JimGant

2 hours ago, mudcat said:

My reading is that dual-nationals pay taxes on pensions received in the country of residence, you believe that sub-paragraph b stating that dual-nationals pay tax in state of residence does not apply to dual-nationals. 

Sub-para b in the actual treaty is short on explanation, as are most of the Articles in the treaty. That's why they wrote the "technical explanation," to better explain matters, like taxation of dual nationals, which they explain quite clearly -- and clearly refute your understanding of the situation. In case you're not familiar with this technical explanation, here's the link:

https://www.irs.gov/pub/irs-trty/thaitech.pdf

With many Yanks married to dual citizens, it's important that their wives clearly understand that the US has exclusive taxation rights on both survivor Social Security payments and survivor gov't pension payments going to these widows. One more briefing item on your death instructions.

43 minutes ago, mudcat said:

I based my comment that Thai/U.S. citizens beneficiaries of a government pension (such as mine from a local water utility) they, as a Thai national would have the pension taxed in Thailand rather than the U.S.

Only if they were not dual citizens. Yes, if my wife weren't a dual citizen, her survivor pension off my Air Force pension would be primarily taxed in Thailand. But her US citizenship retains primary taxation rights by the US of her survivor pension.

Quote

As a general matter, the result will be the same whether Article 20 or 21 applies, since social security benefits are taxable exclusively by the source country and so are government pensions. The result will differ only when the payment is made to a citizen and resident of the other Contracting State, who is not also a citizen of the paying State. In such a case, social security benefits continue to be taxable at source while government pensions become taxable only in the residence country.

"Should you be reading the convention differently I suggest that you do a close reading of the relevant sections I posted earlier in this thread."

Is that close enough?

3 hours ago, mudcat said:

This differs from my government pension which is taxed only in the U.S. for me but would have been taxable in Thailand for my wife.

Is she a dual US/Thai citizen? Then, taking a little liberty with the Thai/US technical explanation, which explains that a private pension paid to a US survivor is treated the same as if paid to the primary:

Quote

Paragraph 1 [Article 20] provides that private pensions and other similar remuneration paid in
consideration of past employment are generally taxable only in the residence State of the
recipient. It is understood that the rules of this paragraph apply even if the payee of the pension
is not the person who performed the past employment. For example, a pension paid to a
surviving spouse who is a resident of Thailand

Nothing similar in the govt pension section -- but believe this to be an obvious oversight. Thus, my survivor Air Force pension to my dual citizen wife should be treated the same as for me, i.e., taxable only by the US.

Anyway, that's the guidance I've given her. Unlikely that would ever be an item the RD would discuss with her.

On a related note -- the wife has two pension checks paid by the US Govt, namely, the Pension Benefit Guaranty Corporation (PBGC). These are for the 35 years she flew with PanAm and United, both of whom declared bankruptcy and dumped their pensions on the PBGC. It would be easy for her to wave these pensions checks as "US Govt paid pensions." Well, yeah -- but the fine print in the DTA says, "Pensions paid for service with the govt." So, guidance here is: These pensions are subject to Thai taxation.

6 hours ago, RupertIII said:

the accountant/auditor for our previous company who confirmed that if personal income is below the taxable threshold it is not a requirement to submit a tax return

Yeah, after subtracting out the 350k baht exemption, then the 150k freebie up front -- and there is no taxable income left -- why file a tax return? Sure, there's some nonsense about having over 120k baht in assessable income, you need to file a return. Forget it. No fine or foul, as no tax owed.

I will assume the accountant's "taxable threshold" meant assessable income minus allowances -- and not the arbitrary, and ridiculous, 120k marker.

4 hours ago, noobexpat said:

For the wealthy pensioner one ...the 80k usd (equivalent) passive income is not subject to any potential thai tax?? ...do you still file a thai tax return, do you know?

 No. You don't file a tax return that includes non assessable income. This might be income excluded via a DTA, like US govt pensions. Or income excluded by a Royal Decree, like that under a LTR visa. Thai tax returns have no lines on which to put income not subject to taxation. And, as Mike said: "And currently there is no facility to declare exempt income." And, if you figure the cost/reward for ever requesting such information -- doubtful it will ever occur. 

