JimGant

What is it about tax credits that you don't understand? The DTA between Thailand and US designates which country has primary taxation rights -- and thus gets to keep all taxes collected -- and which country has secondary taxation rights -- and has to absorb a credit for the taxes paid to the primary country. Have an IRA or private pension? DTA says Thailand has primary taxation rights. So, you have to file with them, and pay full-up taxes -- no credit from US. But, you also have to file with the US (per saving clause, meaning US always has at least secondary taxation rights). As such, when you file your US return, you use a tax credit for the Thai taxes paid to reduce one-for-one your US taxes for the taxes paid Thailand. Bottom line: Your tax bill under this new worldwide Thai taxation scheme will be the same as if you never paid taxes to Thailand. So, file in March with Thailand, and pay their taxes on your declared private pensions and IRAs. Then, file with US, and reduce your tax bill by the Thai tax credit. Like to file early with US? You can figure out on the back of an envelope what your Thai tax will be on the US pensions/IRAs, by January. US doesn't need any formal paperwork to justify the tax credit, so just go ahead with your US tax return, with the numbers from the back of the envelope. Not too complicated. No double taxation -- unless you think having to file with two countries defines "double taxation, " but ignoring the credit aspect.......?

Are you currently paying US taxes on this retirement income?

Two scenarios here. If Thailand, per DTA, has primary taxation rights on income, like private pensions -- they keep all the taxation, as if US taxation, and its credit, didn't exist. They don't lose any taxation collection due to a US tax credit, as no such credit needs to be absorbed. Only the US has to deal with absorbing a Thai taxation credit, due to having only secondary taxation rights. Second scenario, much rarer is: Rental income on property in US. US has primary taxation rights on this income, thus gets to keep all taxation, without any regard to a credit. DTA, however, gives Thailand secondary taxation rights on this rental income -- but Thailand has to absorb a credit for the taxes paid to the US. Thus, credit could completely wipe out any Thai taxation - if US taxation were higher than Thai taxation. But, if Thai taxation higher, they get to keep what's left after the credit.

Definitely.

Many because -- their assessable income doesn't reach the threshold for becoming taxable income.

Why file jointly, adding your income to the wife's 25% tax rate? File singly, and your numbers will be a lot better.

Why would they be called into TRD? Is TRD going to try and identify farangs living here over 180 days per year? And if identified, that their mediocre annual remittances indicate assessable income --- rather than, in most cases, nonassessable gov't pensions, or social security (and if Canadian, private pensions)? Come on. Even TRD can do cost/benefit analyses.

Why? As an upper middle class Yank, whose only capital gains are within my IRA's (and thus taxable as ordinary income) -- my total income tax paid between Thailand and the US won't change one iota. Yes, I'll now have to file a Thai tax return, and pay taxes on that income designated by the DTA. But my US tax return will have a one-for-one reduction in taxation via the tax credits from my Thai taxation. Thus, my total tax bill between the two countries will be the same as before Thailand goes to worldwide taxation. I mentioned capital gains, because that is the on spot where Yanks can be hurt, since Thailand's taxes on such will exceed by a lot US taxes on long term cap gains. So, yeah, maybe some Yanks, living off cap gains, will feel the pain. Just wonder how many of those types are here in Thailand.....

You think TRD has the resources to parse all remittances into Thailand to determine assessable income?

No slam, dunk here for everyone to adopt -- but here is how a US Roth distribution is dealt with, if recipient lives in the UK: The OECD is rewriting their model tax treaty, to encompass language, like the above. And, Thailand is trying hard to become recognized, by petitioning to join the OECD. Thus, I'd certainly take advantage of the prevailing winds, and certainly omit any mention to Thai tax authorities of my Roth distribution -- or similar. And since there's no mention of Roth in my Thai tax return -- or no tax return -- what's the chance TRD calls me in to chat about this? And if they did, I certainly could present an excellent case for why I didn't declare it. Anyway, for grey areas, give yourself the advantage, particularly if you have supporting info for your stance. Certainly, don't give the other side the advantage for a grey area....

The taxation of remittances goes away if worldwide taxation is implemented.

DTA gives Thailand primary taxation rights on your 401k. So, it's not exempt. US has to absorb a tax credit, meaning, you need to know what your Thai tax would be on this 401k before you file your US tax return, so you can deduct the credit (figure the Thai tax out on the back of an envelope, if you haven't already filed; US does not require any proof of this credit).

401k, IRAs, like private pensions, are taxable primarily by Thailand. The US has secondary taxation rights, due to the saving clause in all DTAs, that allow the US taxation rights regardless of what the treaty says. Thus, Thailand gets to tax your 401k/IRA/private pension as the primary taxation authority. As such, they get to keep all the taxes collected -- and the US has to absorb a tax credit for these Thai taxes paid. Result: US may not get to keep any taxes, if Thai taxes are greater than those of the US. Or, if Thai taxes are less than US -- Thailand still gets to keep all taxes collected; and the US collects whatever is left after absorbing the credit. You, the US taxpayer, still end up paying the same overall tax bill, when you add the two countries' tax bills. The below quote from the US-Thai Technical Explanation of the treaty:

Wrong. It's total ASSESSABLE income. If your DTA says your home country pension is not assessable by Thailand, it will, then, just be a missing number on your Thai tax return. If all or most of your worldwide income is not assessable by Thailand per DTA, then you don't even need to file a tax return.

