Living In Thailand, While Working For A Us Company

[dave111223]

Is it possible to work for a US company (which does not do business in Thailand, or have offices in Thailand).

But live in Thailand?

Yet continue to pay US taxes, or would you require a Thai work permit for this, and pay thai taxes?

[Thaipwriter]

Is it possible to work for a US company (which does not do business in Thailand, or have offices in Thailand).

But live in Thailand? 

Yet continue to pay US taxes, or would you require a Thai work permit for this, and pay thai taxes?

yeah, of course it is.

getting a work permit is not so difficult though....if your "working" at a pc for example, and you do it in your own apartment....during darkness hour's.... with all the drapes closed......and you never tell anyone ( because there are too many jealous idiots who might grass on you) ...you can avoid having a WP. especially if you are away from Bangkok or other high profile farang places.

As for Thai taxes!!!!! its pennies...forget about it!

[dave111223]

Thanks for the feedback.

There are really people out there who would grass on you for something like this?

Is it possible to work for a US company (which does not do business in Thailand, or have offices in Thailand).

But live in Thailand? 

Yet continue to pay US taxes, or would you require a Thai work permit for this, and pay thai taxes?

<{POST_SNAPBACK}>

yeah, of course it is.

getting a work permit is not so difficult though....if your "working" at a pc for example, and you do it in your own apartment....during darkness hour's.... with all the drapes closed......and you never tell anyone ( because there are too many jealous idiots who might grass on you) ...you can avoid having a WP. especially if you are away from Bangkok or other high profile farang places.

As for Thai taxes!!!!! its pennies...forget about it!

<{POST_SNAPBACK}>

[justsignedin]

Thanks for the feedback.

There are really people out there who would grass on you for something like this?

Is it possible to work for a US company (which does not do business in Thailand, or have offices in Thailand).

But live in Thailand? 

Yet continue to pay US taxes, or would you require a Thai work permit for this, and pay thai taxes?

<{POST_SNAPBACK}>

yeah, of course it is.

getting a work permit is not so difficult though....if your "working" at a pc for example, and you do it in your own apartment....during darkness hour's.... with all the drapes closed......and you never tell anyone ( because there are too many jealous idiots who might grass on you) ...you can avoid having a WP. especially if you are away from Bangkok or other high profile farang places.

As for Thai taxes!!!!! its pennies...forget about it!

<{POST_SNAPBACK}>

<{POST_SNAPBACK}>

[PFV]

Is it possible to work for a US company (which does not do business in Thailand, or have offices in Thailand).

But live in Thailand? 

Yet continue to pay US taxes, or would you require a Thai work permit for this, and pay thai taxes?

<{POST_SNAPBACK}>

Dave,

An added benefit of your situation is that you can elect to take an $80,000 earned-income exclusion on your US tax return if you qualify as a bonafide resident of Thailand, or remain away from the US 330 days a year. BTW, for irs purposes, being a bonafide resident of Thailand does not necessarily mean having Thai PR.

Good luck!

[daveb1]

Good topic! So if you have income from a job abroad not working in thailand as such ie as you described the odd bit of work on a pc surely you could not get a work permit in Thailand.....could you? is it not best to pay tax in your home country or go for a work permit and pay tax in Thailand?

[ovenman]

surely you could not get a work permit in Thailand.....could you?

One needs to work for a Thai-registered company to apply for a work permit.

[daveb1]

thats what i thought but what if its your own company?

[lanny]

Well, doing the odd bit on a pc at home will not get you a work permit. Unless you get the proper documentation from the property owner, can demonstrate that you have 4 Thais working for you, etc. you won't qualify for a work permit.

If you do this, without the work permit, you do not qualify as a bona fide resident for US tax purposes. One of the requirements for the bona fide resident exclusion is that you be required to pay taxes in the resident country (with certain, very specific exceptions.)

You could still qualify under the physical presence rules by remaining outside the US for at least 330 days in any 12 month period (not necessarily a calendar year.)

Either way, working for a US company you will have to pay the social security and medicare taxes on your income. If you are an employee, the company must withhold taxes, just as it would if you were working in the US. If you are not an employee, you will have to pay the self-employment social security tax. The $80,000 exclusion is for income tax purposes only and does not apply for social security taxes.

