Double Taxation: Paying taxes in Singapore and the U.S.

[maneo]

Are you an IRS agent?
You shouldn't be misleading people like that.

I'm not an IRS agent and I am not misleading anyone. Perhaps you need to do a bit more homework. The bona fide residence test clearly states that there are no specific tests to be met but that acts and intentions are examined. It also clearly states that if you have a long term residence outside the country for an indefinite period of time you meet the requirement. So, for people like me, with a company here, a residence here, and the intention to be here much longer, I qualify. It really doesn't matter how often I go to the US because I meet the bona fide residence requirements.

For someone on short term assignment, or of a known duration, this test may not apply. But how am I being misleading?

And say... aren't you the guy that has to rely on tax accountants?

Illogical misdirection.
I know my limitations.
Neither of you seem to know yours.

Yes, you are misleading people.
The bona fide residence test only indicates if one is eligible for the exclusion.
It has no bearing on how the computations are carried out.

For anyone that may actually believe what you just put forth, they should consult with the IRS expert through the consulate or check with a credible tax accountant.

Note: I would not consider H&R Block a credible tax accountant.
They may be OK for normal situations, but I would never let them handle a complex one.
Working for them would not consititute "unfair advantage."
Sophmoric overconfidence, maybe.

The fact that neither you cannot comprehend that the tax credit computation can be more complex tells me you are not the experts you believe yourselves to be. However, it should not matter. There are not enough IRS agents to audit everyone, so you will probably be able to go on your merry way without knowing any better.

As for the example you noted, yeah that's quite simple.
After all, you were able to explain it, so it must be.

No, my tax situation has been more complex, since my income comes in 4 different currencies with taxes paid in 2 foreign countries, IRAS keeps updating the tax computations for previous years, which needs to be accounted for in the Tax Credit form, I had multiple rental properties with 1031's, MACRS, SDB, caps on passive "losses", straddles and contracts and, yes, the wife goes to the US to do business almost every year.

Oh, so on the topic of how to execute the 2555 form properly it seems that I'm the one who has actual relevant experience here.


WARNING:
Again to any spectators, consult with the IRS expert through the consulate or check with a credible tax accountant for your situation.
You alone are responsible for your taxes.

If tax accountants in the US can never agree it should be no surprise that there will be disagreement amongst non-professional posters.

[sundaymorningstaple]

Sorry Maneo, but it would seem that it's pot, kettle, black. You are spouting and railing and you don't even do your own yet you hold yourself out as an expert?

Nobody here is calling themselves an expert either. But for 99.99% of overseas filers, it's a simple matter. There is always the odd one who does have a more complex return, but they are the anomaly and not the rule. The only unknown poster here is yourself. Your PM to me was somewhat pathetic in as much as you want to diss the largest Tax Preparation company in the world and then claim you know more? In all the posts, we have done nothing but advocate reading to learn, nobody here is espousing that they are experts (oh, except you that is).

Give us a break!

[maneo]

I am not the one that held myself to be an expert.
However, what you wrote does seem to imply this.

I would have liked to get into this but I wont as I do have an unfair advantage insomuch as I was once the District Director for H&R BLock for 8 years in Washington DC.

Rather than address the content of the disagreement with logic and reason, you, like your buddy, in the absence of facts resort to personal attack.

I, however, choose to respond with facts, specifically an example from page 16 of IRS Publication 54 (which you previously referred to) that illustrates exactly what I said:

Example. You are a U.S. citizen, a bona fide resident of Canada, and working as a mining engineer. Your salary is $76,800 per year. You also receive a $6,000 cost of living allowance, and a $6,000 education allowance. Your employment contract did not indicate that you were entitled to these allowances only while outside the United States. Your total income is $88,800. You work a 5-day week, Monday through Friday. After subtracting your vacation, you have a total of 240 workdays in the year. You worked in the United States during the year for 6 weeks (30 workdays). The following shows how to figure the part of your income that is for work done in Canada during the year.

