Will a USA disablity benefit be taxed in Thailand?

[Steven55]

Hi all,
American guy (65+ yrs old), got social security + small pension based on his previous job (both taxed in USA). But also got a high disability (military) pension, which is tax free in the USA.
Question: will this disability benefit be taxed in Thailand? He brings in all his money, because he is severely handicapped and needs nearly all his money for rent, caregivers + medications (Out Patient Medications are not paid by his insurance). Can anyone give me a name of an accountant in Thailand who deals with tax filing for USA citizens in Thailand, or even better: similar cases (if any)?

[dlclark97]

AMERICAN INTERNATIONAL TAX ADVISORS - BANGKOK

[Srikcir]

As per Smokin Joe

Posted March 15, 2024 in Aseannow.com

"Your VA Disability is a Govt Pension and can not be taxed by Thailand per the DTA."

All Double Tax Agreements are available on the Thai Revenue Dept website. 

 

[DrJack54]

OP, @Mike Lister may also have some advice

[Mike Lister]

I agree with the post above quoting Smokin Joe. The VA disability pension is a government pension that cannot be taxed by other than the US.

[bamnutsak]

Do you have to get a TIN? And file a return, even if all of the disability income is not taxed here in Thailand?

 

19 hours ago, Steven55 said:

He brings in all his money

 

How does he do this? Wire Transfer or Direct Deposit?

 

Does he use this to qualify for the monthly income option on an extension of stay/retirement?

 

 

 

Here is the thread mentioned... https://aseannow.com/topic/1322443-is-va-disability-compensation-not-taxed-under-new-law/

 

 

In that thread, the OP mentions that they accumulate several months of payments to an account in the U.S. and then transfer funds to Thailand. 

[Mike Lister]

1 hour ago, bamnutsak said:

Do you have to get a TIN? And file a return, even if all of the disability income is not taxed here in Thailand?

 

 

How does he do this? Wire Transfer or Direct Deposit?

 

Does he use this to qualify for the monthly income option on an extension of stay/retirement?

 

 

 

Here is the thread mentioned... https://aseannow.com/topic/1322443-is-va-disability-compensation-not-taxed-under-new-law/

 

 

In that thread, the OP mentions that they accumulate several months of payments to an account in the U.S. and then transfer funds to Thailand. 

Either way, it doesn't matter, SWIFT transfer or direct deposit achieves the same objective.

 

If he uses the monthly transfer mthod, he can use that to qualify for the monthly income option

 

If his total annual income transferred into Thailand is under 120,000 baht per year, he doesn't need a TIN and doesn't need to file a return.

[bamnutsak]

2 minutes ago, Mike Lister said:

If his total annual income transferred into Thailand is under 120,000 baht per year, he doesn't need a TIN and doesn't need to file a return.

 

Thanks.

 

My guess is that, assuming a higher disability rating, the disability payment alone, or combined with SSA, will be over 120,000 per year.

 

 

 

 

[Mike Lister]

1 minute ago, bamnutsak said:

 

Thanks.

 

My guess is that, assuming a higher disability rating, the disability payment alone, or combined with SSA, will be over 120,000 per year.

 

 

 

 

I'm sorry, my statement is incomplete, I''ve not had my coffee yet! 😞

 

If his total annual ASSESSIBLE income transferred into Thailand is under 120,000 baht per year, he doesn't need a TIN and doesn't need to file a return. His disability income is over 120,000 but is NOT assessable hence it does not have to be reported.

 

[bamnutsak]

3 minutes ago, Mike Lister said:

If his total annual ASSESSIBLE income transferred into Thailand is under 120,000 baht per year, he doesn't need a TIN and doesn't need to file a return.

 

Thanks for cleaning that up.

 

So in summary Disability and SSA transferred into Thailand do NOT qualify as "Assessible Income", and if these are the only funds remitted then there is no need for a TIN or to file a return. Is that correct?

[Mike Lister]

2 minutes ago, bamnutsak said:

 

Thanks for cleaning that up.

 

So in summary Disability and SSA transferred into Thailand do NOT qualify as "Assessible Income", and if these are the only funds remitted then there is no need for a TIN or to file a return. Is that correct?

Correct. There is no place on the current tax forms to show exempt income. It is possible there may be a place in the future, if/when the forms are redesigned so we'll need to keep our eyes open.

[Billpro785]

Check the IRS website, look under the US-Thai tax treaty. All your answers are right there. I'm an American expat and my US accountant , a former IRS agent and overseas  tax advisor says I have nothing to worry about. You will be ok. 

[bamnutsak]

27 minutes ago, Billpro785 said:

Check the IRS website, look under the US-Thai tax treaty.

 

Thanks.

 

https://www.irs.gov/businesses/international-businesses/thailand-tax-treaty-documents

 

https://www.irs.gov/pub/irs-trty/thailand.pdf

 

 

[hml367]

https://www.expattaxthailand.com/your-questions-answered/

 

[Wrwest]

54 minutes ago, bamnutsak said:

 

Thanks.

