[ HTJ Podcast ] U.S./Singapore Taxes for Expats and International Entrepreneurs – 16th March 2021
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And it's five o'clock so, we're ready to begin. Thank you for coming or logging in this afternoon here in our short webinar about US/ Singapore tax. My name is Derren Joseph and joining me, my colleagues, Boon Yip and Eddie down below, anyway. Just a reminder that we are recording and we are live streaming this. So, what that means is that if you do not want your image to be recorded, then you will switch off your cameras. And that's where it is. So, it's it is being live stream right now on Facebook and on LinkedIn and on YouTube, if you have any questions., so the way we're going to do this is the way we do all our webinars. So, for those who have joined us before, you'd be familiar with the format, I'm going to speak for 15 to 20 minutes on US taxes, Boon Yip and Eddie are going to talk for 15 to 20 minutes on Singapore taxes, which leaves us with 15 to 20 minutes for Q and A. So, you don't need to wait until the end. If you have questions, there's a chat box down below you just type in whatever questions you may have. Bear in mind. If you have to leave or you get kicked out, or, you know, you've experienced some sort of disruption, it will be available on our website, HTJ.tax once everything is finished and it's edited and whatever.
So, without further ado, I am going to share my screen and we're good. All right, great. So, as I mentioned before, my name is Derren Joseph. I run a semi-autonomous tax team within a larger practice call called Moore's Roland. Moores Rowland Asia Pacific, we have just over 30 offices and I think it's 13 countries now. So, it's far North Beijing all the way down to Australia. I actually sit in Singapore and based in Singapore for the past eight years, well, October will be eight years, so I'm kind of cheating a bit. This is me. This is my bio. So, it's important that, you know, why I feel as if I'm confident and competent to speak about this topic, now because of us rules and legally required to say that, treat this as an education piece. I know we got some questions in advance. I know some of are self-filers, and I just want to correct any misconceptions. This is not a webinar that you can come with pen and paper. And at the end, you’re competent enough to go away and do your returns. But the take away from this should be here would be, these are the key points that you need to keep in mind. As you engage a qualified advisor to help you in both the Singapore and the US side. So again, this is not advice. This is not advice. This is not advice. This is an education piece, and you will have takeaways to engage with a competent advisor. I say here, nothing that we say here should be construed as, okay, encouraging you to pay less than your fair share of taxes in any jurisdiction in which you're exposed. And that's how we stay out of jail.
So, for those who doubt the, the long reach of the IRS, there are two case studies that we can circle back to, if it’s comes up in a Q and a one of them actually used to be my friend, well, my friend, but one of my connections on Facebook and he's no longer Facebook, why? Because of the law reach of the IRS, he had some legal problems and you have to spend some time in jail. So, my point is this. There are some people that think, you know, outside of the US nobody's going to bother me. That is so far from the truth. The IRS does pay special attention to those us taxpayers outside of the US no, just so quickly jumped into everything. Citizenship based taxation. I don't think I should need to see. I think everyone would be already familiar with the reality that as a US citizen, as a US green card holder, you are subject to taxes on your worldwide income.
Now other jurisdictions do tax in your worldwide income. It's pretty common with advanced economies. So, OACD nations. So, Canada, Australia, New Zealand, UK, Europe, Japan. But I think what makes the US unique is that even though you spend many years in Singapore, and even though you spend many years outside of the US you are still tax resident in the US, you're still required to file and pay taxes. It just doesn't go away. It just doesn't go away. There are many misunderstandings about this but it just doesn't go away. Then people ask, well, how do they know what I do outside of the US?
And this is what FATCA comes in, the financial account tax compliance act. Now, when you're in the US, you get paid on a W2. If you have investments, you get a 1099, a copy comes to you and a copy goes to the IRS. So, there’s checks and balances so if you say something different from what the IRS has already received, they're going to know. When you're outside of the US you ask yourself the question, well, how are they going to know then FATCA is the answer. So, what that piece of legislation has done is empowered financial institutions around the world to basically act as a tax agent. So, OCBC, you will be the, all the banks that you would find in Singapore are required because of FATCA rules to identify who among their account holders, maybe US exposed and report their bank activity to the IRS.
Now like me, I'm sure you have more than one passport. And so, you may think, you know what, I'm smart, right? So, I'm going to use my other passport to open that bank account at OCBC or whatever. And then you think, okay, so who's going to know, well, there are certain rules that are enshrined in the legislation here in Singapore, and are also reflected in the bank policy. So even though an account, the account holder represents him or herself as being another citizen. If that bank officer had any reason or certain indicia or signs, if they have any reason to expect, to suspect a us connection, they are legally required to report you still, without your knowledge to the IRS. And you will be highlighted potentially as a recalcitrant account holder. There's a special designation for those people who are in denial. So, in other words, it comes back to bite you and that creates the checks and balances. So, if it is that you said that you made a hundred dollars this year, yet your bank balance goes up many times that then it creates an exception in the reporting bank of the IRS and treasury, and they can come and ask a few questions.