Number of days worked in
Canada during the year (210)
----------------------------------- x Total income ($88,000) = $77,700
Number of days of work
during the year for which
payment was made (240)

See http://www.irs.gov/pub/irs-pdf/p54.pdf .

Just the facts.

Oh, and H&R Block may be "largest Tax Preparation company in the world," but that does not make them a credible tax accounting firm.
H&R Block is a franchise operation, like Mary Kay, like McDonalds, etc.
Their value proposition is tax preparation.
Their business model means focusing on high volume, mainstream, ordinary returns that can be done by ordinary people trained to handle the most common situations.

I'm sure the training program does this quite well.
However, it is not enough to make CPA's out of the trainees, but that is not necessary.
H&R Block performs a service for many in the US, but it is not in their business model to spend time on high effort, low return complex situations.
Those are best left for CPA's and certified tax accountants.

[Strong Eagle]

Maneo,

Who pissed in your Wheaties? No one has not said that you may have to use the time calculations. After all, they are all over the forms for computation of exclusion and tax credits.

What was said, and what is true, is that if Singapore is my bona fide residence then it doesn't matter how many days I am actually here because I qualify under a different set of rules.

Why are you insisting on being so confrontational? Anyone with brains and desire can read the forms, publications, and instructions, ask questions if they wish to, and do it themselves, or they can hire an accountant... which may or may not get them the right answer.

Give it a rest. You could contribute proactively.

[maneo]

Maneo,

Who pissed in your Wheaties? No one has not said that you may have to use the time calculations. After all, they are all over the forms for computation of exclusion and tax credits.

What was said, and what is true, is that if Singapore is my bona fide residence then it doesn't matter how many days I am actually here because I qualify under a different set of rules.

Why are you insisting on being so confrontational? Anyone with brains and desire can read the forms, publications, and instructions, ask questions if they wish to, and do it themselves, or they can hire an accountant... which may or may not get them the right answer.

Give it a rest. You could contribute proactively.

Don't eat Wheaties.
Am not the one who is confrontational.
Only trying to make sure no spectator gets misled by your failure to understand the overseas exclusion regulations.

Since taxpayers are alone responsible for their own filing, they need to know where to obtain correct info to file properly.

Issue here is not how many days you spend in your bona fide residence of Singapore.
The issue is how the time a US taxpayer overseas spends working in the US affects the amount eligible for exclusion.
If the taxpayer visits the US only for vacation, but does not actually spend any time "working," then there is no impact.

The example provided directly from Pub 54 and the link should be considered a proactive contribution.
It was the only meaningful content in this continuing "discussion" since it comes from a credible source.
Hopefully it is a link some taxpayer might find convenient to download tax info and print forms needed for filing.

[sundaymorningstaple]

As the link was provided in the very first reply to the OP's message and all were exhorted to read it, then I must assume that the rest of your tirade was just about you playing "look at Maneo" look at all my investments?

You misread a message and got on your high horse and instead of admitting you misread the post, it would appear your continuing tirade is just about massaging your bruised ego. I would ask you where did anybody say anything about an amount of the exclusion prior to you going off on your little rants? The first time anything about an exclusion "amount" was by yourself. We didn't need to. The exclusion is just that and by reading the Publ 54 the quantum would have been arrived at by filling out the form. Obviously, while filling out the form, you would possibly need to do some calculations. Otherwise there would be no need for the form would it (insert d'oh smilie here) That is so obvious and is why all were given the links so that they could read up and do it themselves and it would not be necessary to cut and paste into the forum.

Good luck with you taxes.

[maneo]

Sorry, but it wasn't me that got on a high horse.
I wasn't the one bragging about being able to fill out my own taxes or being a deputy director of a tax prep franchise nor did I make ignorant comments about why one used accountants.

I also did not misread messages.
The OP asked "Does anyone have any experiences with this or pertinent information that would be of value? "
That seems pretty open-ended.
Besides that, there was another poster besides the OP with questions (auxilium).

