Some thoughts on the taxation of income brought into Thailand starting in 2024 (US citizen perspective only)

[mudcat]

One of the rare instances that I am grateful for paying U.S. income tax on worldwide earnings.

 

As I have not worked since I walked out the door in 2010 with my Social Security entitlement and Civil Service government pension from the agency I worked for, I believe the DTA has me well covered. 

 

My Social Security is direct deposited into Bangkok Bank for our living expenses here and my pension is deposited into my Chase checking account that I use to pay my credit card, one insurance payment, one-time PayPal payments I don't want to run through my credit card, and for investments.    

My investments are in a Roth IRA and two robot taxable accounts (one each for myself and my wife into which I invest $1,000/month each).  Neither of my investment accounts is withdrawn from but rather form the bulk of my estate through beneficiary designations, currently my wife with two charities as contingent beneficiaries.  

 

I am not worried about tracking ATM withdrawals (typically one a month for which Chase reimburses the Thai bank charges), as I can easily demonstrate the source of funds being my pension - and I use a few different Thai banks for convenience which makes tying the transaction to my Thai tax ID number unlikely.   As I am on a LTR-WP pension I do not need to worry about the local IO or RD officers making discretionary interpretations of what appear to be a very vague proposal.

 

A headache yes, something to make us uproot our lives here - no.  

[DineshR]

18 hours ago, Sheryl said:

@DineshR

 

My reading of the US tax treaty with Thailand is substantially the same as yours except that to my read it is only government pensions that cannot be taxed in Thailand.  Private pensions can be.

 

Of course, any tax you have to pay in Thailand on private pension and the various other taxable incomes can be claimed as a tax credit on your US return. In fact, it could be argued from the terms of  the Tax treaty that any income taxable in Thailand under the DTA should be fully exempt from US taxes. (You'll need an accountant versed in expat issues)

 

To simplify life, you might like to limit your remittances to Thailand to direct deposit of your Social Security (and government pension if that is what you have). If currently using income method and these sources not enough, switch to the 800K method and bring that money in before end of the year. Like that you should be home free since it is only assessable income remitted to Thailand after 1 January that is at issue.

 

If you can't live on just SS, make up the difference through use of a US credit card paid from a US bank account and perhaps occasional ATM withdrawal from US bank account.

 

 

@Sheryl The part about private pensions being taxable is not clear to me from the text as it only talks about government pensions ... so, by omission, it implies it is taxable ? And I agree that we should only remit social security/govt pensions/annuities to be tax exempt per the treaty.

[DineshR]

17 hours ago, retiree said:

Copying and extending from another thread, here's a checklist:

 

 -- was the (US DTA) payment from something other than Social Security, a public pension, or an annuity?  If so, it is income.*

 -- were you a Thai tax resident when you earned it?  If so, the income is assessable.

 -- were you a Thai tax resident when you brought it in?  If so, the income may be taxable, depending on DTA.

 -- was any answer "no" ?  It is not taxable.

 

* The status of distributions of taxed Roth IRA contributions or their tax-exempt earnings doesn't appear to be directly addressed in Section 40 of the Thai code, so they might have to be reported (but not necessarily taxed) if remitted to Thailand:  https://www.rd.go.th/english/37749.html   

 

However .... one would imagine that either

 -- Roth contributions are treated as pre-existing, taxed savings, or

 -- any withdrawal or RMD could be handled by having the Roth or regular IRA purchase an annuity.   

Ask AmCham, maybe?   Afaik the Thai retirement instruments that parallel Roth IRAs (RMF, SSF) are not taxed.  

 

Happy to extend or correct this if there are other straightforward filter questions.

@retiree Good info here ... may I ask where you found this checklist re the first 3 questions in your note above ? Thanks for the link from RD .. good info there.

[Sheryl]

2 hours ago, DineshR said:

@Sheryl The part about private pensions being taxable is not clear to me from the text as it only talks about government pensions ... so, by omission, it implies it is taxable ?

That is my reading, yes -provided one is resident in Thailand under the (complicated) definition of the DTA. Unlike most nationalities, US citizens in Thailand more than 180 days a year are legally tax residents in both the US and Thailand so DTA provisions on dual residency apply.

[retiree]

2 hours ago, DineshR said:

may I ask where you found this checklist re the first 3 questions in your note above ?

Nowhere (it was my own earlier thread).  Just inferred from reading the regulations like everybody else, and happy to extend or correct.

