Many expats are frustrated with the US requirement to continuing filing tax returns even when they reside outside the US. Preparing US expat taxes is complex, time-consuming and frustrating—and you may simply throw your hands up and ask the US government “What are you doing for me?” So let’s take a look at the benefits of retaining your US citizenship!
Your rights will never be stripped
While many expats plan to live abroad permanently (or are already doing so), plenty more are not yet sure where they will ultimately choose to live. Retaining your citizenship allows you to keep your options open—especially when life circumstances change unexpectedly. What if a family member unexpectedly falls ill and needs your full-time care? Or you and your foreign spouse divorce and you no longer feel a close tie to your country of residence? What if you become seriously ill and want to receive a higher-level of care than is available where you live? These are difficult things to consider, but having the option to return to the US may be worth the extra hassle of filing US tax returns if life doesn’t go as planned.
When living abroad, you are still able to vote in elections—which means you have a say in how the US government is run. Americans sometimes take this right for granted but your voice is powerful and you can exercise this unalienable right no matter where you live.
Social Security benefits
If you lived and worked in the US long enough to be eligible for Social Security benefits, you can still receive them while living abroad. There are a handful of countries to which they cannot be sent, such as Cuba, North Korea and Cambodia, but even if you do reside there, you can receive all benefits once you move to an eligible country.
Americans who are eligible for Social Security disability (SSDI) may be able to receive benefits overseas, so long as you live in a country that can receive Social Security payments. If you are a legal resident of another country and not a citizen, your benefits may stop after six months if you don’t live in a country with a Social Security agreement with the United States. However, there are many countries you can be a citizen of and still receive SSDI. To find out if you are a citizen of a country that allows you to receive benefits, you can contact the Social Security Administration.
Of course, you may have to return to the US for periodic disability reviews, which occur every three to seven years, depending upon your disability review diary date. If you do not respond to or comply with Social Security requests (which may include a consultative examination), your Social Security disability benefits may be stopped.
Those living in Puerto Rico, the US Virgin Islands, Guam, the Northern Mariana Islands and American Samoa are considered to be living in the US, not abroad.
If you are currently receiving Supplemental Social Insurance (SSI), your benefits may end after 30 days living abroad. These benefits cannot be reinstated until you are back in the US for at least 30 days.
One of the major concerns for retirees is Medicare. Depending on where you live, healthcare can be expensive, inexpensive, high-quality or sub-par. Unfortunately, Medicare does not pay for medical expenses outside of the US. However, you can continue to be on a Medicare plan when living abroad, even if you can’t receive care in the country in which you reside. Let’s see why that may make sense.
Should you return to the US, Medicare Part A (which covers institutional care in hospitals and skilled nursing facilities, as well as certain care given by home health agencies and care provided in hospices), is available to you. There are no premiums to pay and anyone who is 65 or older and is eligible for Social Security automatically qualifies.
You can also choose to pay a monthly premium for Medicare Part B, which is the portion of insurance that covers outpatient services. If you think there’s a chance you may return to the US or choose US care in the event of an illness or injury, you may want to continue paying the monthly premium while living abroad. If you drop Part B and then choose to re-enroll, you’ll pay an additional enrollment fee—and for every year you don’t hold the coverage, the premium goes up.
There are many rights and benefits to being a US citizen, but the value of US citizenship cannot be quantified—because it’s ultimately about its value to you. The tax rules and requirements may be a burden, but each person must decide if the benefits outweigh the detriments.
If you have questions about filing your US taxes or would like Greenback to prepare your US tax return, please contact us today!