Working in Thailand & USA taxation

[saobaht]

On May 25th I will be moving back to Thailand after living 17 years in the States. I have both a US passport and Thai passport (due to being half thai/half american) and I will be entering Thailand using my Thai passport so that I am able to work (by the way, do i need to check-in at the airline in the US with my American or Thai passport? Does it matter?). I worked at a job in the States earlier in the year so I figured I would have to do my US taxes in 2015 however what about the following years that I am working in Thailand? Do I still need to pay US income tax even though I haven't made any money in the States? I am trying to avoid having to give up my US citizenship but don't want to find out 10 years from now that I owe 10 years of back taxes to the US government because I may want to move back to the States sometime in the future.

If I do have to continue paying taxes, what is the best way to go about it? Should I find an accontant in Thailand who specializes in such cases? Or should I try to handle it myself (I am single with no family so I don't have much deductions).

Thank you in advance for your responses

[ubonjoe]

When you check in for your flight you use both passports. The US to show you were their legally and the Thai to prove you don't need a visa to enter Thailand. The you will show only your Thai passport on entry to Thailand. Hide your US passport away in your bag.

For your tax questions I moving this to the business forum.

[keeniau96]

The basic USA tax rule is if you are USA citizen you have to pay income tax on your worldwide income. Digging into that can get a bit complex. If you work for a company here in TH the payroll people should have some answers.

[CaptHaddock]

You should take precautions not to continue to be liable for state income taxes after returning to Thailand. To do so, review the tax domicile regulations for your state carefully and do what's necessary. As for preparing your taxes, if you don't want to do it yourself with software, then why not find an accountant in the US who lives somewhere where the cost of living is cheap, but is likely to have experience with expats? Via the internet you can do business with any accountant in the US, who is likely to be better informed than someone here in Thailand and can go to an IRS audit if you should ever need that. There is no reason ever to meet your accountant face-to-face.

[lomatopo]

You should take precautions not to continue to be liable for state income taxes after returning to Thailand.

Assuming you want to avoid paying any state taxes, this is very important advice, especially if there are any partial year residency issues. Document your move, and become familiar with your State's change of residency requirements

(Not related to taxes, but make sure you are removed from any jury duty lists. I also recommend verifying no outstanding traffic issues: unknown parking tickets, etc. which can lead to issues down the road - chat with your local police department.)

I would recommend continuing to file a 1040 each year, even if you are not required to pay any tax because you can take advantage of the Foreign Earned Income Exclusion, which allows you to exclude up to ~ $ 99,000 in income earned outside the U.S., assuming you meet the non-residency requirement. (Review the definitions for "Physical Presence Test" and "Part Year Exclusion".)

Unless you have significant un-earned/investment income, or earn more than $ 99,200 in 2014 working in Thailand, your Federal tax liability will probably be zero, after the Standard Deduction. You can use a free program like TaxAct, and it will take you ~ 30 minutes to complete.

Edited May 19, 2014 by lomatopo

[Lefty]

You should take precautions not to continue to be liable for state income taxes after returning to Thailand.

Assuming you want to avoid paying any state taxes, this is very important advice, especially if there are any partial year residency issues. Document your move, and become familiar with your State's change of residency requirements

(Not related to taxes, but make sure you are removed from any jury duty lists. I also recommend verifying no outstanding traffic issues: unknown parking tickets, etc. which can lead to issues down the road - chat with your local police department.)

I would recommend continuing to file a 1040 each year, even if you are not required to pay any tax because you can take advantage of the Foreign Earned Income Exclusion, which allows you to exclude up to ~ $ 99,000 in income earned outside the U.S., assuming you meet the non-residency requirement. (Review the definitions for "Physical Presence Test" and "Part Year Exclusion".)

Unless you have significant un-earned/investment income, or earn more than $ 99,200 in 2014 working in Thailand, your Federal tax liability will probably be zero, after the Standard Deduction. You can use a free program like TaxAct, and it will take you ~ 30 minutes to complete.

Also any income tax paid to Thailand is is a credit to US taxes owed -if any. Use Turbotax program it will guide you through the whole tax issue.