1 hour ago, Ben Zioner said:

Don't forget all income remitted must be declared,

Nope. Only assessable income remitted may have to be declared -- and only then if you're required to file a tax return. And, yes, my US Social Security is exempt from Thai taxation, per DTA. And, of course, there would be no tax credit for Social Security, since the Thais aren't taxing it.

Just a reminder, in the unlikely event you're not aware -- Tricare, and other similar gov't health policies, *are* acceptable for an LTR visa. I had to get one of those throwaway polices from LMG for my OA visa, as Tricare wasn't, of course, one of the 12 acceptable Thai health policies. Thus, one more nice feature of an LTR visa.

4 minutes ago, MartinBangkok said:

For me 27%

 How much to home country for income generated there?

4 hours ago, Mike Lister said:

Bill is an idiot, he went to the bank and borrowed money when he already had it in the bank., Bill doesn't deserve a condo and should be taxed under any circumstances.

Actually, many of us take out loans to preserve our liquid cash position. Bill was especially astute, since this was a case of bringing a loan into Thailand -- or bringing assessable (taxable) income into Thailand. In the former, there's no tax liability up front -- and realistically, no tax liability years down the road when the loan is paid back, by either assessable (but not remitted) or by non assessable income. Thus, a loan bypasses a taxable event. So, once again I say -- FDI, or "foreign investment", if you desire -- is free from Thai taxes. And this is how they want it, as FDI is a powerful economic stimulus.

And the poor cousin of FDI, i.e., credit card purchases, is also not going to be taxed. At least not under any realistic scenario.

That the Brits -- and apparently they're the only ones -- have a taxation situation with remittances and credit card purchases -- is a curious situation. That certainly doesn't mean Thailand is emulating this scenario, as they've the whole rest of the OECD community to emulate.

But, if you're worried your visa will be cancelled, if you don't report your credit card purchases as assessable income -- well, go for it.

1 hour ago, Phulublub said:

Alan earns $50,000 in the US and sends the money to Thailand to buy a condo.  Assessable?

 

Bill earms $50,000 which he puts in his US bank account.  He borrows $50,000 from another bank and sends that money to Thailand to buy a condo.  Later, he clears the debt from his primary account using the money he earnt.  Assessable?

 

I was admonished not to debate on this thread; but going back to page one, here's what the OP says:

Quote

 If after reading it, anyone remains unclear about the points that have been explained in this document, they are welcome to raise questions to see if anyone can provide clarity.

So, here goes. It would be impractical/ludicrous for RD to consider money remitted to Thailand as income, if it was obtained as a loan. How it was paid off in the future couldn't be known for current taxation purposes; so it wouldn't be known if that payment met assessable income criteria, or not; plus, this money would never be remitted, so, again, super not assessable. AND to say, this payback money of the loan is actually a marker for the loan remittance to Thailand -- is a bit too much. Nope. Credit card payments are nowhere in the first world considered taxable income. And logic dictates they wouldn't either be in Thailand.

But, hey, if you're really a super straight shooter -- declare your credit card payments on your Thai tax return (you'll need to invent a line item). But, to be pure, make sure you subtract from those credit card payments any payments to your credit card bank that were non assessable type income, either from pre 2024 accounts, or from govt pensions, etc. Thai RD will really be impressed. And you'll be ready for the funny farm.

Oh, yeah -- per the starting quote. Alan's remittance to Thailand is, first and foremost, not attached to its purpose to buy a condo, in RD's eyes. Thus, it's treated as assessable income, if it fits the DTA criteria, and is post Dec 2023 income. Purpose of remitted income is irrelevant.

Bill's loan, remitted to Thailand, is, by definition, a loan and not income. That it buys a condo is incidental. And that, in later years, it is paid back by assessable income, a gift from Granny, or never paid back due to bankruptcy -- is a bridge-too-far for Thai RD to possibly consider.

Anyway, logic would dictate that credit card charges will not be considered as assessable income. But, hey, if you're worried you'll be suspected of income tax evasion, by all means declare your credit card payments on your Thai tax return. NOT!

5 minutes ago, Mike Lister said:

If I live year round in Thailand and charge all my expenses to my UK credit card which gets paid off from an untaxed income stream that is paid into my UK bank, is that borrowed money!

