Banking service???????

[Darvil]

After living 10 years in the US, I think the American dream is eroding. After this summer visit to BKK, I've decided to move back there in about a year to a year and half. I know I should ask the tax man but I thought I might just pour it out here a bit for some people who might know.

Anyway, I got a verbal OK from my work about working from BKK. I work as a linux/network guy for a hosting company in the US and the move is actually a win/win as I'll actually be able to cover the graveyard shift (Being beeped at night from crashing servers is a PITA).

Also Some of my friends in BKK have started an IT company, and have promised me that they can get me a WP to work with them so I am covered on that. This is a side job as I do have a full time job I'm going to be doing. So here is the question. The income I'll make with them will be a decent amount (I think for a US citizen, it starts at 50k+?). Now I was noticing on some threads people were talking about the foreign earned income (link) for Americans. Now since this money will be purely a Thai income, will I be able to put into this exclusion? I was thinking of going the Physical Presence Test route by staying in BKK 330 days out of the year and coming back to the US for a month every year. I know people here say big Uncle Sam is going to take my money but others insisted there is a legal way around this so I was wondering.

There is also another wrinkle to my situation. I do make a small amount of money over the web (google adsense) and although it is small now, there is a chance in a year it will grow to a decent amount (think 600-1k US a month). Now because I will be living in Thailand, would this income count as an American income? I will be doing the hosting the site in the US but I will be working for the site from Thailand. I'm going to assume this piece is probably for Uncle Sam.

One other thing that I have a question about is the treaty the US has with Thailand about double taxation. Any idea about how this actually works in my situation? Since my company don't officially have a branch in Thailand, I don't think I'll be taxed for that work I do remotely in Thailand. Of course since I will have another income stream in BKK, I am assuming I will be taxed for this.

Now since I'm also moving back to the US a month out of year, this will probably makes the tax situation more complicated with the incomes.

Anyway, anyone might have some comments for me? (other then talk to my local tax guy )

[rgs2001uk]

Please tell me the decent amount you refer to is $50k per year and not 50k baht per month.

[Darvil]

Hi rgs2001uk,

Yes I mean 50k baht a month (whatever that is the minimum the law requires a US citizen to be paid, I think it is 50k?)

Remember that this is work I'm doing on the side.

[rgs2001uk]

The first thing i would check is that the wording on my WP doesnt prevent me from working on the side.

CYA you dont want to be picked up for working illegally on the side.

For any work you do on the side, how will you be paid, cash in hand, paid into a bank account back home or through the books?

[Darvil]

Hi rgs2001uk,

I'm not sure you're getting me or I am not explaining clearly.

The WP is for working in Thailand (for the side job). The real work I do in the US is done remotely (from Thailand) and has nothing to do with the side work in Thailand.

My question was that, they are 2 different work, one in the US and one in Thailand (with WP) and the tax situation with that.

On a side note I found this thread

http://www.phuket-info.com/forums/expats/48747-thailand-tax-avoidance-back-home.html

Looks like I'll be able to avoid paying tax on the side work I do in Thailand but I can't avoid paying Social Security/medicare etc. So uncle sam will have a piece of the pie.

edit: I missed your question. Most likely it'll be paid to a bank account.

Edited November 6, 2010 by Darvil

[ericthai]

It does not matter if you make the money in Thailand or the USA you are responsible to pay taxes on any income you make. However if you stay out of the USA for a continuous 330 days per year then you can qualify for an exemption of I believe this year it is 83,500 USD. So you will not have to pay taxes on any money earned upto 83,500 USD. Anything over this amount you will need to pay taxes on. There is one more issue Social security, you will need to pay this. Hopefully the USA company you work for will pay this and deduct your portion if not then you will be considered self-employed and you will have to pay 15% SS tax on all income earned. Best is to get a good tax guy. I have a good one in the USA I use. He does a really good job for me. If you look around on the net you can get some good information. There is one last thing. If you open a bank account in Thailand and if at anytime during the year the balance goes over $10,000 USD, then you will need to submit a Foreign Bank and Financial Accounts (FBAR) this is submitted to the IRS and is separate from your tax filing.

