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US-Portugal taxes on Social Security Income

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Posts: 4
 JMB
Community Member
Topic starter
(@jmb)
New Member
Joined: 9 months ago

Hello, expats from the US,

My husband and I are looking into retiring in Portugal at age 70. We currently get Social Security benefits as US citizens. If we retain our US citizenship and live in Portugal (first on visas and after five years as permanent residents), will we have to pay taxes on our Social Security benefits in both countries?

Thanks,

Janet B and Gary S

7 Replies

Posts: 3
Community Member
(@chris_in_california)
New Member
Joined: 7 months ago

I have the same question. I've been reading up on the NHR tax regime and I am still confused. It mentions a new tax plan that was enacted in March 2020 where a 10% flat tax will be applied to "foreign-source pension income". I am unclear as to exactly what that applies to (e.g. social security, 401k withdrawals, brokerage account withdrawals, IRA withdrawals, etc.). 

I have also read that a "tax-credit" will be applied if tax has been paid abroad on those funds. I have not read explicitly that we will not be doubly taxed, so I am still confused. 

Hopefully, a tax expert in the group will see this and reply. 🙂

 

-Chris

  

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1 Reply
 Bert
Premium Member
(@bert)
Joined: 12 months ago

Estimable Member
Posts: 132

@chris_in_california Good Morning. I too currently live in California Chris, Sacramento. So far my education in this regard tells me that in addition to the Portuguese rules in the NHR US citizens are subject to the rules of the dual tax treaty between the US and Portugal. Many tax and estate attorneys here are not familiar with the ins and outs of the rules with Portugal. I don't know where you live in California but there is a very large community of Portuguese people in the Central Valley. I am hoping to have an appointment with an attorney in Turlock who is from the Azores in hopes that she will be able to clarify further. There are also a some accountants who understand tax returns in this regard, one for example is Kelly accountants in Modesto. They are also able to translate documents into Portuguese. There is a publication called Tribuna Portuguesa published in Modesto and if you subscribe you will see many advertisements that will help connect you to the right people. It will also help you practice your Portuguese. Hope this helps. Tchau.

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Posts: 110
Community Member
(@jeanne)
Estimable Member
Joined: 7 months ago

Hello all. I am interested in the same types of tax questions and cannot understand why it is so difficult to find answers, ie. why multiple USA retirees all need to enlist the assistance of their own tax advisors. Other than that is good business for tax advisors.  Surely the response is the same for all of us? Certain issues may depend on individual circumstances, but SS is either considered taxable income in PT or it is not. Same for 401k withdrawals and Roth funds.  Perhaps some USA retiree in PT who has recently filed their taxes can enlighten the rest of us. 

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Posts: 14
Premium Member
(@srcarpenter1062gmail-com)
Active Member
Joined: 7 months ago

Thanks for asking this question!  I'm also interested in how government pensions (MA State) are taxed.    I wonder if there has already been a webinar on this topic?

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Posts: 449
Premium Member
(@peggyl)
Reputable Member
Joined: 11 months ago

We moved to Portugal permanently in 2019. We had a vacation home here beginning in 2017 and last year exchanged the small townhouse for a 4-bedroom retirement home. Our solicitor and accountant have assisted us with the non-habitual resident status and taxes. There are rumors of changes in the status of foreign residents and I don't pretend to know what has transpired in the past 8 months. I think that the economy and continue covid crisis may possibly have delayed the anticipated changes in the rules. I can only say for certain that we received our non-habitual resident status and we fall under the 1976 agreement between the US and Portugal that allows a citizen of the US who is also a resident of Portugal to choose in which country they pay taxes. And at that time, Portugal did not tax pension or retirement income. No one asked for my opinion but I suggest the advice of a licensed accountant is warranted here.

@peggyL

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