Simple Tax Guide for Americans in Singapore
At Taxes for Expats we have been preparing U.S. tax returns for U.S. Citizens and Green Card holders in Singapore for over 14 years.
US Expat Taxes - Singapore
Singapore is an attractive country for expats - it has a global culture, a bustling business scene, and a low rate of crime. If you join the 1.3 million people who have chosen to be expats in Singapore, make sure you understand how your taxes will be affected.
US citizens, as well as permanent residents, must file expatriate tax returns with the federal government every year no matter where they reside. Along with the typical tax return for income, many people are also required to submit a return disclosing assets which are held in bank accounts in foreign countries by using FinCEN Form 114 (FBAR).
The United States is among only a few governments who tax international income earned by their citizens, as well as permanent residents, residing overseas. There are, however, some provisions that help protect from possible double taxation. These include:
- The Foreign Earned Income Exclusion. This exclusion allows one to exclude USD 101,300 (this amount is for 2016 taxes) in earned income from foreign sources.
- A tax credit allowing tax on remaining income to be reduced based on the taxes paid to foreign governments.
- An exclusion on foreign housing that allows additional exclusions from their income for some amounts paid to cover household expenses due to living abroad.
Preparing a quality tax return following proper tax planning should allow one to use these, as well as other strategies, in minimizing or possibly eliminating tax liability. Note that in most cases the filing of a tax return is required, even if taxes are not owed.
Tax Rates for Singapore
Compared to many countries, the income tax levels for individuals are low. Like most systems, the system in Singapore is progressive.
|0%||On||SGD 1 - SGD 20,000|
|2%||SGD 20,001 - SGD 30,000|
|3.5%||SGD 30,001 - SGD 40,000|
|7%||SGD 40,001 - SGD 80,000|
|11.5%||SGD 80,001 - SGD 120,000|
|15%||SGD 120,001 - SGD 160,000|
|17%||SGD 160,001 - SGD 200,000|
|18%||SGD 200,001 - SGD 320,000|
|20%||SGD 320,001 and up|
Who Qualifies as a Resident of Singapore?
US expatriates are considered residents of Singapore for tax reasons if they worked or lived in Singapore a minimum of 183 days. Non-residents have their tax calculated at a rate of 15%, then pay the greater of that tax or the tax in the above table. All other income not from employment has a tax imposed of 20%.
There is not a tax on inheritances or capital gains in Singapore. There is, however, a Goods & Services Tax of 7% on all purchases for domestic consumption.
When Are Singapore Taxes Due?
Those who are residents of Singapore must file their Singapore return using Form B1 no later than the 15th of April in each year, similar to US taxes. Those who are self-employed must report earnings on Form B. Non-residents must report earnings on Form M. Even though the tax returns must be submitted by the 15th of April, any payment of taxes associated with them isn’t due until following the mailing of notices. These are usually sent in the month of September. The deadline for paying the tax is one month following the date of the assessment’s mailing. Note that this is quite different than US taxes, where all taxes must be paid by the 15th of April.
Those who made under SGD 22,000 aren’t required to submit a Singapore return. Also, many employers in Singapore send salary information for their employees directly to Singapore’s Inland Revenue Authority. If a taxpayer has no other income, then this eliminates the requirement to file.
Singapore Social Security
The equivalent to United States Social Security in Singapore is known as the Central Provident Fund, or CPF. Expatriates are not mandated to pay into the system unless they gain permanent residency in Singapore. Once a person gains permanent residency status, both they and their employer pay into the Central Provident Fund. The total paid into the fund is 37% of annual salary. 17% of this comes from the employer, with the rest coming from the employee.
US citizens who are self-employed, even overseas, must still pay Medicare and Social Security taxes on their earnings. The self-employed pay both employer and employee portions of the tax using Schedule SE when filing their US taxes. But, employees of foreign employers who are required to contribute to the foreign equivalent of Social Security might not be obligated to pay the United States tax for Social Security.
