question regarding Form IR8A if working remote

[fXXsG2Um]

Hi –I am a ‘trailing spouse’ here on a dependent pass. I still work remotely for my US employer. My tax adviser here is telling me that my US employer needs to fill out form IR8A and also needs to apply for a ‘Tax Reference’ number. My US employer has zero business presence here in Singapore. I really do not wish to get my company’s HR / legal people involved with any paperwork here as the decision to allow me to work remote was more or less a decision between me and my boss.
My questions are:
1. What are the legal implications (if any) of my employer requesting a ‘Tax Reference Number’.
2. My tax adviser mentioned they could “prepare IR8A for the year ended 31 December 2019 on behalf of your US employer”. Does this mean my US employer would not have to be involved at all with completing this form?
I want to follow the rules but just do not want to implicate my employer in any way (ie: opening up some kind of liability here in SG) regarding my remote working arrangement. My concern is that they might determine it’s too much of a burden and disallow the arrangement. Thanks for your help!

[PNGMK]

You can do this yourself. Your tax adviser is full of shit. Only Singapore employers with a legal entity in Singapore need to provide you an IR8A.

You don't need an IR8A for income earned outside of Singapore - fill out the IRAS tax form yourself online with your income and state your employer is a foreign company. I've had the same problem before and the local tax advisers are useless.

Your US employer does not need to be involved in the Singapore tax issues (not sure about the US side).

[bro75]

See the IRAS link

https://www.iras.gov.sg/IRASHome/Indivi ... Singapore/

[fXXsG2Um]

thanks PNGMK and bro75 for the responses.

PNGMK - if doing this myself what would I put in for the 'employer reference number' or do you just leave that blank?

[Myasis Dragon]

See the IRAS link

https://www.iras.gov.sg/IRASHome/Indivi ... Singapore/

This is NOT overseas income received in Singapore. Wrong citation. Overseas income has a special meaning. For example, you were tax resident in Indonesia while working there but your income was paid into your Singapore bank account. That would be non taxable overseas income. You are a director of a foreign corporation and receive director fees that are taxable in the foreign country. That would be non taxable foreign income.

The OP is referring to income received in Singapore for work performed while physically resident in Singapore. It is local income, not overseas income, and is taxable by IRAS. It doesn't matter whether she is working for a US company or a different foreign company. It doesn't matter if she is logging into servers in Brazil, the US, or on Mars. She is performing the work in Singapore, while resident in Singapore.

The second thing that is relevant is that your US employer has no business presence in Singapore. This means you do not need work permits or employment passes to work for this foreign firm. It also means that PNGMK is correct. Your tax adviser is full of shit. Form IR8A is for Singapore registered companies.

You file your IRAS returns as an unregistered sole proprietor. You are an independent business person, earning an independent living, just like the karung guni, the local trash man, who picks up scrap in the neighborhoods. You're just like the person living in Singapore who is buying crap from Alibaba in China, and selling it on eBay in the USA... a sole proprietor running a business out of Singapore.

Relevant tax page: https://www.iras.gov.sg/IRASHome/Busine ... -Partners/

Relevant ACRA page: https://www.acra.gov.sg/how-to-guides/b ... t-register

Quote from the page:

Exemptions from registration
Your business is exempted from registration if:

You choose to conduct business using your full name as reflected in your NRIC.
You choose to conduct the business with one or more partners using their full names as reflected in their NRICs.
Note: If you choose to add descriptive words before or after your name (e.g. Flowers by Tan Mei Ling), you must register the business.

Final thing: I assume that you are a US citizen or US resident? Then, there are two things to consider. First, as a US citizen/permanent resident, you are taxed on your world wide income, no matter where earned. Thus, you must report your Singapore earned income on a 1040, even though you will get an exclusion for foreign earned income.

And now for the more complicated part. If you are a US citizen/permanent resident and you are working for a company registered somewhere in the US, you need to contact a US based tax accountant. It has been quite a few years for me, but I am about certain that the money you will earn from the US company will be subject to social security withholding. Thus, you will also need to file estimated quarterly returns in the US, along with remittances for withholding tax and self employed FICA tax, for the money you earn from the US company. Or, the US company you work for will have to handle withholding. It depends whether they are going to treat you as a W-2 employee or a 1099 contractor.

[bro75]

See the IRAS link

https://www.iras.gov.sg/IRASHome/Indivi ... Singapore/

This is NOT overseas income received in Singapore. Wrong citation. Overseas income has a special meaning. For example, you were tax resident in Indonesia while working there but your income was paid into your Singapore bank account. That would be non taxable overseas income. You are a director of a foreign corporation and receive director fees that are taxable in the foreign country. That would be non taxable foreign income.

Thanks. I understand now that the citation is not relevant to the OP case.

[fXXsG2Um]

Myasis Dragon thank you sir for your response. I am in fact a US citizen and W2'd employee for my company in the US. We have the same accounting firm (US based but with an office in Singapore) doing our taxes as part of my spouse's expat deal. I do still have US withholding from my paycheck although I do expect to not pay anything in US taxes due to the 100k exclusion + foreign tax credit. I like your suggestion of operating as an unregistered sole proprietor. This seems makes total sense to me and seems like the easiest path forward. Anyway thanks again for the reply.

[Myasis Dragon]

I like your suggestion of operating as an unregistered sole proprietor. This seems makes total sense to me and seems like the easiest path forward. Anyway thanks again for the reply.

It's the only way, really. You're either working for a Singapore registered legal business entity, or you're working for yourself. Since the company has no legal presence in Singapore, it's pretty hard to be working for them in Singapore. Hence, your sole proprietor status.

