US expats have a unique situation when it comes to taxes. They are subject to two sets of tax laws – one from the United States and one from Singapore. This makes it difficult to balance their obligations. This guide simplifies the intricacies of filing American expat taxes in Singapore, addressing common questions about taxation in the city-state and providing strategies for efficient and accurate filing.
Do I Have to File a US Expat Tax Return?
Yes, as a citizen of the United States, you are required to report your earnings and pay tax to the IRS each year. This is known as citizenship-based taxation. You are also subject to Singaporean income tax, depending on how much you earn and your residency status.
To avoid double taxation, US expats should rely on a series of exclusions, deductions, and credits that can reduce or eliminate their US tax liability. For example, the Foreign Earned Income Exclusion (FEIE) allows expats to exclude up to $107,600 (2020) of their income from U.S. taxes, and the Bona Fide Residence and Foreign Housing Exclusions can reduce or eliminate taxable rental income. In addition, you can reduce your US tax bill by using the Foreign Tax Credit, which gives you a credit for taxes paid to a foreign country.
As an American citizen living abroad, you may also be subject to social security and Medicare tax payments. If you are self-employed, you must pay these taxes via Schedule SE on your US expat tax return. Fortunately, the US and Singapore both have tax treaties with each other that can significantly mitigate these payments.
If you are a resident of Singapore US expat tax services in Singapore HTJ.tax, you must pay tax to the Inland Revenue Authority of Singapore (IRAS). Your tax rate depends on whether you are a nonresident or resident. Generally, you will be taxed at 15% of your employment income. Other non-employment income is taxed at 20%. The IRAS has published a tax rate table that you can reference for a general idea of what your rates will be.
The IRAS has an online calculator that you can use to determine your tax rates. It’s a good idea to consult with an expert, however, to ensure you aren’t missing any opportunities for lower taxes.
If you’re behind on your FBAR filings, the Embassy in Singapore has a list of qualified preparers that can assist you. However, the Embassy cannot verify the professional ability or integrity of these individuals.