Us Taxes For Us Citizen Working In Bkk

[JJDinsay]

Any US Citizens here working in Thailand (dumb question) Just wondering as I need to know what forms have to be filled out in order for the Fed and State Tax Authorities from deducting taxes on paycheck. I believe it's a 2555 or 2555EZ. Do I have to show any proof that I am paying taxes in Thailand? What happens once this form is filled out? Am I exempt from taxes then?

thanks,

[The Coder]

As you are obviously internet savvy, why not use turbotax or similar? The way it works is it asks you questions, you give it answers. It then identifies and fills out all of the appropriate forms and lets you paperlessly e-file your return with direct debit / deposit of your balance due / refund to your bank account. No more dealing with forms, worksheets, and form instructions. It even pulls in your 1099's automatically from the financial institutions without you entering any data. It does state & federal and handles international situations, businesses, etc. Easy, cheap, and accurate. You can also print and review all of the forms it ends up filling out and filing.

[Tywais]

I use the 2555ez proof of residence form. You do have to prove you are a "bona fide resident". This means 330 days continuous stay in a foreign country. You will be exempt from US taxes if less then 70,000USD (this may have changed). You do have to file the 2555 form every year, not just the one time. If you go to the www.irs.gov website and download the 2555 information form it tells you all the requirments.

[Smokin Joe]

Your employer is the one that takes taxes out. The Fed and state don't withhold anything from your paycheck. Asking your employers pay office how to stop withholding may be the most direct route. A search on the IRS website should turn up the correct form.

Don't forget that the tax you are exempt from is ONLY on what you earn overseas. Anything from a US pension, stock sales, capital gains, or rental property in the US is still all taxable.

Another point about the residency thing. If you spent a cpouple of months during the year in the US you could still be eligible as long as you actually have your primary home overseas. The eligibility is 330 days OR "Bonafide Overseas resident"

Read the 2555EZ closely, it explains it pretty well. Good luck and don't do anything to bring the wrath of the taxman upon you. The IRS is worse than the Mafia if they think you owe them money.

Any US Citizens here working in Thailand (dumb question)  Just wondering as I need to know what forms have to be filled out in order for the Fed and State Tax Authorities from deducting taxes on paycheck.  I believe it's a 2555 or 2555EZ.  Do I have to show any proof that I am paying taxes in Thailand?  What happens once this form is filled out?  Am I exempt from taxes then?

thanks,

<{POST_SNAPBACK}>

[Khun ?]

You have $80,000 tax free from overseas income. The first year would normally be the 330 outside the U.S then after that residence could be claimed which no longer requires the 330 days out of the U.S as long as you maintain your residence

overseas and will return. It does not work off calander year so if you work overseas 18 months continous all 18 months will be tax free.

The IRS has no idea what you get from your foreign employers and if no money is

being sent to a U.S. bank account they will probaly never know. If they take Thai taxes out it does not make a difference until you go over $80K as anything below is non taxable. If you make over $80K then whatever you paid in thai taxes can be deducted from your U.S. taxes.

The residence filing is a little bit of a gray area than the 330 day rule per physical

presence rule. 2555 EZ for most

[Jim_E]

The first thing you should do is go to the IRS web site and download publication 54 ("Tax Guide for Citizens Working Abroad"). It is as well written as any tax guide and should answer all your questions or tell you where to go for further information.

I would avoid blindly trusting "Turbo Tax" or other automated softare. Those work fine for 99% of taxpayers, but when you have special situations, such as foreign income, they might not do it "the best way". Use it to help you, if you want, but you better know what to expect so you can be sure that the software does it right.

http://www.irs.gov/publications/index.html

[IMA_FARANG]

Any US Citizens here working in Thailand (dumb question)  Just wondering as I need to know what forms have to be filled out in order for the Fed and State Tax Authorities from deducting taxes on paycheck.  I believe it's a 2555 or 2555EZ.  Do I have to show any proof that I am paying taxes in Thailand?  What happens once this form is filled out?  Am I exempt from taxes then?

thanks,

<{POST_SNAPBACK}>

1. No, the form 2555 or 2555EZ is the form to file with your tax return to claim exemption on income earned overseas. (The 80,000 exemption). I believe it is a W-4 that has to be filed to claim exemption from payment of deductions.

2. The key is you must be outside the U.S. for purposes of employment for at least 330 days in during the TAX YEAR. (The 2005 Tax Year runs from 1 Jan 2005 to 31 Dec. 2005).

3. Income must be paid to you for the express purpose of employment in your country of residence. Income paid to you in the U.S. (including pensions) is out.

4. You are allowed no more than 30 days in that time to return to the U.S. for holiday. If you go over the 30 day limit, you lose.

5. You can claim as exemption only up to the amount you earn, but no more than 80,000 max.

The best way is to go on-line with the IRS. Look for the publications on filing taxes for overseas taxpayers. This will take too long here. The IRS has a lot of info on their site that gives the information.

