Taxes for USA Digital Nomads on Retirement Visas (transferring 65k a month)

[bangkokgalaxy]

Hello Everyone,

 

I am trying to estimate the tax bill for a person with the following scenario:

 

-53 years old, single

-On a Retirement Visa (65k a month method)

-In Thailand more than 180 days in 2024

-All transfers/remittances to Thailand are from 'self employed' income earned in 2024 in the USA (and transferred from overseas)

-All income for 2024 NOT from Pension, Social Security, Savings or investments

 

-Total income remitted to Thailand would be (65k x 12 months = approx 780,000 for the year). 

 

Question: What tax rate/amount might would apply to this individual? (assuming 780,000 a year transferred to Thailand?)

 

And, if this person opts to have ALL of their taxes assessed and paid in the USA, on their 2024 tax

returns, how does this person avoid double taxation in Thailand?

 

 

 

 

 

[DrJack54]

8 minutes ago, bangkokgalaxy said:

And, if this person opts to have ALL of their taxes assessed and paid in the USA, on their 2024 tax

returns, how does this person avoid double taxation in Thailand?

There are threads running on this topic.

Perhaps @Mike Lister can redirect 

[Goethe]

Read this link: https://www.belaws.com/thailand/double-tax-agreements/

[Etaoin Shrdlu]

10 hours ago, bangkokgalaxy said:

 

 

 

 

And, if this person opts to have ALL of their taxes assessed and paid in the USA, on their 2024 tax

returns, how does this person avoid double taxation in Thailand?

 

 

 

 

 

 

 

It isn't a matter of choosing to pay taxes in the US instead of Thailand. The Thai-US tax treaty specifies which country has first right of taxation. In the scenario you mentioned, in all likelihood your friend would be required to pay tax to Thailand first and then use the tax paid to Thailand as a credit against US taxes. 

 

[KhunLA]

Explained here ... link

Condensed cheat sheets:

 

Edited February 25 by KhunLA

[JimGant]

Thai taxation:

150 + 60 = 210 allowances

780 - 210 = 570 taxable income

Taxes on taxable income: 38000 baht

    -- $1086 @ 35 FX rate

 

US taxation:

Single standard deduction: $16200

Adjusted gross income: $22286 @ 35 FX rate

Taxable income: $6086

Taxes: $609

 

Thailand, per DTA, has first dibs. Thus, they get to keep the full $1086 in tax collection. But, they have to give a tax credit to the US, to cover the full $609 in US tax obligation. Bottom line: You end up paying $1086 in taxes between the two countries. But, since Thailand has first dibs, per DTA, you end up paying $477 (1086-609) more in taxes than if you lived in America full time, and Thailand.

 

 

[Phillip9]

99 out of 100 people in this situation would just pay their US taxes and forget about taxes in Thailand.  There is no way for Thailand to know what his US based income is.

 

He is not allowed to work in Thailand with a retirement visa, so he needs to be able to say he is not working while in Thailand or find a different visa.  If he is not actively working while in Thailand, and his business is based in the US, the US has first claim on taxes anyway.

[JimGant]

Whoops. Single standard deduction is 14600, for those under 65. Thus, US taxes would be $769 -- but Thai tax credit covers that, so you're still out of pocket $1086 between the two countries.

[JimGant]

34 minutes ago, Phillip9 said:

If he is not actively working while in Thailand, and his business is based in the US, the US has first claim on taxes anyway.

 

Good point, and one I missed. Article 15 of the US-Thai DTA seems to say that self-employment income earned in the US, and then remitted to Thailand, "may be taxed" by the US. "May be taxed" is code language in all the model tax treaties for which country has primary taxing authority ("first dibs"). Thus, in this case, the US has primary taxation authority, meaning, it gets to keep all the taxes collected, but has to issue a tax credit to Thailand for the avoidance of double taxation. But, the total taxation in this example would still be $1086 -- $769 paid to the US, and $317 paid to Thailand, after the tax credit is netted out.

 

Hopefully, this whole mess will be simplified by what we heard early on in this new tax situation, i.e., if you pay taxes in your home country on subject income, subject income will not be taxable in Thailand. This certainly would tamp down the complexities inherent in DTAs.

[Mike Lister]

Moved to Finance Forum