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Tax advantages - US expat in Singapore

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Capex101
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Tax advantages - US expat in Singapore

Postby Capex101 » Fri, 18 Jul 2008 9:29 pm

I am moving to Singapore in january under a very good expat package that will have a tax equalization feature. However, I was wondering if anyone who has gone through this has found any legal method of reducing either their US or Singapore tax exposure? And, is there any benefit to being paid out of the US or Singapore (or even the UK for that matter). Any thoughts on this much appreciated.

AmandaStClaire
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Postby AmandaStClaire » Wed, 06 Aug 2008 4:45 pm

Hi. If you are a U.S. "person" (citizen, PR) your world-wide income is subject to taxation. You may be entitled to an exempted amount, but you must file to qualify. The source of your income or benefits considered as income (housing, education benefits, etc) is not relevant.

Hire a US tax preparer locally (and speak to them early to make sure you understand your situation in advance). There are only a few in town. Look on the ad pages here or do a websearch for US tax preparer Singapore. Avoid using a preparer unfamiliar with filing these types of returns.
Best of luck.
A.
Amanda St. Claire

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sierra2469alpha
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Re: Tax advantages - US expat in Singapore

Postby sierra2469alpha » Wed, 06 Aug 2008 4:57 pm

Capex101 wrote:...have a tax equalization feature. However, I was wondering if anyone who has gone through this has found any legal method of reducing either their US or Singapore tax exposure? And, is there any benefit to being paid out of the US or Singapore (or even the UK for that matter). Any thoughts on this much appreciated.


Welcome CAPEX...

One of us (couple) is in a similar situation, tax-equalised - however we are talking about different economies - SIN and Australia. For us, it's better to be paid pretty much everything here in SIN, apart from AUS superannuation.

Do a search through these forums using the search area up on the top right of this page for specific US examples - there are quite a few.

However, let us point out a couple of items that you will want to be aware of:

1. Tax equalisation has been used on a few of our friends that actually places the company in a better financial situation (tax wise) than the relocating employee - make sure you fire up your spreadsheet of choice and do some serious homework. One example (by a VERY large MNC) was for a guy who was told his position in his home country was basically redundant there (AUS), so move to SIN or leave/take redundancy. His package was tax-equalised, which when he ran the figures, was so equalised it was damn obvious why they were in effect moving his role!!

2. When we negotiated #1's package, we made sure to include a statement binding the company that in any event, we will never be liable for more tax (in any jurisdiction) based on the total package in the NEW COUNTRY of residence. The reasoning behind this is clear - we didn't want to get caught with a change in tax regimes in home country vs. SIN. Now, I will say this took a LOT to get "over the line" with #1's company.

3. DO please consider exchange rate differences - tax savings aside, you may find that if you need to repatriate monies back to your home country/into another country, then you may be better off being paid in a different currency but in a different jurisidiction.

We have plenty of helpful folk far more experienced than I here - so I'm sure you'll get some other advice too!

HTH, P

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Strong Eagle
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Postby Strong Eagle » Wed, 06 Aug 2008 6:09 pm

AmandaStClaire wrote:Hi. If you are a U.S. "person" (citizen, PR) your world-wide income is subject to taxation. You may be entitled to an exempted amount, but you must file to qualify. The source of your income or benefits considered as income (housing, education benefits, etc) is not relevant.

Hire a US tax preparer locally (and speak to them early to make sure you understand your situation in advance). There are only a few in town. Look on the ad pages here or do a websearch for US tax preparer Singapore. Avoid using a preparer unfamiliar with filing these types of returns.
Best of luck.
A.


??? Where you earn your income matters a lot. Inside the US (ie - you get paid in US $ from a US firm) you get no exemption. Earn the money in a foreign country and get paid in foreign currency by a foreign registered firm and you get a limited ($82,400 last year) exemption on EARNED income. You also get an exemption for housing allowance which was seriously trashed by Mr. Bush and his cronies last year.

All earned income above the exemption is taxable in the US at the rate as though the income had not been exempted. Note also that any unearned income (interest, dividends, capital gains) is not subject to any exemption and is taxed at your total non-exempted tax rates.

You can get seriously screwed on this if you have a spouse earning in the US and you are foreign. You get your exemption but he/she pays tax at the rate as though you didn't get the exemption.

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sierra2469alpha
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Postby sierra2469alpha » Wed, 06 Aug 2008 6:11 pm

SE - that's why I qualified our particular circumstances early! Different country, different rules. All I tried to do was add our personal experience into the equation.

C

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Postby Strong Eagle » Wed, 06 Aug 2008 7:56 pm

sierra2469alpha wrote:SE - that's why I qualified our particular circumstances early! Different country, different rules. All I tried to do was add our personal experience into the equation.

C


Your post made a lot of sense to me. I was trying to point out that it is quite possible to meet the foreign residency requirements and still be subject to full US tax... don't get paid by a US registered company.

I also think you made valid points that the hiring company is thoroughly reviewing all their options, and it behooves you to fully understand your personal tax options as opposed to simply buying the company line.

Cheers, brother.


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