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Thailand has long been known for its natural beauty and cultural diversity. It’s no wonder, then, that over 40,000 U.S. expats call Thailand their home. But while you savor the food and tropical climate, you may find Thailand taxes for U.S. expats to be a bit of a challenge.
Review these 8 facts to make filing taxes easier while living in Thailand.
Thailand’s residency requirements are determined by the Revenue Department, which is analogous to the IRS. The Revenue Department groups people into two basic categories: residents and non-residents.
To be a resident, you must live in Thailand for 180 days or more during a given tax year. Prior to that 180 days you are considered a non-resident.
Knowing your status is important, as it has a direct bearing on the taxes that apply to you.
Thailand income tax applies to 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.
The Revenue Department charges taxes for foreigners working in Thailand. Non-residents also pay income tax on any money they earned during their time in Thailand.
Again, if you leave the country before the end of the tax year, you’ll need to file taxes on any income you generated during your visit. However, non-residents are exempt from paying taxes on foreign income.
Thailand 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.
The currency used in Thailand is the baht, and its abbreviation is THB. The Thai personal income tax rates are shown here in baht.
Income Tax Rates in Thailand
Unlike the United States, the tax brackets in Thailand are based exclusively on income. Thailand residents won’t have to worry about tax status (e.g., “single,” “married filing jointly,” etc.) when filing their returns.
Thailand taxes for U.S. expats are due on March 31. Residents must file annually using a Personal Income Tax return (“PIT”).
If you are an entertainer or if you receive income from advertising fees, you’re required to pay taxes twice each year. You’ll file your PIT return on March 31 and a “mid-year” return on September 30.
Income tax is the primary form of tax that impacts Americans working in Thailand. But U.S. citizens living in Thailand are subject to other forms of tax as well. Here’s a quick overview of each.
If you earn money by selling assets and securities, this income is subject to personal income tax. This most commonly applies to those who sell real estate properties. Taxpayers can deduct a standard allowance, though this depends on the number of years of ownership.
Unlike the United States, Thailand does not charge a capital gains tax on money earned from the sale of securities on the stock exchange of Thailand. So if you invest in the stock market, you won’t pay capital gains taxes on the securities you sell if the company is listed on the national exchange.
While this law is rarely exercised, Thailand’s Revenue Department reserves the right to assess an additional tax if they believe that your income has been underrepresented.
Like the United States, Thailand uses a system very similar to Social Security. Employees contribute 5% on the first 15,000 THB that they earn, and employers match this by paying an additional 5%. Thailand’s government adds an additional 2.5%. If you are self-employed, you will be required to pay both portions (employee and employer) of your Social Security payments.
Since the 1970s, the U.S. Social Security Administration has pursued “totalization agreements” between the U.S. and some foreign governments. These agreements protect U.S. expats from paying into two different Social Security systems.
There is no Thailand-U.S. totalization agreement. As a result, it’s possible for some U.S. expats to pay for both Social Security systems during their time in Thailand.
Thailand enacted the Inheritance Tax Act on February 1, 2016. Under this act, inheritance can be taxed only if the value exceeds 100 million THB per benefactor. In this case, the benefactor can be taxed at different rates depending on their relationship to the deceased.
Descendants and parents are taxed at 5%, while all other benefactors are taxed at 10%. Inheritance taxes must be filed within 150 days after receiving the inheritance amount; otherwise, benefactors must pay a surcharge or penalty.
In Thailand, gifts are subject to a flat tax of 5%. Some exemptions apply. For example, gifts as high as 20 million THB are exempt when received from a parent, child, or spouse. Gifts up to 10 million THB are exempt when given in a ceremony or on an occasion that corresponds to custom or tradition.
Certain items carry a 7% value-added tax (VAT). This tax is levied on a variety of goods and services, though things like groceries, education, healthcare, and real estate are exempt. Certain legal documents (e.g., leases) are also subject to a stamp duty.
Yes, you’ll need to file U.S. taxes each year with the federal government. If you’re still a resident of a U.S. state, you may also have to file state taxes as well.
The US and Thailand entered into a tax treaty in 1996, and it remains in effect. One purpose of this treaty is to remedy double taxation, which should relieve some of your expat taxes. The tax treaty provisions that cover items on your tax return should be properly applied. You may need to consult with a tax advisor to make sure that happens.
Americans working in Thailand can save on the taxes they owe the U.S. government. Here are the three most common strategies for lowering the amount of taxes you pay.
If you earn income while living abroad, the IRS allows you to exclude this income from your income taxes up to a certain limit. For 2022, this limit is $112,000, though it will climb to $120,000 for 2023.
To qualify, you must meet one of two criteria:
Proving residence requires you to show proof such as a residency card, visa, income tax statements, and other documentation.
The Foreign Tax Credit (FTC) is a dollar-for-dollar credit on any taxable income that you’ve already paid tax on. This prevents you from being taxed twice and can also lower your overall tax liability.
To qualify, you must pay or owe taxes in Thailand. The taxes must be legal, and the FTC applies exclusively to income tax.
Bear in mind that the FTC can apply only to Thai earnings that are subject to U.S. tax. So for example, if you use the FEIE to exclude a portion of your earnings, you cannot also use the FTC on those earnings.
The Foreign Housing Exclusion allows U.S. expats living in Thailand to exclude certain amounts that they use for household expenses. These expenses are generally restricted to expenses that uniquely occur as a result of living abroad, such as purchasing items to help you and your family adjust to a new climate.
Greenback Expat Tax Services can help you make the most of your deductions and navigate the confusing tax situations of expats living abroad. File with us, and our tax experts will help you save money while staying in full compliance with Thailand’s tax requirements.
Whether you need tax advice to prepare for a move abroad, to buy property or even retire, Greenback can help. Consults upfront can help avoid costly mistakes and stress later.