What Visa Do I Need

[tuffy]

I have a rotational job (US based) where i will be month in and month out of Thailand. Sometimes I may remain in Thailand for 2 months or more at a time. My wife who is a Thai citizen and myself are planning a move from the US sometime next year. What would be the best course of action concerning a visa I should take. We are planning on living in Thailand for about 5 years then moving back to the states.

Also does anyone have any insites about how i can get out of paying US taxes?

[Sunbelt Asia]

Get a one year multiple "O" visa in the States at a Thai Embassy/Consulate by showing the marriage cert and ID of your wife. Bank statement as well would be good. You'll be able to stay up to 3 months at a time with no other criteria needed such as 400,000 Baht in a bank as you don't need to apply for the extension of stay.

If you really don’t want to pay U.S. taxes: Move abroad, take your money with you, and renounce your citizenship. This decision is irrevocable, which is why it’s such a serious step as most people agree that blue passport is worth its weight in gold.

You’ll also need to come up with a reason why you moved that doesn’t have to do with the IRS. If the government determines your primary reason for moving was to avoid taxes, it can tax you for up to 10 years after the move.

Another option in the future for you, qualified taxpayers can exclude from gross income as much as $80,000 in income earned while living abroad.

Foreign earned income includes foreign-source wages, salaries, bonuses, commissions, cost-of-living differential, home leave, tips, professional fees and any other form of compensation for personal services rendered. It even includes non-cash income, such as the use of a car.

This exclusion applies regardless of the amount of tax paid to the foreign country.

Here’s how to qualify:

You must have your “tax home” in a foreign country.

You must have a bona fide foreign residence. To meet this requirement, you have to be a bona fide resident of a foreign country or countries for an uninterrupted period that includes a full tax year. For a calendar-year taxpayer, you’d need to include a January-to-December period. Brief or temporary trips for business or vacation won’t disqualify you.

If you don’t qualify under the above bona fide residence test, you may be eligible under the physical presence test. With this test, you can qualify if you spend 330 full days out of any 12 consecutive months in a foreign country or countries. Here, physical presence in 2004 can count in determining if you qualify for the exclusion for 2005.

Any foreign taxes you pay can either be deducted as an itemized deduction on your U.S. federal return as you would treat state income taxes, or potentially taken as a credit against your U.S. tax bill.

If you deduct the taxes, you can't take the credit. Similarly, if you take the credit, it will reduce your deductions. And here's a rule of thumb for dealing with the question: If the tax bracket you are subject to in the host country is higher than your U.S. tax bracket, you may be able to wipe out any U.S. tax liability. If it’s lower than your U.S. tax rate, you may be paying tax to both locations.

Do yourself a favor and do both calculations before you file. The odds are the credit will help your U.S. tax bill more.

Let's say you live overseas and have taxable income of $100,000 a year. The first $80,000 will be excluded from U.S. taxes. The last $20,000 (or 20% of the total) will be subject to U.S. tax.

If the host country taxes you at, say, 25% on your entire taxable income, you will pay $25,000. But you can claim a credit of 20% of that amount -- or $5,000 -- against your U.S. tax bill. If you're in the 25% bracket for U.S. tax purposes, the credit will wipe out any U.S. tax liability. Remember: You get no credit for income excluded from U.S. taxes.

See Form 1116 to compute your foreign tax credit. Remember, this credit is potentially a dollar-for-dollar reduction in your U.S. tax bill. But the credit can’t exceed the U.S. taxes paid on the foreign income.

In addition to the election to exclude foreign earned income, you may also elect to exclude from your gross income a certain amount of employer-provided foreign housing expenses.

These rules are the general rules for working abroad. But, many countries have special direct treaties such as Thailand has with the U.S. government that may affect your potential financial obligations. If you’re planning to work abroad, find out if there’s a special treaty with the nation you’re planning to work in which has a double taxation treaty.

www.lawyer.th.com

[Boon Mee]

Stay out of the states for 330 consecutive days and you are no longer obligated to pay US Federal tax. If you know you are going to be out that long, initially, have your W-4 form filed stating 'exempt' and tax won't be taken out of your salary.

After you've established Thailand (or anywhere) your new 'tax home' you can return to the states for extended periods and still be exempt from tax.

[lopburi3]

Stay out of the states for 330 consecutive days and you are no longer obligated to pay US Federal tax.  If you know you are going to be out that long, initially, have your W-4 form filed stating 'exempt' and tax won't be taken out of your salary.

After you've established Thailand (or anywhere) your new 'tax home' you can return to the states for extended periods and still be exempt from tax.

<{POST_SNAPBACK}>

You may be able to exempt income but you are still subject to US income tax:

I worked out of the country for one year. Do I have to pay U.S. income tax?

As a U.S. citizen, your worldwide income generally is subject to U.S. income tax, regardless of where you are living. However, you may qualify for the foreign earned income exclusion, foreign housing exclusion or foreign housing deduction, or the foreign tax credit. These tax benefits can reduce or eliminate the U.S. tax you would otherwise have to pay on your foreign income.

References:

Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad

Publication 514, Foreign Tax Credit for Individuals

Form 2555 (PDF), Foreign Earned Income

Form 2555EZ (PDF), Foreign Earned Income Exclusion

Form 1116 (PDF), Foreign Tax Credit

[tuffy]

Thanks for the info guys!

One other question (actually a couple)..... When we do move there we are planning on buying a home. Should I try to get my name on the title or just leave it in my wifes name? Do I have to register with the thai govenment with this as my residence? I don't want to come home one day and find the gestopo waiting to take me to a dark cell somewhere!

[lopburi3]

You can not own or pay for land in Thailand so it will be in the name of your wife (unless a condo). When you enter Thailand you report your address on the arrival card and as long as you use visa entry (90 day max stay) that is all you need to do. If you ever remain in Thailand longer than 90 days (continuous) you must report your address on a form Tm.47 to immigration.

[tuffy]

Stay out of the states for 330 consecutive days and you are no longer obligated to pay US Federal tax.  If you know you are going to be out that long, initially, have your W-4 form filed stating 'exempt' and tax won't be taken out of your salary.

After you've established Thailand (or anywhere) your new 'tax home' you can return to the states for extended periods and still be exempt from tax.

<{POST_SNAPBACK}>

You may be able to exempt income but you are still subject to US income tax:

I worked out of the country for one year. Do I have to pay U.S. income tax?

As a U.S. citizen, your worldwide income generally is subject to U.S. income tax, regardless of where you are living. However, you may qualify for the foreign earned income exclusion, foreign housing exclusion or foreign housing deduction, or the foreign tax credit. These tax benefits can reduce or eliminate the U.S. tax you would otherwise have to pay on your foreign income.

References:

Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad

Publication 514, Foreign Tax Credit for Individuals

Form 2555 (PDF), Foreign Earned Income

Form 2555EZ (PDF), Foreign Earned Income Exclusion

Form 1116 (PDF), Foreign Tax Credit

<{POST_SNAPBACK}>

Whould this still apply if I work in the US on occation? Lets say more than 30 days a year?

[Sunbelt Asia]

Whould this still apply if I work in the US on occation? Lets say more than 30 days a year?

On that income you earn in the States it is taxed. On the income you earn in another country if you are in the States more than 34 days a year, it is taxed as well.

www.lawyer.th.com