Tax Filing for Americans in Singapore
What to know about filing US Taxes in 2022There’s so much to like about living in Singapore as an expat. Modern, clean, safe and globally connected, it also has a great climate and a high quality of life. In fact, in 2018, it was ranked the number one place in the world to live and work as an expat by HSBC. Americans in Singapore, however, are still required to file US taxes, as the US taxes all US citizens globally; this is on top of the Singaporean taxes they potentially need to pay.
Filing US taxes from Singapore can be confusing. In this article, Ashwin Ramesh from Bright!Tax answers questions on the taxation of American citizens living abroad in Singapore, to ensure you have the knowledge you need to file correctly for 2022.
What’s my first step when it comes to filing taxes?
As Americans, the IRS requires you to file annual taxes if your global income is high enough. This doesn’t change when you move abroad; so, if you live in Singapore, you are still required to file American taxes.
The income needed to qualify for filing varies. For filing in 2022 (i.e. the tax year 2021), the minimum thresholds are $12,550 for income earned in any form, $400 for those who are self-employed, and $5 total income for an American who is married to a foreigner but filing separately.
These minimal requirements are calculated in US dollars. If you make your salary in a different currency, you will have to convert the amount into US dollars to report and file your taxes.
If deadlines are hard for you, living abroad helps! You have until 15 June to file taxes while living abroad; that’s two months longer than tax day in America. And, if needed, you can request another extension until 15 October.
What are some of the important things to remember?
Don’t forget to report your foreign bank accounts, foreign investments, CPF account balances, and the cash-surrender value of foreign-issued life insurance, if you had over $10,000 in total in terms of the maximum balance in your qualifying accounts outside the US during 2021. You do this by filing a Foreign Bank Account Report (FBAR) and reporting it to FinCEN. Also, if the total of the maximum balances in accounts outside the US during 2021 exceeded $200,000 on the last day of the year for expats who are single or married but filing separately, or $400,000 for expats who are married and file jointly, you also have to file FATCA Form 8938 along with the tax return.
If you choose not to report your foreign accounts, you will be charged penalties and fees. These accounts hold no tax liability, so it’s best to not forget to report them!
What about a gift or inheritance received from a foreign country?
If you received gifts or inheritance from someone who isn’t a US citizen, Green Card holder or US resident, you may have to file Form 3520; that’s if what you received in the whole year exceeded $100,000.
How can I save on US taxes?
The US hasn’t signed a tax treaty with Singapore; however, there are other ways to reduce your US tax bill.
When you file your Form 1040, you can also claim the US Foreign Tax Credit on IRS Form 1116. This helps reduce your tax bill by providing US tax credits based on the amount of taxes you’ve paid in Singapore. The matched amount is then credited to your American tax bill. If your employer makes contributions to the Central Provident Fund (CPF), you can also claim US Foreign Tax Credit to deduct these from your US tax bill, because the way they are applied means the IRS treats them as an income tax.
The US Foreign Earned Income Exclusion is also something you may want to look into. It allows Americans to eliminate up to $108,700 of their 2021 income from their US taxes.
Does having children affect the amount of my tax bill?
If you have children, you can claim the US Child Tax Credit. Under the American Rescue Plan for 2021, this tax credit will give you a refund of $3,000 for each of your children aged six through 17 years, and $3,600 for each of your children under age six years; the children must be US citizens with valid social security numbers, with either parent resident in the US for at least one-half of the tax year (for the Married Filing Joint status). If this residency requirement in the US is not met, you can still qualify for the child tax credit of $2,000 per child below the age 17 years, of which $1,400 is refundable, and the other dependent credit of $500 per child for children above 17 years.
There are other ways to reduce your US tax bill when filing in Singapore, too, so contact a US expat tax specialist, and they will show you other ways to save on your tax bill.
What if I’m self-employed?
If you are self-employed and you live in Singapore, since there is no Totalization Agreement or tax treaty between the US and Singapore, you still have to pay US self-employment taxes on net self-employment earnings over $400 during the tax year.
What if I didn’t file US taxes?
If you live in Singapore and forgot or simply didn’t know that you needed to file your American taxes, you may be able to qualify for the Streamlined Procedure. The streamlined procedure is an amnesty program that allows you to file your taxes without facing penalties.
The program can’t be used once the IRS reaches out to you though, so reach out to an expat tax specialist if you have any questions or doubts.
Ashwin Ramesh is a Managing CPA at Bright!Tax, and an expert in US taxes for Americans living abroad. Bright!Tax is an award-winning US tax services provider for Americans overseas.
brighttax.com | inquiries@brighttax.com‘
Learn more about finance and living in Singapore
Rebecca BissetHeading up Expat Living, Rebecca started off in photography and video. A bit of a nomad before Singapore, she likes to travel when she can but she finds looking at properties as exciting! One day she’s going to build her own house…
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