Edited October 9, 2023 by retiree

[Sheryl]

13 hours ago, Lorry said:

Q10 of the QnA

 

https://aseannow.com/applications/core/interface/file/attachment.php?id=940349&key=652a2822f134d0711b1645dd1f24dd03 418.36 kB · 18 downloads

 

RD Order 161 2566 Q&A.pdf
418.36 kB · 5 downloads

 

Google translation on p70/71 of the main thread

 

They have also said it in their news conference,  it was in the papers. 

 

Thank you for that link, I had not seen it. Hopefully someone will at some point develop an English translation.

 

However  Q 10 deals only with the case where tax was actually paid in the other country, but does not address the situation where the income is not assessable in Thailand under terms of DTA irrespective of whether tax was due in home country.  A common situation with US Social Security and government/state pensions as often the person's income is low enough not to incur a tax (in which case they are not even required to file a tax return).  Probably not mentioned because the  document is largely aimed at Thai citizens and their questions.  One could infer from the answer to Q 10 that the RD intends to abide by the terms of DTAs but it would be more reassuring if this point was directly addressed. "Tax credits" do not apply and will not address the issue for these types of income which are under DTA  not assessable in Thailand.

 

Actually the most interesting for expats sections of this were questions 5,6 and again in Q 9 where it is clearly stated that income of any sort that was earned in a year when the person was not resident in Thailand 180 days or more, is not assessable in Thailand no matter when brought in.  In other words, savings from income of any sort (wages, investments etc) earned  prior to moving to Thailand -- very relevant for retirees - is not assessable in Thailand.

 

Of course how one would go about proving that is another matter, most people could not, so I still recommend that US retirees as much as possible limit their transfers to Social Security and government pension (if any).

[spidermike007]

It will likely have no impact on those of us who are not Thailand taxpayers. 

[hotandsticky]

11 minutes ago, spidermike007 said:

It will likely have no impact on those of us who are not Thailand taxpayers. 

Spot on. That is as much as we need to know for now.

 

Others should not lose sleep over it.

[JackGats]

22 hours ago, bamnutsak said:

Understood.

 

Assuming any/all remittances were subject to tax I would minimize those, and utilize ATM withdrawals and counter withdrawals for the bulk of my monthly expenses. Those would come at the daily Visa rate, and my bank reimburses for ATM fees (usually 150 THB at an AEON ATM). I would also go a bit heavy when the dollar is strong 

ATM withdrawal in TH or even paying a hotel with a foreign credit card in TH is tantamount to importing funds into Thailand I think. More difficult to police than bulk remittances, but all the same. If you rely on that to stay under the radar, you'll be technically committing tax evasion.

 

P.S. Same regarding flying in with wads of currency to exchange at money changers (where they photocopy your passport).

Edited October 9, 2023 by JackGats

[MeePeeMai]

8 minutes ago, JackGats said:

ATM withdrawal in TH or even paying a hotel with a foreign credit card in TH is tantamount to importing funds into Thailand I think

Paying anything with a credit card is not income, it is a loan (debt) which is not taxed other than the 7% VAT added to your purchases.  

[MeePeeMai]

11 minutes ago, JackGats said:

Same regarding flying in with wads of currency to exchange at money changers (where they photocopy your passport).

True, this might come under the radar but having a Thai person exchange the currency for you occasionally might be better (as long as this person does not exchange too much/too often), unless it is your spouse, then you could claim a "gift" exemption (which is currently 20mil baht per year but IMHO, this rather large loophole might be modified and lowered soon).  

[redwood1]

25 minutes ago, JackGats said:

ATM withdrawal in TH or even paying a hotel with a foreign credit card in TH is tantamount to importing funds into Thailand I think. More difficult to police than bulk remittances, but all the same. If you rely on that to stay under the radar, you'll be technically committing tax evasion.

 

P.S. Same regarding flying in with wads of currency to exchange at money changers (where they photocopy your passport).

Yea lets see how many formally law abiding farang we can catch in the murky tax net, and turn them into law breakers and criminals......

 

Edited October 9, 2023 by redwood1

[mokwit]

21 hours ago, TallGuyJohninBKK said:

Or are they going to basically assume that everything incoming is taxable, and then leave it to the expats to prove to the RD that this or that source was NOT taxable?

This IMO they will tax you and it will be up to you to reclaim from them or your home country any exemption from treaties.

[redwood1]

Just now, mokwit said:

This IMO they will tax you and it will be up to you to reclaim from them or your home country any exemption from treaties.