Sure it's borrowed money. Paid off with a separate stream of money never remitted to Thailand. I like the condo example better, because it would seem ludicrous to treat borrowed money to buy a condo as assessable income, because eventually it will be paid back with monies that, should they be remitted to Thailand, which they won't, would then be treated as assessable income.

I believe we're on what's called a 'circle jerk.'

28 minutes ago, Mike Lister said:

You may call that condo purchase FDI, the Central Bank wouldn't

Ok, call it "foreign investment." Same argument. Borrowed money, of any flavor, ain't gonna be taxed by Thailand. Just ask the condo developers association.

13 hours ago, Mike Lister said:

 It is irrelevant that the spending is done on credit, the taxable event occurs in Thailand when the buyer receives the goods or services they purchased and the seller is remunerated.

This is akin to Foreign Direct Investment, critical to the health of the Thai economy. Say I borrow $300k from my US bank, and send the money to Thailand to buy a condo. This is FDI, and the Thais certainly aren't going to shoot themselves in the foot by treating it as taxable income. On a smaller scale, I borrow money from my US bank -- via my credit card -- to buy a new cell phone. FDI, on a smaller scale. Same as if I took a cash advance off of my credit card. So, no, I don't think the Thais will treat borrowed money as assessable income.

Debit cards, of course, are a different animal. No borrowing here -- just a direct dip into your financial account. But if this account was established and largely funded pre 2024 -- or funded with DTA exempt monies -- no assessable income here.

On 3/19/2024 at 5:21 PM, Black arab said:

. If you have govt pension, under the Thai DTA with the UK it says they would not be assessible for tax in Thailand but how do you apply this information to the online form so you would not be taxed. 

Thai tax form is only for assessable income. Your UK govt pension is not assessable, per DTA, thus need not be included on a Thai tax form. If this is your only income, no Thai tax form need be filed, i.e., there is no place, nor need, on a Thai form to show income that is not assessable. They don't care to see any income they can't milk taxes from.

2 hours ago, biervoormij said:

Do you have any idea on what will be required when dealing with the Thai RD. Will I need to provide my US tax returns and balances of my US accounts as of the end of 2023? I have only transferred money from my saving into Thailand but have no idea what they will accept as proof of that. 

Relax. Thailand won't know, or have the resources to uncover, the exact nature of your cash flow into Thailand -- not that you're pulling a fast one. Presumably your IRA is all pre 2024 contributions and reinvested income, thus no assessable income subject to Thai taxation. In the less than 1% chance that you'll get audited, your IRA paperwork will sufffice. And, even if your IRA were taxable by Thailand, you'd get a one for one tax credit against your US tax return's taxes on your IRA. Thus, no added tax hit for Yanks. But, as regards IRA remittances to Thailand, which you can show as pre 2024, no Thai tax return need be filed. Relax.

Quote

I have only transferred money from my saving into Thailand but have no idea what they will accept as proof of that. 

Again, they don't have the resources nor any real need to dig that deep. And if they did, certainly you've got a Wise or other data trail showing this transfer activity. And if that savings account was fully funded pre 2024, you can, on your own accord, opt for FIFO as to how those fungible assets are transferred out, meaning post Dec 2023 deposits and reinvested interest would be last to go, thus probably not even on the radar screen as remitted transfers.

53 minutes ago, biervoormij said:

The US treats IRA and 401K distributions as normal earned income at the time of distribution so I thought this would be taxable in Thailand. Is it in the Thai tax law or the Thailand-US treaty where I am missing the IRA/401K exemption?

No, the distributions are treated by the US as TAXABLE income at time of distribution; but it was earned years ago, and banked in an IRA account as tax deferred income. So, per Thai guidance: "Offshore-sourced income received before 1 January 2024 can be brought into Thailand in 2024 or later without being subject to Thai personal income tax." The tricky word here might be "received." But I would certainly argue that "received" is equivalent to "earned" -- and not that it wasn't really earned until taxes are paid.

This could prove an interesting semantics discussion with a Thai RD person. But that it would ever get to that point, is highly doubtful. Your self assessment on this point, about when the IRA proceeds were earned, should have no head scratching. Yes, if they hadn't interjected the "pre 2024 income" guidance, then your IRA distro to Thailand *would* then be assessable income, per DTA, as it would have been income distributed post Jan 2024 -- and the exclusive taxation right of Thailand, per DTA (with the US saving clause trumping the Thai "exclusivity" clause, so you'll be paying at least someone).

