Tax residency and working remotely, away from Singapore

[sundaymorningstaple]

This is where the confusion is coming in. He could be in any country and OP can operate from his house working directly for his company here in Singapore. They didn't send him there, but he is caught there due to covid. Wfh is possible so I'm not sure if IRAS will make a distinction due the the prevalence of WFH during the pandemic. Pretty Grey area and I'm sure there are going to be a lot of test cases before long. I'm pretty sure that those who are working from home (in their own countries) will be flying under the radar in those countries while under WFH (especially if they are stuck there due to covid but are still able to work via internet with their respective employers via online. It will be interesting to see how this pans out, especially if a spouse & children are still in Singapore.

[PNGMK]

Well this is where the auto file and auto inclusion come in. IRAS will be notified for sure and OP will have to explain why they don't qualify as resident or none resident.

[Myasis Dragon]

Well this is where the auto file and auto inclusion come in. IRAS will be notified for sure and OP will have to explain why they don't qualify as resident or none resident.

Ahh, yes... wrinkles in tax residency status because of travel prohibitions created by the pandemic.

Example: I am actually resident in Singapore, have a house, will eventually get back there. But for the moment, I've spent 10 months in outer BFE, working my Singapore job remotely.

Interesting question. I have not terminated my residency in Singapore. Yet, by most tax treaties, I ought to be paying tax in out BFE.

Seems like this is a question worth asking IRAS.

[PNGMK]

Well this is where the auto file and auto inclusion come in. IRAS will be notified for sure and OP will have to explain why they don't qualify as resident or none resident.

Ahh, yes... wrinkles in tax residency status because of travel prohibitions created by the pandemic.

Example: I am actually resident in Singapore, have a house, will eventually get back there. But for the moment, I've spent 10 months in outer BFE, working my Singapore job remotely.

Interesting question. I have not terminated my residency in Singapore. Yet, by most tax treaties, I ought to be paying tax in out BFE.

Seems like this is a question worth asking IRAS.

Yes - I for one would like it clarified as it impacts my eventual retirement plans.

[malcontent]

PNGMK, I hear you on tax complications in retirement!

Did you know how CPF LIFE annuity payouts will be taxed if you became US taxable? This is something I just learned recently. It’s stated clearly in the general rule on annuities - the entire annuity payment is considered fully taxable as ordinary income if the contributions were untaxed and based on work performed abroad while a nonresident alien.

For my wife and I, we may try to apply for an exemption from CPF LIFE based on social security benefits... hopefully she can keep the money in SA and just earn interest. If that doesn’t work, she has to either renounce or stay outside the US tax system, but that means married filing separately which is punitive.

[sundaymorningstaple]

Yep, ever since the 2nd child turned 18 I've been filing as MFS instead of HoH ever since (the youngest is now 31. Sucks, but what about the IRS never did? When I decided to stay here for the longer duration is when I got my wife to give up her green card without ever residing in the US. She's never had a ITN or SS # either. The IRS has always been punitive.

[malcontent]

Yep, I was looking over my dad’s tax return last week and noticed social security benefits are taxed punitively for MFS filers. I suppose you could still opt to treat your NRA spouse as a RA, get her an ITIN and file MFJ, but then everything under her becomes US taxable. Have to weigh the pros and cons.

[PNGMK]

I'm thinking more and more about setting up a family trust in Singapore before I become tax resident elsewhere.

[malcontent]

You might want to have a listen to this podcast before you make a decision -

https://podcasts.apple.com/us/podcast/b ... 0504122914

Really good interview with an expert on setting up things like family trusts, and they discuss who can really benefit from such a thing.

[PNGMK]

You might want to have a listen to this podcast before you make a decision -

https://podcasts.apple.com/us/podcast/b ... 0504122914

Really good interview with an expert on setting up things like family trusts, and they discuss who can really benefit from such a thing.

Can you give me a brief synopsis? I will listen but am curious what your summary is.

[malcontent]

I’ve actually listened to it twice and there is so much information packed in there (once you get past the introductions), so it’s difficult to summarize. Suffice it to say there are a lot of nuances to consider, which rise exponentially as wealth increases... taxes are one, but also asset protection, estate planning and the degree to which you want professional help with investments, structuring and control both now and after you pass. My take is that it’s probably not worth doing too much of this unless you have at least an 8 figure net worth.

[PNGMK]

Yes - sort of what I thought.

The general plan is to keep as much here (somehow) where there is no CGT or tax on Dividends.

[malcontent]

As long as you remain a Singapore tax resident and stay outside the US tax system, then investments solely under your name would be free of CGT, but any dividends from
US based investments will usually get a flat 30%.

If you ever come under the US tax system, you will want to be sure and sell any investments with capital gains one year prior (reset the basis), but keep any investments with losses, as you can carry those in and possibly take a tax deduction. Once you become US taxable, it won’t matter where your investments are located, they will be taxable, and having them in a foreign trust will only add complication.

As long as you don’t sell investments with gains after you become US taxable, you will only be taxed on dividends, and for US based investments, it’s usually qualified dividends (tax free in the bottom two tax brackets, preferential 15-20% rates above that - better than the flat 30%).

As long as you spend less than 8 years in the US, you can avoid the deemed expat rules and carry out any unrealized gains without paying any CGT.

For a US citizen spouse, they should be maxing out Roth contributions each year, if income is too high, use the back door method. Everything that goes in their will be shielded from US tax forever, so nothing beats that.

[PNGMK]

Depending on how easy travel is in a few years I'm thinking that this may be the method - maintain Singapore or Australian residency and occasionally be state side.

Tax Home – If you can prove that you have had a tax home in another country during the year and were not present in the United States for 183 days during the year. Under these conditions, a tax home is usually considered to be either the principal place of business or the primary residence of the person in question. If you wish to claim this exemption, you will need to file Form 8840 with the IRS.

[malcontent]

Besides tax home, substantial presence is another one to avoid.

Substantial presence is based on day count; if an individual is present in the United States at least 31 days in the current year and the sum of 1) the days that individual is present in the United States during the current tax year, 2) one-third of the days that individual is present in the United States during the first preceding tax year, and 3) one-sixth of the days that individual is present in the United States during the second preceding tax year equals or exceeds 183, then that individual is substantially present in the United States.

Bottom line, if you want to spend as much time as possible in the US each without triggering, keeping it to 4 months each year should work.