JimGant

3 hours ago, beammeup said:

Your stance is not popular because they are your opinions

...but extremely well thought out opinions -- which is the best we can go with, until further clarification from the govt.

2 hours ago, TallGuyJohninBKK said:

So when Thailand says they want to tax all income worldwide for Thailand residents, do they mean all undistributed earnings or only distributions from IRA accounts?

Only the distributions from your conventional IRA -- like your annual RMD. This is clearly labelled in the DTA, particularly in the Technical Explanation. They'll just be concerned with mirroring what's in your US 1040, as to what income they're interested in. And, yes, you'll get a one for one tax credit against your US taxes for the Thai taxes paid on this IRA distribution. Undistributed earnings are of no interest to Thailand, or the US, for taxation purposes.

Roth IRAs are an interesting scenario. The Thai US treaty doesn't mention them, because the treaty was signed before Roth came about. But look at the following from the latest OECD Model tax treaty (2017):

Quote

Notwithstanding subparagraph (a) of this paragraph, the amount of any such
pension or remuneration arising in a Contracting State that, when received, would be
exempt from taxation in that Contracting State if the beneficial owner were a resident
thereof shall be exempt from taxation in the Contracting State of which the beneficial
owner is a resident

 And this, from the US-UK DTA:

Quote

 The Technical Explanation states, “Thus, for example, a distribution from a U.S. ‘Roth IRA’ to a UK resident would be exempt from tax in the United Kingdom to the same extent the distribution would be exempt from tax in the United States if it were distributed to a U.S. resident.”

So, this is the current OECD feeling on Roth IRAs -- and should the Thai-US treaty be reaccomplished, this would certainly be in there. Sadly, we're stuck with the current treaty's ancient language.

What to do? This is what, in the CPA world, is called a grey area. But -- to not declare any Roth distribution as assessable income to Thailand -- seems ethical under the new criteria, and in accordance with more modern standards than when the existing treaty was written. Now, I've been warned to not give tax advice on this forum -- so, just say what I just mentioned was an observation.

That TRD would even be aware of the term "Roth" (which they wouldn't be if you didn't have to declare non assessable income somewhere). Even if they explored your 1040 tax return, Roth would not show up. So, forget anything about any Roth distributions, should you have taken any (no RMD here), as somehow being reportable assessable for Thai tax purposes.

2 hours ago, Mike Teavee said:

shared his findings from Sherrings who clarify the use of the word "May" as to mean they would be the only ones who would apply Tax..

Nope. "May" by itself means there's a primary and a secondary tax authority. "May only" means there's only an exclusive taxation authority. In US treaties, because of the savings clause, where there's an exclusive ("may only") taxation clause, like for private pensions, this evaporates into a "may" situation. Thus, IRAs and private pensions, in this situation, have Thailand as primary taxation authority, but with the US having secondary taxation rights.

18 hours ago, Mike Teavee said:

IIRC (It's been a few months since I looked at this), Thailand has primary taxing rights on UK Rental Income

Negative:

Quote

 Income from immovable property may be taxed in the Contracting State in which
such property is situated. [from uk thai treaty]

This language is similar to other DTAs -- the situs country has primary taxation rights, but the resident country has secondary taxation rights. ['may be taxed' is treaty language for there being a primary taxation authority, but also a secondary one. If it said 'may only be taxed, ' then there's only an exclusionary taxation authority, no secondary.]

So, submit tax returns to both countries -- with UK collecting all the taxes, and issuing a credit toward Thai taxes. If Thai taxes, after absorbing the UK tax credit, are positive -- well, you'll owe this delta, plus full fare to the UK.

18 hours ago, TallGuyJohninBKK said:

That said, if they really go thru with the current plan, it might well hasten us to both relocate back to my home country.  Too many unknowns right now, as usual....

John, what's the worst that could happen? You already pay taxes on your worldwide income. If Thailand will now exercise their right under the DTA to collect their share -- with a subsequent tax credit to be absorbed by the US -- your overall tax bill will be the same.

