Singapore Expats Forum

Ricedoll's Issues with US Taxation

Relocating, travelling or planning to make Singapore home? Discuss the criterias, passes or visa that is required.
earthfriendly
Manager
Manager
Posts: 1943
Joined: Sat, 20 Aug 2005

Re: Ricedoll's Issues with US Taxation

Postby earthfriendly » Sat, 27 Feb 2016 10:38 am

Since me and my family live and work in USA, we get to enjoy more direct benefits than yourself, who live overseas. So, much of my scenario is not applicable to you. I think that is where the confusion arises. I did not get a good sense of your place of domicile. Not sure where you are living now but does your husband have to do many international flights?

ricedoll
Regular
Regular
Posts: 65
Joined: Tue, 27 Oct 2015

Re: Ricedoll's Issues with US Taxation

Postby ricedoll » Sat, 27 Feb 2016 11:00 am

The Singapore tax advantages of its retirement funds (CPF, SRS) are not recognized by any other country unless it has a tax treaty that says so, and Singapore has very few tax treaties in the first place. At least the U.S. has several tax treaties that protect U.S. Individual Retirement Accounts from foreign taxation.

Some countries even have global or foreign wealth taxes. The U.S. is not one of them, but at least it has some more tax treaties that help on occasion.

Moreover, Singapore has zero social security treaties at present. Consequently your Singapore work history doesn't count elsewhere, ever. Unless you hit the minimum work history ("vesting") time in a foreign country (which can be as high as 25 years), your (often hefty, still mandatory) social insurance taxes in that country get you exactly nothing for retirement. The U.S. has lots of social security treaties, meaning that your work in any/every treaty country can qualify you for retirement benefits from that country even if you spend as little as a year working there, as long as you hit 10 years inclusive of your U.S. history. And your spouse (and even in some cases ex-spouse) gets retirement benefits too, even if that spouse never worked.


Ok BBC now maybe you can enlighten me with your knowledge. You said CPF is not recognised by any other countries, does it mean your portion of CPF gets cashed out each month and you pay taxes on it? Other than fellow Americans, do your e.g. Aussie, European or Canadians friends go through the same thing like you? Like I mentioned the "CPF" in the country we work in is not recognized by the US, however I don't see my other expat colleagues face the same problem. They have their portion put into their "CPF" no problem. They are not just from one or two countries, but every country other than the US. Thats what bugs me if you said there is no such unicorn retirement account.

Singapore has zero social security treaties at present. Consequently your Singapore work history doesn't count elsewhere, ever... The U.S. has lots of social security treaties, meaning that your work in any/every treaty country can qualify you for retirement benefits from that country even if you spend as little as a year working there, as long as you hit 10 years inclusive of your U.S. history.


Now this is something new to me. What do you mean?
Do you mean as an expat, you need to work at least a certain number of years to qualify for SG retirement? You meant as an expat right? Not as a PR/SC. That means you remain as an expat for the rest of your life and not the case if you become a PR/citizen of that country, am I right? We have an American couple friend, nearing retirement. They are more than willing to renounce their US passports because they pay more than >$20KUSD in US taxes, and they are furious and unwilling. Anyways, they are unable to renounce because the husband used to work in the military long time ago, and they need to keep their citizenship to enjoy the military retirement benefits, which i quote her "is b.s. and going down hill too".

User avatar
sundaymorningstaple
Moderator
Moderator
Posts: 34783
Joined: Thu, 11 Nov 2004
Location: Still Fishing!
Contact:

Re: Ricedoll's Issues with US Taxation

Postby sundaymorningstaple » Sat, 27 Feb 2016 11:20 am

The U.S. has lots of social security treaties, meaning that your work in any/every treaty country can qualify you for retirement benefits from that country even if you spend as little as a year working there, as long as you hit 10 years inclusive of your U.S. history.


He's talking about the US, not Singapore.

Oh, as far as Singapore's CPF is concerned, I've always reported as income the total put into CPF every year on my US return (inclusive of the Employer's share) and I've always reported all the Interest earned on the CPF account on my US return as well. It doesn't matter whether I cash out or not? I can't cash out unless I give up my PR, but when I do, I will have already paid the taxes, if any, on the 'income' as well as on the 'interest'. I'm probably one of very few who has done this and it could very well blow up in my face (the US taxing it twice) or I may get reduced SS payments (but again, I don't think cashing out of a saving's account is taxable) - BBC & I are at differing viewpoints on this but I'll let everybody know what happens as I'm closer to retirement than most (7 or 8 more years at most) I'm already 68.

