The futuristic city-state of Singapore has a lot to offer American expats who decide to move there for business or retirement. But a US tax return must still be filed, regardless of where the income is earned, and it’s important to ensure you’re filing correctly and using the available credits or exclusions.
The good news is that detailed article about USA tax Singapore has a series of agreements and unilateral exemptions that can help you minimize your US expat tax liability. These include the Foreign Earned Income Exclusion and the Foreign Tax Credit programs. These can offset some of the higher US taxes you may be paying due to double taxation.
However, it’s important to note that you will still have to pay Social Security and Medicare taxes on your earnings in Singapore. These are paid via Schedule SE on your US expat tax returns, and they’re the same as those you would pay if you were working in the United States.
Additionally, you’ll need to report your Singapore-based bank accounts and financial assets on an FBAR form. This is required if you have more than $10,000 in any foreign bank or financial account at any time during the year. The deadline for filing an FBAR is April 15 but you can get an automatic extension to October 15.
If you are a nonresident alien of the US, your Singapore-based income will be taxed at a rate of 20%. This includes dividends, interest, rents and royalties, and capital gains. In addition, you’ll have to pay tax on certain PFIC investments and on passive foreign investment companies.
The US and Singapore don’t have a bilateral tax treaty in place, but both countries have unilateral taxation policies to limit the chances of double taxation. These policies include tax exclusions, Foreign Tax Credit, and other exemptions. These can significantly reduce or eliminate your US tax liability.
While it’s possible to file your US expat taxes yourself, the best option is to consult a professional who specializes in international tax. A qualified tax consultant will be able to guide you through the process of ensuring you’re filing correctly and taking advantage of all the credits and exclusions you’re eligible for. If you’ve missed previous filing deadlines, the IRS has a program called Streamlined Filing Compliance Procedures that can allow you to catch up penalty-free. To learn more, contact our team today by providing your personal details. We’ll be in touch promptly to assess your situation and recommend the best course of action for your individual tax situation. Our firm is 100% dedicated to US expat taxes and has helped hundreds of Americans living abroad get back on track with their IRS filing obligations. We look forward to hearing from you!