Anyway, take your IRA RMD, pay Uncle Sam taxes as if it were ordinary income, and don't worry about Thailand.

26 minutes ago, Mike Lister said:

There's one big difference, lots of income in the UK is taxed at "source", unless requested and approved otherwise, savings interest, dividends, rental income etc. Also, UK CG must be filed within 60 days of the gain arising, not at year end with the tax return.

Good point. Unlike the US-Thai treaty, the UK-Thai treaty is short on declaring what income is exclusive to Thailand (e.g., private pensions). Thus, a lot more wiggle room to declare home country taxation rules the day.

19 hours ago, Mike Lister said:

If you ask me about it, I will suggest that where the tax arises is key and fundamental. Income that is taxed at source in the country where the asset or source exists is primary, what comes afterwards is squabbling over differences. You sell an asset in the US and you pay tax at source, the IRS has possession. When you import those funds to Thailand and declare them on your Thai tax return, the Thai RD notes (potentially) that it is owed tax money on that transaction that has already been paid to the IRS. The TRD doesn't ask the taxpayer for the credit, it raises a request to the IRS and either gets paid or doesn't.

First and foremost, as least regarding US taxes, the only "at source" taxation I know of is for payments to non resident aliens. This is a final tax, with a fixed rate, which would make no sense for a US taxpayer, subject to a graduated tax scale. Thus, forget the "at source" stuff -- the US taxpayer figures out his taxable income via 1099 reports or from a spreadsheet, where sales proceeds minus basis, arrives at a taxable gain. At any rate, he files a tax return with this information.

Let's use my IRA annual payment (called a Required Minimum Distribution - RMD) as one example source of income. Per the DTA, if I remit this income to Thailand, Thailand has exclusive taxation rights on this income, and the US secondary rights, per the saving clause in the DTA. This will only show up on a Thai tax return -- if I so declare, as they won't know what part of my cash flow into Thailand from my bank account is assessable income. And Thai RD has no way of knowing whether or not I paid US taxes on this income, nor, probably what the DTA says about this income, i.e., whether or not it gets a US tax credit against it -- or whether the US gets a Thai tax credit against it. Again, it is my self-assessment in reporting this. And, per the DTA, with Thailand having exclusive taxation rights, I declare the whole amount as assessable income, i.e., not offset by a US tax credit. This is probably all, or most, transparent to Thai RD, who maybe has no interest in or knowledge of any related DTA. Or, maybe I just take Sherring's advice, and don't even declare this on a Thai tax return, since according to Sherring, as it's taxed by the home country, double taxation is avoided by just not paying Thai taxes on it (a spreadsheet would show US tax credits completely wipe out any Thai taxation).

But, if I follow the DTA treaty rules, I pay Thailand full fare taxes on this RMD, and take the Thai taxes as a credit against my US taxes. Again, this is all done with information I collect. Thailand doesn't send any information to the IRS. And they're completely oblivious to the fact that their taxes are being used as a tax credit on a US tax return. Why would they care -- it doesn't affect the taxes they collect.. Oh, I could even figure out what my Thai taxes would be on this RMD, long before I even file a Thai tax return, via a little spreadsheet work. Nothing official need be provided the US on this Thai tax credit. I just plug the numbers into Form 1116 -- and realize a one for one offset in my US tax bill, i.e., no extra taxes paid anyone in this scenario. But, the DTA rules are at least followed in this scenario.

Anyway, Sherring doesn't agree. But here's a better take on tax credits:

https://www.cpasforexpats.com/post/us-thailand-tax-treaty

Quote

The Thailand US tax treaty provides mechanisms for relief from double taxation, ensuring that income earned in one country by residents or citizens of the other is not taxed twice. To avoid double taxation, the treaty allows U.S. citizens to claim a foreign tax credit for the income tax they pay on Thailand sourced income to Thailand against their U.S. tax liability. Conversely, Thailand offers a credit for U.S. taxes paid on U.S. sourced income against it's own tax liabilities.

9 hours ago, G_Money said:

Absolutely no way I would pay 2 countries income tax.

 

You're absolutely correct. The tax treaty prohibits double taxation. Do a little research, and relax.

