JimGant

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 They are the moment tax deferred until they are withdrawn, not sure if that applies in Thailand.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.

13 minutes ago, Mike Teavee said:

do I still need to declare the 2Million THB as assessable income even though I won't be seeing any benefit from it?

Yes. The final purpose for the remitted assessable funds makes no difference to its taxability. [However, the jury is still out on whether or not remitted funds that are a legitimate gift are exempt from income tax.]

2 hours ago, Mike Teavee said:

To be clear, are you saying that he would be taxed as the ultimate recipient of the money or would be taxed as the sender of the money? 

As a tax resident, it's the sender, if the remittance is assessable income, who is responsible for the income tax. There could be a second, unrelated taxable event, if the receiver gets a gift -- or is being paid for a service or product.

2 hours ago, petedk said:

On 5/30/2024 at 8:22 AM, anchadian said:

What if you transfer (Wise) all of your income to your wife or girlfriend’s Thai bank account and withdraw from that account as and when required, would that work?

We all trust our wives and GF’s 555

 

Your wife will be taxed.

Why would she be taxed? Her bank account is just your intermediary for receiving funds that you remit to Thailand. Self-assessment says it's you that has the obligation to declare, or not, remitted funds to Thailand as assessable income. These funds certainly aren't your wife's remitted foreign income funds.

3 hours ago, JohnnyBD said:

where such income is brought into Thailand in a fiscal year subsequent to the year in which the income is derived.

Wouldn't it make sense that, if the powers that be wanted to give LTR visa holders a tax perk -- the simplest avenue would be: Let's grandfather the LTR visa holders under the old rules. Which, of course, means: remit the money in a later year than year earned.

Obviously, another bump in the road with these new tax angles that need to be ironed out.

3 minutes ago, redwood1 said:

Point being USA taxes will offset Thai taxes not the other way around...I doubt the IRS would take to kindly to some claimed Thai tax credit..

Wow, did you get a wrong number. The DTA's elimination of double taxation is highly dependent on being able to take a tax credit for one country's taxes against the other treaty country's taxes. A key example is US private pensions and IRAs, which the DTA gives primary taxation rights to Thailand. As such, those taxes paid to Thailand on this US income is allowed as a credit against US taxes. And, yes, some form filing is required to accommodate this (like Form 8833). But, this certainly shows it ain't a one way street -- Thailand, in many situations, gets to keep all the collected taxes -- and the US has to absorb a tax credit against such.

9 minutes ago, sabaiguy said:

Did you pay tax on that money in your home country that you plan to remit?  If so nothing to worry about.

Not necessarily. If you paid US taxes on a private pension you remitted to Thailand, the DTA says Thailand has exclusive taxation rights on that pension -- and if remitted in same year paid, and LTR folks aren't correct about its exemption -- well, need to declare on a Thai tax return, and then file an amended US tax return for the credit.

Ain't this fun.

11 minutes ago, redwood1 said:

You pay your USA taxes first.....And any other taxes 2nd.....Thats the way it works...USA is always first..

Where'd you get that from? And who cares -- if you filed your US taxes -- before you determined the tax credit you'd get from your Thai tax return -- you could always file an amended return. But that would never be necessary -- if you live in Thailand, your US tax return isn't due until June 15th; Thai tax return, several months earlier. Thus, you certainly know the credit to take. Heck, even if you file your US return the end of Feb, you'll know -- by the back of a napkin -- the upcoming Thai taxes, which you flip to your US tax return; no Thai official paperwork required to be attached.

1 hour ago, Gknrd said:

Summary and conclusion is it is a huge rip off for the average US and European retiree.  

 Interesting. Just from the US perspective, can you show why -- under the new Thai guidance -- your total tax bill, between the two countries, will be anything more than you're now paying to the US? From all I can see -- and because of the US saving clause, whereby your total worldwide income is taxable by the US, regardless of treaty language -- all those new taxes you'll be paying to Thailand will be acceptable as a credit against your US tax on same income. Thus, more tax income for Thailand, less for the US. But for you, no difference in out of pocket total tax payments.

