US Expat Taxes Guide for Americans Living in Belize – A Guide

If you like turquoise waters, a laid back culture and a slower pace of life, then Belize may be the expat destination for you. Further benefits include an English-speaking culture, proximity to the US, thriving expat communities, and easy residency programs. However, every American must still report their worldwide income to the IRS each year, no matter where they reside – and expats often have additional US reporting to do, too.

In this article, we cover what Americans in Belize need to know about their US tax obligations, how Belize’s taxes work, and how to minimize your tax bill.

Understanding your US tax obligations as an American abroad

Unfortunately, moving overseas doesn’t mean escaping US taxes. The US has a citizenship-based tax system, so every American citizen and Green Card holder must report their worldwide income to the US government each year. That includes income from both inside and outside the US.

Filing thresholds start at just $400 of self-employment income, or just $5 of any income if you are married filing separately.

Expats get an automatic extension until June 15th to file, although any taxes you may owe are still due by April 15th. You can also request a filing extension until October 15th.

Key tax forms for Americans in Belize

In addition to filing Form 1040, most US expats in Belize need to submit a few extra forms: 

• Form 2555: this form lets you claim the Foreign Earned Income Exclusion and the Foreign Housing Exclusion, if you qualify.
• Form 1116: use this form to claim the Foreign Tax Credit to avoid double taxation.
• FBAR (FinCEN Form 114): If your combined foreign financial account balances exceed $10,000 at any time during the year, you’ll need to electronically file this form. Belizean bank accounts are included in that total.
• Form 8938 (FATCA reporting): If your total foreign financial assets exceed certain thresholds, you must report them under FATCA rules.

Completing these forms accurately and on time prevents penalties – however hidden away Belizean beaches might feel, don’t underestimate the IRS’s global reach!

An overview of Belize’s tax system

Belize’s tax rules are refreshingly simple. The country has a territorial tax system, which means that residents pay tax only on income earned within Belize. Foreign income, like investment or retirement income from the US, is tax-free locally.

For employees, Belize applies a flat 25% income tax on earnings above BZD $26,000 (about USD $13,000). Employers handle withholding and payment.

Other taxes include:

• Social Security contributions: Both employers and employees contribute a small percentage based on wages.
• Business tax: Self-employed individuals and companies pay a gross revenue tax ranging from 1.75% to 19% depending on the business.
• Goods and Services Tax (GST): Belize’s version of sales tax, applied at 12.5%.

For Americans earning primarily US income, Belize’s territorial system can mean little or no local tax liability. Still, the IRS expects full reporting of every dollar earned worldwide.

How the US and Belize tax systems interact

The US and Belize haven’t signed a tax treaty or a Totalization Agreement. However, Americans living in Belize can still reduce their tax burden by claiming the Foreign Earned Income Exclusion or the Foreign Tax Credit, or sometimes both (though not on the same income).

If you work for a Belizean employer and pay taxes in Belize, you can usually claim a credit for those taxes on your US return. However, if your income falls below the FEIE limit, you might exclude it entirely.

Self-employed Americans face a unique challenge. Even if Belize taxes your income, you must also pay US self-employment taxes. Without a Totalization Agreement, there’s no exemption from US Social Security or Medicare contributions.

Avoiding double taxation

Three major IRS provisions help Americans abroad avoid paying taxes twice:

1. Foreign Earned Income Exclusion (FEIE)
   You can exclude up to $130,000 of earned income for tax year 2025 (filed in 2026) if you meet one of two tests:

○ Physical Presence Test: You must demonstrate that you spend at least 330 full days outside the US during any consecutive 12-month period.

○ Bona Fide Residence Test: You must demonstrate that you  live in Belize full-time without immediate plans to return to the US.

2. Foreign Tax Credit
   You can claim a dollar-for-dollar credit for income taxes you’ve paid in Belize. This offsets your US tax bill directly.
3. Foreign Housing Exclusion or Deduction
   Housing in Belize can be pricey in certain areas. If you qualify under FEIE and also meet one of the residence tests, you may exclude (if you are an employee) or deduct (if self‑employed) your Belizean housing expenses. 

Combined, these provisions can significantly reduce or even eliminate your US tax liability.

State taxes and expat residency

Leaving the US doesn’t always mean you’ve left your state tax obligations behind. Some states, including California and New York, are aggressive about holding onto former residents, especially if you maintain any ties such as property or financial accounts in your former state or intend to return.

To end state tax residency, you might consider:

• Establishing a home in Belize
• Closing old state bank accounts and voter registrations
• Obtaining a Belize driver’s license and national ID
• Spending minimal time in your former state

Social Security and retirement considerations

Because Belize and the US lack a totalization agreement, self-employed expats must continue paying US self-employment tax on their earnings. These payments contribute to your future US Social Security benefits.

If you already collect Social Security, your payments continue while living in Belize. The US Treasury sends benefits to Belize with no restrictions, and you can receive direct deposits in either a US or Belizean bank account.

Withdrawals from IRAs or 401(k)s remain taxable by the US, though Belize usually does not tax foreign pensions. It’s wise to consult with a Belize tax advisor before transferring or drawing large sums.

FBAR, FATCA, and Belize financial accounts

Belize’s banks follow FATCA (Foreign Account Tax Compliance Act) rules, meaning that they report American-held accounts to the IRS each year. Expats also have reporting requirements relating to non-US financial accounts and assets.

If your total foreign account balances exceed $10,000 at any point, you’ll need to file a Foreign Bank Account Report (FBAR). If they exceed $200,000 (if you’re single) or $400,000 (for joint filers) at year-end, or $300,000 / $600,000 at any time, you also need to file Form 8938 under FATCA.

Form 8938 should be filed with your tax return, while FBARs should be filed separately to FinCEN by October 15th.

Failing to report foreign assets and accounts can lead to steep fines, even if your failure to file was unintentional.

Real estate and capital gains in Belize

Many Americans in Belize invest in real estate, attracted by favorable ownership laws and low prices compared to the Caribbean. Belize does not tax capital gains on property sales, which is a major advantage for investors.

The IRS, however, still taxes worldwide gains. If you sell your Belize property for a profit, you must report it on your US return. The standard exclusion of up to $250,000 ($500,000 for couples) applies if it’s your primary residence and you’ve lived there for at least two of the past five years.

Rental income from Belize property is taxable both locally and by the IRS. You can deduct maintenance and depreciation expenses and claim a Foreign Tax Credit for any Belizean income tax paid.

Practical tax tips for Americans in Belize

A few smart habits make expat tax life much easier:

• Hire an expat tax specialist who is familiar working with Americans living in Belize. Not all CPAs understand the details of foreign reporting.
• Keep detailed records. Save copies of tax receipts, rental contracts, and residency papers.
• File early. Expats automatically receive until June 15 to file, but interest still applies if you pay late.
• Report all income sources. This includes freelance work, rental income, dividends, and cryptocurrency gains.
• Stay current. The IRS updates thresholds and exclusion limits yearly. Small changes can make a big difference.

Belize is a paradise, but don’t neglect your US taxes

Belize offers Americans a sunny sanctuary filled with friendly people, laid-back living, and no local tax on foreign income, but the IRS still expects you to file every year.

Note that if you’ve been living in Belize for a while but haven’t been filing, you may qualify for an IRS amnesty program called the Streamlined Procedure.

With strategic planning and specialist advice, you can optimize your tax bill while enjoying your life in paradise.