Lefty

[ProThaiExpat]

The state tax issue mentioned is very important. Some states lik California are very aggresive about imposing state taxes.

I had not been back to the US for six year and not back in California for 9 years when the Franchise Tax Board filed a tax lien of $4500 on me. I only learned it this last month when a credit report was generated for me by an online service.

After a few telephone calls, I found out that in 2008 FTB decided that since I had a Real Estae Brokers License and had not filed a state income tax form for five years, I must have been earning income with the Brokers License and estimated what my income would be and filed the tax lien in court.

Talk about being flabergasted!!!! When I explained the reality to the state tax agent on the phone, she said if you fax me a copy of your annual social security income statement to support your contention that you are retired, I will have the lien expunged. I did and only time will tell if she did it.

Tax liens destroy your credit and prevent you from buying a home through mortgage etc. How is that for agressive tax collection!!!!

[saobaht]

Thank you for all of the information. I live in New York. Are the requirements for NY similar to CA?

I will not be earning more than $99k a year, does that mean I don't even need to do my US taxes because I won't owe the US government anything anyways?

Edited May 19, 2014 by saobaht

[thrilled]

ThebUS is really getting aggressive about money you make in other countries.Especially the interest made from investments,thai banks etc.Any money in Thai banks over $10,000 the IRS wants to know about.

[vaultdweller0013]

As others has stated, if you are a US citizen, you will need to file taxes every year, (if you have total income above some very low threshold, which I don't know off the top of my head). Although you will likely own nothing due to various deductions and credits unless you are making quite a bit of money.

In addition, you will need to file a FBAR every year declaring all foreign assets if the TOTAL amount of all foreign assets is more than $10k. Note this is seperate from filing your taxes, but is pretty much just as important. See http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Report-of-Foreign-Bank-and-Financial-Accounts-FBAR for some details.

[CaptHaddock]

Thank you for all of the information. I live in New York. Are the requirements for NY similar to CA?

I will not be earning more than $99k a year, does that mean I don't even need to do my US taxes because I won't owe the US government anything anyways?

Not the same. NYS is not nearly as aggressive as CA, which is one of the worst. Nevertheless, you will have to read the requirements which are readily available on the NYS website. Google is your friend.

The Foreign Earned Income Credit is not automatic. You must file and claim it. If you do not, you would be liable to Uncle Sam for your entire income in Thailand.

[mccw]

Or if you have the funds; buy a house in Saint Kitts & Nevis (Caribbean island nation), 400k dollars on a house and 50k dollars fee they will give you citizenship and a passport - the passport is good like a British one ( nation is ex colony) enjoying visa free travel to USA, EU, UK etc etc 150 countries in total. The property is full foreign freehold allowed, can give for rent making around 3-5% pa and then can sell after 5 years but keep the citizenship and passport forever.

If I was American / liable for US taxes worldwide forever then I would personally say "balls to that deal Uncle Sam" and choose to renounce the US citizenship and get the Saint Kitts citizenship instead.

Saint Kitts is also pretty much a tax free country! No income taxes, no inheritance taxes, no capital gains taxes.

Look it up.

If you like to PM me about it I can help as my friend is a specialist in this field.

Even though I am British and we are no taxed so badly as the US I am still considering getting the above as a back up just in case my country tries to institute something tax wise or equally unjust. What with the demographics and welfare state etc it's probably just a matter of time and not for certain how long citizenship through investment programs like this will remain available. Example- other countries have similar programs but one needs to actually live in the country, where as saint kits you never even need to go there.

Sent from my iPad using Thaivisa Connect Thailand

[dinger]

I am from Calif. and have lived in Thailand for the past 6 years. I have a retirement income from the State of Calif. so I have to file a fed tax return. As I don't live in Calif. I am not required to file a state return. With that said I usually get a letter from the Calif. tax board asking why I filed a fed return and not a state and there is a form with it. I fill it out and state that I have not lived in Calif. at all for the previous year. Then I get a return letter acknowledging that and I am finished for that year.