[IMA_FARANG]

Any US Citizens here working in Thailand (dumb question)  Just wondering as I need to know what forms have to be filled out in order for the Fed and State Tax Authorities from deducting taxes on paycheck.  I believe it's a 2555 or 2555EZ.  Do I have to show any proof that I am paying taxes in Thailand?  What happens once this form is filled out?  Am I exempt from taxes then?

thanks,

<{POST_SNAPBACK}>

I'm back.

The publication you want is Publication 54 - Tax Guide for U.S. Citizens and Resident Aliens Abroad.

You can read/download a PDF version at

www.IRS.gov/pubs/IRS-pdf/p54.pdf

Hope it gives you the info you need.

[thaihome]

1. No, the form 2555 or 2555EZ is the form to file with your tax return to claim exemption on income earned overseas. (The 80,000 exemption). I believe it is a W-4 that has to be filed to claim exemption from payment of deductions.

2. The key is you must be outside the U.S. for purposes of employment for at least 330 days in during the TAX YEAR. (The 2005 Tax Year runs from 1 Jan 2005 to 31 Dec. 2005).

3. Income must be paid to you for the express purpose of employment in your country of residence. Income paid to you in the U.S. (including pensions) is out.

4. You are allowed no more than 30 days in that time to return to the U.S. for holiday. If you go over the 30 day limit, you lose.

5. You can claim as exemption only up to the amount you earn, but no more than 80,000 max.

The best way is to go on-line with the IRS. Look for the publications on filing taxes for overseas taxpayers. This will take too long here. The IRS has a lot of info on their site that gives the information.

<{POST_SNAPBACK}>

W4 is the form your employer uses to determine how much to deducted for Fed/State Income tax.

Once you have established residency outside the US, usually through the physical presence test the first year, there is no limit on how much time you spend in the US. This can get complicated if you also maintain a residence in the US.

Foreign earned income does not have to be paid outside the US. My salary is paid in USD and deposited in a US bank but is still considered foreign income.

Your first 80k is exempt from US taxes. You can offset the tax you owe on amounts over the 80k with the foreign tax credits (which can carryover from pervious years) from the Thai Income tax you pay. You can still end up owing a couple of thousand due to the Alternate Minimum Tax.

If you employer is a subsidiary of a US corporation and registered as a FICA company, you will still have FICA (social security) deducted from your pay.

Housing, education, living allowances are considered income for both Thailand and US. This can really skew your income. Most Multi-Nationals have a tax equalization program to compensate.

TH

Edited September 9, 2005 by thaihome

[The Coder]

I think this thread demonstrates why one SHOULD use turbotax. It absolutely does determine if you apply for the FEIE and fills out form 2555 optimally. I for one have used it and the computerized foreign residence guide and 330 day sliding scale works pretty slick. It's hogwash to say you could do a better job by hand. There are other considerations that may not be obvious as well such as if you claim all foreign earned income, you cannot make an IRA contribution. Turbotax is aware of all of the up to date tax laws and constantly works to find every possible deduction to give you the LOWEST, LEGAL tax burden. If it didn't, who would use it?

Anyone on the fence should do taxes by hand, then do them in turbotax and compare the results. You don't pay anything with turbotax unless you actually file and then it can be quite small; $20 for me last year. You can play with what-if scenarios really nicely all for free and never file if desired.

[taxout]

Just to clarify some of the statements above:

1. The physical-presence test requires that you be out of the US for 330 days in a consecutive 365-day period, not necessarily a single taxable year. Thus you can arrive in Bangkok on July 1 and leave the following June and still qualify for the exclusion. If you qualify for only part of a tax year the $80,000 exclusion is pro-rated for that year.

2. After you've met the physical presence test for a year, you MAY be able to switch to the so-called foreign residency test, in which you no longer have to meet the 330/365-day test, but do have to be bona-fide resident overseas.

3. Your earnings for work performed in the States are never excluded; salary earned while working on a visit back to the US, for example, will not be excluded. Whether earnings are PAID in the US or overseas is irrelevant for the exclusion.

4. There's an additional exclusion for excessive housing costs and if you qualify -- not too likely in Thailand, perhaps -- your exclusion can exceed $80,000.

5. The exclusion does not affect Social Security tax, which you'll still pay if you're employed in Thailand by a "US employer" or if you're self-employed. If you're self-employed this can be a surprisingly big number.

6. If you're paying Thai income tax, you may well be able to credit it against US tax on income not covered by the exclusion. Of course, you can't take a foreign tax credit on excluded income. There's the option of deducting a foreign tax instead of crediting it, but crediting is usually better.

7. To avoid Federal income tax withholding in your case -- that was your original question, after all -- you need to file Form 673 with your employer.

http://www.irs.gov/pub/irs-pdf/f673.pdf

8. Most importantly, the exclusion isn't automatic: you have to file a return and claim it.