The hidden costs of becoming an expat

Since I was old enough to vote in presidential elections, I’ve heard plenty of grumbling across the political spectrum about moving to Canada if one candidate or another wins. And since I have been a full-time worker, I have also been party to a number of pie-in-the-sky conversations about the expat potential of retiring to Barcelona; Buenos Aires, Argentina; or Bangkok.

But conversations about leaving the United States have felt a little different over the last couple of years. It started when several of my parents’ contemporaries actually retired abroad, rather than just thinking about it. Then multiple friends picked up stakes—which included selling houses and cars and uprooting high-school aged kids—simply to relocate away from America.

It’s not just my circle of friends and acquaintances, either. CS Global Partners found a 102.4% jump in U.S. expatriation in the first quarter of 2025 compared to the last quarter of 2024—although that jump only represents an estimated 1,285 individuals in real numbers.

As easy as it is to say you’d like to become an American expat living it up in another country, the reality isn’t necessarily that simple. I spoke to two people who have moved away from the U.S. about the hidden costs of emigration.

Infrastructure matters

Valerie Roseborough retired to Panama when she exited her career in sales and marketing. She first got the expat itch during COVID-19. “In my early career, I had done a lot of solo international traveling,” she says. “Seeing so much of the world go through the same thing at one time reminded me of how connected I had once felt to the rest of the world.”

That convinced Roseborough to start traveling more—with retirement in the back of her mind. She spent six months in Mexico and realized it was not her place. “The infrastructure wasn’t going to work for me,” Roseborough says. “It’s a large country and sort of challenging to move about from state to state and place to place.”

Once Panama presented itself as an option, with its large international airport and direct flights to North America, as well as generous discounts to retirees, Roseborough realized it was an ideal spot for her second act, as an expat. Travel to and from her home in the Washington, D.C. area makes it possible to stay closely connected with her children.

But she also recognizes that her location in the States as she was planning the move also helped make the process easier. “I was fortunate in that I was relocating from Washington, D.C, which has a Panamanian consulate and embassy,” she says. “I just had to make an appointment and show up with the necessary documents.”

If you don’t live in an area with a nearby embassy or consulate for the country you want to emigrate to, you may have to work through the State Department and handle everything via mail.

Prepare for taxes

Rian Chandler-Dovis and her husband decided to immigrate to Cabo San Lucas, Mexico, from Virginia several years ago. “We got down here, and we were like, we love this place,” she says. “What is it going to take to immigrate here?”

Mexico has a relatively flexible immigration policy, in part because “the government has instituted a 16% sales tax across the board,” Chandler-Dovis explains. This means immigrants to Mexico don’t necessarily have onerous income requirements, because even if you’re not paying income tax in Mexico, the 16% sales tax contributes massively to the economy.

But if you are living abroad and maintaining an American residency, that can complicate your income tax situation. Chandler-Dovis’s husband now earns income in Mexico, while she owns a business that is registered in the United States. They pay income tax in Mexico, but found that maintaining their residence in Virginia would change their tax status in ways that would complicate matters too much.

“For tax purposes. Virginia is what you call a sticky state,” Chandler-Dovis says.

There are four other so-called sticky states: California, New Mexico, New York, and South Carolina. Each of these states consider individuals to still be tax residents even after moving abroad, and expects them to keep filing state tax returns and paying state taxes.

These states have also been known to levy penalties for noncompliance to any émigré foolish enough to think that moving to another country would cut any necessary tax ties to their former home.

Not all costs are financial

Unfortunately, giving up their Virginia residency has a serious cost for Chandler-Dovis and her husband. Without an address in America, they can’t vote in U.S. elections.

“In order to stay registered to vote, you have to have a U.S. address,” Chandler-Dovis says. “And the law says that if you move out of the country, your voter registration must reflect your last U.S. address.”

This can be a serious catch-22 for Americans living abroad, especially those who are considering a move for political reasons. You may be stuck deciding between a nightmare of a tax scenario if you live in a sticky state or the ability to vote in American elections.

New opportunities, new problems

Living abroad can be a dream, an adventure, or an escape. But it will never be exactly what you expect, and it will always have hidden costs that you can’t possibly anticipate.

Specifically, it’s important to take the infrastructure of both your destination and your current situation into account. Taking a trial run in your potential home, as Valerie Roseborough did in Mexico, can help a prospective expat determine if it will work. Her six months in Mexico made it clear that the Mexican infrastructure wasn’t a good fit and led her to Panama, which is perfect for her retirement. She also recognized that living in Washington, D.C. made applying for her visa much easier because of her proximity to the Panamanian consulate and embassy. If you aren’t as fortunate, expect the process to take longer.

Taxes will continue to be a headache no matter where in the world you live. While income may be less important to some countries, that does not necessarily mean you won’t need to worry about how your tax situation will affect your finances, immigration status, and residency.

Additionally, taxes may affect an expat’s ability to maintain residency—and the ability to vote—in America. Make sure you consider all those kinds of nonfinancial costs before you make any decisions about moving.