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Thailand is one of the most fascinating and most frequently visited places in Asia – and it regularly draws hundreds of thousands of American visitors each year. With a delicate balance between its cultural past and high-tech future, Thailand is a country that around 20,000 US expats call home.
With a laid-back atmosphere and tropical climate, the Land of Smiles offers an excellent home base for US expats. It’s also home to over 500,000 expats from across the world, making it an excellent traveling spot if you want to connect with individuals from a variety of cultures.
Living in Thailand as an expatriate also comes with responsibilities, like paying taxes. When you live abroad, but are a US citizen, it’s essential to understand how other countries’ tax codes impact you.
If you’re a US expat, here’s everything you need to know about taxes.
What are the residency requirements in Thailand?
Even though you’re a US resident, you may also qualify as a resident in Thailand. This is important to know, because understanding your residency status is helpful in determining how much you owe in income tax – and to which countries.
While some countries have fairly complicated residency determinants, Thailand’s is quite simple. Thailand’s version of the IRS, the Revenue Department, groups people into two categories: residents and non-residents. US expats could fall into either category.
In Thailand, you’re considered to be a resident of the country if you’ve lived there for 180 days or more in a tax year. If you’ve lived there for less time, Thailand considers you to be a non-resident.
So, if you spent seven months in Thailand in 2022 (roughly 210 days), the country considers you to be a resident. However, if you settled in this Asian country for only three months during 2022 (roughly 90 days), you are considered a non-resident.
How Thailand Taxes Work
If you meet the residency requirements in Thailand, then you must pay two types of taxes: income taxes to Thailand on any income earned in the country, as well as a percentage of foreign income earned outside the country.
However, if you qualify as a non-resident, then you are not required to pay taxes to Thailand on any foreign income earned during your stay. But you will owe taxes on any income earned in Thailand during your time living there.
In both cases, the US also requires you to pay income taxes if you’re an expatriate. In addition, if you traveled to any other countries during 2022, then you should also review their residency requirements to find out if you owe income taxes to those countries.
Thailand Tax Rates
Just like in the US, Thailand uses a progressive tax system, charging you a percentage of tax based on the amount of income you earn in a year. This system is based on baht, the official currency of Thailand, and ranges from 0% – 35%. One baht is equal to roughly $0.028 USD as of July 4th, 2022.
Thailand’s 2022 tax brackets are:
| Taxable Income | Tax Rate |
|---|---|
| Up to 150,000 baht | 0% (Exempt) |
| 150,001 – 300,000 baht | 5% |
| 300,001 – 500,000 baht | 10% |
| 500,001 – 750,000 baht | 15% |
| 750,001 – 1,000,000 baht | 20% |
| 1,000,001 – 2,000,000 baht | 25% |
| 2,000,001 – 4,000,000 baht | 30% |
| 4,000,001 and up | 35% |
Social Security Taxes in Thailand
Just like in the US, you will also pay social security taxes in Thailand if you earn income in the country – whether you’re a resident or a non-resident.
You’ll pay 5% on the first 15,000 baht earned in Thailand and your employer will match the contribution, paying an additional 5% into social security. Thailand’s Government then kicks in another 2.5%.
This means you may end up paying both US and Thailand social security taxes.
Value-Added Taxes in Thailand
In addition to income tax and Social Security contributions, another tax you may encounter as a US expat living in Thailand is value-added tax or VAT.
This tax is added to the cost of certain items or services purchased in Thailand, similar to US sales tax. Unlike US sales tax, however, VAT is a national tax and is not determined by states or territories.
Officially, the VAT tax rate in Thailand is 10%. However, it is currently reduced to 7% until September 30th, 2023.
When are taxes in Thailand due?
Whether you’re a resident or non-resident, you file your Personal Income Tax (PIT) return once a year. If you owe Thailand taxes, they are due on March 31st for the prior tax year.
If you are an entertainer or if you earn advertiser fees, you also must file a mid-year return by September 30th of the given tax year.
Your tax returns and the amount of taxes due (if they were not paid through employment withholding) are both due on this date.
How do I file Thailand tax returns?
You can file your tax returns online through Thailand’s Revenue Department website. This website also has links to third-party tax filing services that can help you prepare your income tax return. However, US expats may find it best to work with a foreign tax service to ensure they understand all of their tax liabilities and to ensure that if they qualify for any tax breaks and credits, they are claimed.
