No fixed address abroad.
No foreign tax bill.
You're not moving to Portugal. You're spending three months there, then three months somewhere else, then heading home to renew your driver's license and see the grandkids. You're a traveler, not an expat.
That distinction matters enormously for taxes. If you manage it correctly — SD domicile, no foreign address, day counts tracked — no foreign government has a claim on your income. Here's exactly how that works.
Updated · Published
Educational content, not personalized tax advice. Day-count thresholds shift, and some country rules are more fact-specific than they appear here. Work with an expat CPA who knows your destination before committing to an itinerary.
The whole strategy in three sentences.
Establish domicile in South Dakota (or another no-income-tax state) before you leave. Keep a mailing address there, renew your driver's license there, spend a few weeks there each year.
Never spend more than ~150 days in any single country in a calendar year — a comfortable buffer below most countries' 183-day tax residency threshold. A few countries (France, UK) have additional tests; stay aware of those.
You still file US taxes every year — citizenship-based taxation means the IRS never stops caring. But with no foreign tax residency triggered, no foreign government has authority over your income.
The IRS doesn't care
that you're always moving.
The US taxes citizens on worldwide income regardless of where they live or travel. Social Security, IRA distributions, pension payments, and investment income are all still reportable on your 1040. Travel changes nothing.
The upside: because you never establish foreign tax residency, the Foreign Tax Credit is a non-issue. No foreign country is taxing your income, so there's nothing to credit. Your return looks essentially the same as if you'd spent the year in South Dakota.
The FEIE myth — especially relevant here
The Foreign Earned Income Exclusion only applies to wages and self-employment income. It shelters nothing from Social Security, pensions, IRA withdrawals, or investment income — the sources most retirees actually rely on. Even qualifying by spending 330+ days outside the US doesn't help.
Why this matters for retirees →
If you have a large Roth IRA,
this strategy is especially good for
you.
Roth IRA distributions are tax-free under US law — qualified withdrawals never trigger a federal tax bill, no matter where you live.
The problem is foreign countries. Most US tax treaties were written before the Roth IRA existed (1997), so foreign tax authorities don't recognize its tax-free character. If you establish tax residency in Portugal, Italy, or Greece, those countries can tax your Roth distributions as ordinary income — at their rates, which can run significantly higher than the US.
No foreign residency means no foreign tax authority. Your Roth withdrawals are yours. Combined with zero US tax on qualified distributions, your Roth income is genuinely tax-free globally.
The window closes when you establish foreign residency.
If you're considering eventually settling somewhere permanently, convert Traditional IRA funds to Roth before you establish foreign residency. Once you're a foreign tax resident, the conversion itself becomes taxable in that country. Full Roth IRA abroad guide →
South Dakota: one night
and you're a resident.
South Dakota was built for this. The state has no income tax and set up its residency rules specifically for full-time travelers. Establishing domicile requires three things:
Driver's licenses for full-time travelers (South Dakota)
The South Dakota DPS has a dedicated program for people with no fixed address — it's not a workaround, it's an officially supported path. The process:
- — One night in a South Dakota hotel, campground, or Airbnb — keep the receipt
- — Present that receipt at a South Dakota DMV to obtain a driver's license
- — A South Dakota mailing address — mail forwarding services in the state specifically serve this population (America's Mailbox, Dakota Post, Your Best Address)
License renewal can be done by mail for years at a time. No minimum annual days are required to maintain domicile for tax purposes — though a brief trip each year builds the paper trail that would matter if your domicile were ever challenged.
Why SD over FL, TX, NV?
Florida and Texas work well if you'll spend meaningful time in the US each year. SD wins for full-time travelers because the physical presence requirement is the lowest of any no-income-tax state — one overnight versus Florida's Declaration of Domicile process or Texas's infrastructure around the Escapees RV Club ecosystem.
Compare all five states →Watch the "sticky states."
If you currently live in California, New York, Virginia, New Mexico, or South Carolina, simply leaving doesn't end your state tax obligation. Establish SD domicile before you start traveling, not after.
Sticky state exit guide →
183 days in a country,
and that country owns a piece of your income.
