Do I Have to Pay US Taxes If I Live in Costa Rica?
Yes — if you are a U.S. citizen, you must file U.S. taxes no matter where you live. The United States taxes based on citizenship, not residency.
However, there are major credits and exclusions that significantly reduce or eliminate your U.S. tax liability.
1. U.S. Tax Filing Requirements
As a U.S. citizen abroad, you must:
File annual U.S. tax returns
Report global income
File FBAR (if foreign accounts exceed $10k)
You’re still fully eligible to receive Social Security abroad.
2. Tax Benefits for Expats
Foreign Earned Income Exclusion (FEIE)
Allows exclusion of:
~$120,000 USD of income (adjusted yearly)
Foreign Tax Credit (FTC)
Reduces U.S. taxes if you pay taxes abroad.
Costa Rica Bonus
Costa Rica does not tax foreign income, meaning:
No tax on U.S. Social Security
No tax on U.S. pensions
No tax on foreign salaries (unless earned within Costa Rica)
3. Do You Pay Taxes to Costa Rica?
You only pay Costa Rican tax on:
Income earned inside Costa Rica
Foreign income is completely exempt.
4. How Expats Reduce Tax Burden
Use FEIE
Use FTC
Keep U.S. investments in U.S. accounts
Maintain tax residency abroad
Avoid double taxation through IRS treaties
Bottom Line
Yes — you must file U.S. taxes.
But with exclusions, credits, and Costa Rica’s territorial tax system, many expats pay little or no U.S. tax in practice.
Use CitizenCR to streamline your application.
Download the CitizenCR app for expat tax guidance and residency planning tools.