Yea right.....No complications with that.....Talk about bureaucratic hell.....And not just once but every year......Nope

[Mike Lister]

7 minutes ago, mokwit said:

This IMO they will tax you and it will be up to you to reclaim from them or your home country any exemption from treaties.

Tell me that you don't think the banks will automatically take tax off your funds transfer and hand it over to the Revenue for you to try and claim back later, please tell you don't think that!

[mokwit]

21 minutes ago, Mike Lister said:

Tell me that you don't think the banks will automatically take tax off your funds transfer and hand it over to the Revenue for you to try and claim back later, please tell you don't think that!

No I don't, even though they could identify foreign non corporate remittances. YOU will be expected to turn up at RD to pay tax and they may become more proactive about ensuring that you do.

[DineshR]

15 hours ago, Lorry said:

Q10 of the QnA

 

https://aseannow.com/applications/core/interface/file/attachment.php?id=940349&key=652a2822f134d0711b1645dd1f24dd03 418.36 kB · 23 downloads

 

RD Order 161 2566 Q&A.pdf
418.36 kB · 5 downloads

 

Google translation on p70/71 of the main thread

 

They have also said it in their news conference,  it was in the papers. 

@Lorry You reference a Google translation on p70/71 if the main thread … can you give me the link to the main thread? Thanks.

[Mike Lister]

3 minutes ago, mokwit said:

No I don't, even though they could identify foreign non corporate remittances. YOU will be expected to turn up at RD to pay tax and they may become more proactive about ensuring that you do.

I think what you mean is that you will be required to file a tax return and account for the funds (or not) if they are taxable. There is no automatic default that you go and pay tax on the money.

[DineshR]

53 minutes ago, MeePeeMai said:

True, this might come under the radar but having a Thai person exchange the currency for you occasionally might be better (as long as this person does not exchange too much/too often), unless it is your spouse, then you could claim a "gift" exemption (which is currently 20mil baht per year but IMHO, this rather large loophole might be modified and lowered soon).  

I did some research on Thai tax just to understand how much tax would be due if it turned out that we had to file along with what deductions we could take. I did not see anything related to gift exemptions - do you a link for  Thai tax exemptions? One thought I did have was to simply send my wife some money every month as under the rules currently, she is exempt from filing if the value of gifts received is less than THB 20 million. That would reduce the amount I had to transfer to myself that might be subject to tax. All of this might simply be a storm in a tea cup but I’d like to be prepared with every scenario so I can plan ahead.

[MeePeeMai]

1 minute ago, DineshR said:

One thought I did have was to simply send my wife some money every month as under the rules currently, she is exempt from filing if the value of gifts received is less than THB 20 million.

This would probably work for now (until they catch on and change the gift exemption amount).

[Lorry]

2 hours ago, Sheryl said:

 

Thank you for that link, I had not seen it. Hopefully someone will at some point develop an English translation.

 

However  Q 10 deals only with the case where tax was actually paid in the other country, but does not address the situation where the income is not assessable in Thailand under terms of DTA irrespective of whether tax was due in home country.  A common situation with US Social Security and government/state pensions as often the person's income is low enough not to incur a tax (in which case they are not even required to file a tax return).  Probably not mentioned because the  document is largely aimed at Thai citizens and their questions.  One could infer from the answer to Q 10 that the RD intends to abide by the terms of DTAs but it would be more reassuring if this point was directly addressed. "Tax credits" do not apply and will not address the issue for these types of income which are under DTA  not assessable in Thailand.

 

Actually the most interesting for expats sections of this were questions 5,6 and again in Q 9 where it is clearly stated that income of any sort that was earned in a year when the person was not resident in Thailand 180 days or more, is not assessable in Thailand no matter when brought in.  In other words, savings from income of any sort (wages, investments etc) earned  prior to moving to Thailand -- very relevant for retirees - is not assessable in Thailand.

 

Of course how one would go about proving that is another matter, most people could not, so I still recommend that US retirees as much as possible limit their transfers to Social Security and government pension (if any).

 

23 minutes ago, DineshR said:

@Lorry You reference a Google translation on p70/71 if the main thread … can you give me the link to the main thread? Thanks.

Google Translation

 

 

[Lorry]

2 hours ago, Sheryl said:

 

Thank you for that link, I had not seen it. Hopefully someone will at some point develop an English translation.

