Most US citizens living abroad must file a federal tax return, but those who live in Singapore also have to submit local taxes to the government. This article is a guide to US expat returns in Singapore, from how to calculate the required tax rate to which forms are necessary to submit.
Singapore has a territorial tax system, which means that only income earned within the country is subject to local taxation. This is an attractive proposition for individuals seeking to minimize their tax burden, and it can be especially beneficial for business owners who have a global presence.
The Inland Revenue Authority of Singapore (IRAS) is the country’s primary tax-governing body. The agency regularly reviews its tax-collecting practices to ensure that the proper amount of money is collected and paid by residents, and that citizens do not face excessive taxes or other difficulties.
US expats who work US expat tax Singapore explained in details typically report their income using Form B1. The tax year for this form runs from January 1 to December 31, and the filing deadline is April 15 of the following year, or April 18 for e-filing.
In addition to reporting employment income, Singaporean expats who are self-employed may need to complete Form B1S. This form is used to report income from other sources, including rental property income and capital gains. Those who have a business partnership, trust, or corporation may need to submit Form 5471 to declare their profits. This form is used to assess the new GILTI tax imposed by the 2017 US tax reform, and it can be quite complex.
Those who own residential real estate in Singapore must pay a property tax on the value of the taxable property. The rates vary depending on the location, but they are usually around 10% to 20% of the property’s value. The taxable amount is then determined by applying the progressive rate tables shown above. In addition, residents must also contribute to the social security system in Singapore, which is known as the Central Provident Fund. This mandatory contribution is credited to the resident on Form 1116 of the US tax return and can offset a portion of income tax payable.
Other deductions available to expats in Singapore include membership fees or annual subscriptions to professional bodies that are essential for one’s career, as well as medical expenses. Additionally, the interest paid on a mortgage is deductible. Donations to charity are taxable but can be deducted up to 2.5 times the donated amount, encouraging citizens to support causes important to them.
It’s a good idea to consult with an experienced US expat tax specialist before filing your return in Singapore. If you are behind on your US tax filings, the IRS has a program to help you catch up penalty-free, so do not hesitate to contact us at Bright!Tax to discuss your situation with a CPA. Start the process today by providing your personal details, and we’ll be in touch with you shortly to arrange a consultation.