Have a Tax Question? Ask a Tax Expert
Hello and thank you for using Just Answer,I would be happy to help you if I can and if I can not I will find another expert that can. Please post your question.
My question is in regards XXXXX XXXXX job proposal that will be located in Thailand.
Ok, and are you a US citizen or resident alien?
I want to ensure I understand international taxation and be able to negotiate appropriate compensation levels should I take up this post.
I am a resident alien, holding a Singapore passport.
When you say resident alien are you a Green Card Holder or just by physical presence in US a resident?
The position reports into the Asia-Pacific office located in Shanghai, however, corporate office is in US
I am green card holder
Thanks I will wait now till you post your full info
The position reports into the Asia-Pacific office located in Shanghai, however, corporate office is in US........so do you want to know where you will be taxed ?
Well I suppose I can just tell you some things about Thai Tax and how you will remain US taxable person as well.
Thailand taxes on a resident and nonresident basis too, alot like the US.
The position reports into the Asia-Pacific office located in Shanghai but I will be base in Bangkok. Corporate office is in US but I want to understand how tax works in this situation. And what is best situation, and if my Singapore passport status can come into play.
I will let you "speak" and will asked questions when are done.
When you have been there 180 days you will be resident for tax on all and up to the 180 days in a year you will be taxed on just the Thai income. You will remain a taxable person for the US but you can use the Foreign Tax Credit of if you remain there for 330 days in a 12 month period you will be able to exclude (for 2013 $95,100) earned income from US taxation.
I am going to need to look into a tax treaty between Singapore an Thai but if your VISA to work in Thailand is through the US you will not be allowed any treaty (if there is one).
One sec please
The income earned for services performed by foreign individuals in Thailand is generally subject to the Personal Income Tax. However, if the foreigner comes from a country having a tax treaty, such income might be exempt if the individual meets criteria specified in the treaty. The criteria relate to the amount of time the individual is located in Thailand during the tax year, the nature of the services and for whom the services are performed.The Singapore?Thailand treaty does not prevent you from taxation because you are a resident of US and if your VISA to go to Thailand is from the US you could not exclude your Thailand income from taxation. Now let me check on the US treaty with Thailand, even though we already discussed that you can exclude (if time met) or use the tax credit if you do need to pay Thailand income tax there may be a provision for more benefit........
Thanks for waiting, yes, you will pay tax in Thailand on your earnings in Thailand, you will continue to report you worldwide income to the US and to make sure you are not double taxed you are allowed to use the Foreign Tax Credit or the Foreign Earned Income Exclusion for your US tax reporting.
I will catch my breath and you can ask what you feel you need to.
Did I cover all you wondered about?
1) If the scenario is that I am hired out of Asia office in Shanghai based on my Singapore passport, how does that affect my US tax status? Corporate might not have jurasdiction on AP office hiring me and I probably will not go through the corp office here.
2) I am base in Thailand but expected to travel frequently in Asia so I want to understand if I request my base to be in Singapore, will that be more beneficial for both company and me in tax terms
Well you would be allowed to use the treaty between Singapore and Thai which would assist you but your company would not really benfit from it.
3) I am not allowed to be out of US for more than 6 months to hold my green card status, hence, I will be returning to US periodically
Then the Foreign Tax Credit (allowed for Resident Aliens) will make sure you are not double taxed.
Your green card will always make you US taxable as long as you hold it
no matter where you say your base is.
For point 2) if I base me in Thailand and Shanghai office pays my salary, my taxation is not on Shanghai/US or Shanghai/Thai or Shanghai/SG tax correct
if I base me in Thailand and Shanghai office pays my salary, my taxation is US and Thailand
Your tax ia where you physically are and were and for US if you are a resident or citizen
overlook the "and were" above just Your tax is where you physically are and for US if you are a resident or citizen
What about split remittance of salary, i.e. if I want only to be paid 1/3 of salary into Thai bank and the rest to US bank or Singapore bank, how does that tax work?
US does not look at that and neither does Thailand it is where you earn it. Thailand will see you as earning it in their country and the US wants all citizens and resident aliens to report their worldwide income.
They both use "Sourcing Rules" the main source is where you physically earned the money
What is personal income taxes in Thailand?
You mean rate?
sorry, yes, personal income tax rate.
One sec, I will need to look that up
Taxable income (Baht) Tax rate 0 – 150,000 0%150,001 – 500,000 10%500,001 – 1,000,000 20%1,000,001 – 4,000,000 30%From 4,000,001 37%
Just as high as the US!
In percentage yeah, that was my same reaction.
But that works good for the tax credit
So, you mentioned "able to exclude (for 2013 $95,100) earned income from US taxation", does this apply even if I do not obtain Thai work visa from US but from Singapore embassy because of my passport status?