That's a better situation anyway. If they did have a legal presence in Singapore, then you'd need a work permit of some sort to be employed by them, with all the attendant hassles.

[Myasis Dragon]

Just a couple more thoughts about your situation.

You realize, of course, that you are jam on the Singapore tax man's slice of bread. What I mean is that, in reality, you're working out of home, you're working remotely, you're working for a foreign company, and the IRAS will never know how much money you make unless you report it. Singapore and the USA don't have a tax treaty, so for example, IRAS would never go to the IRS and ask how much income you reported.

However, US tax rules for "foreign earned income" are exactly the same as most other countries... you earn where you are physically residing and physically working. Thus, should the IRS ever question your foreign income exclusion, tax returns and payments to IRAS would certainly solve that problem.

[PNGMK]

^ from what I recall my US spouse includes her IRAS payments on her US income taxes (cant' remember where).

[Myasis Dragon]

^ from what I recall my US spouse includes her IRAS payments on her US income taxes (cant' remember where).

Form 2555 does not have any provision for recording foreign taxes paid. This is the form you must always fill out to get the foreign income/housing exclusion. You may not deduct foreign taxes paid for any and all earned income up to the exclusion limit.

If you were to exceed the earned income exclusion limit, then you would be taxed by the US on that income above the exclusion limit. At the same time, you would be able to deduct, as a tax credit, foreign income taxes paid on earned income above the exclusion limit. If this is your circumstance, then you would use form 1116, foreign tax credit computation, to determine how much of your foreign taxes paid you could deduct from your US tax bill.

But, all of this only applies if you have income in excess of the foreign income exclusion, which for 2019 is $105,900 for 2019. Be aware that the earned income exclusion is per taxpayer, even if filing jointly. So, if one spouse made $150,000, the other $25,000, you couldn't combine exclusions. One spouse would have to declare $44,100 in non excluded earned income.

[PNGMK]

Thanks Dragon - good info. Did you enjoy the transition to the new trump tax forms?

[fXXsG2Um]

Thanks to you both again for your contributions. A couple of quick follow up questions which I think I know the answers to but will ask anyway
1. Bank account interest, dividends, capital gains from stock sales. Assuming all done from banks / brokerages in the US that would not be reported here correct?
2. Would I report the gross amount from each paycheck or just the net amount that lands in my bank account? Example: If my paycheck is 4k gross but after 401k contributions and taxes I only have 3k – would I just report the 3k here in SG?

[Myasis Dragon]

Thanks to you both again for your contributions. A couple of quick follow up questions which I think I know the answers to but will ask anyway
1. Bank account interest, dividends, capital gains from stock sales. Assuming all done from banks / brokerages in the US that would not be reported here correct?
2. Would I report the gross amount from each paycheck or just the net amount that lands in my bank account? Example: If my paycheck is 4k gross but after 401k contributions and taxes I only have 3k – would I just report the 3k here in SG?

In general, passive income is always earned, and taxes paid, in the country in which the passive income was generated. Therefore, all of these will be taxable in the USA but not reported nor taxed in Singapore. Be aware that your passive income is taxed at a rate in the USA as though you did not have the earned income exclusion in place, ie, passive income is taxed at the highest marginal tax rate applicable to your income bracket.

Your second question is much more complicated. First of all, what lands in your bank account is irrelevant, it is what you earn, gross and net, that matters. So, it's what you report on your Singapore personal tax return that matters, not what you put into your bank.

As I noted, there is no tax treaty between the USA and Singapore, and in reality, Singapore has no idea how much you are earning. You could call IRAS on this item but I doubt you'll find anyone with a clue... at least not easily... but it would be worth a try. I would email IRAS... they have been quite helpful to me in the past. And given that your tax accountant thinks foreign companies need to file IR8A's... well, I don't give them a high degree of credibility.

Here's how I would handle it. Virtually nothing is deductible in Singapore, except for government mandated retirement programs (CPF and the supplemental retirement scheme). There are other deductions, none applicable to you, I don't think (earned income relief is automatically applied).

Therefore, I would report my business income as my US gross minus social security and medicare deductions. Remember that you will be filing IRAS form B for sole proprietors, and the amount you receive is your gross revenues for your business, not personal income to you. However, unless you are making a ton of money, IRAS only requires you to file a two line revenue and adjusted profit/loss tax return.

Other retirement plan contributions are not deductible in Singapore, so you couldn't consider a 401k contribution as a deduction, if one were trying to mimic what is deductible and what is not in Singapore. However, you are running a business and you can deduct business expenses... and I have no idea if your contributions could be considered qualified business expenses... I think not, but that's just a SWAG.

Info on a sole proprietor tax return: https://www.iras.gov.sg/irashome/upload ... glish).pdf

[Myasis Dragon]

Thanks Dragon - good info. Did you enjoy the transition to the new trump tax forms?

Are those the new forms where you just send them your whole paycheck and they send back what they don't need?

My tax reporting life has become much simpler since I've returned to the USA and wound up my businesses in Singapore, Thailand, Malaysia, and Australia. Plus, closing foreign bank accounts has saved a ton of reporting.

Add onto this the fact that my home is paid off (no mortgage interest deductions), and the standard deduction has been increased, and my reporting has become easy peezy.

I will turn 70 and 1/2 in April and I was going to be subject to required minimum distributions from my retirement accounts. That age has been kicked up to 72, so I like that.

However, in the broader picture, trump and the republicans have f*cked the USA with irresponsible tax cuts that have created trillion dollar deficits. In the immortal words of Rober de Niro at the Tony awards, "F*ck trump!".