Tax questions for US Citizens working in Singapore

[kc_phil]

I am trying to get a handle on the tax situation I will face by working for a company in Singapore.

It is my understanding that as a US citizen working abroad, I will be exempt from both state and federal income tax but will still be responsible for social security. For that matter, my responsibility for social security will double because the foreign employer will not be paying into the system like a US company would.

Browsing the forum has led me to believe that Singapore income tax is relatively low (10-15%). Is this correct?

All this potential for taxation makes working abroad seem like a fairly spendy proposition. Do Singapore companies ever take on the income tax burden for their foreign employees? Does it matter if you are a ‘local-hire’ or on an expat package?

Though i have consulted with my financial advisor in the US I would like to get a point of reference so I can discuss these matters with a degree of intelligence.

Comments from anybody with experience in this area would be appreciated.

Thanks!

[sundaymorningstaple]

Hi kc_phil,

Hopefully, I can ease you mind somewhat. Or at least straighten out some of the confusion.

You may or may not be expempt from State taxes, this varies from state to state. You are NOT exempt from US Income taxes. If you are working for a foreign employer (non-US employer) you are NOT required to pay Social Security taxes (either side). You are however required to pay US Income taxes but are allowed to deduct up to $84,000 USD worth of wages from your gross income. The rules have changed somewhat recently but the "Income Earned Abroad Exclusion" is still 84K/year. The biggest difference now is that the excess will be taxed at the rates that would have been applicable before the exclusion of the 84K. There are other changes to be aware of as well but more information can be found at the IRS Website Pub 54 - Tax Guide for US Citizens and Resident Aliens Abroad as well as the latest updates here: Publication 593.

Hope these help.

sms

[kc_phil]

great info! Thanks.

What about my tax burden in SNG? Some folk have suggested i get the company to pay it? Is that common?

[sundaymorningstaple]

Singapore, like the US, uses a graduated tax rate. As an example, if you gross income for the year is SGD 200,000 then your tax liability will be 11.6% of you salary or 23,250, with the upper tier tax bracket of 18%. The maximum tax rate will be reached at a gross income in excess of $320K and that rate is 21% on the excess over 320K. The taxes on the first 320K will be $44805 or 14% of gross. The tax rates are much cheaper here. There is no Personal Income Tax treaty with the US but there are limited tax treaties but these are in the import arena. Hope the IRAS links below help.

Use this to understand Residence status for tax purposes Tax Rates for Foreigners

This is a link for the tax rates if qualified as resident. Tax rates for resident individuals (over 183 days in Singapore).

sms

[wirby]

Does this apply to British Citizens too?

[sundaymorningstaple]

Does this apply to British Citizens too?

The UK has a conprehensive tax treaty with Singapore which also covers Income Taxes. Following is the link to that agreement: UK - Singapore Tax Treaty

You will need Adobe Acrobat reader to read the document.

Hope this helps

sms

[wirby]

Cheers for this useful information