Retiring abroad? Your Social Security benefits will follow.

Q: What are the pros and cons of spending retirement years in the "old country"? Does the retiree get the same Social Security benefits, and how are the benefits given?
- D.A.Y., via e-mail

A: "If you're a US citizen, we can send your benefits to almost any country in the world," says an official at the Social Security Administration. In many cases the money can be directly deposited into a foreign account. If you're not a United States citizen, you still may be able to get your benefits in other countries; sometimes for as long as you live outside the US, other times for only six months. Social Security officials say that in some instances they're required to withhold taxes on payments sent overseas, and they note that some governments will tax your benefits.

In 2002, Social Security put out a booklet, Pub. 05-10137, that explains the details on who qualifies for payments sent to which country. Check it out online at www.socialsecurity.gov.

Beyond a monthly check, you'll also want to take care of health insurance matters. Generally speaking, the only time Medicare may cover you outside the US is in certain emergency situations while traveling in Canada and Mexico.

Q: My family has been sending me financial support since I was incarcerated almost six years ago. Does this support meet the guidelines and rules of the annual $11,000 tax-free gift that can be given from one person to another? If so, how would an individual go about showing that on their tax return? Also, how far back can they go to take advantage of this deduction? My family first started sending me this support in June 1998.
- J.M., Huntsville, Texas

A: As long as you stay under the $11,000 mark on the IRS radar screen, you need not report it on your tax return. Nor does the giver.

In fact, says the IRS, each of your parents can give you an $11,000 annual gift, for a total of $22,000. Beyond that, the money may be taxable to you (though the donor doesn't get any sort of break).

The maximum limit of $11,000 for 2002 and 2003 - it had been $10,000 - rises from now on depending on inflation.

For more information, see the instructions for IRS Form 709, "United States Gift (and Generation-Skipping Transfer) Tax Return." If you're a glutton for the inside information on this, there also is IRS Publication 950, "Introduction to Estate & Gift Taxes."

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