Your comment that "If you read Publ 54 you have 99% of your answers already. Not that difficult. Even for someone who has no background in taxation," is basically true.
If only everyone could read as well.
The reaction to my short note about keeping track of "time worked in the US" simply proves that not everyone understands what was written as intended.
And this is even after the IRS has made their publications more readable.

I merely pointed out something that people easily overlook.
Clarification should be welcomed, not criticized.

[sundaymorningstaple]

If you say so.

[Laksa]

Hello everybody!

I am a US citizen who is new to Singapore. From what I understand, I will be paying both Singapore and US taxes on any income over $84,500. I had some additional questions that I was hoping you could help me with.

1) Is there any legal way to avoid or minimize the double taxation?

2) Do I get any credit on my US taxes for the tax I pay in Singapore?

3) I understand that the rent my company pays on my behalf is taxed differently. How does that work?

Thanks in advance for any advice you can provide!

[maneo]

1) Is there any legal way to avoid or minimize the double taxation?

You will be liable to IRAS for taxes on your earnings, including allowances, in SG.
As a US citizen, you are liable for taxes for money earned anywhere.
You will not be eligible to claim the foreign earned income exclusion until you have been physically present in foreign countries for a total of 330 days out of a 12 month period.
You may need to take advantage of extensions to file in order to try meet this criteria.
By the way, this amount was increased to $85,700 for tax year 2007.
Hopefully, it will increase again for tax year 2008.
For details, download Pub. 54 from http://www.irs.gov/pub/irs-pdf/p54.pdf .
It really is quite easy.

2) Do I get any credit on my US taxes for the tax I pay in Singapore?

You could.
Go to the following link:
http://www.irs.gov/taxtopics/tc856.html

3) I understand that the rent my company pays on my behalf is taxed differently. How does that work?

See Pub. 54 for how this is to be treated.
Download it and read it.
It's only 50 pages of reading.
See how your tax dollars have been put to work so that those tax dollars can be collected correctly.

[Laksa]

Hi Maneo,

Thanks for the quick reply! I didn't realize you had responded until logging in again just now.

I had a few follow-up questions that I'm not sure if you guys can help with:

1) Is there any legal way to avoid or minimize the double taxation?

I will definitely take the foreign earned income exclusion of $85,700 with respect to my US taxes. But I'm wondering if there is a way to minimize my taxes in Singapore? For example, is there anything my company can do in the way it structures my pay so that not all of it is subject to Singapore tax?

2) Do I get any credit on my US taxes for the tax I pay in Singapore?

I'm a little confused here. Are you saying that my US taxes will be reduced by the amount of my Singapore taxes? If so, then I don't understand why everyone keeps saying there is double taxation for US citizens.......

3) I understand that the rent my company pays on my behalf is taxed differently. How does that work?

Thanks for the tip! I will definitely read Pub. 54 as you suggested. Just to clarify, I was actually wondering how the rent my company pays on my behalf will be taxed by the Singapore government. I was told it is a very low percentage.

Thanks again for your help! It is much appreciated.

[maneo]

1) Is there any legal way to avoid or minimize the double taxation?

I will definitely take the foreign earned income exclusion of $85,700 with respect to my US taxes. But I'm wondering if there is a way to minimize my taxes in Singapore? For example, is there anything my company can do in the way it structures my pay so that not all of it is subject to Singapore tax?

Singapore taxation is quite simple.
There is very little room for creative accounting as is done in the US.
Your Singapore taxes will be based on what is reported in your IR8A (which may be filed directly with IRAS).

2) Do I get any credit on my US taxes for the tax I pay in Singapore?

I'm a little confused here. Are you saying that my US taxes will be reduced by the amount of my Singapore taxes? If so, then I don't understand why everyone keeps saying there is double taxation for US citizens.......

Only the tax paid on the income that is not subject to the foreign income exclusion may be elgible for tax credit.
For those receiving high incomes plus various allowances, they may end up paying more in tax. Some companies provide "tax equalization" for this situation. For those earning amounts not far above the exclusion limit, they may actually pay less. Haven't determined what the cross-over point is.