4 minutes ago, Mike Lister said:

Now you're asking me if I am in contact with Sherrings, the answer is no, I'm using the same published inputs as everyone else:

Ok, per my entry, and in your opinion -- is Sherrings, as presumably a rep of RD, correct that tax credits will only be one-way, i.e., from home country to Thailand? If you agree with that, does that make any sense in light of what a DTA grants Thailand in taxation exclusivity? Just curious.

On 2/10/2024 at 8:15 PM, Mike Lister said:

On 2/10/2024 at 7:58 PM, JimGant said:

Uh, this doesn't track with most DTAs. Take the US-Thai DTA. Private pensions are exclusively taxable by Thailand, the country of residence. That the US also taxes these pensions, as secondary taxation authority, means that, in the interest of avoiding double taxation, the US has to absorb a Thai taxation credit. As such, the US may realize no taxes, should the Thai credits exceed the US tax bill. And Thailand, as exclusive taxation authority, gets to keep the whole tax collection, without any offset from US tax credits.

 

Thus, to say that all Thai taxation will be offset by taxes paid to the home country on this income -- in all situations -- is pure baloney. Thailand, if they have any gumption, will apply the DTA to their benefit, and apply full taxation to those monies indicated by the DTA -- and provide a tax credit for this full taxation to the home country.

 

How this will work out in practice, I don't know. Amended tax returns, maybe, to slip that Thai tax credit into home country taxation? I just know Thailand probably will not give up taxes by absorbing tax credits that the DTA says should go the other way. 

 

Whatever. For most of us, this just means our total tax bill will be the same, only, if Thailand is smart, they'll monitor what's due them via the DTAs. And tax appropriately.

Expand  

It may seem like baloney from a DTA perspective but that is what the RD confirmed in the Sherrings Q&A, Q15 below

 

 

https://sherrings.com/foreign-source-income-personal-tax-thailand.html

You know for a fact this is what RD confirmed to Sherrings? You're in contact with them?

If true, this says Thailand will forego a lot of tax collection from income the DTAs say is theirs exclusively. Why? Because Sherrings is saying tax credits will only go one way -- from home country taxation to Thailand taxation; meaning, the home country gets to keep all taxation, since they have no credits to absorb. But Thailand gets to keep only taxes left after netting out the home country credits.

Only where home country taxes are slight, or even nil -- will Thailand get some tax collections in their coffers ('cause there would be no, or slight, home country credits -- per the Sherring report -- against Thai taxation). For countries like the US, where taxation on income remitted to Thailand will probably exceed what the Thai taxation would be on same -- Thailand collects zip -- even tho' the DTA says they have exclusive taxation rights.

So, for Thailand to get what the DTA says they deserve, the credit granting needs to be reversed: Thailand gets first taxation rights on the income stipulated by the DTA; as such, they get to keep every satang of that tax collection; and the home country has to absorb a tax credit for the taxes paid to Thailand. For most taxpayers, this will just mean less taxes paid to home country, more to Thailand -- but totaling up the same. No net difference financially -- just more paperwork involved, what with having to file a Thai tax return.

But, per Sherring (who hopefully is in the know with Thai RD), Thailand is not interested in collecting taxes they're due via a DTA. Instead, just allow the home country to keep all taxes, and issue a credit against any Thai taxes. There, Double Taxation Question solved.

Ridiculous. [But easy to fix, so we probably haven't heard the end of this Again, same total tax bill, but now with country A getting more, and country B getting less -- per the DTA.]

On 3/10/2024 at 10:17 AM, JoseThailand said:

That's why I have a dedicated debit card for online shopping and keep only small amounts there

You'd be better off with a credit card, which, I guess, is harder for some to get than a debit card.... Some credit card issuers, like Capital One, have virtual credit cards that use throwaway credit card info (tied to your actual account, of course) for online purchases. Nice safety feature. Plus, of course, fraud won't clean out, nor even touch, your bank account. Getting a credit for a fraudulent purchase is faster and more efficient than trying to reload your bank account. Then, most credit cards have cash back credits -- and the credit card companies have better guarantee policies, as far as I know.

Anyway, I'm preaching to the choir. If you have the option of a credit card over a debit card -- you're already there.

Since they're not made by Boeing, the doors and panels shouldn't fall off.

Excellent replacement for the light attack OV-10s that Wing 41 retired many years ago.