abroad

Frequently Asked Questions About U.S. Taxes in Costa Rica