Most countries determine tax residency by counting days. Spend more than 183 in a calendar year in Portugal, Spain, Greece, Mexico, or most other destinations — and that country can tax your worldwide income for the year. Days don't need to be consecutive.
Three months in spring plus three months in fall add up faster than most travelers expect. The calendar resets January 1, but the clock keeps running from day one.
Triggering foreign tax residency doesn't automatically mean double taxation — the US has treaties with most major destinations that include a tie-breaker (typically favoring the country where your permanent home is, which for you is South Dakota). But you'd still have to file in that country, assert the treaty position, and hire a local tax professional.
Prevention is far cheaper than cure.
Day thresholds by country
| Country | Threshold | Key risk beyond day count | Safe max |
|---|---|---|---|
| Portugal | 183 days / yr | None beyond day count | 120 days |
| Spain | 183 days / yr | + Economic ties test if assets/income based in Spain | 150 days |
| France ⚠ | No simple rule | Foyer test: recurring address = resident, regardless of days | 90 days; no fixed address |
| Italy | 183 days OR habitual abode | Renting same apartment annually can trigger habitual abode test | 120 days; vary addresses |
| Greece | 183 days / yr | None beyond day count | 120 days |
| UK ⚠ | 46 days automatic (16 days if prior UK resident) | SRT ties test: family, accommodation, prior residency all lower the threshold | Under 46 days; no UK accommodation |
| Mexico | 183 days / yr | + Center of vital interests test (family, assets in Mexico) | 120 days |
| Thailand | 180 days / yr | 2024 rule: foreign income remitted to Thai accounts now taxable for residents | 120 days |
| Japan | ~1 year continuous | Short tourist stays generally safe | 120 days |
France: no safe day count exists
France uses four alternative tests — any one triggers residency. The most relevant for travelers is the foyer test: if France is your habitual place of living, you may be treated as a French tax resident regardless of day count. In practice: rotate through hotels and Airbnbs; don't maintain a recurring lease or regularly return to the same address year after year.
UK: the Statutory Residence Test has traps
The UK uses a "ties" system. If you have family in the UK, accommodation available to you (including a relative's guest room you use regularly), or previously lived there, the safe day threshold drops significantly. Under 16 UK midnights per year is bulletproof. Under 46 is safe with zero UK ties. With ties, get specific advice before extending a UK stay.
The 90-day EU travel limit
is not a tax shield.
The Schengen 90/180 rule limits non-EU citizens to 90 days within the Schengen Area in any rolling 180-day window. It's an immigration rule — it does not directly prevent foreign tax residency.
What it does do: because it applies to the entire Schengen zone as a combined unit, it naturally forces you to spread time across countries. If you distribute your 90 days across Portugal, Spain, France, and Italy, no single country accumulates enough days to hit its 183-day threshold.
The thin edge case: the mathematical maximum Schengen days in any calendar year under strict compliance is about 182 — one day under the typical 183-day threshold. If all 182 days were in a single country, you'd be uncomfortably close. Spread across multiple countries, you're comfortably clear. Concentrate in one country, and track carefully.
Most of Western Europe is Schengen
Portugal, Spain, France, Italy, Greece, Germany, Netherlands, Austria, Switzerland — all Schengen. The 90-day clock is shared across all of them combined.
Not Schengen: UK, Ireland, Cyprus, Romania, Bulgaria. Each has its own immigration and tax residency rules entirely separate from the 90/180 calculation.
Use a Schengen calculator.
The 90/180 is a rolling window, not a calendar-year reset. A miscalculation is an overstay violation. Run your specific dates through a free online calculator before booking any European leg.
visa-calculator.com → (opens in new tab)
What a compliant year
actually looks like.
