Pre-Expatriation Tax Planning: What to Do Before Moving Abroad

The year you move abroad is one of the most tax-sensitive years of your life as a US taxpayer, and decisions made before you leave can save significantly more than decisions made after. Consider the timing of income: if you have large bonuses, capital gains, or deferred compensation that can be accelerated or deferred, taking that income before you move (while your US tax situation is clear) or deferring it until after you qualify for the Foreign Earned Income Exclusion can reduce your total tax bill. Review your investment accounts before leaving: selling appreciated positions before departure resets your basis, and if you're moving to a country where capital gains are not taxed or are taxed at low rates, holding positions until after you establish residency there could reduce your combined tax on those gains. Cutting your state tax ties cleanly before you leave avoids state income tax continuing to follow you abroad after you go. Think through your retirement accounts, HSA, and any stock options or RSUs that will vest soon, because the treatment of each changes once you become a bona fide foreign resident.