Tax

[Polaris]

Is anyone familiar with the DTT between the US and Thailand?  I read about it on Ajarn.com, copied the article and took it with me to the tax office at the end of a 4 month contract.  I wasn't charged any taxes during the school term and was only given tax papers at the very end.  When I presented my papers and the article to the tax women she gave me a receipt for taxes paid for 2002.   My real question is, now I am going to be charged taxes monthly at my new job.  I still qualify under the DTT as I have not been in Thailand for more than 2 years and am a teacher at a recognized gov't institution.    What is the proper procedure for implementing the DTT?  Does my school have to apply for me ahead of time?  Do I do it on my own?  Do i wait until the end of the year and seek a return?   Does anyone have experience in this area?  Thanks!!

[lanny]

I have had several clients take advantage of the provisions of the treaty that exempts teachers and researchers from Thai tax for the first two years in Thailand.  You need to obtain a statement from the U.S. Internal Revenue Service and give that to your school.  They then present it to the tax office so that they can pay your salary without withholding tax.  I've never had a client try to get a refund but have heard that the tax office is very, very reluctant to give money back.

You should also be aware that taking advantage of this treaty position can impact your U.S. tax situation.  Because you are telling the Thai authorities that you are not subject to Thai taxes, you cannot qualify for the exclusion under the bona fide resident rules.  If you want to claim the exclusion, you must meet the 330 day rule.  If you return to the States for more than 35 days, you cannot exclude the income from U.S. tax.