Taxes For Americans Moving to Spain on Retirement

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Did you know? Spain taxes pensions and other retirement income at rates ranging from 19% to 47%, while the U.S. applies federal tax rates between 10% and 37%. If you’re a U.S. citizen retiring in Spain, failing to understand the tax treaties and exemptions could cost you thousands each year. For example, a retiree with an annual pension of $60,000 could owe over $12,000 in Spanish taxes if not properly planned—despite already paying U.S. taxes on that income.

In this video, we dive deep into Spanish taxes for American retirees, covering everything from pension income, Social Security taxation, and avoiding double taxation under the U.S.-Spain Tax Treaty. Learn how to maximize your retirement income by leveraging tax credits, exclusions, and understanding key legal nuances.

Key Topics Covered:
Double Taxation Agreements: Find out how Article 20 of the U.S.-Spain Tax Treaty ensures you don’t pay tax twice on the same income.
Pension Income in Spain: Spanish taxes apply to worldwide income, including pensions, but certain qualified plans receive preferential treatment.
Foreign Tax Credits: Understand how to use IRS Form 1116 to claim credits for taxes paid to Spain.
Tax-Free Thresholds: Did you know Spain allows personal allowances, such as up to €5,500 for retirees over 65? We explain how this reduces your taxable income.
Social Security Coordination: Discover why your U.S. Social Security might not be taxable in Spain if you’ve contributed to both systems.
Make the most of your golden years in Spain by avoiding costly mistakes and ensuring your tax strategy aligns with both Spanish and U.S. laws.

Sources:

U.S.-Spain Tax Treaty, Article 20
IRS Publication 514 (Foreign Tax Credit for Individuals)
Agencia Tributaria (Spanish Tax Agency) Guidelines