Would that be money remitted from a BG's foreign account? Even here, there's a chance it's not income -- if not declared as such, how is TRD going to know, unless they interview everyone that receives money from abroad (which would be absurd, as not cost effective) If BG gets the money from someone else's foreign account, here it's certainly not prima facie income declarable by her -- unless it's a payment for a current service being rendered, like cutting sender's grass while sender is in the States. Anyway, the recipient of wired money from someone's foreign account, if for some reason called into TRD for a chat, could just say the money was a gift (which would put her in the 10k gift tax situation); or that she's just holding the money for the sender, until he returns to Thailand, 'cause he doesn't have a bank account; etc. Again, she's not in an income situation, unless performing current services. It's the remitter, if a tax resident of Thailand, who's on the hook for any taxes on remitted monies. But, yes -- a BG who received remittances that exceeded an amount the TRD has established as being subject to random compliance audits -- would just be another individual subject to such an audit. In which case, she could just prove she didn't send the money to herself, thus not subject to any tax (except maybe gift tax).

Plus, must be married for those five years to the spouse from whom you're deriving the spousal benefit.

Yep. Completely under the radar. Without the equivalent of 1099s or W-2s, like in the US -- TRD has no computer tracking of taxable income -- and they're certainly aware much remitted monies are non assessable per DTA, or by the decree for pre-2024 income. So, what's TRD going to do -- call in for a chat 300,000 farangs without TINs? And what if they did? I would imagine most could prove that their remittances are non assessable income -- or for sure, all assessable income is less than meets the taxable threshold. Thus, another reason TRD wouldn't waste resources on non-productive chats. No, forget getting a TIN, or for filing a tax return if no taxes are owed. There are no TRD bad days in your future.

Ridiculous. Only if you remit a significant amount -- like many millions during the year -- would you possibly make a list of potential folks subject to a random compliance audit. Otherwise, TRD doesn't have the resources, nor any reason, to track the average remitter.

Well, if a dual citizen, the US citizenship overrides, at least for SS, tho' not for govt pensions:

It's only too much baht -- if you know that the baht is heading on a permanent downward spiral -- which reason tells me, you cannot know. And the last decade or so have shown the baht just muddles between 30 and 35 baht per US dollar. So, I wouldn't have the foggiest to know whether or not to bring money over here into a Thai baht bank account, or a USD account, based on FX speculation. Thus, it would just be which type account is easier to put baht notes into my hand or to pay my Thai creditor per direct debit.

Well, sure -- that's how most of us do it. SWIFT dollars sent will be converted to baht , at your bank, using their TT rate. WISE uses a more favorable FX rate than TT, but has more fees. Anyway, your method vs those I mentioned, will probably have timing as the determining factor as to what's best. All on the same day -- haven't a clue, but your method certainly adds a new twist to sending money to Thailand.

Huh? The wife, a US-Thai, and me have all our US bank accounts and other bank assets as joint, with right of survivorship. My IRA and life insurance policies all have her as sole beneficiary. Our real estate, also jointly owned, has now all been sold -- but, if not, also wouldn't have been an inheritance problem. So, not sure what you're talking about.... Our biggest problem is trying to equally divide our US financial assets between nieces and nephews in the US, and in Thailand. The US ones are POD (pay on death), thus will receive our financial assets without the need of a Will. However, unable to do a POD for Thai relatives, as no SS or ITIN possible. So, now bringing some of those financial assets over to Thailand, where our Thai Wills will suffice to provide for them.

Yes, at any point in time. But, a week, month, year after you establish that dollar account, those dollars may be worth less than what's available in your US bank for conversion to baht. You can't pretend having a USD account somehow mitigates against an FX loss, unless you've somehow placed yourself in an emergency-need-baht situation. Again, as I said, having a contingency account in baht is certainly not inferior to having one in USD. Or, maybe I'm missing your point. Are you saying you send dollars to your USD account, then, using that as a conduit, make an immediate conversion to baht, thus appreciating the superior conversion rate doing this in-country conversion realizes?

You mean, it's a surplus fund, sitting there for a contingency, that would require baht? Why not, then, keep a surplus fund in baht, that can be assessed immediately, not almost immediately. There's no interest advantage. Makes no cents, er, sense. As far as FX speculation, yeah, maybe a couple of days journey across the ocean by dollars, to catch a low point in the baht, may miss the absolute low point by a day or two. But, that couple day's journey might also realize an even lower point -- as speculation can be tricky. Anyway, as you say, to each his own. Right now, my wife is briefed on how to go online and transfer my Thai account assets to her account, when I croak. Not sure she could do that with a USD account..... (please, let's not reopen the discussion about a bird in the hand vs probate).

He's just confused, and has it in reverse. Early in this goat rope, a phrase came out from the Thais saying something like," If your home country has a DTA with Thailand, and if you pay taxes to your home country on your income, then Thailand will not bother taxing this income." We haven't heard anything about this subsequently -- probably because somebody realized that if Thailand followed this rule, they'd be forfeiting a lot of taxes they have first dibs on, per DTA. Another fumble by this guy is where he says, "All pensions paid or issued by the US federal govt are exempt from Thai taxes." Not quite. Only if that pension is for services rendered to the federal govt. My wife gets a pension from the Pension Benefit Guarantee Corporation -- a federal organization established to take over bankrupt pension funds. But that was for services rendered to PanAm. Thus, this doesn't qualify under the DTA. But, hey, maybe I"ll advise the wife to hire this guy when I croak, and thus pay no taxes to the US on her IRA required minimum distribution -- and pay no taxes to Thailand on her PanAm pension.....