Thailand is a country that offers visitors variety and simplicity. It is home to people of varied lifestyles yet it is able to maintain its simple ways. Perhaps it is Thailand’s simple freedom that becomes glue to the shoes of US expats who settle there. But it is important for expats to know the tax laws in both their home and host country. Fortunately we have outlined the 8 things you need to know about you expat taxes.
Once you have lived in Thailand for more than 180 days in a calendar year you are considered a resident. Prior to that 180 days you are considered a non-resident.
Thailand taxes worldwide income, just as the US does. But unlike the US, only residents are taxed on their worldwide income while non-residents are taxed only on the income earned in Thailand.
Thailand’s tax rates vary depending on your personal income. Rates are progressive and range from 0% for those who earn less than 150,000 baht to 37% for those who earn more than 4,000,001 baht.
Thailand uses a calendar year and your Personal Income Tax return (“PIT”) must be filed by March 31 for the prior year. If you happen to be a public entertainer or earn advertising fees, you are required to file a ‘mid-year’ return by September 30th.
Thailand uses a social insurance system where employees contribute 5% on the first 15,000 baht of income, and employers pay a matching 5%. The Thai government adds a 2.5% contribution to the insurance system.
Thailand and the US do not have a social security agreement with each other. This means some US expats will be required to pay into both social security systems on some Thai earnings.
You will pay a 7% VAT (value added tax) on certain items you purchase in Thailand. There is also a stamp duty on documents you sign such as leases.
If you are a US citizen or resident, you will still be required to file US taxes each year. If you have assets in foreign bank accounts, you may be required to report those as well. Specifically, anyone with 10,000 dollars or more in a foreign bank or financial institution during a calendar year will be required to file the FBAR.
Fortunately, there are a few ways you can lower or eliminate your US tax obligations. The first is the Foreign Earned Income Exclusion, which allows you to exclude a certain amount from your foreign earned income on your US expat taxes.
The second is the Foreign Tax Credit, which allows you to offset the taxes you paid in your host country with your US expat taxes dollar for dollar.
And third is the Foreign Housing Exclusion, which allows an additional exclusion from income on US expat taxes for certain amounts paid for household expenses that occur as a consequence of living abroad.
If you have any questions about filing your US expat taxes, please contact us.
Want more information about taxes for expats in Thailand?
Our expert CPA’s and IRS Enrolled Agents can answer any specific questions you have about your tax situation as an expat in Thailand. Contact us today and we can help you prepare your expat tax return!