US Taxes for Expats in Singapore

Yes. The IRS taxes US citizens on their worldwide income unless and until they relinquish their citizenship, and U.S. lawful permanent residents (green card holders) who live outside the U.S. continue to be subject to U.S. tax on their worldwide income until the green card has been revoked or has been administratively or judicially determined to have been abandoned.

There has yet to be a treaty established between the United States and Singapore. Despite the lack of treaty, each country offers a tax credit designed to eliminate dual taxation. In the US, this is called the foreign tax credit. In Singapore, this is called the unilateral tax credit, which services the same purpose. Both will give credit for taxes paid to a foreign country.

Generally, gains are taxable when employees exercise the share options. This is the case even if the employee has ended his employment with the employer or if the employee has been posted overseas and is no longer employed in Singapore. For an employee who is not a Singaporean Citizen, a “deemed exercise” rule is applied when the employee is no longer employed in Singapore so that tax is payable at that time.

Foreign income remittances in the form of dividends, branch profits, and services income derived by resident companies are usually exempt from tax. Provided that the income is received from a foreign jurisdiction with a certain minimum headline tax rate in the year the income is received or deemed received and the income has been subject to tax in the foreign jurisdiction.

You are required to report the receipt of foreign gifts or bequests only if the applicable threshold is exceeded. For purposes of determining the reporting thresholds, you must aggregate gifts received from related parties. For gifts or bequests from a nonresident alien or foreign estate, you are required to report the receipt of such gifts or bequests only if the aggregate amount received from that nonresident alien or foreign estate exceeds $100,000 during the taxable year. If the gifts or bequests exceed $100,000, you must separately identify each gift in excess of $5,000.

For purported gifts from foreign corporations or foreign partnerships, you are required to report the receipt of such purported gifts only if the aggregate amount received from all entities exceeds $17,339 for 2022 and $18,567 for 2023 (adjusted annually for inflation). You must separately identify each gift and the identity of the donor. Note that the IRS may recharacterize purported gifts from foreign corporations or foreign partnerships.

If you fail to timely file Part IV of Form 3520, or the information you provide on the form is incomplete or incorrect, the IRS may determine the income tax consequences of the receipt of the foreign gift or bequest. In addition, you may be subject to a penalty equal to five percent of the value of the gift or bequest for each month in which the gift or bequest is not reported, not to exceed 25 percent of the gift, unless you have reasonable cause for the failure to timely or accurately file.

Most earned and passive investment income is taxable in the US, however, there are types of receipts that are excluded from taxable income. Examples are life insurance proceeds received by the qualified beneficiary, tax-exempt interest, property acquired by bequest, devise, or inheritance.

If any contract which is a life insurance contract under the applicable law does not meet the definition of life insurance contract under section 7702, the excess of the amount paid by the reason of the death of the insured over the net surrender value of the contract shall be deemed to be paid under a life insurance contract for purposes of section 101.7 (In other words, the normal rules for life insurance proceeds will apply).

On the other hand, if the policy is not a life insurance policy under applicable law, or if the entity issuing the policy is otherwise treated as a “passive foreign investment company” (PFIC) under U.S. tax law, the proceeds on death may be taxed as if it were a PFIC. The ownership of a PFIC by a U.S. individual may result in adverse current annual U.S. income tax consequences, as well as adverse U.S. income tax consequences on the death of the owner. For example, any actual or deemed disposition of a PFIC during a lifetime, possibly including relinquishing U.S. citizenship or U.S. residency, gifting the policy, or even pledging the policy for a loan, may result in adverse U.S. income taxation under the excess distribution regime. Further, the death of the policy owner may also trigger a deemed disposition and result in adverse U.S. income taxation under the excess distribution regime.

The owner’s interest in the foreign insurance company will not be treated as a PFIC if the entity is: a “qualifying insurance corporation”, and it derives its income from the active conduct of an insurance business.

Selecting brokers for international trading is not easy. Many look for platforms that cover international exchange-traded funds (ETFs) and American depositary receipts (ADRs) universes and direct access to global markets assets.

Businesses that buy and sell virtual currencies in the ordinary course of their business will be taxed on the profit derived from trading with virtual currencies. Profits derived by businesses that mine and trade virtual currencies in exchange for money are also subject to tax. Businesses that buy virtual currencies for long-term investment purposes may enjoy a capital gain from the disposal of these virtual currencies. However, as there are no capital gains taxes in Singapore, such gains are not subject to tax.

Whether gains from the disposal of virtual currencies are trading or capital gains depends on the facts and circumstances of each case. Reference is made to the “Badges of Trade” in deciding. Here factors such as purpose, frequency of transactions, and holding periods are considered when determining if such gains are taxable.

The CPF is a mandatory social security savings scheme funded by contributions from employers and employees. The CPF is a key pillar of Singapore’s social security system, and serves to meet retirement, housing and healthcare needs. The CPF contribution rates for employees aged above 55 to 70 will be increased to strengthen their retirement adequacy. The changes will apply to wages earned from 1 January 2023.

All savings in the deceased person’s CPF accounts will be distributed. Retirement Account (RA) savings that were used for buying an annuity from an approved insurer, or deposited with a participating bank, will likewise be distributed.

When a loved one passes away, they leave behind their estate. This includes their money and property (such as cash, real estate, financial securities, possessions, and other assets), as well as their liabilities (such as debts). Estates must be administered and distributed in accordance with the law. Probate and administration is the legal process of appointing someone to manage the deceased’s estate. The Family Courts and the Family Division of the High Court hear probate and administration applications.