I believe the deadline each year is sometime in June. I cant recall.

Good luck..

[Darvil]

Hi Ericthai,

Thanks for the post. I didn't know about the 10K dollar rule in BKK so thanks. Its odd that I have to inform IRS. They just want a record of it even though I would be exempted?

Anyway I'll be paying SS and medicare tax with the regular work I'll be doing and its full time. Does that mean the money I make in Thailand is totally exempted?

[Soutpeel]

Hi rgs2001uk,

Yes I mean 50k baht a month (whatever that is the minimum the law requires a US citizen to be paid, I think it is 50k?)

Remember that this is work I'm doing on the side.

You are confused, there is no law which says a US citizen or any other citizen must be paid a certain amount of money to be granted a WP

You are getting mixed up with the extension of stay based on employment which requires a minimum of 50k/month so you do not do visa runs, ie you never leave the country just report every 90 days, and just because somebody is on the books for THB 50k/m doesnt mean the indivdual has to be paid 50k a month.

Per one of you other posts, if you planning to try and avoid paying tax in Thailand, you will not be able to get a WP anyway, as you need to pay tax for your WP and if on extension of stay per above, the taxable amount will be on the THB 50k/m

[Soutpeel]

Does that mean the money I make in Thailand is totally exempted?

No..... you have to pay tax in Thailand if you are on a WP

[phaethon]

You are getting mixed up with the extension of stay based on employment which requires a minimum of 50k/month so you do not do visa runs, ie you never leave the country just report every 90 days, and just because somebody is on the books for THB 50k/m doesnt mean the indivdual has to be paid 50k a month.

A small Gedankenexperiment: Does that mean if I have more than THB50k income from abroad I could get a job in LOS payin, say THB1 per year with WP and then get extensions?

[Darvil]

Hi rgs2001uk,

Yes I mean 50k baht a month (whatever that is the minimum the law requires a US citizen to be paid, I think it is 50k?)

Remember that this is work I'm doing on the side.

You are confused, there is no law which says a US citizen or any other citizen must be paid a certain amount of money to be granted a WP

You are getting mixed up with the extension of stay based on employment which requires a minimum of 50k/month so you do not do visa runs, ie you never leave the country just report every 90 days, and just because somebody is on the books for THB 50k/m doesnt mean the indivdual has to be paid 50k a month.

Per one of you other posts, if you planning to try and avoid paying tax in Thailand, you will not be able to get a WP anyway, as you need to pay tax for your WP and if on extension of stay per above, the taxable amount will be on the THB 50k/m

Hi,

Thanks for the clarification. And that is exactly what I want. I don't want to deal with the visa runs. Also you are right on the 50k/m in the books, the plan is just to mention the amount to make my life easier.

As for the tax, I don't have a problem paying the Thai tax as it is quite small. What I was afraid of was double taxation esp if the income in Thailand was lumped with the income in the US. Plus some extras on the side (IE website earnings).

[keeniau96]

The bank reporting is not IRS but US Treasury form, due at end of June each year. Required to be filed if account exceeds US$10k at any time.

[givenall]

Does that mean the money I make in Thailand is totally exempted?

No..... you have to pay tax in Thailand if you are on a WP

The best is to talk to a US accountant. The money you earn in US and paid in US to US bank has nothing to do with the Thailand and you still have to pay tax in US. If the money was earned in Thailand then you would have tax exemption which is about 90k per year if you do not stay in US for more than 30 days a year. If you have to have work permit here so you can stay on Thailand then min salary is now 60k bth so you have to declare that and pay Thai Taxes for income of 60k X 12 per year.