What do I mean by US person? So of course, us passports, now for those, and this has been a big deal for those who were affected by COVID and the travel disruptions. We had in cases of many Singaporeans, who, because of travel disruptions, no fault of their own, they were stranded in the US. And they took them what we call substantial presence. So, by spending a certain amount of time in the US under section 7701, you will be considered a US person as if you were a citizen or a green card holder. So substantial presence is one way in which you trigger that US tax explorer.
And in other ways, accidental Americans. And it happens all the time. An American citizen comes out to Singapore and Malaysia, Indonesia, and they get married or have a relationship with someone who is not American. And the child that unions sometimes may be an accidental American. So even though you did not register that birth at the embassy, even though there's no social impacts that Singaporean childhood is also a US citizen, unless until it's announced officially. And at some point, in time, they may be required to file and pay taxes when they work.
Another way, which you may become a us person is intentionally under section 613G. And we can get into that in the Q and A, if there's any questions around that, but basically you can elect to have your non-American spouse, your Singaporean spouse, to be treated as a US person, there’s certain taxes advantages, or it may be of strategic importance. If it is, you intend to move to the US at some point of time. So, the responsibilities of us persons are pretty straightforward. I think, what strikes some people as somewhat counter intuitive is the idea that, okay, if I'm in the US so if I don't file and pay my taxes, then you know, it's interested in a zero-rate interest in zero interest rate environment. Anyways, it's not going to be that much, depending on what your liability may be, but when it comes to international tax counter- intuitively, the IRS spends more time focused on reporting than they do actually pain. What do I mean by that? So again, if you don't pay interest, but if it is that you don't report that bank account, you will be, the penalty could be up to 50% of the unreported balance. If it is the, you don't report your investment in a company in Singapore, just, and it's not necessarily a tax liability, it's just that you did not report your holding in that company, above whatever the threshold may be, your penalty could be $10,000 per year. So, and we have had cases where the IRS has, you know, enthusiastically levy, those, those penalties for US persons in Singapore and Malaysia who have not being compliant.
So, remember, it's not also, you know, we tend to think we tend to be focused on, yeah, we need to pay our taxes, but it's reporting all transactions. And these reports may not necessarily trigger a tax liability, but post, I think post 9/11, starting with a pit, there's been a certain aggressiveness when it comes to pursuing people who are not reporting their activities outside, and that can include gifts as well. You know, you having a relationship, you're married to a Singaporean, and there may be gifts going back and forth. Those gifts are reportable above a certain threshold and again, failure to report maybe up to 30% of the gift. So again, it's not necessarily a tax liability being triggered, but it's a reporting requirement to be taken seriously.
So, what we devise or whatever devices, you know, what I think is a nice acronym for remembering what your responsibilities are as an expat, as a US exposed person in Singapore. And that is I ask you to do your BEST. What do I mean by do your best? B stands for bank accounts and by banking also some mean or financial accounts, whether you, some people invest in, Ifast, some people have a CPR because their PR whatever the case may be, or maybe Singapore, and with a green card, every financial account, Unitrust, every financial account that you have brokerage accounts, they need to be reported. Again, it may not trigger a tax liability where the IRS wants to know where your money goes.
Next, estimated taxes. Obviously when you're in the US you get paid on a W2. And there's withholding every two weeks, every month as the case may be. When you're outside of well, you know, there's no withholding typically. So that means that the responsibility falls on your shoulders. You need to work out what your, so we’re in 2021 right now, what is your estimated tax liability for 2021, and make sure that you pay in at least four installments, so quarterly payments. Failure to do that, you know, there's a form 2210, and a penalty may be levied. I have a client yesterday saying, Hey, what's going on? Why am I facing this penalty? What's this about? Unfortunately, you did not make your estimated tax payments in 2020. I know a lot was going on, but the IRS wants its money and they don't want to wait until April 15th of 2021 to get taxes paid on what you earn in 2020, you should have been paying it in quarterly installments.
Thirdly, your state taxes do your best. B E S stands for state. You have 50 states, 50 different rules, but most States are domicile States. What do I mean, unless you were a proactive and you re domicile to one of those nine States without an income tax, there are cases where you have lived in Singapore and you're still subject to state taxes back in the US? And he thinks, well I'm in Singapore where they're going to do? come find me, maybe not, but at some point, in time, you may return to the US and you get faced with a, you got, you know, you're greeted with a big fat tax bill, and we've seen it so often so often. I can't tell you often we see it. So, you need to work with your advisors to ensure that you properly severed your tax resident with your state of origin before, you know, the state that you were last domicile at before moving to Singapore.
