U.S. taxes for Americans in Colombia: what to file, and how to catch up.
Medellín and Bogotá draw American remote workers, retirees and families, and all of them still file a U.S. return every year. There is no U.S.-Colombia tax treaty, but Colombian tax still counts toward your U.S. foreign tax credit. The details to get right are Colombian tax residency, pension funds, cesantías and property. Most people who fell behind can catch up under the Streamlined procedures, with no penalty if they qualify.
Sound familiar?
- You moved to Medellín or Bogotá as a remote worker and stayed.
- You became a Colombian tax resident and now file there too.
- Your employer pays into an AFP and cesantías for you.
- Your Colombian bank asked for your U.S. tax number.
How does the IRS treat Colombian pensions, cesantías and property?
Accounts go on your FBAR once they add up to more than $10,000. What differs is how the IRS taxes them.
| Item | U.S. treatment | |
|---|---|---|
| AFP pension funds | Could be treated as social security or as a foreign retirement account the U.S. can tax, and the rules don’t settle which. | Check first |
| Cesantías | Severance savings your employer funds. They could be taxable for the U.S. when deposited or only when withdrawn; the rules don’t settle which. | Check first |
| Investment funds (FICs) | Usually PFICs (Form 8621), with complex reporting and tax rules. | Watch out |
| Bank accounts and CDTs | Interest is taxable for the U.S., and the accounts count toward your FBAR total. | Taxable |
| Property | Rental income goes on your U.S. return, and U.S. tax may apply when you sell. Peso moves can create gains or losses. | Plan ahead |
| Colombian wealth tax | A tax on net assets for wealthier residents. It isn’t an income tax, so it doesn’t reduce your U.S. tax. | Plan ahead |
Which Colombian investments are PFICs?
Colombian collective investment funds (fondos de inversión colectiva, or FICs), the funds inside voluntary pension plans, and Colombian-listed ETFs. For U.S. tax they’re passive foreign investment companies, or PFICs.
- Each fund needs its own Form 8621 in most years, and gains can be taxed at the top U.S. rate plus an interest charge, unless an election was made in time.
- Banks often suggest FICs for spare pesos, so many Americans hold one without thinking of it as a fund.
- Not PFICs: CDTs, shares of individual companies, Colombian government bonds (TES), and bank accounts.
Is there a U.S.–Colombia tax treaty?
No. The U.S. and Colombia have no income tax treaty and no social security agreement. U.S. law still does most of what matters:
- The foreign tax credit doesn’t need a treaty. Colombian income tax can be credited against U.S. tax on the same income.
- The foreign earned income exclusion works the same with or without a treaty.
- No social security agreement means a self-employed American owes U.S. self-employment tax, even when also paying into the Colombian system, and working for a U.S. company usually means U.S. Social Security withholding.
You become a Colombian tax resident once you’re there more than 183 days in any 365-day period. From then on it taxes your worldwide income, U.S. income included.
When are Colombian and U.S. taxes due?
Both tax years run January to December, so each Colombian year lines up with one U.S. return.
| Colombia | United States | |
|---|---|---|
| Tax year | January to December | January to December |
| Annual return | August to October, on a date set by the last digits of your tax ID (NIT) | April 15, moved to June 15 automatically when you live abroad, or October 15 with an extension |
| Paying the tax | Withheld at source on salaries and some payments, with any balance due with the return | April 15, even if you file later |
| Foreign accounts | Foreign assets are declared with the Colombian return above a set value | The FBAR, due October 15, filed online |
Foreign tax credit or exclusion: which wins in Colombia?
It depends on whether you’re a Colombian tax resident and how much Colombian tax you pay:
- Remote workers who aren’t yet Colombian residents, or who pay little Colombian tax, usually use the foreign earned income exclusion, up to $130,000 for 2025.
- Colombian residents paying income tax at rates up to 39% often do better with the foreign tax credit.
- Retirees on U.S. Social Security, pensions and IRAs use neither much: that’s U.S. income, outside the exclusion, though Colombia may tax it too once you’re resident.
We run your returns both ways before choosing. How we compare the exclusion and the credit.
A worked example: a remote worker in Medellín
Nate moved to Medellín in 2021, working remotely for a U.S. company. He became a Colombian tax resident in 2022, keeps savings in a CDT, and bought an apartment he rents out part of the year. He hasn’t filed a U.S. return since moving.
| Item | How it’s handled |
|---|---|
| Salary | Taxed by Colombia as a resident. For the U.S., we compare the exclusion and the credit; his U.S. employer still withholds Social Security. |
| CDT | The interest goes on his U.S. return, and the account on the FBAR. |
| Apartment | Rent goes on his U.S. return with U.S. depreciation, with a credit for Colombian tax on it. |
| Catching up | Three years of returns and six FBARs under the Streamlined procedures, with no penalty if he qualifies. |
Catching up from Colombia
Most Americans in Colombia who fell behind without meaning to can catch up under the Streamlined Foreign Offshore Procedures: three years of returns, six years of FBARs and, if you qualify, no penalties. If only FBARs are missing, or you’ve moved back to the U.S., another route may fit better. See every IRS catch-up option for expats, compared.
Common questions
Do I pay U.S. Social Security tax in Colombia?
Usually not if you work for a local employer. There’s no U.S.-Colombia social security agreement, though, so self-employment tax can still apply if you work for yourself, and FICA if you work for a U.S. company.
Without a tax treaty, will I be taxed twice?
Usually not. The U.S. foreign tax credit works without a treaty, so Colombian income tax you pay generally reduces your U.S. tax on the same income.
I’m a remote worker. Which country taxes me?
Colombia taxes you once you’re a tax resident, generally after 183 days in any 365-day period. For U.S. purposes, the foreign earned income exclusion or the foreign tax credit usually prevents double tax on your pay.
Are cesantías taxable in the U.S.?
It’s unsettled whether they’re taxable when your employer deposits them or only when you withdraw them. We explain both and report them consistently.
Does Colombia’s wealth tax reduce my U.S. tax?
No. It’s a tax on net assets, not on income, so it doesn’t count toward the U.S. foreign tax credit.
How do you handle peso amounts?
We convert using the correct IRS exchange rates for each year and account. It’s routine for us.
American in Colombia? Let's get you caught up.
Answer 3 quick questions and our tax team will review your situation for free.
Get in touch →