U.S. 3.5 percent tax on remittance transfers is still in the Senate version of big bill

[Jingthing]

Folks, this is a can of worms in the making!

 

The "good" news that I have gleaned.

 

-- the original figure was 5 percent so 3.5 is obviously better

-- the current senate version doesn't apply until January 2026 so we have time to transfer in bigly money before then

 

The "bad" news 

 

-- Transferring entities must register and are subject to a lot more paperwork. Maybe fewer will even do transfers or if they do, they might raise their fees.

-- Being a U.S. citizen does NOT mean that the tax won't be taken out! You'll need to file with the IRS later for a refund

-- Transferring entities if they fail to take out the tax and it turns out the tax is still due will be liable to pay the tax themselves! This explains the above point. 

 

The "target" was supposedly illegal aliens in the U.S.

U.S. citizen expats are not going to be treated much better.

 

As expats we have no political power.

Currently, Mr. Trump is on a wag the dog war high.

That will help him cram this big bill through the senate.

 

I know many of you voted for him. Another case of the leopard eating faces, yeah?

[bamnutsak]

Have to see how this shakes out in the final Act's wording. Some major differences in the the House and Senate versions.

 

Hopefully first-party (me remitting funds to myself) remittances by U.S. citizens will be exempt.

 

And if not, the 3.5% withheld can be eligible for a refund.

 

Will be interested to see how ATM and credit card usage gets treated.

 

Could be messy and cumbersome, with unintended consequences.

 

[Jingthing]

Credit cards exempt.

[Jingthing]

To emphasize.

 

It's still in the bill which suggests it will be there if it passes.

 

Trump's projecting himself as a war winner gives him at least temporary political capital to help push the bill.

 

Bad news for expats.

[John Drake]

What I have read says the tax will only apply to non-citizens. Has this changed?

[angryguy]

Makes the decision not to live here easier

[timendres]

10 minutes ago, John Drake said:

What I have read says the tax will only apply to non-citizens. Has this changed?

 

That has not changed. However, what people are pointing out is that banks and other institutions will be unwilling to make the investment to verify citizenship. It will be easier and cheaper to simply say "get it back at refund time". So they will take it from every transaction.

[John Drake]

3 minutes ago, timendres said:

 

That has not changed. However, what people are pointing out is that banks and other institutions will be unwilling to make the investment to verify citizenship. It will be easier and cheaper to simply say "get it back at refund time". So they will take it from every transaction.

 

Aside from SSA, which uses direct deposit into my Bangkok Bank account, the only international transfer service I use is Wise. And several months ago Wise required me to upload an image of my passport. So it seems, Wise, at least, has already verified citizenship.

[bkk6060]

1 hour ago, Jingthing said:

expats we have no political power.

Sure they do.  The right to vote, but if you voted for Kamala you obviously now feel powerless.

[Jingthing]

36 minutes ago, bkk6060 said:

Sure they do.  The right to vote, but if you voted for Kamala you obviously now feel powerless.

I obviously meant beyond voting. Like lobbying power as a demographic that any politicians care about.

[Jingthing]

39 minutes ago, John Drake said:

 

Aside from SSA, which uses direct deposit into my Bangkok Bank account, the only international transfer service I use is Wise. And several months ago Wise required me to upload an image of my passport. So it seems, Wise, at least, has already verified citizenship.

There is no way that you could know that Wise won't deduct the excise tax anyway.

 

[Jingthing]

45 minutes ago, timendres said:

 

That has not changed. However, what people are pointing out is that banks and other institutions will be unwilling to make the investment to verify citizenship. It will be easier and cheaper to simply say "get it back at refund time". So they will take it from every transaction.

Exactly!

Especially considering if they get it wrong, THEY pay the tax.

Since when would we expect such firms to take any kind of such risk?!?

[John Drake]

7 minutes ago, Jingthing said:

There is no way that you could know that Wise won't deduct the excise tax anyway.

 

 

Wise breaks down your charges, noting the exchange rate and transfer fee. If you suddenly start seeing an extra $1000 deducted on a transfer, it will be noticeable.

[Jingthing]

Just now, John Drake said:

 

Wise breaks down your charges, noting the exchange rate and transfer fee. If you suddenly start seeing an extra $1000 deducted on a transfer, it will be noticeable.

That's true. 

We'll only know the details for any specific transferring firm if this law is passed when people either try it or the firms announce their policies about it to clients.

Cheers.

[John Drake]

1 minute ago, Jingthing said:

That's true. 

We'll only know the details for any specific transferring firm if this law is passed when people either try it or the firms announce their policies about it to clients.

Cheers.

 

The more frightening thought to me is that once they begin implementing this 3.5 percent tax, they will soon start raising rates, as government gets more desperate, and very soon the exemption for citizens will go away. All that is needed is for the camel to get its nose under the tent.

[TimBKK]

Most banks and brokerages already ask for citizenship to open and/or maintain an account - BOA, Chase, WF, Citi etc.  I am hard pressed to believe that they would ignore this information and slap the tax on everyone, including people they know the tax isn’t applicable to.

[biervoormij]

2 hours ago, Jingthing said:

Folks, this is a can of worms in the making!

 

The "good" news that I have gleaned.

 

-- the original figure was 5 percent so 3.5 is obviously better

-- the current senate version doesn't apply until January 2026 so we have time to transfer in bigly money before then

 

You may want to avoid the bigly transfer prior to 2026 unless you are sure the Thai Tax man will never decide to enforce the remittance tax that was started in 2024. It may be better to loan the US government 3.5% rather than get audited by the Thai tax man and have to pay a 30% Thai tax. 

 

I am not sure Thailand will ever attempt to tax expat remittance but good to think about it before making a big transfer.

 

I had seen something about this 3.5% withholding but thank you for posting it here. Good to be informed. 

 

 

 

[bamnutsak]

56 minutes ago, TimBKK said:

Most banks and brokerages already ask for citizenship to open and/or maintain an account - BOA, Chase, WF, Citi etc.

 

I don't think I've ever had to prove citizenship to open/maintain an account?

 

And a W9 isn't a strong enough 'filter' re: "Citizenship".