Tax Session for American citizens from the Embassy and American Chamber of Commerce

[Thailand J]

Long post nothing new.

If they had published 162/2566 earlier I may not have gotten the LTR visa.

 

 

 

 

[mooping20Baht]

So, both Thailand and the US are going to tax Ordinary Income , seems like double taxation to me.

 

 

I'm willing to guess no one tracks the original contributions past a certain year in the past for TIRAs , so not a possible task .

 

[Thailand J]

17 hours ago, Guavaman said:

According to the DTA, Thailand has priority in collecting tax from your IRA distributions. 

 

True for non US citizens non residents who file 1040NR.

Not for US citizens who file 1040, who are taxed as US residents disregard of where they may live the entire tax year.

[Guavaman]

13 minutes ago, Thailand J said:

Not for US citizens who file 1040, who are taxed as US residents disregard of where they may live the entire tax year.

Replace "Switzerland" with "Thailand" in this analysis by the IRS.

 

U.S. tax law says that a U.S. citizen — no matter where he/she lives — will be taxable on worldwide income. But if you’re a U.S. citizen living in Switzerland you’re taxable as a resident there. Both country wants to tax you. Which country gets first crack at you when you take a distribution from your Individual Retirement Account? Survey says? Switzerland. Switzerland gets the right to tax the distribution from your IRA, and the United States will give you a tax credit for the Swiss income tax you pay. Just to be clear:  if you’re a U.S. citizen living in Switzerland, you pay the Swiss income tax on the distribution.  Then you also report the distribution on your Form 1040 that you have to file every year with the Internal Revenue Service because you’re a citizen.  You claim the foreign tax credit on Form 1116.  Since all of this is happening by way of the income tax treaty between the United States and Switzerland, you attach Form 8833 to your Form 1040, making the relevant elections to invoke the treaty provisions to protect you from the IRS. Here is a recent analysis of the law by the Internal Revenue Service.

 

https://hodgen.com/ira-distribution-to-u-s-citizen-living-in-switzerland-which-country-taxes-it/

[Thailand J]

every tax treaty is different. Different income different rates etc.

You can't replace a country name and make an arguement.

as of today thai tax law tax no IRA benefits remitted the year after.

and with 162/2566 it's a complete different game.

 

Does Swits has the exact same DTA with US as Thai?

Does  Swiss has the same tax rules regarding foreign incomes as Thai?

 

[DudleySquat]

On 12/7/2023 at 7:56 AM, ChicagoExpat said:

All -- just learned there will be an online meeting to answer questions about the new tax law for Americans.  It's free with the promo code USBKK23 Tax Committee: Thai Tax on Foreign-Sourced Income (mailchi.mp)

 

 

 

Is there a link for the meeting? 

[Guavaman]

40 minutes ago, Thailand J said:

Does Swits has the exact same DTA with US as Thai?

US- SWITZERLAND CONVENTION	US-THAILAND CONVENTION
The Treasury Department's 1997 Technical Explanation ("TE") to Article 18 explains, in relevant part:    Paragraph 1 provides that private pensions and other similar remuneration derived and beneficially owned by a resident of a Contracting State in consideration of past employment are taxable only in the State of residence of the recipient.	The Treasury Department's 1996 Technical Explanation ("TE") to Article 20 explains, in relevant part:   Paragraph 1 provides that private pensions and other similar remuneration paid in consideration of past employment are generally taxable only in the residence State of the recipient.

[Thailand J]

swiss actually tax US income but Thai so far has not.

and if Thai does next year it wont be the same way as Swiss does.

different country different deal. .

 

Stay with Thai_Us tax.

[Guavaman]

13 minutes ago, Guavaman said:

 

 

7 minutes ago, Thailand J said:

Please lets stay with Thai-US tax can we?

US- THAILAND CONVENTION The Treasury Department's 1996 Technical Explanation ("TE") to Article 20 explains, in relevant part: Paragraph 1 provides that private pensions and other similar remuneration paid in consideration of past employment are generally taxable only in the residence State of the recipient.

[Thailand J]

US taxes IRA distribution if you are a US citizen.

If there is another state that is able to and actually does impose  tax on the the same distribution then there will be an arrangement such as tax credit.

so far it has not happen with US -Thai tax where US IRA is taxed in Thai.

I am not sure why you try so hard.

Open your eyes, non of us here who stay in Thailand ever paid Thai tax on our IRA distributions.

 

 

[Guavaman]

52 minutes ago, Thailand J said:

Open your eyes, non of us here who stay in Thailand ever paid Thai tax on our IRA distributions.

You are speaking on behalf of all American tax residents in Thailand when you say: "None of us." 

 

The future might not look like the past. 

 

The RD is providing hints about what the future may look like. It remains to be experienced.

[Thailand J]

 US citizens are taxed as US residents using the same tax form as the residents : IRS Form 1040. Foreign income is reported on form 2555 attached to form 1040. This is going to be the same in the future unless there is a  a major policy change in US which I see no hints of happening.

 

[JimGant]

20 hours ago, Thailand J said:

swiss actually tax US income but Thai so far has not.