On 5/31/2024 at 10:45 AM, BigStar said:

No. They'll send everything back to you if you screwed up.

Actually, they just sent me an email, stating my photo sucked, er, wasn't sharp enough; please submit another. Gave me a reference number to cite -- but kept all of the original submission. [Note: Photoshopped pictures may eliminate your zits -- but can cause acceptability problems.]

14 hours ago, placnx said:

Then what article of the tax treaty allows me to allocate US-source income to foreign-source income in form 1116? I looked through the whole treaty and don't see any clause to cite in form 8833.

Why they left re-sourcing out of the Thai-US DTA is a question researched by others. See page 19 of the below reference for a rationale that re-sourcing was a given, and not necessary to be specifically addressed:

https://nysba.org/NYSBA/Sections/Tax/Tax Section Reports/Tax Reports 2014/1313 Report.pdf

I'd cite Article 25(1) on my Form 8833:

Quote

The United States agrees, in paragraph 1, to allow to its citizens and residents a credit
against U.S. tax for income taxes paid or accrued to Thailand. (from the Technical Explanation)

This, along with an explanation in that two miles of space they give you -- should suffice, by addressing the forest, and not all those piddling re-sourcing trees.

The forest, of course, is the treaty to eliminate double taxation. And a treaty that gives Thailand primary taxation rights on certain US Income, namely private pensions and IRAs. But without a Form 8833 permission to trump the Internal Tax Code that says:

Quote

Tax credits are only allowed for taxes paid on foreign income,

..... how can you eliminate double taxation if you can't take a tax credit on your US tax return -- for those taxes you paid Thailand for their taxation of your US private pension or IRA?

Obviously you can't, otherwise the treaty is worthless. Thus, the lack of a re-sourcing paragraph in the treaty, that you can cite on your Form 8833 -- is a non starter. The forest -- and common sense -- rule.

Note the last para in Article 25 of the Technical Explanation:

Quote

The diplomatic notes also provide that if the United States alters its policy to authorize tax-sparing credits or grants such a credit in a tax treaty with another country, negotiations will be opened with a view to concluding a protocol that would amend the Convention to incorporate such a credit.

Written 26 years ago -- with no subsequent protocol to incorporate re-sourcing language. May be they figured the treaty wasn't broken -- and no protocol needed. Or, maybe they were just plain lazy. Anyway, I can't see a problem with any Form 8833 filings (other than they have to be mailed in, and can't be included with your electronic TurboTax filing. Oh well.

1 hour ago, placnx said:

Credit on US taxes is complicated because the Thai-US tax treaty does not contain a provision for what is called re-sourcing, unlike other US treaties negotiated in the same time frame. Strange, since over the years there were model treaties containing these rules. It seems like it is time for overhaul of the Thai-US treaty.

Good catch. And, yes, the US-Thai DTA does not have a re-sourcing clause. But, that omission is not critical to allowing a tax credit for Thai taxes on US income. This is all accomplished by attaching a Form 8833, along with your Form 1116 (tax credit form), to your tax return. 

What the Form 8833 explains away is that, per tax treaty, the Internal Revenue Code that says tax credits are only allowed on foreign income, not US income -- is overridden by the tax treaty -- specifically, that tax credits are a major part of the treaty, precluding double taxation. And, yes, this means a credit for Thai tax on US income taxable by Thailand. Here from the Form 8833 instructions:

Quote

A taxpayer takes a treaty-based return position by maintaining that a treaty of
the United States overrules or modifies a provision of the Internal Revenue Code
and thereby causes (or potentially causes ) a reduction of tax on the taxpayer’s tax return. For these purposes, a treaty includes, but is not imited to, an income tax treaty; .....

 That the Thai-US DTA doesn't have a re-sourcing clause is a minor oversight -- and not one that would preclude the Form 8833 from allowing a tax credit for Thai taxes on US income specifically allowed to be taxed primarily by Thailand.

