US Taxes for Americans in Thailand – What Expats Need to Know

Expat Living In Thailand

The Kingdom of Thailand, known as Mueang Thai by locals, is “the land of freedom” because it is the only Southeast Asian country never conquered or ruled by an outside country. Many expats probably remember both the Rodgers and Hammerstein musical The King and I in the early 1950s as well as the name of Thailand and Siam substituted for one another during the first half of the 20th century. They also enjoy temperatures that range from a balmy 19 C (66.2 F) to as high as 40 C (104 F) in mid-April across a land that extends down the Malay Peninsula facing the Gulf of Thailand. The west coast faces the Andaman Sea.

The beautiful Wat Chaiwatthanaram ruins at Ayhthaya are only one example of ancient architectural treasures and artifacts in this ancient Asian land showing the religious influence of Buddhism and Indian culture. Living treasures like the elephant, the national symbol of Thailand, are threatened even in this century. Nevertheless, the emerging economy of this ancient Kingdom is one of the wealthier among Southeast Asian nations along with Singapore, Brunei and Malaysia.

Below is our top 10 list of cities in Thailand for expats (in no particular order):

• Bangkok
• Mueang Samut Prakan
• Mueang Nonthaburi
• Udon Thani
• Chon Buri
• Nakhon Ratchasima
• Chiang Mai
• Hat Yai
• Pak Kret
• Si Racha

Life in Thailand is like its native cuisine, mixing sweet with spicy sour. Jasmine variety rice is a common foundation for flavors borrowed from lands from India to China. The Thai people are spiritual, generous, and show a strong social commitment dominated by a deep respect for elders in their immediate family and extended community.

Guide To US Expat Tax In Thailand

The Tax Samaritan country guide to US expat tax in Thailand is intended to provide a general review of expat tax in Thailand and how that will impact your U.S. expatriate tax return as a U.S. Expat In Thailand.

As a U.S. taxpayer, all worldwide income is subject to taxation and reporting and for most expatriates you are required to file a U.S. tax return on an annual basis due on April 15 each year (June 15 if you are residing overseas on the April 15 deadline). The tax treatment for different classes of income can vary greatly from Thailand and the U.S. For example, certain benefits may be tax free or excluded from taxable income in the Thailand, but in the U.S. these benefits are likely to be non-qualified benefits that are subject to being included as taxable income in U.S. As such, there are a number of considerations related to US expat tax in Thailand and this brief article will address a few of those considerations.

Thailand Expat Income Taxes

Who Is Liable For Income Taxes In Thailand

Both resident and non-resident income earners are subject to a personal income tax (or PIT). Thailand-source income even if from self-employment or business is considered part of the PIT if it is sent into the Kingdom in the year earned. You are considered a Thai resident if you reside in the country for 180 or more days. The Revenue Department assesses taxes for a calendar year. Married persons can elect to file jointly or separately. Professionals and the self-employed must pay taxes they report by the filing date.

Tax Year In Thailand And Tax Filing And Payment Rules

Taxable income falling into various categories is calculated based on what can be what remains after various allowances and deductions. Employment income including salaries, allowances, Director fees, pensions, and certain employer-provided benefits or accommodations are considered taxable unless specifically exempt. Some medical and travel expenses are tax-exempt. Business and self-employment income less legitimate deductions are assessable under the tax code. While capital gains from the sale of listed securities on the Stock Exchange of Thailand are exempt, gains derived from the disposition of real property are subject to PIT. There are personal deductions allowed under the tax laws.

There are several other forms of taxation to consider including a net worth tax, taxes on inheritances and gifts, and social security. The PIT is withheld by employers. Professionals or those individuals who are self-employed or collect rental income are expected to make a payment of interim taxes in September.

Expat Tax Withholding In Thailand

There are important deductions and allowances particular relevant to expats living or working in the Kingdom of Thailand. There is a Thailand-US Tax Treaty. Consequently, tax returns of US expats, especially in Thailand, require analysis by an international tax specialist like Tax Samaritan.

What You Need To Know About US Expat Tax In Thailand

When dealing with US expat tax in Thailand, there are a number of preferential expat tax treatments that may benefit your U.S. expatriate tax return. In fact, for many U.S. expats, the Foreign Earned Income Exclusion (IRS Form 2555) and other deductions will reduce your U.S. taxes to zero.

Some of these preferential tax treatments or benefits for US expat tax in Thailand include:

• If you are a U.S. citizen or a resident alien of the United States and you live in Thailand, your US expat tax in Thailand is based on your worldwide income and as such you must file a U.S. return for all the years that you are residing in Thailand. However, as a U.S. expat you may qualify to reduce your U.S. taxable income up to an amount of your foreign earnings that is adjusted annually for inflation ($99,200 for 2014). In addition, you can exclude or deduct certain foreign housing amounts. This is known as the Foreign Earned Income Exclusion and foreign housing exclusion.
• When it comes to your US expat tax in Thailand, most US expatriates worry about “double taxation” – paying taxes to two different countries – the U.S. and Thailand. A U.S. taxpayer working overseas in Thailand may be able to reduce U.S. taxable income and “double taxation” by claiming the Foreign Tax Credit on Form 1116. Should any foreign income not be fully offset by the foreign earned income exclusion, housing exclusion or housing deduction, the foreign tax credit paid or accrued may be used as a deduction or credit on the U.S. tax return. Taxpayers can elect to either deduct the taxes as an itemized deduction on Schedule A or claim a credit against tax. In most cases, it is to your advantage to take foreign income taxes as a tax credit.

