GSM8 wrote:Furthermore, its kind of a double whammy because US is the only developed country in the world that practices citizenship based taxation, which basically amounts to double taxation if you are an expat. Apart from the tax aspect it effectively restricts most of your other investment options as well (including retirement). Expat citizens of almost every other country are taxed only in the country that they reside in and work, in this case Singapore.
The US is not the only major country in the world that taxes worldwide income.
China also taxes worldwide income of its citizens & PRs (those that have stayed in China more than 5 years).
Like the US, the tax is withheld by the employers, which is not done in Singapore.
Not sure what you mean by "double whammy" here in SG.
You should not have to pay taxes twice on SG earned income.
Assuming that SG has become your"bona fide" tax residence or that you pass the physical presence test, the US tax on the 1st $99,200 of foreign earned income should be excluded.
You should only be paying tax to SG on this 1st $99,200.
For income above $99,200, the tax you pay to SG can be claimed as a foreign tax credit against the US tax you owe, so again, you are effectively paying only the US tax you would owe, except that part of it goes to SG instead of the US.
Taking into account the total tax paid to both countries compared to what you would have to pay earning the same amount in the US, you could save ~$10K in taxes for a single wage earner. This is due to the difference in tax rates on the earned income exclusion amount.
The only income that should be taxed twice would be passive rental income.
Other passive income, such as interest, dividends and capital gains are not normally taxed for individuals residing in SG.
GSM8 wrote:Apart from the tax aspect it effectively restricts most of your other investment options as well (including retirement).
Actually, it is the zealous pursuit of potential tax income via FATCA that is resulting in restrictions on overseas investment options for US citizens.