Taxes for Americans employed by American companies

[NorthernRyland]

1 hour ago, Sheryl said:

Technically illegal but pretty much unenforced. I would however certainly not advertise the fact or tell it to immigration.

 

And yes, any income you bring into Thailand is tax assessable in Thailand.

I really loath to lie and I figured I had no option anyways because how else does the 40 year old get the 400k while he's living in Thailand? Everyone knows what's going on and at least I'm not competing with Thai people so there's no victim to speak of.

 

It sounds to me like the best move for people like myself is just not tell the revenue department we're employed and just pay taxes on imported monies and consider that your income. If they start auditing people and requesting tax documents then the illegal employment thing is going to come up again and then it's an immigration. I don't know how the Thai tax forms work but it may not be required to disclose sources of income. If they do require that information then it's up to them if they report us to immigration I suppose. This whole thing could fizzle out like so many others so it's probably too early to get to worked up about it.

[NorthernRyland]

56 minutes ago, Sheryl said:

He is likely taking the foreign income exemption on his US taxes so tax credit from payments in Thailand will not do much if anything for him financially.

 

I'm taking no such exemptions, I don't think your location matters to the IRS anyways because I never got an accountant, just TurboTax. As far as they're concerned I live in the US and pay federal + state tax based on my parents address.

[NorthernRyland]

50 minutes ago, Mike Lister said:

Isn't TR the classic digital nomad, other than he's married to a Thai? 

 

I'm presuming TR gets paid in the US, is taxed there and then imports his earnings, is that correct?

 

Those things being true, perhaps opening a Thai company to receive the US earnings would work, that way he could retain his marriage visa and use the company and the US/Thai DTA to reclaim US tax with held?.

 

@NorthernRyland

TR? I assume that's me? Anyways yes, I do just that. I even spend 2 months a year in the US so I'm not totally detached even.

 

That's an interesting idea. Lots of extra headache though so I'd need to know how serious these new laws turn out to be and if they really start targeted people and talking with the IRS etc... Opening a company which has no presence in Thailand and no employees is probably fraud I would assume too.

[NorthernRyland]

59 minutes ago, Sheryl said:

 False for most expats. But true for those whose income is derived from work performed in Thailand.

 

I thought the whole idea is to tax based on income regardless of where it's earned providing you're a tax resident. Apparently this is illegal anyways so maybe the tax rate is mute.

 

57 minutes ago, Sheryl said:

Are you using the income method or the 400k in the bank method? If the latter should not need to tell them anything about your work.

 

I already replied but yes 400k in the bank. They asked and I didn't want to refuse an answer. Probably stupid but I'd rather be upfront and sort it out properly.

[Sheryl]

41 minutes ago, NorthernRyland said:

I'm taking no such exemptions, I don't think your location matters to the IRS anyways because I never got an accountant, just TurboTax. As far as they're concerned I live in the US and pay federal + state tax based on my parents address.

In that case -- and assuming you are either permanently settled in Thailand or out of the US 330 out of 365 consecutive days -- you may have  been missing a chance to avoid federal tax on your income.

 

And depending on your state, you may be paying unnecessary state taxes, too.

 

However given that you for some reason choose to -- or have to -- do this, you could apply any taxes paid in Thailand as a tax credit.

 

 

 

 

[NorthernRyland]

6 minutes ago, Sheryl said:

In that case -- and assuming you are either permanently settled in Thailand or out of the US 330 out of 365 consecutive days -- you may have  been missing a chance to avoid federal tax on your income.

 

Well in that case I do spend 2 months a year in Colorado  so I wouldn't apply. Paying state seems ridiculous being there only 2 months with no residence. Maybe I should hire an accountant. 🙂

[JimGant]

Remember this nugget, from page one of the 232 treatise on the new tax:

Quote

"The program will begin January 1, 2024 and apply only to tax residents in Thailand meaning tourists and short term workers will be exempt. Also exempt will be those who have been taxed in a foreign country that has a standing Double Tax Agreement with Thailand."

Thai Enquirer

 

The OP is paying US tax on this income in question. Early in the game, per the above quote, it appeared Thai RD didn't want to waste resources by fine toothing every DTA on which country gets primary taxing authority, then has to issue a credit, blah blah. Instead, if you can wave a DTA and a tax return from home country at RD, then, no taxes owed to Thailand. Simple, sensible approach. Haven't heard anything more on whether or not this approach is still viable -- or never was ever viable.