 I really don't think they wrote a tax treaty, that gave Thailand primary taxation rights on US income, but allowed avoidance of double taxation -- by allowing a credit of this taxation against US taxes -- but forgot to add a clause about "treating US income as foreign income" (re-sourcing) -- that resulted in negating the treaty's protection against double taxation.

Anyway, I'll take the tax credit. And if ever asked about it (1% chance, based on auditing data rates) -- I'm obviously equipped with enough narrative to put any auditor into: "Enough, OK."

Nice, intellectual discussion. That's about it.

3 hours ago, ThaiPauly said:

Are all these funds now vulnerable to taxation?

3 hours ago, ThaiPauly said:

 

Let's set the scenario. New worldwide taxation scheme replaces taxation of remitted income. It probably won't come into effect until, at the earliest, 2025. Come 2025, all your worldwide income in that tax year is subject to Thai taxation, as modified by DTAs. Thus, worry only about your tax year 2025 worldwide income. Monies already in Thailand pre 2025 are automatically savings -- only tax aspect here would be interest earned on these savings. Monies in your home country savings accounts pre 2025 are savings, thus no income tax angle (again, except for earnings within the account). What's new here is: foreign income earned in 2024, that was assessable and might be remitted to Thailand in 2025 or later -- would now be exempt from Thai taxation; whereby under the remitted law, it would be assessable income, subject to taxation, in any year remitted. 

So, if you currently have 2024 foreign income that you really need in Thailand, but know that if you remit it this year, or in any later year -- under the current rules, it will be subject to taxation. Now, if this new worldwide rule comes into effect in 2025 -- well, wait until 2025, or later, to send to Thailand. No taxation in this scenario.

Maybe the new rules ain't so bad, for those waiting with baited breath to send money across the border -- but can't afford the remittance based taxes. Serendipity, maybe?

1 hour ago, Sheryl said:

The biggest pitfall I can forsee is if the tax forms continue to have no way to show non-assessable income and you live mainly on same. 

First off, if I'm filing a tax return, I would have assessable income that exceeds the Thai standard deduction (TEDA) -- thus having taxable income. Otherwise, I wouldn't file. But you're saying you'd like Thai tax forms to have line items where I can put my non assessable income? What for? So the RD guy can argue with me on the fine points of my DTA, as to why it's not assessable? No way. I'd win the argument, at that level. No profit with this approach, just a waste of resources.

Now, for folks not filing tax returns, and who can be shown to have large cash flows into their Thai bank -- yeah, call them in for a chat on assessable vs non assessable income.

But line items for non assessable income, for the folks who actually file.....? Naaaa.

4 hours ago, lordgrinz said:

What do they want to see as acceptable proof of funds being savings only?

Under this new "forget the remittance BS," it will only be the current tax year (normally coinciding with the calendar year) whose intake of funds will be subject to income scrutiny. In the US, the IRS knows what most of this income is -- due to 1099's -- but other income, like self-employment income, relies on self-assessment, to a large extent. Same for tip and gambling winnings, as an example. For Thailand, maybe FATCA and CRS reporting will provide income figures. But, I wouldn't, at this stage, put too much faith on the completeness of this reporting. Thus, self-assessment will play a bigger role in Thailand for getting anything approaching a representative picture of income potentially subject to taxation.

So under this new worldwide system -- any monies you possess that existed prior to the current tax year -- are savings. Don't need a special law, when remittances aren't involved, to designate a previous year as a 'savings' portfolio.

21 minutes ago, spidermike007 said:

Many have significant overseas income that is not brought into Thailand. For these creeps to even consider attempting to tax that would be insanity and a bizarre over reach of power. 

But -- if you're a Yank -- you're already paying US taxes on that "significant overseas income." Thailand, going to worldwide taxation, is just going to now get a piece of the pie, per DTA -- and issue a credit to be absorbed by the US for those taxes Thailand is now collecting. For the Yank: In most cases, no change in total yearly taxes paid between both countries. For someone not paying taxes to home country -- well, welcome to the world of "you're going to pay someone," per OECD's guidance.