I recommend if you have a way to stay in Thailand, may be you are a Thai citizen, or can stay here with retirement visa, then don’t worry about work permit and just work fo US company and get pay over there and take care of taxes over there

[RAZZELL]

Does that mean the money I make in Thailand is totally exempted?

No..... you have to pay tax in Thailand if you are on a WP

The best is to talk to a US accountant. The money you earn in US and paid in US to US bank has nothing to do with the Thailand and you still have to pay tax in US. If the money was earned in Thailand then you would have tax exemption which is about 90k per year if you do not stay in US for more than 30 days a year. If you have to have work permit here so you can stay on Thailand then min salary is now 60k bth so you have to declare that and pay Thai Taxes for income of 60k X 12 per year.

I recommend if you have a way to stay in Thailand, may be you are a Thai citizen, or can stay here with retirement visa, then don’t worry about work permit and just work fo US company and get pay over there and take care of taxes over there

Mmm...bit confused over this...The OP would be physically working in Thailand for a USA based company....and you're advising him to work without a WP?

In the long run the legal and best way to do this would be to get a WP and pay Thai tax on THAT income which is remitted to Thailand. All legit and above board. No problems with extension of stay etc

RAZZ

[Darvil]

Does that mean the money I make in Thailand is totally exempted?

No..... you have to pay tax in Thailand if you are on a WP

The best is to talk to a US accountant. The money you earn in US and paid in US to US bank has nothing to do with the Thailand and you still have to pay tax in US. If the money was earned in Thailand then you would have tax exemption which is about 90k per year if you do not stay in US for more than 30 days a year. If you have to have work permit here so you can stay on Thailand then min salary is now 60k bth so you have to declare that and pay Thai Taxes for income of 60k X 12 per year.

I recommend if you have a way to stay in Thailand, may be you are a Thai citizen, or can stay here with retirement visa, then don’t worry about work permit and just work fo US company and get pay over there and take care of taxes over there

Thanks for the post,

The minimum amount has been raised to 60k for a US citizen? I didn't know that. From looking at the income table here it looks like I'll have to pay about 70k baht in tax with that earning (as I'm a single guy).

I'm not Thai citizen (and not yet 30) so the only route for me is to get a WP through my friends. Obviously initially I won't be making that much from the side work I'll do (its like 10 hrs a week) but at least I can be there legally and there is potential for more money.

Thanks for the information. I think I'm getting a much clearer picture now.

By the way, does anyone have any idea on the google adsense income at all? Would that count as a US income even if I am working for the site in Thailand? The server is located in the US. I also could have the money be sent as a Western Union into a Thai bank instead of the money being dropped into a US bank account (which it currently does now). Would that count as a Thai income if I do that?

Edited November 8, 2010 by Darvil

[Darvil]

I can't find any info on the 60k minimum for a US citizen. Perhaps this has changed during the past few months?

I see links like this which shows 50k. Is there a specific site that is up to date that I can check? Can't seem to find any.

[fstarbkk]

It does not matter if you make the money in Thailand or the USA you are responsible to pay taxes on any income you make. However if you stay out of the USA for a continuous 330 days per year then you can qualify for an exemption of I believe this year it is 83,500 USD. So you will not have to pay taxes on any money earned upto 83,500 USD. Anything over this amount you will need to pay taxes on. There is one more issue Social security, you will need to pay this. Hopefully the USA company you work for will pay this and deduct your portion if not then you will be considered self-employed and you will have to pay 15% SS tax on all income earned. Best is to get a good tax guy. I have a good one in the USA I use. He does a really good job for me. If you look around on the net you can get some good information. There is one last thing. If you open a bank account in Thailand and if at anytime during the year the balance goes over $10,000 USD, then you will need to submit a Foreign Bank and Financial Accounts (FBAR) this is submitted to the IRS and is separate from your tax filing.

I believe the deadline each year is sometime in June. I cant recall.

Good luck..