[Smokin Joe]

I don't think you qualify for any tax break in the situation you described. Your income would probably still be considered to have been "earned" in the US.

Example -- you do computer work and e-mail all the work back to a US company. You can be anywhere in the world but probably still be considered as employed in the US. Probably different for a non-US citizen.

I certainly wouldn't worry about work permits etc. as there would be no evidence that you were working here.

The law is so strictly written though, that a businessman on vacation that answers a work related e-mail is technically breaking the law.

Only my opinions. Ask a tax accountant, you might just save yourself some money one way or the other.

[dave111223]

I'm taking a course right now in Federal Income Taxes. (Its actually interesting)

But unfortunately i had already ruled out the foreigned earned income tax break. As the company is an S-Corp, which means the Net Income goes straight onto my tax return, and then its taxed.

I believe if i changed it so that i was an "Employee" then i could claim the foreign earned income credit, but then i would have to pay FICA, federal/state unemployment tax, SS...etc etc ... so i'm not sure its really worth it. Especially as those taxes you cannot have deductions.

[Thaiquila]

I'm taking a course right now in Federal Income Taxes.  (Its actually interesting)

But unfortunately i had already ruled out the foreigned earned income tax break.  As the company is an S-Corp, which means the Net Income goes straight onto my tax return, and then its taxed.

I believe if i changed it so that i was an "Employee" then i could claim the foreign earned income credit, but then i would have to pay FICA, federal/state unemployment tax, SS...etc etc ... so i'm not sure its really worth it.  Especially as those taxes you cannot have deductions.

<{POST_SNAPBACK}>

Do you happen to know whether the foriegn income exclusion could apply in this scenario:

Partner ("member") of an LLC taxed as a partnership, or a partner in a partnership (US based)

Working in Thailand for this US partnership (not paying Thailand taxes and no work permit) ... the profit from this is "passed through" to the members, and taxed as income annually.

Any money distributions payed into a US bank account

Living in Thailand all year (meeting the residency test)

Edited October 5, 2005 by Thaiquila

[dave111223]

I'm taking a course right now in Federal Income Taxes.  (Its actually interesting)

But unfortunately i had already ruled out the foreigned earned income tax break.  As the company is an S-Corp, which means the Net Income goes straight onto my tax return, and then its taxed.

I believe if i changed it so that i was an "Employee" then i could claim the foreign earned income credit, but then i would have to pay FICA, federal/state unemployment tax, SS...etc etc ... so i'm not sure its really worth it.  Especially as those taxes you cannot have deductions.

<{POST_SNAPBACK}>

Do you happen to know whether the foriegn income exclusion could apply in this scenario:

Partner ("member") of an LLC taxed as a partnership, or a partner in a partnership (US based)

Working in Thailand for this US partnership (not paying Thailand taxes and no work permit) ... the profit from this is "passed through" to the members, and taxed as income annually.

Any money distributions payed into a US bank account

Living in Thailand all year (meeting the residency test)

<{POST_SNAPBACK}>

Again, similar situation as mine.

For it to be "earned icome" you have to be an "Employee" :\ Meaning you have to pay SS, FICA, fed/state unemployment taxes. Or even more basic do you get a W2, if not i believe you do not qualify.

So if you become an "employee" then you could claim it has foreign earned income.

But the company has to match some of the payroll taxes, (there is an employer and employee tax).

So basically i think it comes down to how much money make. If its not that much, probably not worth paying all these extra employment taxes to get the tax credit.

But if you're making the big $$$ then the employment taxes probably come no where close to the amount you would save iwth the $80,000 tax credit. <--- so if you're making a lot of $$ then become an employee instead of partner.

But i have only taken about 2 months of this tax course so far, so feel free to check this information for yourself

Edited October 5, 2005 by dave111223

[PFV]

...

If you do this, without the work permit, you do not qualify as a bona fide resident for US tax purposes.  One of the requirements for the bona fide resident exclusion is that you be required to pay taxes in the resident country (with certain, very specific exceptions.)

....

<{POST_SNAPBACK}>

Hi Lanny,

My accountant thinks that someone in Dave’s situation qualifies as bona-fide residents of Thailand, even without a work-permit and paying taxes to Thailand, because the bona fide foreign residence determination is based on where one's primary abode is and his or her intent to live there permanently.