A common but dangerous mistake is the assumption that if there are zero taxes owed with these tax benefits that a return for US expat tax in Thailand does not need to be filed. That is not true. If you are working overseas, it is likely that you meet the filing requirements to file a tax return and must do so. It is important to note that the preferential tax treatments, such as the foreign earned income exclusion and foreign tax credit are not applicable to the outcome of your tax liability until they are claimed on a filed tax return.

When faced with US expat tax in Thailand there are many tax items to consider, but the above are by far the most common preferential tax benefits. With top-notch experienced and knowledgeable expat tax preparation from Tax Samaritan, you can be assured that you are paying the minimal amount of U.S. taxes that you are legally obligated for.

Thailand Foreign Bank Account Reporting – The FBAR (FinCen Form 114)

Another important tax deadline that frequently applies to US expat tax in Thailand is in regards to the disclosure of foreign assets on the FBAR (Foreign Bank Account Report – Form 114 – formerly known as TD F 90-22.1).

The FBAR filing deadline is June 30th (or the preceding business day if June 30th falls on a weekend). Unfortunately, requesting an extension on your individual return does not extend the FBAR due date – there is no extension available for the FBAR deadline. Any reports filed after this date are considered a delinquent FBAR. In addition, the FBAR is different than many other tax forms in that it must be received by the deadline date (and not postmarked by the deadline date).

The FBAR must be filed with the Treasury Department (it is not filed with your federal income tax return) whenever you meet the FBAR filing requirements, which in a nutshell is whenever a U.S. person has a financial interest in, or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust or other type of foreign financial account (including an insurance policy with a cash value such as a whole life insurance policy) maintained with a financial institution, with an aggregate value of over $10,000 at any time during the calendar year based on the highest value of each foreign account during the tax year.

If you have bank accounts at Siam Commercial Bank, Bangkok Bank, Siam City Bank, Bank of Ayudhya, Kasikorn Bank, Kiatnakin Bank, Tisco Bank, United Overseas Bank, Standard Chartered Bank (Thailand), Krungthai Bank or at another bank in Thailand or any other foreign country, you may meet the filing requirement to disclosure your foreign accounts on the FBAR. Please don’t hesitate to contact Tax Samaritan to learn more about your filing requirements.

U.S. – Thailand Social Security Totalization Agreement

The United States has entered into agreements, called Totalization Agreements, with several nations for the purpose of avoiding double taxation of income with respect to social security taxes. These agreements must be taken into account when determining whether any alien is subject to the U.S. Social Security/Medicare tax, or whether any U.S. citizen or resident alien is subject to the social security taxes of a foreign country. As of this time, Thailand has not entered into a full Totalization Agreement with the United States thus there is no opportunity to avoid double taxation of social security income for US expat tax in Thailand.

U.S.- Thailand Tax Treaty And Tax Relief For US Expat Tax In Thailand

The United States currently has a separate US-Thailand Tax Treaty. The US Internal Revenue Code offers tax credits against any Thailand income tax. See our Tax Samaritan Takeaways below for other valuable references.

Request A Tax Preparation Quote

Our goal at Tax Samaritan is to provide the best counsel, advocacy and personal service for our US expat tax in Thailand. We are not only tax preparation and representation experts, but strive to become valued business partners to American expatriates in Thailand. Tax Samaritan is committed to understanding our client’s unique needs; every tax situation is different and requires a personal approach in providing realistic and effective solutions.

Click the button below to request a Tax Preparation Quote today to get started with the preparation of your return for US expat tax in Thailand or to request a free 30-minute tax consultation.

Tax Samaritan Takeaways

Please click on the hyperlinks below for additional takeaways for your expat tax in Thailand:

Tax Samaritan Expat Tax Services

2014 IRS Publication 54, Tax Guide for US Citizens and Resident Aliens Abroad

US Embassy in Thailand

Royal Thai Embassy in Washington, D.C.

Thailand Ministry of Foreign Affairs

Tax Samaritan is a team of Enrolled Agents with over 25 years of experience focusing on US expat tax in Thailand and throughout the world. We maintain this tax blog where all articles are written by Enrolled Agents. Our main objective is to educate US taxpayers on their tax responsibilities and the selection of a tax professional. Our articles are also designed to help taxpayers looking to self prepare, providing specific tips and pitfalls to avoid.

When looking for a tax professional, choose carefully. We recommend that you hire a credentialed tax professional such as Tax Samaritan that is an Enrolled Agent (America’s Tax Experts) that is experienced and knowledgeable about US expat tax in Thailand. If you are a US taxpayer overseas, we further recommend that you seek a professional who is experienced in expat tax preparation, like Tax Samaritan (most tax professionals have limited to no experience with the unique tax issues of expat taxpayers).

Randall Brody is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals and experienced with US expat tax in Thailand. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits and adhere to a stringent code of ethics.

Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional US expat tax in Thailand advice based on your individual needs.