 

However  Q 10 deals only with the case where tax was actually paid in the other country, but does not address the situation where the income is not assessable in Thailand under terms of DTA irrespective of whether tax was due in home country.  A common situation with US Social Security and government/state pensions as often the person's income is low enough not to incur a tax (in which case they are not even required to file a tax return).  Probably not mentioned because the  document is largely aimed at Thai citizens and their questions.  One could infer from the answer to Q 10 that the RD intends to abide by the terms of DTAs but it would be more reassuring if this point was directly addressed. "Tax credits" do not apply and will not address the issue for these types of income which are under DTA  not assessable in Thailand.

 

Actually the most interesting for expats sections of this were questions 5,6 and again in Q 9 where it is clearly stated that income of any sort that was earned in a year when the person was not resident in Thailand 180 days or more, is not assessable in Thailand no matter when brought in.  In other words, savings from income of any sort (wages, investments etc) earned  prior to moving to Thailand -- very relevant for retirees - is not assessable in Thailand.

 

Of course how one would go about proving that is another matter, most people could not, so I still recommend that US retirees as much as possible limit their transfers to Social Security and government pension (if any).

This is all correct. But the highlighted part cuts both ways:

 

If someone has been living mostly here for 10 year (over 179 days per year) but didn't bring all income here, instead saved some part of his income during these 10 years and kept the savings in his home country - these savings are taxable whenever (after Jan 1) he brings them here. 

[mudcat]

Should your income in the U.S. be under the standard deduction after calculating the tax status of your Social Security benefit and thus a tax return was not required one can file amended returns back three years to organize your paper trail.

[spidermike007]

2 hours ago, JackGats said:

ATM withdrawal in TH or even paying a hotel with a foreign credit card in TH is tantamount to importing funds into Thailand I think. More difficult to police than bulk remittances, but all the same. If you rely on that to stay under the radar, you'll be technically committing tax evasion.

 

P.S. Same regarding flying in with wads of currency to exchange at money changers (where they photocopy your passport).

Nope. Wrong. It is likely only tax evasion if you are already a taxpayer in Thailand, which most of us are not. This thread reminds me of covid. Alot of fear, few facts and a bit of an over reaction to what might be a nothing burger. 

 

After all, Thailand cannot even police their own population, when it comes to taxes. 

[DineshR]

1 hour ago, Lorry said:

 

Google Translation

 

 

@Lorry Thank you. Though the Google translation is a little difficult to decipher at some places. I will get a native Thai to help me understand the Q&A better.

[Lorry]

1 hour ago, spidermike007 said:

taxpayer in Thailand, which most of us are not.

Sure? 

I don't know anybody here who is not a tax resident. 

 

[Mike Lister]

3 minutes ago, Lorry said:

Sure? 

I don't know anybody here who is not a tax resident. 

 

Likewise, everyone I know is tax resident. I did meet a tourist once but I try to avoid them most days.

[Sheryl]

2 hours ago, mudcat said:

Should your income in the U.S. be under the standard deduction after calculating the tax status of your Social Security benefit and thus a tax return was not required one can file amended returns back three years to organize your paper trail.

I don't see why you would need or want to.

 

Us Social Security is not assessable income in Thailand. Full stop. Not droendent on filing a US tax return. 

 

The annual statement of benefits SSA  sends out each year and their annual IRS form are proof of income from this source.  

[Billpro785]

I'm a US expat,  I HIGHY Suggest you talk to a REAL accountant , US tax lawyer , etc , someone who KNOWS , and don't listen to the armchair. tax experts here. 

That is what I have done, had video chat with my US based tax accountant , and as I posted before, I'm not worried, and for me this means nothing and life will continue as normal living here in Thailand full time. 

Edited October 9, 2023 by Billpro785

[mudcat]

16 minutes ago, Sheryl said:

I don't see why you would need or want to.

 

Us Social Security is not assessable income in Thailand. Full stop. Not droendent on filing a US tax return. 

 

The annual statement of benefits SSA  sends out each year and their annual IRS form are proof of income from this source.  

 The purpose would be to have a tax return or transcript showing the sources of your income. 

Basic process is to add half of your Social Security benefit to your gross  income.  If the result is under $25/32 thousand (single/married filing jointly) your benefit is not taxable income and your taxable income is likely to be less than your standard deduction.  See definition of gross income footnote to "do you need to file" in your i1040 instructions.

 

Having a return or transcript will give you the information you may need to answer questions from the RD who may not understand the tax treatment of Social Security benefits