3 hours ago, MeePeeMai said:

Exactly which and what amount of relevant documents am I going to have to show to the Thai R.D. and just how are they possibly going to figure out this mess in a fair and equitable manner with regards to the tax amount due under the USA/Thai double taxation treaty?

Of course, your govt pensions and social security are strictly US business -- and need not be reported to TRD, as they're exclusively taxable by the US. IRAs, private pensions, annuities-- to name three -- are primarily taxable by Thailand. So, you just self-declare this income on your Thai tax return -- no official paperwork needed. And since Thailand is primary taxation authority, there's no credit due from the US: Thailand, as primary taxation authority, gets to keep all the taxes -- and issues a credit to the US to absorb. So there's NO US tax credit against Thai taxes.

On the US side, you don't need any official paperwork from TRD to take a credit against your US taxes -- you just do it, based on the numbers you derived from you Thai tax return. Since you don't have to file your US return until June, plenty of time to file a Thai tax return, and get the amount to credit. 

One other example -- rental income from a US property -- is a mix, with the US as primary taxation authority (but not exclusive taxation authority), and Thailand as secondary. In this scenario, if it's possible that Thailand would collect more taxes on this rental income than the US, then obviously they would want you to file a tax return. Probably, however, unlikely, if you're a middle class US taxpayer. In this situation, I'd just not file a Thai tax return (since the US credit would kill all Thai tax collection). No tax evasion, of course. And easily explained if ever audited.

Anyway, the credit game seems to be on way -- with Thailand issuing the credits. And not much paperwork involved, that I can see.

2 hours ago, spidermike007 said:

If this is indeed true, it seems like a major over reach, and rather draconian. I cannot see it being enforced. And if these govt. goons ever figured out a way to enforce it, the expat population would likely drop to 10,000. 

 

Over taxation is a device used by lazy minds who do not seem capable of running an economy. 

 

Are you talking about going from remittance taxation of worldwide income -- to just pure taxation of worldwide income? Very little, if any, difference -- unless somehow you could exist in Thailand without remitting any (or most) of your assessable income. I believe you're a Yank -- I'd really be interested in why you think the new worldwide income taxation will cost you any money? Thanx for your time.

2 hours ago, topt said:

Just so happens that Thailand not only moved the goal posts with the change announced last year but now are talking about moving the whole stadium..........(if it goes ahead)

Nice to finally see some forward thinking in the Thai govt. Finally being able to use the language in their DTAs with other countries (before, if the money wasn't remitted in same year, DTA language was worthless) to collect the taxes stipulated in the treaties -- is a nice, and necessary, touch. Particularly with the looming aging population problem. That I'll spend my last years here in a stable, and sufficiently financed, economy -- is reassuring.

And getting rid of the remittance loophole, and going to worldwide taxation, is really a no brainer -- for policy makers who have the country's well-being as their altruistic goal.

2 hours ago, MeePeeMai said:

My funds are currently co-mingled in my bank accounts in the USA.

 

Going to taxing just income, and not remitted income, means discerning which commingled funds are assessable income, and which are not, will no longer be an item, or a problem.

3 hours ago, MangoKorat said:

my take on it is that all that will change is that you won't be able to claim that the money you bring into Thailand was earned before 1 January 2024.

You miss the whole point on the new policy, which won't care about any money brought in -- only income earned in the current tax year, that per DTA, is taxable by Thailand. Nevertheless, all that money in your pre 2024 bank account is now savings, not current year income. Feel free to remit it, or not, as there's no longer a tax angle to it.

2 hours ago, lordgrinz said:

Is there anything in the laws, as they are now, that would make 401K's and IRA's open game for taxes if they aren't cashed out? They are the moment tax deferred until they are withdrawn, not sure if that applies in Thailand.

No, neither if cashed out in Thailand or US.