BBCWatcher
Editor
Editor
Posts: 1035
Joined: Sun, 13 Sep 2015

Re: Ricedoll's Issues with US Taxation

Postby BBCWatcher » Sat, 27 Feb 2016 2:21 pm

ricedoll wrote:You said CPF is not recognised by any other countries, does it mean your portion of CPF gets cashed out each month and you pay taxes on it?

Live anywhere with an income or wealth tax, and most probably the answer is yes. It might even be worse than that, though. Under some tax codes since CPF contributions were never taxed you might owe income tax on the full value of the withdrawal. Switzerland is probably like that, to pick a random example.

Other than fellow Americans, do your e.g. Aussie, European or Canadians friends go through the same thing like you?

Well, most of them are going to start being asked by their banks FATCA-like questions. Some of them have home country tax advantaged accounts that aren't tax advantaged elsewhere. Some of them are having increasing difficulty declaring nonresidence as their governments and tax authorities increase the "stickiness" of residency. As a matter of fact, I was chatting with a colleague of mine from a European country, and he couldn't separate from that country's tax system because he had a spouse living there. They were legally separated, but that didn't matter. Divorce did not necessarily end the link; it had to be a particular type of divorce. The U.S. tax code has nothing like that that I can think of.

....But let's back up a bit here. Let's compare two tax systems: Singapore and the United States.

Singapore
Has citizenship-based taxation (MediShield Life).
The vast majority of its citizens and permanent residents must pay (>90%).
Has a regressive tax (same fixed amount no matter the income or wealth of the individual).
Tax increases with age.
Offers no cash benefits (refundable tax credits) through its tax system to those overseas.
Offers no tax relief even if you live in a high tax jurisdiction (e.g. Denmark).
Not a creditable tax under foreign tax codes.

United States
Has citizenship-based taxation (personal income tax, self-employment tax if applicable).
Only about 6% of its citizens and permanent residents living overseas owe any tax.
Has a progressive tax (those with high income and low foreign tax pay more than others).
Offers some cash benefits (refundable tax credits) through its tax system even to those overseas.
Offers full tax relief for foreign income taxes, even allowing accumulation of excess credits to offset future income tax.
Any tax is generally creditable under foreign tax codes.

Now, which is better? Well, if you (or your husband) has a relatively high income or better, and if you live in a comparatively low tax jurisdiction, then you might not like the U.S. tax system. (And if you don't, no problem, you can file for divorce as it were: renounce U.S. citizenship.) But if you think the U.S. tax system is "unfair," then that description is at least as applicable to Singapore's regressive overseas tax system.

BBCWatcher
Editor
Editor
Posts: 1035
Joined: Sun, 13 Sep 2015

Re: Ricedoll's Issues with US Taxation

Postby BBCWatcher » Sat, 27 Feb 2016 2:26 pm

sundaymorningstaple wrote:BBC & I are at differing viewpoints on this....

We don't: "There is no such thing as a globally tax advantaged account." (Although a U.S. person still typically receives some U.S. tax benefit on CPF contributions thanks to the Foreign Earned Income Exclusion since the employee side contributions would be classified as foreign earned income, up to/within the FEIE limit. So it's still a very good deal.)

I was describing the very typical scenario when somebody from Singapore works a couple years overseas and comes back to Singapore, compared to somebody from the United States who does the same thing and returns to the U.S. The hypothetical U.S. worker is better off in terms of social security contributions thanks to all the social security treaties the U.S. has signed. The Singaporean's contributions into, say, the U.K. national pension system are gone: paid in, no benefit out. (Not enough years of work history to qualify.) The similarly situated U.S. worker in this example gets a small retirement benefit from the U.K. thanks to the U.S.-U.K. social security treaty, plus his/her U.S. benefit.