Last, but not least would be transfer taxes. And these are a bit tricky because the rest of the rules you can Google, you can see them in the US in the tax code in the inland revenue code, Internal Revenue Code, but when it comes to transfer taxes, we have to rely on case law. So, it's kind of trickier to track down and to understand and grasp, especially when it comes to the concept of domicile, again, it is defined in codes. We rely on precedent, but anyway, the bottom line is? that if you were gifting back and forth to friends, to people with whom you have some sort of relationship, any transfer taxes, please bear in mind that they may be a tax responsibility or reporting requirement. I’m not talking about like a tax bill to be paid, but at least a report to be filed as part of your tax return. So, transfer taxes, pay attention to that.
And of course, we live in unprecedented times, so, estate planning is also something that we strongly advise. So again, you know, seek out a qualified estate planner to help you with that. Because again, unfortunately, we have a part of our practice, which is dealing with Singaporean spouses who've lost the US spouse, and they've left the Singaporean widow, widower with a lot of unfinished business. When it comes to the tax side, there was no proper planning and then there's the stress in the family. You know, I'm sorry I don’t want speak on such a morbid topic, but it creates distress in the family when there's a cashflow interruption, because sometimes you cannot access, especially US Situs assets like us bridge accounts and stuff like that until certain paperwork has done, but that inconvenience, we can preclude it by proper tax planning. So, I'll leave it there.
I'm going to talk a bit about stimulus payments because you know, some people have questions around that. So, we are actually now in our third round of stimulus payments as of last week, I guess. Now the first two rounds were around last summer. And then the second round was in December. These are the criteria, so everyone, even green card holders could qualify for those stimulus payments.
Let's see, right. If it is, you didn't get it because I know a lot of you have reached out and said, hey, I did not get my check. It was not deposited to my bank account, what do I do? It's not too late, it's okay. When you're working with your tax team to file your 2020 returns, there's something called a Recovery Rebate, which means that if it is, the you have a tax liability, it can be reduced by the amount of the stimulus payments, even though you didn't get it. So, you got a credit, or if you do a refund, the refund will be increased by the amount of the, rebate credit. So, it's still available. Speak to your tax advisers on that.
Many of our clients are high income net earner and of course they see they're following the news. They know, hey, checks had been issued where's my money. So, I get emails and WhatsApp’s, Derren, where’s my money. I'm not getting my money. Unfortunately, it's targeted at lower income earners. So many of our Singapore and clients, they phase out. So, when you make beyond a certain amount, unfortunately it's reduced until it's nothing. So, if it is you didn't get it, one of the possibilities is that, you know, it's a price of your success. You earn more than, you know, the allowed limit.
And then of course, right now, when, you know, phase of stimulus payment, round three, those we've, you know, some clients have already got it. So, we always encourage people to e-file. E-file especially right now, you have no clue how much of a mess the IRS is in right now. How many people, paper filed returns to 2019 and they have not yet been processed. It's I know it's crazy, but when COVID hit last year, the IRS shut down its offices, and then when they did reopen the reopen social distancing. So, it wasn't at full capacity. And then the mails, so the mail system has been a complete disaster. So, returns have been lost. You know, things just have not been processed. You spending hours on the phone trying to get through. So please e-file, even if you have a Singaporean spouse, you can get an ITIN, which is the equivalent of a fin foreign identification tax ID for someone who's not a US person. And our software actually allows us to file returns even if your Singaporeans policy does not have an ITIN. So, the point is that when you e-file, you get these payments, first of all, your returns get processed on time. And if you do a stimulus payment, it comes like that. So, people got them because they have been e-filing. So, they've got even number three already. So again, remember this is going to be higher than the other two, but it does phase out so bad news again, to be fair, more again most of our clients won't get a stimulus payment under round three because of the phase of rules. The IRS has to their credit, even though, you know, I've come down hard on them for what's going on in their processing side, the website is up to date. So, you can check out IRS.GOV and you can track your payments. There's a comprehensive FAQ. So please check it out. Everything is there. I also, you know, this is my final slide. I think in terms of filing requirements there’s a lot of misconception. You know, sometimes people think, you know, if I earn less than the foreign earned income exclusion, hey, I don't need to file a return. Not exactly, the threshold changes that filing threshold changes year and year. And this year it's actually for 2020, it could be as low as $5. So, if you file married, filing separately, if you earn more than $5 the return is due. So again, don't assume because you didn't earn a certain amount that a return is not due. In fact, assume the opposite exercise, you know, do care, exercise, diligence, and try to figure out, speak with an advisor, make sure that you're filing whatever it is you're required to file because the thresholds are pretty low.
