Any Americans with a Provident Fund?

[Ralph4878]

Hello!

As part of my new job in Thailand, I'll be contributing to a Provident Fund.

Not sure what the specific investment choices will be yet, but I am (sadly) very aware that contributions - both mine and my employer's - will likely be subject to some pretty onerous taxation as it seems said contributions will be considered as going into PFICs.

Just wondering if there are any Americans out there who have dealt with this: are there ways around it? Do you use an accountant in Thailand to file your American taxes?

Thanks!

[Monomial]

A Thai provident fund is a PFIC for US tax purposes.

 

Make sure whatever investment you choose is either a QEF for US tax purposes (I'm not sure any actually exist in Thailand), or else only invests in assets traded on public exchanges and reports a daily NAV so that you can do mark to market.

 

You really want to elect mark to market on your US tax return and to pay US taxes on the unrealized mark to market gains of your tax free Thai provident fund. Sucks to be an American. Your Canadian colleagues aren't penalized this way. Failure to elect mark to market every year results in horrendous tax treatment when you finally go to withdraw your money.

 

Read up on PFIC's....they are truly nasty things and make filing your US taxes significantly less pleasant than a root canal.

 

My recommendation:  spend a month studying the tax code, or else get an accountant in the US to file your US taxes. If you have a provident fund, LTF or RMF, you need to be very careful with how you report them. It is very easy to get it wrong. Even accountants get it wrong.

 

[Ralph4878]

15 hours ago, Monomial said:

A Thai provident fund is a PFIC for US tax purposes.

 

Make sure whatever investment you choose is either a QEF for US tax purposes (I'm not sure any actually exist in Thailand), or else only invests in assets traded on public exchanges and reports a daily NAV so that you can do mark to market.

 

You really want to elect mark to market on your US tax return and to pay US taxes on the unrealized mark to market gains of your tax free Thai provident fund. Sucks to be an American. Your Canadian colleagues aren't penalized this way. Failure to elect mark to market every year results in horrendous tax treatment when you finally go to withdraw your money.

 

Read up on PFIC's....they are truly nasty things and make filing your US taxes significantly less pleasant than a root canal.

 

My recommendation:  spend a month studying the tax code, or else get an accountant in the US to file your US taxes. If you have a provident fund, LTF or RMF, you need to be very careful with how you report them. It is very easy to get it wrong. Even accountants get it wrong.

 

This is what I've learned in the last few months of research. I won't have to pay Thai income tax for two years, which is nice, but it looks like the 15% contribution my employer will put into the Provident Fund for me will be considered taxable deferred income to the IRS, and any gains I make in the fund need to be mark-to-market or else I lose about 50% in tax. Yeesh. At least my salary will let me claim the full Foreign Earned Income Exclusion...

Edited March 16, 2017 by Ralph4878