ricedoll
Regular
Regular
Posts: 65
Joined: Tue, 27 Oct 2015

Re: Ricedoll's Issues with US Taxation

Postby ricedoll » Sat, 27 Feb 2016 6:00 pm

Singapore
Has citizenship-based taxation (MediShield Life). I honestly don't mind paying for my own health that I eventually someday might rely on. It probably cost a couple of dinner dates anyways.
The vast majority of its citizens and permanent residents must pay (>90%). Like above. I don't mind.
Has a regressive tax (same fixed amount no matter the income or wealth of the individual). Even better for me!
Tax increases with age. What do you mean? I assume your pay increases with your experience at work. It would be a shame if otherwise. I don't mind being taxed slightly more when I am older. And what's the tax rate? I'm sure its nowhere near 30%!
Offers no cash benefits (refundable tax credits) through its tax system to those overseas. Err.. ok.
Offers no tax relief even if you live in a high tax jurisdiction (e.g. Denmark). Not in Europe, never will be. You pay taxes where you reside and work in. As simple as that.
Not a creditable tax under foreign tax codes. Doesn't affect me.

United States
Has citizenship-based taxation (personal income tax, self-employment tax if applicable). This RUINS lives of millions overseas!! Many can't open bank accounts, rejected by banks and couldn't get a mortgage because you are American. Google it.
Only about 6% of its citizens and permanent residents living overseas owe any tax. What is the definition of OWE? We don't use any facilities, infrastructure, what do we get? Our income is not from a US company either. How dare you use the word OWE?
Has a progressive tax (those with high income and low foreign tax pay more than others). Hate it, especially for high-income people like us. Our brains, hard work and luck bring us to where we are now. And I don't think our income should be taxed more just because we are more hardworking and luckier. Robin hood 2016?
Offers some cash benefits (refundable tax credits) through its tax system even to those overseas. We sure didn't receive any nor benefit from this.
Offers full tax relief for foreign income taxes, even allowing accumulation of excess credits to offset future income tax. Sorry, didn't and will never benefit us.
Any tax is generally creditable under foreign tax codes.
Last edited by ricedoll on Sat, 27 Feb 2016 6:12 pm, edited 2 times in total.

ricedoll
Regular
Regular
Posts: 65
Joined: Tue, 27 Oct 2015

Re: Ricedoll's Issues with US Taxation

Postby ricedoll » Sat, 27 Feb 2016 6:04 pm

http://www.forbes.com/sites/robertwood/ ... dc62514de7

The Canadian movement dovetails with a legal claim filed by Canadian citizens against the Canadian Attorney General that challenges the constitutionality of Canadian government’s FATCA deal with the United States. The Canadian plaintiffs were born in the U.S., but left as young children to live in Canada. They never obtained U.S. passports or developed meaningful ties with the U.S. Even so, the case says, they are considered ‘tax cheats’ because they are not ‘IRS compliant.’


What a joke?! Now I will wait and see what you all patriots say.

BBCWatcher
Editor
Editor
Posts: 1035
Joined: Sun, 13 Sep 2015

Re: Ricedoll's Issues with US Taxation

Postby BBCWatcher » Sat, 27 Feb 2016 8:07 pm

As background, U.S. citizens enjoy the following "backstop" government services as notable examples:

1. Medicaid. If you're a poor or low income U.S. citizen (or become one), you can return to the United States at any time and get free medical services, including long-term nursing home care, paid by your state and federal government.

2. Supplemental Security Income (SSI). Likewise, if you are a U.S. citizen with little or no income (or become one), and you are elderly, blind, or disabled, then you can return to the United States and receive a monthly cash benefit to help you survive.

The U.S. State Department will help repatriate Americans in need who cannot afford to return.

Tax revenues pay for these and other important services. U.S. civil society has agreed, through its democratic representative system of government, that part of the tax financing for these and other programs should come from the 6% highest income U.S. citizens living in comparatively low tax jurisdictions, i.e. that the most financially successful Americans, even if living overseas, must financially help, to some small extent, their most unfortunate fellow Americans, if they're not helping the societies where they live to at least a somewhat lesser extent. And that the more financially successful they are, the more they must help their fellow Americans.

Now, if the only thing you care about is your husband's rather well stuffed wallet, I suppose you'll never be persuaded that that progressive approach to raising tax revenues to provide for essential services makes sense. In that case, if that's how your husband feels, then he can pay $2350 (or more, if applicable) and renounce his U.S. citizenship. Among other things that also means if he's ever in desperate financial or medical trouble then he won't be able to take advantage of Medicaid or SSI -- or U.S. State Department help to get to the U.S. to get that help. As it happens, his renunciation would also likely mean the U.S. government will not have been repaid for the considerable investments it made in him during his formative years.