Sorry, there's one more slide Biden and President Biden oppressed over his proposed tax plan. We can probably jump into that later, but it's just a plan. And I know the media has been hyping it up over the past 48 hours, but it's simply, or what he would, his campaign had published, his campaign published last year, a comprehensive, it was pretty detailed, but just to call out the highlights that may be relevant to ex-pats in Singapore for those earning over 400K the cap on social security may be removed.
So, it's going to be an extra 12.4% potentially. And again, these are just proposals. Everything has to be debated, of course, in Congress. Corporate income tax especially for those who work in which structures, especially those who this is here in Singapore, know what the GILTY tax is. Sorry about that. But they, corporate tax is going to go up from proposed to go from 21 to 28, which has implications for both your US structure and your Singapore structure, child tax credits, great stuff. They, this, this step up in basis that you get for, for those who are planning for succession and estate planning, you get a step up in basis in your asset especially, if you have a grant or trust, that's going to be removed. The exemption for gift and estate taxes, President Trump had it just about 11 million. It's going to come back down to around 3 million. So that's going to bring a lot more people into the tax net. So those are just some of the highlights, but of course, everything is just tentative and subject to further discussion. And with that, I will stop here and I will turn you over to Boon Yip and to Eddie who will walk you through the Singapore side of things. Boon Yip over to you.
Boon Yip are you okay? You should be able to unmute yourself? Yeah.
Boon Yip Yee
My name is Bonnie. So, I'm a director of SME client service and with me is Eddie. And he's our tax director specializes in Singapore taxes. So, let me share my screen. So today we will be covering Singapore budgets, just a highlight and a summary of the changes in tax. So, as you can see the Singapore budgets, 2021, basically talk about emerging stronger together. So, the supports are mostly channeled to the families and households, and those are lower income families. And there are some of course to the business. Okay.
Before I go further, so Eddie would actually take on the Singapore budgets updates, and I'll tell you more, just that's a brief about Singapore. So, I believe most of your, some of your, maybe already in Singapore, so you would have to know, and Singapore actually is unique by all this diagram. If you can see a competitive global economy, ease of doing business to name a few. So, we actually ranked quite high and being a popular place for businesses and also individuals. Okay. So, the incorporation, so when you come to Singapore is quite easy to get things started. So basically, these are the process and it would take just a week and everything is up and going. Okay. Briefly taxes in Singapore. So corporate tax, if you can see is quite attractive, one of the lowest tax regimes in the region. So, you're talking about my 3% effective tax rate. It is Wyatt 2020, but I don't think Wyatt 2021 that will be much changes. So, there are basically two tax blenders for companies taxable. So, if you look at all these points, these are all taxable, the gains and profits from trade and business income from investment interests, of course, royalties and gains in revenue in nature. So other than this, they all non-taxable. So, individuals, individual rates, we are on a progressive system. So individual tax is the 15th of April every year. So, it's about time to follow a personal tax. So, it's very about one month from, sorry, two months. Yeah.
So again, taxes for individuals. So, whatever is taxable, they are quite similar to those of corporations. So, we talk about employment income, trade, and business for sole proprietors and partnerships of course, property or investments and other sorts of incomes. So, whatever is non-taxable can see. Okay. If we talk about interest is actually not taxable under individuals for companies is taxable. So, I can see this is the only major difference between the individuals and the corporate, right.
Okay. Just to brief you, Singapore is one of the highly incentivized countries. So, these are the selective incentive in Singapore, more popular. So, we talk about international HQ, which is the more popular one, the merger and acquisition and the global trader program, and also double tax deduction for internationalization. This is also quite popular gaining popularity, and there are changes for this in the budgets 2021. Eddie will bring you through a more about this later on.
Okay. So, the next is I can see fund management incentives is, are gaining popularity. So, this is a family office whereby the high net worth comes to Singapore and they start the investments of fund management activities here in Singapore, and they get a very attractive tax. Okay. So, I think I'm done so I'm a person to Eddie just highlight on the budgets and you know, tax changes.
Okay. Thank you, Boon Yip. So, my name is Eddie and I'm the tax director of MRI. I have about 30 years of experience and actually accredited tax advisor. I'm experienced in dealing with personal tax, corporate tax and cross- border tax planning, including international expatriation programs. We have, of course, you know, is there anything that you need to ask? We can do it at the Q and A later on. Coming to the budget for this year, which was actually done in February. Just give you a very short overview covering the important points of the 2021 budget.
Actually, as you can see from the slides, the budget is actually meant as, you know, the bulk of it is actually for support for workers and for businesses, I'll use acronym. And if you can see those highlighted in orange is actually jobs support schemes, later on, you you'll see that there is also other aspect of it, which is actually also more like a subsidy from the government to the businesses to ensure that workers are continuously employed in during this pandemic time. For example, this job support scheme actually is more towards support funding, the important areas or industries such as the aviation, the aerospace and the tourism, the hotel, the airport where in even if you are out of job, even if you are not allowed to go back because of the pandemic, the government will continue to pay the, the businesses that are in this sector, at least about 30% of the wages of the employees.
