Investing in Thailand or other countries outside the U.S

[watgate]

I am considering investing some money in Thailand and would like some info on the proper way to invest without running afoul of US tax laws. I understand, and correct me if I am wrong, that if a US citizen has more then 10k invested in a foreign country, then you are required to report the income annually to the IRS on your tax return. Is that correct? Also, how safe is it to put money in a Thai bank? Are your funds insured? As for end of the year reporting by Thai banks or other Thai financial institutions, how do they report your interest or dividends to you? Can you go into the bank at years end to get a year ending statement from them showing your interest or dividend income. If one were to invest in stocks in Thailand what is the best place to place a trade besides online? Any input or advice about investing in Thailand would be appreciated and I don't want the IRS breathing down my neck so I want to make sure, if I do decide to invest some money in Thailand, that it is done properly so as to not cause any problems with the IRS.

[HLover]

It may be wise to spend less than $50 and consider consulting an accountant in your home country.

[spud67]

The easiest way for Americans to invest in other countries would be country specific ETFs through ishares or the like. The next easiest is to buy American Depository Receipts of foreign companies on NYSE. Here is a good searchable list of most of the available ADRs. Beyond that, I would check out Interactive Brokers (an American firm I believe) but I'm not sure they handle the Thai stock market.

If you really want to move your cash onto foreign soil, I echo the above comment; book a session or two with an accountant.

Edited June 6, 2015 by spud67

[SantiSuk]

"I am considering investing some money in Thailand and would like some info on the proper way to invest without running afoul of US tax laws. I understand, and correct me if I am wrong, that if a US citizen has more then 10k invested in a foreign country, then you are required to report the income annually to the IRS on your tax return. Is that correct?"

I'm not qualified to answer US tax questions. I would expect that as a US citizen you are taxable on any level of income anywhere in the world

"Also, how safe is it to put money in a Thai bank? Are your funds insured?"

The present level of insurance stands at ThB 50 million (say US$ 1.7 million). Whether this would be honoured in the unlikely event that banks were generally crashing, who knows? That's obviously an unusually high level, but next year it reduces to ThB 1 million which is relatively poor by international standards. How safe generally are Thai banks? The standard ThaiV member reaction is to assume they are hugely risky with comments like don't put your money here - keep it in your 'home country'. However firstly, if you live here it makes sense to match at least some of your living expense liabilities (which are in baht) with baht assets - keeping all your money in your home country exposes you to long run exchange rate risk - would you want all your money to be "left behind" if and when South East Asia takes off in relative development terms compared with the maturing economies of the west? Secondly the unthinking assessment of Thailand and Thai banks as being fundamentally risky and weak is a massive overstatement. The rating agency Moodies recently reported on Thai banks in generality and some specific banks in particular here: https://www.moodys.com/research/Moodys-concludes-review-on-four-Thai-banks-assigns-Counterparty-Risk--PR_326711. Read the comments under "Ratings rationale" if you want some balance. It is unwise to assume that single banking systems anywhere in the West are fundamentally 'safe' these days anyway!!

Investing and wealth management is all about spreading risk and not putting eggs in one basket. Having all your assets in Thailand would make little sense from a risk viewpoint. Personally I would not want more than 10% of my net wealth held within Thailand and no more than a couple of percent in one institution, but I might be persuaded to increase that to 25% or more the longer I lived here and the nearer to dying here that I got! I am happy to have 5% of my net wealth in Thai deposit accounts and 5% in UK banks, but I have a much higher proportion of my wealth in short term banking assets than most. The rest is in equities (invested through the UK but with a very broad geographical spread). I don't specifically invest in Thai equities but as I have 15% of my equity portfolio in Asia-Pacific and emerging markets I probably pick up 1% in Thailand by default. If the politics were to settle down here I might look at investing specifically in Thai public companies if and when I have the time to put in some effort - for the time being I regard that as higher risk or speculative grade to be avoided.

Providing hard and fast guidance about "how safe" is stuff and what balance of risk to take is not sensible - it's down to personal choice and personal circumstance, but do go for a balanced spreading of risk approach. Never be persuaded to make a significant one asset or one economy punt with your life's savings, no matter how remunerative it might then look.