Do US expats living in Thailand also have to file US taxes?
Yes. Whether you’re a Thailand resident or non-resident who paid Thailand taxes, if you’re still a US citizen or Green Card holder, then you must file a US tax return.
The US uses a citizenship-based taxation system, which means that you have to file a US tax return every year because of your citizenship rather than your residency location and report any earned income to the Internal Revenue Service (IRS).
Read more: What is Citizenship-Based Taxation? – Bright!Tax
Are US expats living in Thailand taxed twice?
If you’re a US expat who also qualifies as a Thailand resident or earned income in Thailand, you may technically owe tax returns to both Thailand and the US. In this case, you may worry about paying taxes twice on the same income. Luckily, the US-Thailand tax treaty of 1996 prevents US expats from double taxation. Additionally, the IRS offers a few other programs that can alleviate your US tax bill.
These double-taxation programs commonly used by US expats are the Foreign Tax Credit and the Foreign Earned Income Exclusion.
Foreign Tax Credit (FTC)
A US expat can claim the Foreign Tax Credit (FTC) if you owe or have paid taxes on income earned in another country, such as Thailand. This credit offers US expats a dollar-for-dollar credit on any foreign income earned that you already paid taxes on. This can help lower your US tax bill, by reducing the amount of income you owe taxes on.
You do have to meet certain qualifications to use this tax credit. To qualify for the FTC, first, you must pay or owe foreign taxes, as well as meet the three criteria below:
- – Your current home base country requires you to pay income taxes. The country where you currently live must impose these income taxes on you, through withholding on your income or requiring freelancers to pay by the tax return deadline.
- – The taxes must be legal.
- – The taxes must be income tax and no other type of tax.
If you meet all three of the above requirements, then you may qualify for the FTC. This allows you to claim this credit for up to the amount of foreign taxes you paid or owe.
So, if you earned $65,000 in Thailand income in 2022, paid $9,750 in income taxes, and met the above requirements for the FTC, you could claim up to $9,750 in tax credit by using the Foreign Tax Credit.
Read more: The US Foreign Tax Credit – A Complete Guide for Expats
Foreign Earned Income Exclusion (FEIE)
Another foreign tax credit US expats living in Thailand could consider is the Foreign Earned Income Exclusion. The FEIE lets you exclude foreign income earned from your US tax return, effectively lowering your US tax bill. For the 2022 tax year, the FEIE allows you to exclude up to $112,000 in foreign-earned income.
This tax credit also has requirements. If you’re a US expat living in Thailand, you must meet one of these two tests to qualify:
- – The Physical Presence Test. This test measures how long you’ve been outside of the US. You’ll pass this test if you lived out of the US for 330 days or more during any 365-day window. For example, if you lived in Thailand in 2022, but traveled back to the US for a total of 40 days in 2022, you may not meet the Physical Presence Test for the 2022 tax year.
- – The Bona Fide Residence Test. This test measures your residency status in another country. You’ll pass this test if you are a foreign resident of Thailand (or another country) for more than one calendar year, supported by proof of residency, which could come in different forms, such as a residency card or visa, paying income tax to the country, your family living abroad with you, among others.
If you pass either test, then you can use the FEIE to exclude the first $112,000 (for the 2022 tax year) that you earned in income for your US tax return. This means if you earned $99,000 in income in 2022 and meet one of the FEIE tests, you could actually lower your US taxable income to $0, essentially eliminating your tax bill.
In addition, you can use both the FTC and FEIE on different incomes. For example, if you earned $85,000 in foreign income, you may use the FEIE to lower your US tax bill. You then might apply the FTC to passive income (such as investments, or rental income) earned outside the country. You cannot, however, use both tax savings tools on the same income.
Read more: IRS Foreign Earned Income Exclusion 2022 – Ultimate Guide
US Expats Living in Thailand May Need to File an FBAR
While the above covers many of the main requirements for US expats living abroad in Thailand, you may encounter a few other common tax reporting requirements.
The FBAR (Report of Foreign Bank and Financial Accounts) is a US financial disclosure required of US expats who hold foreign bank accounts over a certain amount. If you have a foreign bank account that had $10,000 or more in the account at one time during the tax year, you must file an FBAR. If you had multiple foreign bank accounts that had a total combined balance of $10,000 during the tax year, you must also file an FBAR.