Okay, next we go to which credit scheme and the job growth. Now, these two schemes actually started very early, which credit scheme that he started way back in 2019, I think. And it is actually more towards trying to co-match, incremental encouraging companies to support workers by giving them increment every year by the government will actually fund maybe up to a team of 15% of whatever increased on a year-to-year basis. So that's the WC equities which credit scheme, the next one is actually more to incentivize hiring of locals, which is under the job growth incentive. We call it J GI. And that's actually to look at, you know, local companies in Singapore, if they hire local, then there's a chance that the government will actually do a matching of the co-payment of up to maybe 25%. So, during the Spanish time. So, continuing down, the other changes in the budget are actually more on how to have the businesses to cope. We have various like the first one that we have executive the carryback relief. Now we have carryback relief, which, you know, you're allowed a deduction for up to a hundred thousand for the immediate year. Now this, this extension is actually allowing it to be carried back three years up to after three years from the current year, right? That's the current back relief. The next one is actually accelerated capital expenditure, which is sort of a de-position allowance about you can claim over a period of three years here, the government saying, okay, you are allowed to claim it over two years, 75% of the first year, then it 5% on a second year. Okay. So that's actually more like to say we allow you more so that you pay lower tax. Hopefully now the third one is actually on what we call the R expenditure, which is for refurbishment and renovation. Usually this is not qualifying deduction, but they are set aside say, look, we'll give you 300,000 over three years whereby if you don't qualify, but it fits into one of those refurbishments or those renovation, that expenses that it's actually not part of non-qualifying items, which is for buildings. Notice you can claim a deduction against your taxable revenue.
Okay. Just now Boon Yip was explaining about the double deduction. Okay. That's actually in place from for many years, basically to incentivize or to encourage businesses, to expand overseas, do marketing, for example, the visit new places to open up new market or to sell new products in all market. So, the current criteria that if you look at a slide there about five now, what do you want to do now is actually to say, hey, during this pandemic time, I think instead of going for the actual physical threat face and boot it's setting an exhibition, you are not to do virtual treat face provider is approved. And then these are the costs that you in. And these are the costs that we will actually allow. In addition to those that has been given before. So, the value is about 150,000, which you are allowed to claim a double deduction. The value is the deduction is actually automatic. There's no need to apply for approval from the relevant authorities, unless you, there is you have X days spent above the cap of 150,000. And if you have any other new items that you think is not uncovered under the existing commodities or expenses, you may even ask for a case-by-case approval.
Okay. Now the next one is actually more support for the, what do you call the non-business expect the, you know, the charities and the nonprofit organization, whereby there's an extension of incentive given, and this will actually be extended by a couple of years from where we have, it's supposed to be ending till end of the year, for example. And for example, in the case of the business and IPC partnership, yes, you will probably be extended to 2023. And the other one which is an investment allowance granted for to incentivize in 75 automation, productivity, scaling up of machineries and efforts. This has been scaled down, they actually decided to actually let it lapse, you know? Okay.
Okay. These two, I think I'll jump because actually it's more for, it's more for friendly expenditure, which will qualify for additional deductions. Okay. Okay. This is actually a change on some change on the business tax, which is actually a consumption tax in Singapore, which is now extended to what we call a B to C business whereby kicking in 2020 generally we have this oversee vendor scheme. We call it OVR, and as well as the reverse charge for the GST whereby it's smart, a GST on the supply of goods and services coming from overseas by foreign suppliers. There's a need for GST registration. There's a need to see if you are liable for GST registration. If you're one of those vendors from overseas under the scheme, which is the old VRC, which all the reverse charge companies who have examined themselves and see whether they fall into the criteria for a compulsory GST position under these two schemes, okay, let's go to the next one.
Okay. Low value of goods, it's one item whereby nowadays piecing opponents or those something apart likes to visit the neighboring countries. And then we bring back the goods. What this change means is that in the past, there's a green lane. There's a lane from now on which there'll be no greener lane everything will be declared. You have to defect for GST, which is to say that a low, value goods, which there's an exemption criteria. I think it was a hundred dollars, $150. And by you don't have a declared as a Greenland. You can go through now, there's a need to declare and PGST the moment you bring them in.
Okay. The next one is actually B2C. I think that will come very much later whereby now, if you are subscribing to say education for maybe for trading or for seminar, whereby it is actually undertaken by foreign percent. So that will actually come under GST regime which is about the same as what is in place in Australia and in New Zealand. So, this will not come in so immediately it was, I think two years later, they are time to look at how to set up a regime that is able to cope with and monitor these days, this recovery of GST on from this area.