As for end of the year reporting by Thai banks or other Thai financial institutions, how do they report your interest or dividends to you?

For bank account and bank deposits, no unless you ask them to, but you can check bank accounts and most deposit accounts on line. If you invest through banks in their mutual funds or similar longer term investments I'm pretty sure they would send you annual statements, but you would seek to clarify that at point of investment.

Can you go into the bank at years end to get a year ending statement from them showing your interest or dividend income?

Yes. You would want to do this anyway of you were seeking to recover from Thai Revenue any Thai taxation deducted. That may however be a futile exercise if you are US and paying US tax on global income. If it works like the UK (for those who are resident UK for tax purposes), you can reduce your US tax liability by he amount of any tax suffered in Thailand, so if you seek to reclaim tax in Thailand it would only increase you US tax by an equivalent amount, so you might as well not bother reclaiming - I assume you would be honest in all your tax dealings (like me!). A Thai bank will typically charge you for 100 or 200 baht for tax certification unless you are a premium customer

If one were to invest in stocks in Thailand what is the best place to place a trade besides online?

I don't directly invest in Thai stocks so can't advise

Bon chance!

[Srikcir]

From an income tax perspective it doesn't matter how much you have invested in a foreign country. The US taxes citizen's global earnings. There are limited exemptions for wages earned in foreign countries and you can get foreign tax credits for any foreign paid income tax.

Then there are separate reporting requirements for controlling foreign financial accounts.

[NeverSure]

I'm not qualified to answer US tax questions. I would expect that as a US citizen you are taxable on any level of income anywhere in the world

It isn't true that any level is taxable. It is true that you aren't qualified to answer, LOL. There seems to be a general belief here that Americans pay income tax on any money they make and that is patently untrue.

First, people whose income of any type is below a certain threshold don't owe any income tax. A single person under the age of 65 can have earnings of $9,500 without owing taxes. If the person is older or if it's a couple filing jointly or if there are dependent children that number goes up significantly. LINK

People whose working earnings are below a certain level not only don't pay income tax, but they can actually get a "refund" even if no taxes were withheld. It's called the earned income tax credit, as unlikely as that sounds. From the IRS website:

"The Earned Income Tax Credit, EITC or EIC, is a benefit for working people with low to moderate income. To qualify, you must meet certain requirements and file a tax return, even if you do not owe any tax or are not required to file. EITC reduces the amount of tax you owe and may give you a refund."

"Who Qualifies?

To qualify for EITC you must have earned income from working for someone or from running or owning a business or farm and meet basic rules. And, you must either meet additional rules for workers without a qualifying child or have a child that meets all the qualifying child rules for you

.

Use the EITC Assistant to see if you qualify for tax years: 2014, 2013 and 2012. The EITC Assistant helps you find out your filing status, if your child is a qualifying child, if you are eligible and estimate the amount of the credit you may get."

Link

[NeverSure]

From an income tax perspective it doesn't matter how much you have invested in a foreign country. The US taxes citizen's global earnings. There are limited exemptions for wages earned in foreign countries and you can get foreign tax credits for any foreign paid income tax.

Then there are separate reporting requirements for controlling foreign financial accounts.

There are many repeated misconceptions about American income taxes on this forum. Americans have to file a tax return if their income is above a certain threshold, but they don't owe taxes until they reach that certain threshold. They may even get a "refund" of money they never paid. See post above.

Also everyone gets some deductions before taxes are calculated. The personal deduction just for being alive is $4,000. So money doesn't even start to get counted except that which is above $4,000 and that applies to everyone. If it's a couple or someone with children it's much greater.

LINK

Last, people from countries with very high income tax rates may flinch at that term, but the US has rather low tax rates. The highest percentage the richest person can pay, and that's on the amount after standard deductions is 38%. The average working stiff is probably paying 15% of his adjusted gross income. Here's where the average stiff would fall especially if retired. Remember, this is after deductions.

LINK

Rate Single Person Married filing jointly

15% $9,076 to $36,900 $18,151 to $73,800