3) I understand that the rent my company pays on my behalf is taxed differently. How does that work?

Rent paid by your employer should be accounted for in form 2555 and then be offset by the amount of rent paid.
Details in publication 54.

[Capex101]

I am tagging on to an old string that only sort of applies to a few questions I have - but it was fun reading. I have three questions for anyone that can help:

1. Is there a good tax accountant in Singapore that is fully up on US tax filing - and if so any names would be appreciated. I gave it my best attempt to do it on my own - and am just not comfortable I have it right.

2. When I did do my US taxes (after doing my Singapore taxes - very simple) I did get all the exclusions/allowances/etc, took the tax credit for Singapore taxes - and up came the AMT for a whopping amount. Anyone else see the same results?

3. Does the fact that my wife also works in Singapore have any influence on any exclusions/allowances/etc?

A few details in very rough numbers:

Arrived Singapore Jan 1, 2009
Wife also works in Singapore
Both paid salary out of the US in USD - ($380k total)
Car allowance, COL adjustment, overseas premium, electric bill, TV, home leave, US house maintenance etc, etc paid to me by company locally in SGD (S$200k/year)
Housing paid directly by company to landlord in SGD (S$144k/yr)

Yes, it is a pretty good deal - or so it seems. As I said, the Singapore taxes were simple - add everything above up (plus the company's 401k contribution and some other things that are not taxed in the US) and pay about 20% of it to IRAS. My assumption was then that the Singapore tax would be credited against the US tax liability - and it was - then the AMT reared its ugly head.

I am going to go to a professional to get this done (and yes, I have read all the publications), but it is always good to hear first from someone who has actually been in a similiar situation.

[sundaymorningstaple]

I reckon you could probably use any of the ones listed on the US Embassy's site with some sort of safety. Give 'em a call to check 'em out.

http://singapore.usembassy.gov/tax_acco ... apore.html

[Strong Eagle]

I am tagging on to an old string that only sort of applies to a few questions I have - but it was fun reading. I have three questions for anyone that can help:

1. Is there a good tax accountant in Singapore that is fully up on US tax filing - and if so any names would be appreciated. I gave it my best attempt to do it on my own - and am just not comfortable I have it right.

2. When I did do my US taxes (after doing my Singapore taxes - very simple) I did get all the exclusions/allowances/etc, took the tax credit for Singapore taxes - and up came the AMT for a whopping amount. Anyone else see the same results?

3. Does the fact that my wife also works in Singapore have any influence on any exclusions/allowances/etc?

A few details in very rough numbers:

Arrived Singapore Jan 1, 2009
Wife also works in Singapore
Both paid salary out of the US in USD - ($380k total)
Car allowance, COL adjustment, overseas premium, electric bill, TV, home leave, US house maintenance etc, etc paid to me by company locally in SGD (S$200k/year)
Housing paid directly by company to landlord in SGD (S$144k/yr)

Yes, it is a pretty good deal - or so it seems. As I said, the Singapore taxes were simple - add everything above up (plus the company's 401k contribution and some other things that are not taxed in the US) and pay about 20% of it to IRAS. My assumption was then that the Singapore tax would be credited against the US tax liability - and it was - then the AMT reared its ugly head.

I am going to go to a professional to get this done (and yes, I have read all the publications), but it is always good to hear first from someone who has actually been in a similiar situation.

Your "problem" as it were is not directly related to the earned income exclusion although it may have an effect. Your problem is that you are claiming a sufficient number of deductions, which may or may not include questionable tax shelters, that the AMT tax kicks in so that all pay their fare share.

I'm not saying he AMT is all ticky boo (because it keeps dropping into more moderate income earners) but you got tagged for insufficient taxes paid given your income level, and from the numbers you posted you know you are in a small minority.

And actually, as I think about it, you will get roughly USD 200K in income exclusion as well as around USD 35K in housing allowance so you will still be well over the top and will pay taxes at a rate as though the income were not excluded. So, you must have a lot of other deductions to see the AMT kick in.