Are you considering the exciting prospect of moving overseas? Whether it's the allure of Costa Rican culture, the picturesque beaches of Spain, the relaxed way of life in New Zealand, or a career change in the UK and USA, the possibilities are endless.

No matter where you choose to relocate, it's an opportunity to experience a new way of life and embrace new experiences. From the local cuisine to the customs and traditions, there's so much to explore and discover.

As you plan for your move, it's important to consider the practicalities of transportation and packing up your belongings. It's also a good idea to think about how your daily routine may change and what adjustments you may need to make.

However, before you start packing your bags, it's essential to be aware of any potential legal issues you may need to address. Taking care of tax-related matters before you go can help ensure a smooth transition to your new home.

1. Ensure your U.S. tax filings remain current.

It's important to be aware that even if you have relocated overseas, as a U.S. citizen or green card holder, you may still be considered a U.S. tax resident and be required to file U.S. taxes. This means that any foreign income you earn may need to be reported.

For the 2022 tax year, single filers earning more than $12,400 and married couples filing jointly earning at least $24,800 in worldwide gross income are still required to submit tax returns to the United States.

It can be easy to forget about your tax obligations while living abroad, but it's crucial to stay on top of them. Fortunately, there is a two-month extension for tax filing deadlines for Americans living abroad, until June 15th, which provides some extra time to get everything in order.

2. Make sure you're ready to travel to the U.S.

If you're moving overseas during the year, it's important to stay out of the United States for at least 330 days in order to qualify for the Foreign Earned Income Exclusion. This exclusion allows you to exclude approximately $100,000 of overseas income from your US tax calculations, which can be a significant benefit.

For Americans who are paying taxes while residing abroad, the Foreign Earned Income Exclusion can help individuals exclude up to $108,700 of income from foreign sources on their tax return for the following year. This can help avoid the issue of double taxation and ensure that you're only paying taxes once on your income. It's a great benefit to take advantage of if you're eligible.

3. End your state residency properly

Many states will waive the typical six-month residency requirement if you can demonstrate that you live elsewhere. However, some states, such as Virginia, California, and South Carolina, can be challenging to avoid state taxes. You may need to provide evidence that you have no intention of returning to the state in order to avoid paying taxes.

If you're looking to sever ties with your state before going abroad, there are a few steps you can take. First, resign from any property owner in the state and revoke your state-issued driver's license. Additionally, filing a non-resident state tax return for the first few years that you're away from home can help ensure that your non-resident status is established and recognized by the state. By taking these steps, you can potentially avoid paying state taxes while living abroad.

4. Change Your Tax Year

It's important to be aware that the start of the tax year can vary depending on the country, with some starting in April and others starting in July. This can take some adjusting, so it's important to keep track of when the tax year starts in your new country of residence.

Additionally, make sure to save your pay stubs so that you can accurately report your overseas income using the U.S. tax year, which runs from January 1st to December 31st. This will ensure that you're able to properly file your taxes and avoid any potential issues with the IRS.

5. Keeping a US bank account

If you're sending money back to family members in the United States, it can be helpful to have a US bank account. Additionally, having a US bank account can ensure that you're able to receive any US benefits that you may become eligible for, such as social security. This can help avoid potential issues with transferring money into your foreign bank accounts.

It's also important to seek out information and guidance prior to relocating abroad. Consider speaking with a reputable ex-pat tax filing business and the American embassy in your prospective host country to ensure that you have a clear understanding of any tax or legal requirements that may apply to you. This can help make your transition smoother and avoid any potential issues down the line.