That's part of the deal, too. His choice.

User avatar
sundaymorningstaple
Moderator
Moderator
Posts: 34783
Joined: Thu, 11 Nov 2004
Location: Still Fishing!
Contact:

Re: Ricedoll's Issues with US Taxation

Postby sundaymorningstaple » Sun, 28 Feb 2016 12:46 am

BBC, I wish you would quit deliberately trying to obfuscate the CBT issue and Singapore. Technically you are correct, but in reality the general understanding is CBT is normally thought to mean "INCOME TAXES" on earnings and/or investments. Your trying to put government mandatory Medical Insurance into the same basket is a red herring. It's not CBT at all as it's not a tax but a medical insurance premium which is why it is a payment based on age and not earning, albeit it's mandatory. All you are doing is trying to do is confuse people (or maybe you are confused). Additionally, it's not CBT as it pertains to PRs as well and they are not citizens.

earthfriendly
Manager
Manager
Posts: 1943
Joined: Sat, 20 Aug 2005

Re: Ricedoll's Issues with US Taxation

Postby earthfriendly » Sun, 28 Feb 2016 9:13 am

Lol, on a side note, that is what the US tax laws do to people. Inscrutable and open to interpretations. Confusing and comical at the same time. Bed Bath Beyond does not tax on the single serve Tassimo coffee pods but another grocery store does. Most restaurants tax on takeouts while others don't (I think Baja Fresh and Subway fast food, can't remember exactly , I mean who can keep up with this labyrinth).

BBCWatcher
Editor
Editor
Posts: 1035
Joined: Sun, 13 Sep 2015

Re: Ricedoll's Issues with US Taxation

Postby BBCWatcher » Sun, 28 Feb 2016 9:21 am

sundaymorningstaple wrote:Technically you are correct....

Yes, I am.

but in reality the general understanding is CBT is normally thought to mean "INCOME TAXES" on earnings and/or investments.

Says who? Rich people?

Your trying to put government mandatory Medical Insurance into the same basket is a red herring.

Of course it's not. Taxes are taxes. They raise revenues to support government, and they are compulsory. Money is fungible.

It's not CBT at all as it's not a tax but a medical insurance premium which is why it is a payment based on age and not earning, albeit it's mandatory.

That's a tax. If the U.S. government called the personal income tax as it applied to U.S. persons living overseas a "membership fee," would it cease to be a tax? (It pays for Medicaid!)

All you are doing is trying to do is confuse people (or maybe you are confused).

Not at all. The only confusing part is that somebody with a fairly well-to-do husband thinks that a tax that only 6% of the highest income citizens overseas owe is tyranny while a tax that hits 90+% of citizens overseas (modest and high income alike) is just fine. I don't know what moral value system that is except pure personal greed or at least opposition to progressive taxation, democratically decided.

You can hold any views you want about taxation. I have no objection to that. But I am characterizing and contrasting these views accurately.

Additionally, it's not CBT as it pertains to PRs as well and they are not citizens.

CBT is a term of art -- not mine! -- where the "C" can apply to both citizens and permanent residents. It does for both Singapore and the United States. I share your objection to the term, as it happens, for the same reason (and others), and I wasn't the first person to use the term in this forum. Nonetheless, for better or worse, it's the term people use to summarize the basic nature of Singapore's and the U.S.'s tax systems.

One additional reason I don't like the term is that so-called "RBT" often has "CBT" attributes, that tax systems run along a continuum. Two "buckets" isn't quite enough. For example, Hungary unquestionably has a "CBT," and in the precise meaning of the term, but some people (rich people?) don't like to include Hungary on the list because they find it easy to avoid Hungarian taxation. (In practice Hungary's CBT probably has a tax incidence lower than 6%, and that percentage is not confined to highest income in low tax jurisdictions.)