Does Singapore Tax Foreign Income?
In Singapore, taxes are imposed on any income earned by Singapore residents, or within Singapore. For tax reasons, a person is considered to be a resident if they have worked or lived in Singapore a minimum of 183 days during the prior year. Expats do not pay Singapore tax on income earned from outside Singapore. Income from employment for non-residents has tax imposed at a 15% flat rate, or at the tax rates for residents, whichever is greater. Other types of income on non-residents are taxed at a 20% rate, unless there is a specific exemption or a reduced rate due to a treaty.
Surprisingly, there is not currently a tax treaty between Singapore and the US. Even without a tax treaty, each of the countries offers tax credits to eliminate most dual taxation. For the United States, this is known as the foreign tax credit. It is known as the unilateral tax credit in Singapore. Both of these allow credit for taxes paid to foreign countries.
Employee Expat Taxes
If a person is employed by a company based in Singapore, their income is subject to income tax in Singapore. Unfortunately for United States citizens, any income earned within Singapore is also subject to United States expat taxes. But, there is good news. There are several credits and exclusions in US tax regulations for taxes paid, and income earned, in foreign nations. Ultimately, the goal is to balance a taxpayer’s tax liability worldwide.
Self-Employed Expat Taxes
Similar to the requirements in the United States, self-employed persons who operate their own business in the country of Singapore owe taxes on net profits, payable to Singapore. Any foreign persons who plan to start their own business within Singapore must first get a EntrePass before beginning their business. United States citizens are required by the IRS to continue reporting and paying tax on earnings from self-employment on their United States expatriate taxes. Where the person’s income is generated doesn’t matter, but the credits and exclusions previously mentioned may provide some relief.
Singapore Form IR8A
Gross Salary - Report the total amount of the annual Gross Salary in Earned Income section of our Tax Questionnaire. (TQ: Main>Earned Income>Foreign Sourced Income Section)
Bonus payment received during the tax year - should be reported in the Tax Questionnaire under the Earned Income tab as a component of Gross Wages. For further detail, please click the corresponding help link (blue question-mark) in the TQ. (TQ: Main>Earned Income>Primary Tax Filer)
Your director’s fee should be reported as self-employment income only if you are self-employed Main>Earned Income>Self-Emp Primary. If you are an appointed director in the corporation this income is added to wages.
If you own 10% or more shares in the corporation this income is still reported as wages. You also must file Form 5471. Ownership in the foreign corporation should be reported in the TQ under the Other Income tab. (Main>Other Income>Corporation/Trusts/Partnerships).
If your employer provided allowance on top of direct salary (car, education, home leave, etc.) please report this in the TQ under the Earned Income tab. (Main>Earned Income>Primary Tax Filer>Foreign Sourced Income)
Contributions made to a foreign employer pension plan - The IRS considers it as a part of the annual compensation - unless there is a country-specific Treaty Exemption (for example UK, Belgium and the Netherlands). Report these contributions in the TQ under the Earned Income tab. (Main>Earned Income>Primary Tax Filer>Foreign Sourced Income)
If you participate in a company Employee Ownership Plan and are issued matching shares for your own contribution, these shares are considered as Stock-Based Compensation. They are reported separately from your regular income. Please report your employee stock ownership in the TQ Earned Income section.
Singapore Social Security - Expatriates are not mandated to pay into the CPF unless they gain permanent residency in Singapore. Contributions to the Social Security fund should be reported in the Tax Questionnaire under the Earned Income tab within the Taxes Paid section. (Main>Earned Income>Taxes Paid)
The amount of income taxes you paid during the calendar year should be reported in the TQ under the Earned Income tab. (Main>Earned Income>Primary Tax Filer>Taxes Paid)
Questions About US Taxes in Singapore?
Contact us! We have an expert team to provide tax advice to expats, and give you all the information you need to know to file your United States expat tax return while living outside the country.