A resident alien is allowed to use Form 2555 to exclude the yearly amount from US tax just like a citizen
Sorry, trying to wrap my head around this
I know (me too!) just kidding
haha...so, who can I approach to help do a backward calc on appropriate remuneration package?
You want to know more about the exclusion?
Are they offewring to gross up and cover local tax?
I don't even know what "exclusions" are in this context, please share.
Sorry, I meant, what do you mean by "exclusion"...
If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to an amount of your foreign earnings that is now adjusted for inflation ($91,400 for 2009, $91,500 for 2010, $92,900 for 2011, $95,100 for 2012). In addition, you can exclude or deduct certain foreign housing amounts.
A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months can exclude the yearly limit.
Generally, to meet the physical presence test, you must be physically present in a foreign country or countries for at least 330 full days during the 12-month period. You can count days you spent abroad for any reason. You do not have to be in a foreign country only for employment purposes. You can be on vacation time.
Your 12-month period can begin with any day of the month. It ends the day before the same calendar day, 12 months later
So if you were there on April 1, 2013, April 2, 2014 would be your 12 month period
The 330 days need t be in that 12 months
Does the US taxation prorate if I start Mid-year and when I do tax return for 2013, Am I able to claim foreign tax credit?
Yes, you learn fast
As long as you expect to meet the time when you file. If not you file an extension til Oct and the you meet the time.
So Robin, could you please elaborate on "exclusion" as you mentioned earlier. And, how does grossing up and covering local taxes benefit?
Say you earn $95,000, the uS wants you to report it, you do, but you use the Form 2555 to show that you were in another country for the required time then you exclude the $95,000 form US taxation.
The thing is the US is really big on knowledge, they want to know but they do allow benefits to not be taxed in more than one place on the same dollar.
Now about grossing up
...sorry, what about grossing up?
Many companies use what they call tax equalization agreements.
The principle being that with a "tax equalization policy" is that the employee will not need to suffer neither a financial hardship nor experiencing a financial windfall, all being the result of the tax consequences of an international assignment.
The employee should pay no more or no less tax than he would have paid had he never left his former home.
Yes, I've heard of that "tax equalization" term
Every expatriate agreement should provide for the employer to pay for tax advice and tax equalization and should make an employee financially “whole” in going abroad. Tax equalization ensures that an employee does not suffer an additional tax liability due to working abroad, and tax assistance ensures compliance with the U.S. expatriate tax laws as well as the tax laws of the host country. In many instances, employees are paid via their home country payroll to their home country accounts.
but didn't know how it works...
The problem with that would be if you get a refund yu have to turn it over to the company
They never want you to be better or worse off than if you did not work abroad
But they normally take care of you filing requirements
so that is a plus.
So, would Shanghai office be my Home Company, Thailand office my Host Company, and US office is just corporate office in this instance?
Yes but it is doubtful you would have any taxation to Shanghai only Thailand and US.
I suggest you see if your company offers the equalization, then make sure you ask about the details (such as returns of refunds) and responsibilities.
The company would compare your “hypothetical” home-country tax (US) to the actual home- and host-country taxes incurred. The amount of hypothetical income and social tax that is contributed by you is based on what you would have paid in the US applying all appropriate US tax laws. Current-year income tax laws, personal exemptions and allowances, and tax rates in effect for your US return are used in computing this liability.
If the sum of the estimated hypothetical tax withheld throughout the year and any actual taxes paid by you are greater than the final hypothetical tax liability, the excess is refunded to you through the equalization process. However, if the sum of the estimated hypothetical tax withholding and any actual taxes paid by you is less than the hypothetical liability, or you receive a refund on the aggregate of actual income tax payments made on your behalf by the company, you are required to reimburse the difference to the company through the tax equalization process.
Is there a tool out on the internet I can use to calc all these income rate and tax to investigate hypothetical situations?
Good question, I don't know
I can do a quick search
Not really, that I found, you would just need to look at what you normally pay in the US then apply the rate from Thailand
Sorry, and I was doing so good til then
:) you've been helpful. Is there anything I am missing that I should consider?
Not at this point that I can think of.
You can always come back if you think of something
I would be happy to assist again
If I do come back, how do I ensure I have your perspective again?
Just ask for me, start your question with "For Robin" if you are not asked if you want me
Your positive rating is always thanks enough.If you could also participate in the very short survey that Just Answer will send you by e-mail I would appreciate that very much.I really enjoyed working with you – please feel free to request me again when you come back to ask another question.
Will do. Thank you for the directions thus far. Have a good day!
You are most welcome
You have to actively click on a rating to release me.
Yes, understood. Just want to take proper notes to ensure I did not miss anything.
It will not be erased