The instructions for IRS form 2555 state that: “…No specific rule determines if you are a bona fide resident of a foreign country because the determination involves you intention about the length and nature of your stay….”

Nowhere in the IRS code is there a requirement to pay taxes to the foreign government. There is however a requirement that you do not make a statement to the Thai authorities that you are not required to pay taxes to them.

(From IRS Publication 54)

… You are not considered a bonafide resident of a foreign country if you make a statement to the authorities of that country that you are not a resident of that country and the authorities:

- Hold that you are not subject to their income tax laws as a resident, or

- Have not made a final decision on your status

……

So I would imagine that Dave would be able to file a form 2555 if he indeed had earned income. Of course, if Dave has a Subchapter S corporation and his income is actually in the form of unearned income distributions, the whole matter is moot.

The reason I am very interested in this matter is that my wife and I will be moving to Thailand in a couple of months and I will continue working for my Subchapter C corporation in the US. My accountant has told me that he will no longer deduct Federal and State income taxes, just the usual Social Security and Medicare taxes.

I sure hope he knows what he is saying…

Cheers,

Paul

Edited October 6, 2005 by PFV

[Thaiquila]

This is indeed a complex tax issue, and different "experts" will have different opinions. I recently talked to an experienced enrolled agent about these kinds of issues, and he admitted lots of (billable) research would be needed to provide an informed opinion.

Back to my question, if you are an LLC and opt to be taxed as a partnership, you are not an employee, you are a "member", your share of the profit of the LLC is taxed as taxable income (whether taken out of the business or not), there are no W2s because you are not an employee, and distributions of money are a separate issue and are not taxable events. Self employment tax payment is required.

I think an argument can be made for being eligle for the foreign earned income exclusion in these kinds of circumstances just by reading the residency guidelines as above, but there is certainly a lot of room to wonder whether it would be challenged or not!

[lanny]

I AM a tax accountant -- a CPA -- and I've been doing tax returns for expats for many, many years. I used to have a practice in the states and now work in Bangkok.

The rules for claiming the exclusion are simple if you read them but not so simple when you try to apply them. As described, it is my opinion that Dave would not qualify under the bona fide resident rules but could meet the physical presence test.

Claiming the exclusion depends on where the work is actually done, not on where payment comes from. If the company is an S corporation he could still qualify. If he actually does work for the company, he MUST pay himself a salary, withhold all appropriate taxes, and issue a W-2 at the end of the year. Only the income after deducting the salary and taxes is passed through.

A partner or LLC member can claim the exemption is he actually performs services outside the US.

In each case, the exclusion is determined on the persons personal income tax return, not the corporate or partnership return.

Just because someone is a CPA or EA does not mean they know and understand the rules for foreign income exclusion. Over the years, I have seen a lot of returns prepared by CPAs and EAs that were wrong because the preparer was not familiar with the rules. Just as I would not prepare a complex partnership return, because of my lack of experience in this area, some preparers should not do expat returns if they are not familiar with the rules.

[Adagio]

For those of you not from the USA I (eventually, they never answer their phone or emails) managed to speak to someone at the Thai embassy in London and was told I did not need a work permit and could work on my tourist visa. I do website support and told them I would be doing 2-3 hours a day whilst in the kingdom for a year. Of course I was only told this verbally and would not recommend relying on this advice, however if you are just doing' a little PC work' and are discrete the chances of getting into any trouble seem minimal.

[Adagio]

After writing the above I managed to get hold of someone in the Birmingham consulate who told me there was no way I could do any sort of work whilst in the country on a tourist visa. I could only work if I had a work permit and as I was not going to be working for a Thai company I could not get a permit. She had no answer when I asked how a travel journalist might manage to write an article about the country. I was not confident she was giving me accurate advice so I thought I'd also see if I could speak to anyone in one of the other consulates here in the UK and managed to get hold of somone in the Liverpool consulate. She sounded much more like she knew what she was talking about and confirmed that I would not be considered to be working in Thailand and so a tourist visa was fine. She also consented to confirm this to me in writing if I wrote to her stating my plans, which I have just done. that way if I do have any problem when I'm in the country I can at least present written evidence that I was acting on the advice of a consular official.