 

https://www.irs.gov/businesses/international-businesses/thailand-tax-treaty-documents

 

https://www.irs.gov/pub/irs-trty/thailand.pdf

 

 

I want to thank you. While having already been advised by the US Tax Return preparer not to worry ... after reading Article 20 & 21 of the Treaty I am assured that I am not to be taxed by Thailand. I will remain subject to tax only by the USA as a citizen receiving Social Security and retirement funds from my public service educator service. It was my choice but working for lower pay resulted in my need to retire to a lower cost country in order to have a sustainable working middle class retirement. Ha! Such a burden ... living in Thailand being taken care of by my Thai wife ... poetic justice (ignoring the current pollution).

[bamnutsak]

11 minutes ago, Wrwest said:

I want to thank you.

 

Don't thank me, thank Billpro785.

[Steven55]

3 hours ago, bamnutsak said:

Do you have to get a TIN? And file a return, even if all of the disability income is not taxed here in Thailand?

 

 

How does he do this? Wire Transfer or Direct Deposit?

 

Does he use this to qualify for the monthly income option on an extension of stay/retirement?

 

 

 

Here is the thread mentioned... https://aseannow.com/topic/1322443-is-va-disability-compensation-not-taxed-under-new-law/

 

 

In that thread, the OP mentions that they accumulate several months of payments to an account in the U.S. and then transfer funds to Thailand. 

 

[Steven55]

3 hours ago, bamnutsak said:

Do you have to get a TIN? And file a return, even if all of the disability income is not taxed here in Thailand?

 

 

How does he do this? Wire Transfer or Direct Deposit?

 

Does he use this to qualify for the monthly income option on an extension of stay/retirement?

 

 

 

Here is the thread mentioned... https://aseannow.com/topic/1322443-is-va-disability-compensation-not-taxed-under-new-law/

 

 

In that thread, the OP mentions that they accumulate several months of payments to an account in the U.S. and then transfer funds to Thailand. 

 

[Steven55]

He uses 800,000 for his yearly extension of stay. His pensions are paid to his USA bank account, and now and then transferred (~ 4x a year) to his Thai bank account.
The money he needs in Thailand ~ 2 million baht: he pays a high rent for a big apartment, two 24/7 caregivers.
Anyway, thanks to all you here, I know now that his VA disability benefit is a USA Government pension, which will not be taxed in Thailand. That is a relieve, otherwise possibly his budget might not be enough to stay here.
Thanks!

[john donson]

is everybody here on 2-3-4 pensions?

 

and 2 million not enough???

[fulhamster]

On 4/4/2024 at 6:29 AM, Mike Lister said:

The VA disability pension is a government pension that cannot be taxed by other than the US.

Does the Thai government or tax authority understand this ?

 

[Steven55]

23 hours ago, john donson said:

is everybody here on 2-3-4 pensions?

 

and 2 million not enough???

He spends around 2 million baht, sometimes even more, indeed. Because he is severely handicapped and needs two 24/7 caretakers, in a large, expensive rental apartment. They entertain him, driving him to some nice places. Next he needs to pay his (expensive) medications by himself (OPD meds not included in his insurance coverage). He needs to pay for expensive diet food, diapers etc etc.
Yearly ~ 2 hospitalizations (last year 4 times!), of which he also needs to pay co-insurance.

[oMega69]

On 4/4/2024 at 3:41 AM, Mike Lister said:

Correct. There is no place on the current tax forms to show exempt income. It is possible there may be a place in the future, if/when the forms are redesigned so we'll need to keep our eyes open.

 

So if have disability pension from EU .. its same same no taxable ?.

[Smokin Joe]

1 hour ago, oMega69 said:

 

So if have disability pension from EU .. its same same no taxable ?.

 

The Thai-USA DTA (Tax Treaty) does not apply to citizens of other countries. You need to look at the DTA of your country. If there is one.

[Mike Lister]

5 hours ago, oMega69 said:

 

So if have disability pension from EU .. its same same no taxable ?.

It depends on what the DTA says, the EU has a separate DTA to the US, you will need to check yours, in all probability the answer will be the same..

[oMega69]

1 hour ago, Mike Lister said:

It depends on what the DTA says, the EU has a separate DTA to the US, you will need to check yours, in all probability the answer will be the same..

 

My country have DTA with Thailand so its should be zero tax then. . .

[CartagenaWarlock]

Just now, oMega69 said:

My country have DTA with Thailand so its should be zero tax then. . .

Just having a DTA does mean anything. If you have to dig into it to find out what is specifically exempt,. US SS, and government pensions are specifically exempt. 

[Mike Lister]

59 minutes ago, oMega69 said:

 

My country have DTA with Thailand so its should be zero tax then. . .

Read your DTA and see what it says.

[arjunadawn]

On 4/4/2024 at 5:49 AM, Srikcir said:

As per Smokin Joe

Posted March 15, 2024 in Aseannow.com

"Your VA Disability is a Govt Pension and can not be taxed by Thailand per the DTA."

All Double Tax Agreements are available on the Thai Revenue Dept website. 

 

For clarity, VA Disability is not VA or Military Pension. VA Disability Compensation differs from VA Pension, which is counted as income, and means tested. Even the US IRS cannot levy VA Disability Compensation. 

[arjunadawn]

On 4/4/2024 at 6:29 AM, Mike Lister said:

I agree with the post above quoting Smokin Joe. The VA disability pension is a government pension that cannot be taxed by other than the US.

Again, VA Pension differs from the primary VA program, Service Connected Disability Compensation. They are NOT the same. Only Compensation is excluded from tax or as income under US Code. Pension is a very different VA program.