Many Americans in Singapore blindly follow what tax guide they have read on the Internet and apply similar rules in their own taxation forms. They are often unaware that the United States and Singapore have different tax laws for expat tax filing and may not properly file their taxes. If you have moved to Singapore since January 1, 2018, you will need to file 3 years of tax returns from 2018-2020 while withholding taxes. As an American Expat living in Singapore, you will still be required to pay US Taxes by filing Form 1040 (for individual or business income).
You might wonder what to do if you have earned some money or acquired capital gains during the past year. How will you handle your tax returns? Will you be able to file 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, US expatriates are considered residents of Singapore for tax purposes if they worked or lived in Singapore for at least 183 days of a given tax year. For non-residents, the tax is calculated at a flat 15% rate if their income is below S$20,000 (S$28,000 for a couple filing jointly). The greater of that tax or the table affects all income over those levels until the individual’s net taxable income reaches S$22,800.
Taxes in Singapore are relatively low to low-middle income earners, especially if you are a US Expat. There are two types of taxes in Singapore, Income Tax and Goods and Services Tax (GST). The income tax is 15%, but if you spend an average of SGD 6,000 per month or less on accommodation and food (excluding public transport), you are considered a resident for tax purposes, 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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The time of due taxes in Singapore
Yes, this is a very important piece of information. And, the fact that the tax return deadline falls on April 15 and not on April 15 should be noted for future reference. Even though the IRS is currently offering an automatic six-month extension to file your US taxes, expats in Singapore whose home country is the United States must submit their B1 form to IRAS by the April 15 date every year.
US expats in Singapore are required to file a tax return. Self-employed expats must report earnings on Form B1. Non-residents must report earnings on Form M. These forms must be submitted by April 15
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Social security
The Singaporean equivalent of the United States Social Security is known as the Central Provident Fund, or CPF. It’s a compulsory social security mechanism that allows you to build a pension for retirement in addition to your own savings. The Central Provident Fund (CPF) is the primary means of retirement savings in Singapore. Expatriates who qualify may opt to contribute to the scheme.
The Central Provident Fund or CPF is a compulsory 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 for retirement, housing, education, and medical purposes. Therefore, a person wishing to receive those respective benefits must have contributed to the system. If not, they cannot qualify for them.
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Foreign income tax
Foreigners who are not employed in Singapore are considered non-residents. Non-resident foreigners receive gross income up to a maximum of S$34,000 each year free from income tax. After the S$34,000 cap is reached, taxes will be imposed at a 15% flat rate on any income earned. The remaining income above the S$34,000 limit will be taxed at the resident rate of 22%.
Singapore has taxes for expats, which are not included in the levies in other countries. Therefore, before expats move to Singapore, it is advisable that they ask their family accountant or financial planner about the different tax rules concerning their stay in Singapore.
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Tax treaty
There is no tax treaty between Singapore and the US. The good news? Both countries offer a foreign tax credit, so expats don’t need to worry about double taxation. To receive any tax credit, you must file taxes with both countries and follow all of the 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 the income tax treaty intended to avoid 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 income tax treaty. However, Singapore has bilateral income tax treaties with more than 90 other countries. For more on Singapore’s dual taxation agreements, click here. The agreement with the United States is not part of the list.