 

....'cause the Swiss tax US IRAs as income, not as REMITTED ONLY income. Wait 'til Thailand does away with the remittance aspect, then you'll see that the US tax treaty with Thailand, and with Switzerland, are near identical -- and definitely identical in how IRAs are treated. Guavaman has done an excellent presentation on how this works. Suggest you re-read.

[JimGant]

10 hours ago, Thailand J said:

US citizens are taxed as [the same as] US residents using the same tax form as the residents : IRS Form 1040. Foreign income is reported on form 2555 attached to form 1040.

 

Yes, US citizens are taxed on worldwide income, and thus are treated as if they're residents of the US (and, yeah, file Form 1040, same as a real US resident). But, if they live here in Thailand for over 180 days, they're tax residents of Thailand, as far as the DTA is concerned. And this gives Thailand 'first dibs' on certain income -- but such income is still subject to US taxation, per the saving clause -- with credits avoiding double taxation.

 

As far as the Form 2555 is concerned, this deals only with foreign earned income. It has nothing to do with how US income is dealt with by the Thais, per the DTA, which is what all these latest threads are about. Sure, it's nice to know, if you work full time here in Thailand, how to avoid declaring your Thai income on your US tax return (Form 2555). But that's not what this discussion is about.

[Thailand J]

On 12/28/2023 at 5:24 PM, JimGant said:

Suggest you re-read.

 

If I reply to you posts I will just be repeating what I've posted.

I suggest you re-read my posts.

[gamb00ler]

On 12/27/2023 at 8:51 AM, mooping20Baht said:

So, both Thailand and the US are going to tax Ordinary Income , seems like double taxation to me.

 

 

I'm willing to guess no one tracks the original contributions past a certain year in the past for TIRAs , so not a possible task .

 

Since TRD has exempted all funds received/earned prior to Jan. 1, 2024 we don't need records from before that date.  We would need to show documentation of the value of all accounts at the end of 2023.

[placnx]

On 12/27/2023 at 8:24 PM, Thailand J said:

every tax treaty is different. Different income different rates etc.

You can't replace a country name and make an arguement.

as of today thai tax law tax no IRA benefits remitted the year after.

and with 162/2566 it's a complete different game.

 

Does Swits has the exact same DTA with US as Thai?

Does  Swiss has the same tax rules regarding foreign incomes as Thai?

 

The Thai-US tax treaty does not contain the re-sourcing provisions of US treaties with many other countries, so it is not possible to make remittances to Thailand appear as foreign income when preparing Form 1116 on the US tax return. The result is that the only option is to get a tax credit on the Thai tax return for taxes paid to the US. The result may be that tax due Thailand will be zero.

[ChicagoExpat]

I talked to a consular officer at the Embassy -- he said that while they had received a lot of anxious emails from people here about this tax stuff, they had not yet received a single complaint of someone who appeared to have been actually taxed contrary to the terms of the tax treaty.

[JimGant]

On 10/11/2024 at 12:34 PM, placnx said:

The Thai-US tax treaty does not contain the re-sourcing provisions of US treaties with many other countries, so it is not possible to make remittances to Thailand appear as foreign income when preparing Form 1116 on the US tax return. The result is that the only option is to get a tax credit on the Thai tax return for taxes paid to the US

Yes, because of when the Thai-US tax treaty was written, a paragraph addressing re-sourcing was not included. But, regardless of this omission, the Treaty still allows foreign tax credits for taxes paid on US remitted income to Thailand. How? With a Form 8833, whose instructions include: That a treaty grants a credit for a foreign tax which is not allowed by the Code.

 

Why the need? Because the US Tax Code says that foreign tax credits are only allowed for foreign taxes paid on FOREIGN income. Which remittances of US income, taxed by Thailand, certainly are not. But, a re-sourcing clause in a tax treaty -- or, when absent, a Form 8833 -- trumps the US Tax Code by allowing foreign income tax credits on US income taxable by Thailand -- by changing this income into pretend foreign income.

 

Otherwise, the tax treaty would be worthless in preventing double taxation. And you couldn't just reverse things, by having Thailand absorb a tax credit for US taxes paid on certain income -- when the treaty says Thailand has primary taxation rights on that income. Because with primary taxation rights, Thailand keeps all taxes collected, as it does NOT have to absorb a tax credit. To somehow say, sorry Thailand, because there's no re-sourcing clause in the treaty, you now have to absorb a tax credit, contrary to what's in the treaty. Nope.

 

Anyway, forget the lack of a re-sourcing clause. Form 8833 is your go-to form.

 

 

[JimGant]

On 12/27/2023 at 9:47 PM, Thailand J said:

US taxes IRA distribution if you are a US citizen.

If there is another state that is able to and actually does impose  tax on the the same distribution then there will be an arrangement such as tax credit.

Yes, since Thailand has primary taxation rights on an IRA, you'll get a tax credit against your US taxes for those Thai taxes. That no one has yet paid taxes to Thailand for an IRA remittance -- is just another verse to the tune, "all my remittances are last year's income." That song's been cancelled.