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Many Americans in Singapore blindly follow the tax guide they have read on the internet and apply similar rules in their own tax forms. They are often unaware that the United States and Singapore have different tax laws for expatriate income tax return and may not file their taxes correctly. If you have moved to Singapore since January 1, 2018, you will need to file 3 years of 2018-2020 income tax returns while collecting taxes. As an American expatriate living in Singapore, you will still need to pay US taxes by filling out Form 1040 (for personal or business income).
You may be wondering what to do if you have made money or acquired capital gains in the past year. How will you manage your tax returns? Will you be able to declare your move out of the United States successfully? Here are five tips on how to get started with your expat taxes if you are moving to Singapore.
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Qualification as a resident of Singapore
According to the Singaporean tax website www.iras.gov.sg, U.S. expats are considered residents of Singapore for tax purposes if they have worked or lived in Singapore for at least 183 days in any given tax year. . For non-residents, tax is calculated at a flat rate of 15% if their income is less than S $ 20,000 (S $ 28,000 for a couple filing jointly). The higher of this tax or table affects all income above these levels until the individual’s net taxable income reaches S $ 22,800.
Taxes in Singapore are relatively low for middle to low income earners, especially if you are an American expat. There are two types of taxes in Singapore, the income tax and the goods and services tax (GST). Income tax is 15%, but if you spend an average of 6,000 SGD per month or less on accommodation and food (excluding public transport), you are considered a tax resident and your income tax is reduced to 0%. If, on the other hand, you spend more than $ 6,000 per month on accommodation and food, then you are considered a non-resident for tax purposes.
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When to tax Singapore
Yes, this is very important information. And, the fact that the tax filing deadline falls on April 15 and not April 15 should be noted for future reference. Even though the IRS currently offers an automatic six-month extension to file your taxes in the United States, expatriates in Singapore whose home country is the United States must submit their Form B1 to the IRAS by April 15. of each year.
American expatriates in Singapore are required to file an income tax return. Self-employed expatriates must declare their income on form B1. Non-residents must declare their income on form M. These forms must be submitted by April 15
The Singaporean equivalent of U.S. Social Security is known as the Central Provident Fund, or CPF. This is a compulsory social security system that allows you to build up a retirement pension in addition to your own savings. The Central Provident Fund (CPF) is the primary means of retirement savings in Singapore. Eligible expatriates can choose to contribute to the scheme.
The Central Provident Fund or CPF is a mandatory social security system that resembles the United States social security program. The CPF is administered by the Singapore government and owed by its citizens. The benefits provided by this fund are intended for retirement, housing, education and medical purposes. Therefore, a person wishing to receive these respective benefits must have contributed to the system. Otherwise, they cannot claim it.
Foreigners who are not employed in Singapore are considered non-residents. Non-resident aliens receive gross income up to a maximum of S $ 34,000 per year without income tax. Once the S $ 34,000 limit is reached, taxes will be imposed at a flat rate of 15% on all income earned. Income remaining above the S $ 34,000 limit will be taxed at the 22% resident rate.
Singapore has taxes for expatriates, which are not included in the levies in other countries. Therefore, before expats move to Singapore, it is advisable to ask their family accountant or financial planner about the various tax rules regarding their stay in Singapore.
There is no tax treaty between Singapore and the United States. The good news? Both countries offer a foreign tax credit, so expats don’t have to worry about double taxation. To receive a tax credit, you must file your taxes with both countries and follow any instructions provided by each government on how to claim the foreign tax credit. In addition, you will need to submit what is called a completed Schedule C in the United States and an incomplete certificate of foreign tax payment in Singapore.
Unlike a tax treaty aimed at avoiding double taxation of income, a tax treaty does not always address the issue of double taxation of capital gains. Singapore and the United States do not have a comprehensive tax treaty. However, Singapore has bilateral tax treaties with more than 90 other countries. To learn more about Singapore double taxation agreements, click here. The agreement with the United States is not on the list.
