American Lives in Bangkok,

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Question - US AND THAILAND SPECIFIC
I will be moving to Bangkok in November for two years.  How much tax will I owe and to whom.  I am single and will be making $10,000 US a month working for a Bangkok Company on contract.
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david ingram replies
Article XV of the treaty deals with independent personal services. If you were there less than 90 days and had no fixed base of operations, you would NOT be taxed in Thailand.  However a two year contract with the monies being paid by a Bangkok company, will result in tax at the following rates.
3.  Tax Rates 
       3.1  Progressive Tax Rates 
                Personal income tax rates applicable to taxable income are as follows. 
      Tax rates of the Personal Income Tax  
     
            Taxable Income Tax Rate (%) Tax Amount Accumulated Tax 
            0 - 50,000 Exempt - - 
            50,001 - 100,000 5 2,500 2,500 
            100,001 - 500,000 10 40,000 42,500 
            500,001 - 1,000,000 20 100,000 142,500 
            1,000,001 - 4,000,000 30 900,000 1,042,500 
            4,000,001 and over 37   
     
                    In the case where income categories (2) - (8) mentioned in 2.1 are earned more than 60,000 Baht per annum, taxpayer has to calculate the amount of tax by multiplying 0.5% to the assessable income and compare with the amount of tax calculated by progressive tax rates. Taxpayer is liable to pay tax at the amount whichever is greater. 
     
Note that as of Oct 1, 2003 one baht equals about 40 cents US.
For your US return you are in the unenviable position of having to file a US return where ever you live. Citizens from every other country can arrange their affairs to be tax exempt in their homeland.
"YOU" will start your 2003 return filing with a form 2350.  This form will give you an automatic extension to file your 2003 tax return until you have been out of the country for 330 out of 365 days or one full calendar year. Because you will be out of the country for one full year, you can use that year to qualify to exclude up to $80,000 of earned income per year by filing forms 2555 for 2003, 2004 and 2005.  Your 2003 US return will NOT be filed until Jan 15, 2005 if you use the form properly.
After you have claimed the prorated amount of  exempt income on the 2555 form, you will have some Thailand income that is taxable to you.  However, you will already have paid 5 to 37% tax to Thailand.  You will claim credit for this on form 1116.
Because you have to pay alternative minimum tax on all income over $35,750, you will actually owe about $111.00 to the US.
Use  a form 1116 AMT to calculate the AMT foreign tax credit and use form 6251 to calculate the alternative minimum tax.
Hope this helps
David Ingram of the CEN-TA REALTY  Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 980-0321 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
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