 

But, obviously, a question whose answer would help the OP -- and would certainly put to rest questions by others paying home country taxes and wondering about having to file a Thai tax return. Maybe we haven't heard more about this because it was too simplistic in the early goings-on of this new tax drill..... But, a reaffirmation sure would go a long ways, particularly for Yanks, who normally always file a tax return, even if no taxes owed due to standard deduction being greater than gross income.

[Sheryl]

2 minutes ago, NorthernRyland said:

Well in that case I do spend 2 months a year in Colorado  so I wouldn't apply. Paying state seems ridiculous being there only 2 months with no residence. Maybe I should hire an accountant. 🙂

You may still qualify as having bona fide residence in Thailand.

 

I also spend 2 months a year in US. For the past 28 years I have taken the foreign income exclusion based on bona fide residence.

 

See https://www.irs.gov/pub/irs-pdf/i2555.pdf

Section II

"Whether you are a bona fide resident of a foreign country
depends on your intention about the length and nature of your
stay. Evidence of your intention may be your words and acts. If
these conflict, your acts carry more weight than your words.
Generally, if you go to a foreign country for a definite, temporary
purpose and return to the United States after you accomplish it,
you aren't a bona fide resident of the foreign country. If
accomplishing the purpose requires an extended, indefinite stay,
and you make your home in the foreign country, you may be a
bona fide resident"

 

As for Colorado taxes, look up the state tax rules regarding nonresidents/part year residents. During the 2 months you are back in US, are you working?

 

 

[PingRoundTheWorld]

3 hours ago, Sheryl said:

He is likely taking the foreign income exemption on his US taxes so tax credit from payments in Thailand will not do much if anything for him financially.

 

I could be wrong, but I don't think you can claim the foreign income exemption on income that was derived/paid from a US source - regardless of where the work was performed. If he was working in Thailand, getting paid in Thailand, he could claim the exemption.

[PingRoundTheWorld]

2 hours ago, NorthernRyland said:

I'm taking no such exemptions, I don't think your location matters to the IRS anyways because I never got an accountant, just TurboTax. As far as they're concerned I live in the US and pay federal + state tax based on my parents address.

Why are you paying state tax?? Just get a mailing address in a state like Texas where there is no state income tax and file using that address. You have no legal obligation to pay taxes to a state you don't live in.

[PingRoundTheWorld]

23 minutes ago, PingRoundTheWorld said:

I could be wrong, but I don't think you can claim the foreign income exemption on income that was derived/paid from a US source - regardless of where the work was performed. If he was working in Thailand, getting paid in Thailand, he could claim the exemption.

It appears I am indeed wrong, and you CAN claim the FEIE on income from US employers as long as you meet the requirements (bona fide foreign resident). I am slightly shocked as in the past I spent a decade paying US income tax while living overseas because I had an online business incorporated in the US. It's too late to amend those returns, but good to know...😵

[Sheryl]

41 minutes ago, PingRoundTheWorld said:

It appears I am indeed wrong, and you CAN claim the FEIE on income from US employers as long as you meet the requirements (bona fide foreign resident). I am slightly shocked as in the past I spent a decade paying US income tax while living overseas because I had an online business incorporated in the US. It's too late to amend those returns, but good to know...😵

Yes, of course you can claim the Foreign Income Exemption if you have a US Employer (unless it is the US Government).

 

There is even a place on the relevant tax form for "Employer's US address".

 

 

[Sheryl]

1 hour ago, PingRoundTheWorld said:

Why are you paying state tax?? Just get a mailing address in a state like Texas where there is no state income tax and file using that address. You have no legal obligation to pay taxes to a state you don't live in.

No need for an address in a different US state. Just file from Thailand where he lives.

[PingRoundTheWorld]

44 minutes ago, Sheryl said:

Yes, of course you can claim the Foreign Income Exemption if you have a US Employer (unless it is the US Government).

Wish I knew that a decade ago. Would've saved me a lot of money and headaches. I ran my own company (C Corp) so made sure to maximize (legal) deductions to lower my salary/taxable income. It wasn't that much, but still paid some over those years. Sounds like I could've just paid it as salary and excluded it. (but then again minimizing payroll also minimizes payroll taxes which you can't exclude AFAIK)