Okay. There's one new change to the which concerned GST on how to rate media. Media and advertising revenue, which is actually going to increase in the future. So, we are looking at whether there's a possibility of doing zero rating on this kind of revenue whereby it is online. So, what happened now is that the government has actually say, look, we will define the loss for you. If the customer belongs in Singapore, the media sales will be standard rated, I mean, subject to 7%. But if you are able to demonstrate that the services actually belong to is actually for a customer overseas and actually is rendered overseas, then it can be zero rated. So, this is to define where zero rating applies or standards will apply. And this kicks in from next year, January. Okay. Okay. This is finance sector. I think I'll skip because it's more towards the bank, but we told him tax about double tax deduction. Again, same to our keep on the billing tax because it's financial sector, the banks, as well as well. We'll skip this. Okay. So, I think probably we ended, I think we'll have, would be to allow more time for Derren, for us to do a Q and A, thank you.
Thank you very much. Okay. So now we come to what I think is a fun part of the Q and A. I'm going to see some questions, for those who are watching us on zoom, you can just type in the box below, there more people watching us on Facebook and comment below on LinkedIn, the same. And we'll get to them one by one.
First question, what does a tax consultant need from clients to be able to help us file? You just need to reach out to any one of us, to Boon Yip, to Eddie, to myself, to Hannah, just shoot us an email. Our emails have been given in the box below for those who are watching on other streaming platforms, you can email us at firstname.lastname@example.org And we'll start the conversation going and get you onboarded.
Next question. Someone know I commented earlier that the IRS is really backed up and it's really messy. And a lot of 2019 has not been filed as someone who's watching who that 2019 apparently has not yet been filed. If it is there any questions around 2019, you can, you'll probably need to reach out to the IRS directly, but bear in mind, especially at this time, there's going to be quite a long process. You need to email them that you can check for a contact number on their website. The number that I use and I get through typically within an hour, depending on the time of the day, I try first thing in the morning. So, like eight, nine o'clock or last thing at night, and I tend to get through within an hour. So that's 1267 941 1000, that’s 1267 941 1000. And you can have a conversation find out whether they did get it or whether you need to resubmit it. And yeah, I know a lot of people who paper filed, they're having problems.
Moving down. Someone was asking about a template for 2020, again, same responses above. You can email any one of us and we'll get you onboarded. And we'll get you the organizer. According to the rules of the American Institute of CPAs, we required by their rules to use an organizer. So, we have a spreadsheet that has itemized all the questions that we need to ask to onboard clients. So, we get that dialogue started once you email us, so included, somebody has been asking about reaching out to Boon Yip and Eddie directly their emails. If you've seen, if you are in one of the streaming platforms, if you're on zoom, if you look down in the chat box below Boon Yip email is there as well as Eddie's email is there, you can reach out to them directly. Feel free. Please. Please do so.
Next question. All right. I answered that one already. So yes, to the person who is asking about the presentation, yes Boon Yip and Eddie did speak about businesses, but if you have any questions on individuals, Singapore, individual tax matches feel free to just type in the box below that's no problem. It will be anonymous. I won't see your name.
Scrolling down. Did you say earlier that we need to report our CPF account balance? The answer is yes. The CPF is a qualified plan in Singapore, but it is not a qualified plan in the US, which means you need to report that. You need to report the interest on your schedule B depending on the threshold, you need to report it in form 8938. And of course, you need to put it on your FBARS, the foreign bank account report. And sometimes for those of you who are using tax teams outside of Singapore, they don't know what a CPF is. So, you, you probably just need to share that with them, that the CPF is a qualified Singapore plan, but it's not us qualified. So, we need to report it accordingly.
Next question. Brokerage accounts shares. This is regarding a brokerage account. She has invested, if I invest in a brokerage account and there's no income or dividend, do we still need to report that? The answer is yes. And this is where it gets interesting if it is that you just buy shares and Singtel or whatever you like, that's one thing, right? If it is, you had threshold report that in 89, 38 and interest on schedule B dividends are in schedule B. But if it is you, you invest in a brokerage account and really popular in Singapore would be like Ifast. Or some of, some of the other financial advisors sell you insurance policies, or they sell your pension plans. Now you need to be particularly careful with those because under US tax rules, some of those insurance policies, especially those with a cash surrender value are actually investment products. And they're treated as something called a PFIC, passive foreign investment company, which is the bane of your existence. If you're a US taxpayer, that is what you hit the most, because why, because it has to be taxed and treated according to special rules that were passing in 1980s. And it's taxed in almost draconian fashion. So, if it is that you have an investment and any sort of brokerage account, so any sort of mutual fund, any sort of unit trusts or pensions or insurance policies outside of the US run them by a preferred advisor, make sure that you don't run afoul of the PFIC rules. The PFIC rules are the ones that you want to avoid, like a plague.