Read more: Foreign Bank Account Report (FBAR) Filing – Bright!Tax
Do US expats living in Thailand have any other tax requirements?
Depending on the type of work you conduct while living abroad, you may have other US tax requirements. For example, if you own your own business, you may need to report and pay business taxes on your US tax return.
The rules around foreign business taxes can be complex and vary depending on if you own your own business venture, work as a freelancer, or own or have a partial stake in a controlled foreign corporation.
I’m a US expat who’s lived in Thailand for years. Do I owe past US tax returns?
Many US expats don’t realize they owe US tax returns when living outside of the country. So, if you’ve lived in Thailand for years, but still remain a US citizen, you may need to catch up on filing past US returns. If this is the case and the IRS hasn’t already contacted you about past-due taxes, then you may qualify for a tax amnesty program called the Streamlined Procedure. This procedure can help you catch up on past-due tax returns and back taxes, without fear of penalties.
The IRS charges penalties on past-due taxes. So, if you owe previous tax returns and have a tax bill due, penalties could add to this bill, making it more expensive. The Streamlined Process effectively wipes out these penalties, as long as you’ve been abroad for at least a part of the past three years.
To qualify for the Streamlined Procedure, you must certify that you did not pay past-due US taxes due to “non-willful negligence.” This means you did not purposefully avoid filing your tax returns or paying your US taxes. For example, if you weren’t aware you owed US taxes while living in Thailand and the IRS has not contacted you with a Failure to File notice, then you could qualify for the Streamlined Procedure.
You must also have been abroad for 330 days during at least one of the most recent three past years for which a tax return is past due.
Living in Thailand? Bright!Tax Makes Expat Tax Filing Easy
Managing your US taxes is more complicated when you live in a foreign country. Whether you want a Bright!Tax CPA to lead you through the entire tax process or simply have a few questions about your tax liability, we’re here to help.
Get started by connecting with an experienced Bright!Tax CPA today.
I'm well-versed in the intricacies of expatriate taxation, particularly concerning US citizens living in Thailand. From residency requirements to the nuances of tax obligations, I can navigate the complexities that expats encounter when it comes to filing taxes in both Thailand and the United States.
In Thailand, residency is determined by the number of days spent in the country during a tax year. I'm aware that residing in Thailand for 180 days or more qualifies one as a resident for tax purposes. This distinction influences whether one owes taxes on income earned both within and outside Thailand or solely on income earned within the country.
Thailand's tax system employs progressive tax brackets, similar to the US, with rates ranging from 0% to 35%. Beyond income tax, expatriates also contend with social security contributions, currently set at 5% for the first 15,000 baht earned in Thailand, along with a matching contribution from employers and a supplementary contribution from the government.
Value-added tax (VAT), akin to sales tax in the US, is another factor to consider in Thailand, with a standard rate of 7% (reduced from the standard 10% until September 30th, 2023) added to certain goods and services.
Tax filing deadlines in Thailand are crucial. For instance, personal income tax returns must be filed annually, with taxes owed for the previous year due by March 31st. Expats in Thailand can file their tax returns online through the Revenue Department's website or seek assistance from third-party services to ensure compliance with both Thai and US tax laws.
Speaking of the US, citizenship-based taxation means that regardless of residency, US citizens are required to file annual tax returns and report worldwide income to the IRS. However, to avoid double taxation, there are provisions such as the US-Thailand tax treaty of 1996, which prevents double taxation for US expats and offers avenues like the Foreign Tax Credit (FTC) and the Foreign Earned Income Exclusion (FEIE) to mitigate tax liabilities.
Additionally, certain reporting requirements, such as the FBAR (Report of Foreign Bank and Financial Accounts), apply to US expats holding foreign accounts above a certain threshold. The Streamlined Procedure offers a way for those behind on US tax filings to catch up without incurring hefty penalties, provided they qualify based on specific criteria.
Navigating the intricacies of expatriate taxes demands a comprehensive understanding of both Thai and US tax laws, including their interplay. It's essential for US expats in Thailand to be well-informed about their tax obligations in both countries to ensure compliance and maximize available credits and exclusions to minimize tax liabilities.