Currently, under the remitted taxation system, if you cashed out a chunk of your IRA and sent it to Thailand this year, it would NOT be assessable income -- because the Thai rules say all income earned before Jan 2024 is not subject to Thai taxation. And this chunk of your IRA (assuming no contributions in 2024) would definitely be pre-2024 income. That it is 'tax deferred' income, makes never no mind in this remittance scenario. There would, of course, be US taxation on this chunk of IRA -- but with no offsetting Thai credits, since you paid no Thai tax on it.

Now, under the new worldwide income scenario, if you cashed out a chunk of IRA in 2024, it would now be a taxable event, both in Thailand and the US (because of the US savings clause). And the amount of taxable IRA would be the same, both on your US and Thai tax returns. And, per DTA, Thailand has primary taxation rights on this IRA, thus gets to keep all the taxes it collects, and the US has to absorb a tax credit for same. But total tax bill between the two countries would thus be the same as if I only paid taxes to the US. Example:

I cash out $15000 of my IRA (which, in real life, approximates my last year's RMD). This all falls into my 12% tax bracket, so my US taxes on this IRA is $1800

In Thailand, I have their equivalent of 'standard deduction' (also called TEDA, in some quarters) being 500,000 baht (age over 65, no wife deduction). When I plug in the $15,000 IRA as assessable income, this (using 36 FX) translates into 540,000 baht. So when I subtract TEDA, I end up with 40,000 baht of taxable income. All of this falls in the first Thai tax bracket, where the rate is 5%. So, tax bill is 2000 baht, or $56.

Now, on my US tax return I could take this Thai tax bill of $56 dollars as a tax credit, lowering my US tax bill from $1800 to $1744. And, I wouldn't even need to file the tax credit Form 1116, since I'm below $600 (filing joint). Just a one line item entry on Schedule 3, and that's it. No extra effort at all.

Now, look at both scenarios: Remitted and worldwide.  My total tax bill is the same -- $1800 or $1744+$56. So, at least for Yanks and private pensions and IRAs -- this new worldwide income scheme is a real yawner. And, it's even tempting (tho' I've been warned about giving tax advice on this forum) to say: Is my time worth filing a Thai tax return for $56? I guess it could be, if I could do it all online, although I don't have (or want) a TIN. Will need to ponder that one.

Worldwide income taxation by the Thais doesn't alter much for Yanks.

20 hours ago, JackGats said:

Except I read that Norway had been collecting taxes from its citizens living in Thailand for years now. The rationale was that if Norwegians residing in Thailand were not ACTUALLY paying taxes to Thailand, they needed to pay them to Norway. I can do without tax treaties of this kind thank you very much.

Welcome to the OECD's new world of, not just 'no double taxation' but also 'no no taxation.' The new model tax treaties are being written to accomodate this. Some countries, like the US, aleady prevent 'no no taxation' with its savings clause, that gives the US at least secondary taxation rights, even in situations where the DTA gives the other country exclusionary rights.

Norway's system is interesting. If you can show the Norwegian tax authorities that 100% of you Norwegian income (to include govt pensions) was subject to taxation by Thailand, then you get a complete pass from Norwegian taxes (even if the Thai taxes were considerably less than what the Norwegian taxes would have been). And apparently that's how it works out, and why Norwegians in Thailand welcome being taxed by Thailand.

18 minutes ago, ukrules said:

almost all countries use a remittance based tax system.

As far as I can find, only a handful do -- and this is the "non-dom" option, for legal residents who are not domiciled in country of residency. UK comes to mind. Malta, also.

10 hours ago, stat said:

How did you prove the last 12 months or is it last calendar year? Thanks!

As I applied in July 2023, I only sent Tax Year 2022's Form 1040 and related 1099's.

1 hour ago, JohnnyBD said:

I didn't submit any 2022 tax year docs.

I got my LTR WP back in July 2023. I queried BoI about whether or not one or two years of tax returns were needed. Here's the answer I got back:

Quote

For Wealthy Pensioner category, you will only need to submit the income of previous year or last 12 months, meaning that it will be for year 2022 only. We do not need an income from 2021.

 

I guess you'll find out whether or not a second year's tax return is required...... Curious.