Scrolling down. If you have your own business in Singapore, you would still need to file in the US? You’re absolutely correct the business reportable and a form 5471. And it may also any investments in the business, you report that inform 926 and the profits are also reportable on your personal tax return, depending on your situation, depending on whether it's a control, whether its shed or you shared all the US persons combined is exceeds 50%, then there's special tax rules that can, but the bottom line is yes, have business in Singapore must report to the IRS.
So, one is asking for the IRS number again, the number that I use to get through within an hour, again, first thing in the morning, US time, last thing at night, us time, 1267 941 1000 and that’s 1267 941 1000.
Even if I make no income in the US are, we still eligible for stimulus payment? The answer is absolutely correct. Yes, you are. If you go to the IRS website and you type in a search box, like stimulus payment, and you get all the FAQ's and there a lot of tools that allow you to interact and to register, because of course, getting through CRS or the phone is like really hard right now. So, if you have not got it, you can input your details in CRS website. Yes, you are eligible for the stimulus payment and you don't want to miss out on the third one. The one that was just announced, decided by Congress or signed up by president Biden over the weekend, because that is pretty attractive.
Next question. Can we live in the US and have a Singapore company? Yes, you can, you know, freeze, freeze country in the world. You can live in the US and you can ha you can have a country anywhere in the world, except if it's a jurisdiction that is subject to sanctions. So not Venezuela, not Iran North Korea, but yeah, you can live in the US and, and have a company outside of the US but remember, in that scenario that you are actually running the company from the US so you need to speak to your advisor because special tax rules may apply if you're running it, if you are the key decision makers, and you're based in the US as opposed to you have boots on the ground in Singapore, and you have a CEO, you have a team that's running it in Singapore. So, you speak to your advisor about the nuances of that.
Next question. I'm sure it varies state by state, but what is some of the things necessary to do in order to sever ties with us States, particularly where we potentially, or state tax, if we move back, that's a great question on you. And within your question, as the answer, it does vary state by state, but you want to pay special attention, especially those who may be domiciled in California, because of course, there's no discussion going on around wealth taxes, and you don't want to be caught in that neck, because that is double taxation to the highest level, but essentially what it involves. And again, it varies state by state. But what you've been doing is sitting with your advisor, and you're looking at one of the nine States where there are no taxes, most popular will be Texas and Florida, obviously. And you make sure that, you know, your hold mail address. If you want a US PO box is going to be there. If you, you know, if you go to register to vote, maybe you want to put it in one of those States, you know, the address for your brokerage accounts, everything you're going to put it in one of those nine States. So, in other words, you give up your driver's license as well, try and get it in one. So, in other words, you don't want to have any ties to the other States that States that that are pretty sticky. And to us, the stickiest state is actually Virginia. And for some of you who may be with not with the US-based, but with civilian contractors, maybe you don't have a choice. You stuck to Virginia, but you still speak to your advisors for those civilian contractors. See if you can cut ties with Virginia, if possible, and make sure, and redomicile yourself in another state.
Next question. What if I haven't reported the CPF in the past years, I reported this year, would I be in trouble? If it is that your previous tax returns have been incomplete? The, is there are ways of getting up to speed with addressing that the most popular, which is something called the streamlined compliance procedure. And you Google that you'll see a lot of stuff online. Basically, the IRS says, okay, I know you haven't done whatever in the past, just the statute of limitation for your tax returns of three years and for the FBAR, the foreign bank account reports for six years. So, in other words, come to me with the amended tax returns for the last three years, which July has already passed. And that case you're talking about 1918 and 17, and the last six years. So, moved back six years and report your CPF on that, or report whatever the missing bank account or their brokerage account or whatever on that. And the IRS agrees that, and you have to pen a letter as well, explaining the reason for your non-compliance depending on the sophistication or the complexity of your situation, because we've had clients obviously with a more sophisticated structures and higher missing balances than others. Then we work with attorneys in Singapore to help you draft the non-comp the non willful letter. So, we work with Butler Snow, and with those Cartel Wong, which are, as far as I'm aware, the only, I mean, there's big McKenzie and stuff like that, and DLR Piper. But in terms of working with individuals, US exposed individual, private client work, you're looking at where this costs along and Butler Snow, we work with them closely to make sure that you get the non willful latter done in the right way to prevent any issues. But you're looking at streamline. If, if you need to catch up some people, especially online, if the keyboard warriors they're going to be Googling, and some people would advocate quiet disclosure, read the fine print, see whether those people are US qualified chances are, they're not, they don't have a CPA license on the line. They're not an enrolled agent. They're not an attorney. They're just, you know, a helpful keyboard warrior. And one of the, especially one of the Facebook groups, we strongly advise against quite disclosures. If it is you made a mistake in the past, we all make mistakes. You need to it in the right way, moving down. What is the approximate price range for helping us file U S individual federal returns start at 800 sing state returns, 400 sing AF by start at 400 saying if it is that you have a company, depending on the complexity of your Singapore entity, because we actually have to translate from, from Singapore gap, generally accepted accounting principles? And in Singapore, to US principles to report to the IRS and we charge 1500 or 2000 for those. So that's a rough price range, but please feel free to reach out to Boon Yip or Eddie or Hannah or myself. And we can get you up to speed, get you an accurate quote.