I have an excellent accountant in the US and recently had occasion to discuss my situation with an equally good int'l tax attorney. Both told me exactly what you outlined in your post. So I think that's solid info. Now I wonder if you could get me in touch with the guy you use in the States, as the one I use now is good, but VERY expensive. Cheers!

[MattFS218]

International tax law can often be interpreted different ways. I assume you publish a website that earns publishing revenue from AdSense by displaying ads. I believe that you probably gave AdSense your ss# and a US address at signup, so AdSense will probably issue you at 1099 which MUST be reported on your US taxes but you might be able to claim the foreign earned income exclusion on the earnings

I wouldn't worry about it reporting it on the Thai side because they are not likely to care if you are not steeling Thai jobs. I believe it's 70k baht/mo for a work permit issued by the Thai government for American citizens. On the Thai side there are a lot of yearly deductions for people who save their income and invest in qualified funds. The actual tax rate on an individual can actually be substantially less than the US on all income brackets if taking advantage of the deductions. Typically Social Security and Medicare taxes are withheld by US employers.

It's good to see more young Linux guys coming to Thailand, if you need some work I'm also looking at hiring some expat Linux talent in Thailand to do VoIP stuff.

[MattFS218]

Also if you are a director in a Thai company with any sort of signatory power over bank accounts you need to investigate if you need to file IRS form 5471. The fine for not filing is a automatic $10k USD/year.

[Darvil]

International tax law can often be interpreted different ways. I assume you publish a website that earns publishing revenue from AdSense by displaying ads. I believe that you probably gave AdSense your ss# and a US address at signup, so AdSense will probably issue you at 1099 which MUST be reported on your US taxes but you might be able to claim the foreign earned income exclusion on the earnings

I wouldn't worry about it reporting it on the Thai side because they are not likely to care if you are not steeling Thai jobs. I believe it's 70k baht/mo for a work permit issued by the Thai government for American citizens. On the Thai side there are a lot of yearly deductions for people who save their income and invest in qualified funds. The actual tax rate on an individual can actually be substantially less than the US on all income brackets if taking advantage of the deductions. Typically Social Security and Medicare taxes are withheld by US employers.

It's good to see more young Linux guys coming to Thailand, if you need some work I'm also looking at hiring some expat Linux talent in Thailand to do VoIP stuff.

Thanks Matt,

I will look into the google adsense as you mentioned. Will be great if I can claim it as a foreign exclusion earnings.

Now is it safe to assume, I won't need to declare my US earning to Thailand? I'm assuming just the 70k baht/mo for the work permit right? Still from looking at the http://www.doingbusinessthailand.com/thailand-taxes/thailand-taxes-personal-income-tax-simulation-table.html here, I would have to pay almost 100k in taxes for the year! Wow. Thats more then I expected. But my yearnings to be back to BKK is quite overwhelming. Obviously the side work I'll be doing will definitely not pay me anywhere close to 70k so this Thai tax will have to come out of my US earnings. But I'm committed to stay in BKK to get residency eventually (3 years before I can apply I think) so I don't have much of a choice.

Can you tell me where you get the 70k figure? I'm getting all sorts of numbers. My friends in Thailand are saying 50k to 60k. You're the first one I see that mentions 70K. 50k would just means 45K tax a year which is quite a bit less then 100K in tax for a 70k monthly income. I'm looking at http://www.thaivisa.com/513.0.html and even there (updated in Aug 2010) quote "a. From most countries in European continent, Australasia, Canada, Japan, or United States of American, the minimum salary would be 50,000 Baht per month"

Thanks for the job offer BTW. I will have some extra time so I was thinking about doing some work on the side but we'll see when we get there (don't know much about VOIP ). At least I know that there are some opportunities on BKK for a linux nerd like me from other expats! I would like to at least earn enough to pay the tax and living costs. I'd like to keep all my US earnings in the US til I'm ready to make a big purchase.