2 hours ago, Ebumbu said:

Am I understanding you correctly? Did you just say that Americans like me can deduct any taxes paid to Thailand from their US taxes? If I bring in a million baht from the US and pay Thai taxes on that, the Thai taxes will be deductible from my US taxes? If so, that effectively means I'll continue to pay no Thai taxes. Am I getting it right? That would be a relief. 

Well, you'll continue to pay Thai taxes -- on those remitted incomes the DTA says are primarily taxable by Thailand. But, yes, those Thai taxes, in the form of a tax credit, can be deducted from the US tax bill on the same income. Assuming US taxes on this income are higher than you paid in Thailand, your total tax bill, between the two countries, would be the same as if you didn't have to pay taxes to Thailand. But, now, Thailand gets to keep all the taxes -- and the US takes a hit equal to the credit. Fair is fair.

1 hour ago, Chris BKK said:

Have people considered the impact on foreign funds being used to support 'girl friends', wives and perhaps children in Thailand from a farang. If say a farang sends B30k per month to Thailand from abroad then the Thai referred to above could be up for tax on the foreign income. By rough reckoning that could see the Thai recipient up for tax, depending on age etc, for up to B7.5k per year. So not only the expat up for tax but the Thai foreign income recipient. Some of those Thais would have never been registered for tax (no TIN) or ever paid tax. How will the Revenue Dept treat this income?

Not unless she provided a product or service of equal or near equal value to the amount of money you sent her. Then, yes, it's income earned in Thailand and she's then on the hook for income taxes in Thailand. Otherwise, the money you send her could be 1. a gift; 2. a loan; or 3. your money, to be held temporarily by her, until you arrive to pick it up (a situation that could occur, should you not have a Thai bank account). In these three situations, the wife/gf is not subject to income tax. The only potential tax is a gift tax, for amounts over 20M/10M baht (wife/gf).

You, however, are subject to Thai income tax on remitted assessable income (as stipulated in the tax treaty) and earned after Jan 1 2024. [There's a question on whether or not a gift might be tax exempt; the jury is still out on this question.]

18 hours ago, ThiAmo said:

In your estimated opinion will this transaction (with fund transfer to her Thai bank account) be regarded and accepted by the TRD as a Gift for the spouse and thus be non taxable income-wise?

Are you a Yank? If so, this cannot be a non-taxable event -- because of the peculiar nature that all our DTAs have a savings clause, whereby the US always has at least secondary taxation rights on income -- meaning that you'll always pay taxes to someone (which the OECD is trying to make standard for all its community).

So, the argument about whether or not gifts remitted to Thailand are exempt from Thai taxation -- is a non player for Yanks. Why? Because, if you pay no taxes to Thailand on this gift -- because you believe all the gossip about it being tax exempt -- then you'll have no Thai taxes to offer as a credit against that other tax obligation, the one to the US. So, you pay full bill to Uncle Sam. Yeah, if you sent a pile of gift money to Thailand, the Thai taxes you avoided may exceed the full bill you pay Uncle Sam; but we're talking a lot of remittance. Anyway, bottom line: Yanks, don't get too excited about maybe getting a tax break by remitting gift money to Thailand.

3 hours ago, JohnnyBD said:

or I just need to upload my SSA-1099 & Company Pension 1009-R which is over the $80k threshold?

That should do it. But, no harm uploading other 1099s of passive income, allowable towards, or over, the 80k requirement.

7 minutes ago, Mike Lister said:

The issue is not whether the money involved is assessable or not.

 

The issue is, whether the scenario I set out represents contrived tax evasion.

I guess I really can't read, because it appears you're saying money used to payback a loan, that is money assessable as income by Thailand -- if it were remitted to Thailand (I hope you're not confusing the loan and payback as one in the same monies?) -- but it's not assessable, because it's not remitted -- represents contrived tax evasion.?

Any referees here?