Next question. Dan's for the blah, blah, blah. Question will a non- US citizen spouse, retirement investments in IRL Roth, filing together with a US citizen, be at risk of higher tax rates in the future. If their green card is forfeited. Now this is something I actually have a client that I emailed like 10 minutes before this, they had a similar situation. Okay. A US retirement account is a US tax preferred. It's a tax deferred account. It's meant for us taxpayers because the benefit of having a 401k or Roth or whatever is as tax deferral, to some extent, depending on whether, what it, what it is, if it is you ceased to be a us person, because you now your citizenship, or you have given up your green card, then in theory, you should be speaking to you, broke her back in the U S and letting them know that you are no longer a us person, and they will work with you accordingly chances are you'll need to transfer the funds from the retirement account in to another. So, if it is that you were a us person, you invested in, you build temporary time in account, and now you are no longer a us person. You should reach out to your broker back in the U S because you may no longer qualify. And it's not just retirement accounts. Only people just have investment accounts on us platforms like Charles Schwab, for example, even if you still, you're still a us citizen, you're still a green card holder. You're living in Singapore. They don't like the fact that you're living in Singapore and it's not. They say it's against the rules. I don't think it is.
It has nothing to do with sec rules. It has to do with the compliance burden. If it is that they have clients that reside outside of the U S they face an additional compliance burden. So, they, and that means an additional cost basically. And so, it costs a little bit more to service your account than it does someone who's based in the U S in terms of the extra paperwork. So even I know some people come back and say, well, I use a VPN. Some of the platforms are so sophisticated. They can tell that you've, you're signing in with a VPN, and they give you a certain number of chances and they freeze your account. So, reach out to them before they fill the stuff out. So, you can just work, it, work it through. They just don't like account holders outside of the U S so please speak, speak to your broker. Next question. How many years do you have to pay taxes to the U S after you give up your us citizenship? Yeah, this is, I know this is a, this is a big decision for many people. We deal with two or three clients each month who are giving up their U S passport or green card to them under the old rules. Yes. You had to file returns for a certain number of years under the new rules, the rules that are in play right now, unless you have some sort of deferred tax liability.
Typically, you don't have to continue filing tax returns after you surrendered your green card or passport, if it is your covered X-Box and what I mean by a covered ex-pat covered expatriation, expatriation refers to the process, the legal process of giving up your green card or us passport and your covered X. But if your net worth is it's higher than a threshold, 2 million, or your tax liabilities for the proceeding three years, or more than, let's say 150 K or so. So, if it is that you are covered X by special rules apply, and some pre-expatriation planning may be necessary because you'll be facing an exit tax. So, if it is that you are a high net worth individual, and you're considering surrendering you, your passport or your green card, please reach out for professional advice because you want to mitigate as much as legally possible the exit tab. But typically, if it's just like a regular person, who's not a covered X-Box, there's no deferred tax liability, and you're giving up your passport or green card. There's no requirement to file returns after you're done, unless you have your source income, typically rental properties and stuff like that. Next question. If I own real estate, this is the last question, because we're approaching the top of the hour. If I own a real estate in Florida, but I'm not living in the U S I live in Europe. Am I still considered a us resident? Do I have to pay taxes in the US… Hmm. It depends if it is it's you are. You remember when referred to section 77 Oh one previously, if you are not a us citizen, you don't have a passport. You don't have a green card. You didn't hit substantial presence, then no, you're not going to be taxed on your worldwide income. One, two you're outside. If it is that you did hit substantial presence, you do have a green card. You do have a us passport you're subject to taxes and your worldwide income. If you're not caught up because of such and 70, 71, you're not a us taxpayer. And all you have as a rental in Florida, it's okay. You just, you just pay federal taxes on whatever the net income is. Normally we work with our real estate clients. We make this an election because the default is that it's subject to 30% withholding rate your rental income. So, we make an ECI election. We make an election for the rent to be treated as if effectively connected income. So therefore, you get to deduct the expenses that are ordinary and necessary to run your real estate investment portfolio. And you only pay taxes on the net income. So, speak to us, speak to any one of your chosen quantified advisors if you have a US real estate portfolio.
And with that, thank you very much. We really appreciate your time. Those who are in the various streaming platforms thanks logging in. Please feel free to reach out to Boon Yip, to Eddie, to Hannah, to myself. Thank you very much. Have a good evening guy. Bye now.
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