Here's one way to structure a full year that clears every threshold with room to spare. Exact dates matter for the Schengen rolling-window calculation — run your specific itinerary through a calculator before booking.
| Dates | Where | Days | Notes |
|---|---|---|---|
| Jan 1 – Feb 10 | South Dakota | 41 | Anchor the year: renew DL, file taxes, doctor visits |
| Feb 11 – May 9 | Portugal → Spain → France (Schengen Block 1) | 88 | 88 Schengen days used; no single country over ~35 days |
| May 10 – Jul 9 | Thailand → Vietnam | 61 | Schengen clock resets; well under Thailand's 180-day threshold |
| Jul 10 – Aug 9 | South Dakota | 31 | Second US anchor; Block 1 days rolling out of Schengen window |
| Aug 10 – Oct 31 | Italy → Greece → Croatia (Schengen Block 2) | 83 | Safe: Block 1 fully out of the 180-day window by mid-August |
| Nov 1 – Nov 30 | Mexico | 30 | Well under Mexico's 183-day threshold |
| Dec 1 – Dec 31 | South Dakota | 31 | Year-end: financial tasks, holiday, physician visit |
| Year totals | 365 | 103 US days · 171 Schengen days across 2 windows · no single country at 183+ days ✓ | |
US days
103
Sufficient for SD domicile; strong paper trail for IRS non-residency position abroad
Schengen days
171
Across two separate rolling windows — fully compliant with the 90/180 rule
Single-country max
<45
No destination approaches any country's 183-day tax residency threshold
Track your days.
It's not optional.
The strategy is rules-based. It works if you manage your counts; it creates expensive problems if you don't. Use our free Schengen calculator — built specifically for US retirees — to track your rolling 90-day window and plan ahead.
Schengen Day Counter
Enter your trips and see how many of your 90 days you've used in the trailing 180-day window — plus your earliest legal re-entry date and six real-world example itineraries.
Open the calculator →UK SRT Calculator
Enter your UK midnights and ties; the calculator walks through the Statutory Residence Test and gives you a residency verdict.
daysmonitor.com →Update when you book, not when you travel.
The time to catch a problem is before you've committed to flights and accommodations. Run the numbers each time you add a destination. The strategy has flexibility built in — you just need to know what the running total is.
Want someone to stress-test your itinerary?
A cross-border CPA can verify day counts, check treaty positions for your destinations, and flag country-specific risks before you commit. TFX handles perpetual traveler situations routinely — a typical retiree return runs ~$535/year.
Frequently Asked Questions
If I never establish foreign residency, what do I actually owe foreign countries?
Do I still file US taxes every year?
Does the Schengen 90-day rule protect me from EU tax residency?
What's the right Medicare setup for a full-time traveler?
Is this strategy especially good for Roth IRA holders?
How do I avoid triggering French tax residency?
What changed in Thailand in 2024?
What does South Dakota domicile actually require?
Four things to do, in this order.
-
Establish South Dakota domicile before your first long trip
One night with a receipt and a driver's license appointment. Get a SD mail forwarding address. If you're coming from a sticky state (CA, NY, VA, NM, SC), exit that state first.
Compare domicile states → -
Switch from Medicare Advantage to Original Medicare + Medigap Plan G
The Advantage 6-month service area rule will catch you if you're gone most of the year. Switch before your first extended trip. Annual Enrollment Period: October 15 – December 7.
Medicare for part-year travelers → -
Get international health insurance
Medigap Plan G covers 80% of foreign emergencies up to $50,000 lifetime. That's a backstop, not a health plan. You need real international coverage for your months abroad.
Compare international plans → -
Build your day-tracking system before you book
Schengen calculator for Europe, a UK SRT calculator for UK visits, and a simple country-day spreadsheet for everywhere else. Update every time you book travel, not after.
Day-tracking tools above →
Planning to eventually settle somewhere? The Roth picture changes.
Most countries don't recognize Roth's tax-free status once you establish formal residency — they can tax distributions as ordinary income at their rates. Here's the full breakdown by country and what to do before you establish residency.
Roth IRA abroad guidePrimary sources
- IRS — US citizens and resident aliens abroad
- GOV.UK — Statutory Residence Test guidance note RDR3
- PwC — France individual residence (Article 4B criteria)
- PwC — Mexico individual residence
- Taxing.It — Italian statutory tax residence test: 2024 changes
- Expat Tax Thailand — Foreign-sourced income 2026 update
- Terms.law — Thailand remittance tax 2024
- Global Citizen Solutions — The 183-day rule: complete guide
- South Dakota DPS — Driver's licenses for full-time travelers
- Schengen Visa Calculator — 90/180 rule planner
- Days Monitor — UK Statutory Residence Test calculator