While Thailand is the home to many diverse cultures, its inhabitants enjoy a simplicity found few places in the world. Perhaps it’s this freedom that becomes glue to the shoes of US expats who settle there. But is it possible for expats to enjoy the same simplicity when it comes to taxes in Thailand? Review these 8 facts to make filing taxes easier while living in Thailand.
Who Is a Tax Resident of Thailand?
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.
Does Thailand Tax Foreign Income?
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.
Tax Rates 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 35% for those who earn more than 5,000,001 baht.
When Are Taxes Due?
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.
Social Security in Thailand
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.
Other Taxes in Thailand
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.
US Taxes and Financial Reporting for Americans in Thailand
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.
How to Save on Your US Expat Taxes
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 on 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. When you file with us, our expat tax experts will investigate every possible tax credit and deduction to maximize your savings. Get started with your US expat tax return today!