As background, well-to-do people have been howling about the "injustice" of progressive income taxes for generations. The U.S. adopted its "CBT" income tax in 1863, and in modern form it's been around for about a century. Americans have debated "CBT" endlessly, and they just don't agree that there's any fundamental problem with the principle. But well-to-do people sure love to complain about progressive income taxes. ;)

Last year the Singapore government agreed to exactly the same core principles. Singapore's CBT is regressive (and, also by design, with the highest global tax incidence among CBTs), but the core principles are exactly the same, with the same justifications. Those justifications aren't wrong; they are logical. Singapore citizenship and PR is (also) valuable in part because of "backstop" publicly provided medical care. But OK, if you don't like that deal, give up your blue or pink NRIC. Then Singapore won't have to take care of you.
Last edited by BBCWatcher on Sun, 28 Feb 2016 10:01 am, edited 5 times in total.

BBCWatcher
Editor
Editor
Posts: 1035
Joined: Sun, 13 Sep 2015

Re: Ricedoll's Issues with US Taxation

Postby BBCWatcher » Sun, 28 Feb 2016 9:29 am

earthfriendly wrote:Bed Bath Beyond does not tax on the single serve Tassimo coffee pods but another grocery store does. Most restaurants tax on takeouts while others don't....

These are sales taxes, levied by state and local governments. They have nothing to do with the federal government.

However, practically every country with a GST or VAT has "strange" rules, Singapore included. For example, I'm not sure why Singapore exempts GST for purchases at Changi Airport, always airside (subject to customs limits), but if you're in the public area you now (from April, 2015) have to sign up for a "Changi Rewards" card to get the GST waiver, but it doesn't apply to everything you can buy at the airport, but you can't get a card if you are affiliated with the airport (read this paragraph).... You get the idea. It's the same idea.

ricedoll
Regular
Regular
Posts: 65
Joined: Tue, 27 Oct 2015

Re: Ricedoll's Issues with US Taxation

Postby ricedoll » Sun, 28 Feb 2016 10:52 am

Patriots, you can say all you want but our feelings towards the great ole uncle sam is DONE. =D>
Too bad, this is our personal decision and nothing you can say could redeem the ill feelings overseas Americans have towards CBT and FATCA. We owe uncle sam NOTHING, absolutely nothing! Except for maybe some appreciation and thats about it. I don't owe uncle sam a single cent and its absurd "membership". So glad that my husband and I both agreed that our kids should be keeping the SG passport instead. We will not let our next generation go through this! Just calculated, this year my husband will be paying almost USD$20K... for WHAT? And what exactly are we funding? Sayonara, we won't even be looking back.

User avatar
sundaymorningstaple
Moderator
Moderator
Posts: 34783
Joined: Thu, 11 Nov 2004
Location: Still Fishing!
Contact:

Re: Ricedoll's Issues with US Taxation

Postby sundaymorningstaple » Sun, 28 Feb 2016 12:18 pm

Good riddance springs to mind.

Sent from the ozone layer - the answer is out there!

BBCWatcher
Editor
Editor
Posts: 1035
Joined: Sun, 13 Sep 2015

Re: Ricedoll's Issues with US Taxation

Postby BBCWatcher » Sun, 28 Feb 2016 12:55 pm

sundaymorningstaple wrote:Good riddance springs to mind.

I have no problem with any legally competent adult who decides to terminate any citizenship per its democratically decided termination provisions. (In the case of the U.S. it's a $2350 fee based on the average, fully burdened cost of processing a renunciation or relinquishment -- I can believe the State Department on that point -- and occasionally some Expatriation Tax.) That's anybody's right, and it's an important right.

The U.S. isn't going to be at all upset or concerned if/when somebody ends his citizenship, if that's what you mean. Groucho Marx resigned from the Friars' Club and allegedly said this: "I don’t want to belong to any club that would accept me as one of its members." Well, the U.S. government doesn't particularly care whether you maintain your club membership or not. It's your choice, and nobody in the government (at least) is going to be crying, just as nobody in Singapore's government cries when a Singaporean acquires another citizenship and thus, under Singapore citizenship law, loses his/her Singaporean citizenship. (I'll have to take a look at the numbers some day, but I'm pretty sure Singapore loses more of its citizens every year than the U.S. does, and the U.S. has a much larger population.)


  • Similar Topics
    Replies
    Views
    Last post

Return to “PR, Citizenship, Passes & Visas for Foreigners”

Who is online

Users browsing this forum: No registered users and 3 guests