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Resident Status and Income Tax


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If I opt for the retirement visa in the Philippines, will my retirement income from the US be subject to tax?  If it is, is there another visa version that avoids this tax?  I searched, but didn't find anything exactly on topic.

Thanks!

Max

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15 minutes ago, Maxheadspace said:

If I opt for the retirement visa in the Philippines, will my retirement income from the US be subject to tax?  If it is, is there another visa version that avoids this tax?  I searched, but didn't find anything exactly on topic.

Thanks!

Max

Visas have no real impact on tax status.

As a U.S. citizen in the Philippines, the Philippines will only tax you on income derived in the Philippines. 

If you do have Philippines income and do pay Philippines income tax, you report the income and tax on your U.S. tax return.  The Philippine tax you paid will be given back as a "foreign tax credit" against U.S. tax that you owe.

Your U.S. retirement income such as investment income, rental income and social security is only taxed by the U.S. 

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3 minutes ago, OnMyWay said:

Visas have no real impact on tax status.

As a U.S. citizen in the Philippines, the Philippines will only tax you on income derived in the Philippines. 

If you do have Philippines income and do pay Philippines income tax, you report the income and tax on your U.S. tax return.  The Philippine tax you paid will be given back as a "foreign tax credit" against U.S. tax that you owe.

Your U.S. retirement income such as investment income, rental income and social security is only taxed by the U.S. 

Excellent news.  We plan to remain in the Philippines enough every year to qualify for no US income tax.  Although I do plan to do some part time work as a US immigration attorney in the Philippines, which I think will force me to consult a tax specialist to sort out.

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50 minutes ago, Maxheadspace said:

Excellent news.  We plan to remain in the Philippines enough every year to qualify for no US income tax.  Although I do plan to do some part time work as a US immigration attorney in the Philippines, which I think will force me to consult a tax specialist to sort out.

Remaining in the Philippines for X amount of time has no impact on your U.S. income taxes.  I have been in the Philippines for 7+ years now and still pay my U.S. taxes every year.

You might be able to pay 0 income taxes but that would be by managing a tax strategy that has nothing to do with where you are.

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11 hours ago, Maxheadspace said:

as a US immigration attorney in the Philippines

Totally off topic, MHS... but there was a forum topic just recently where someone here was looking to obtain a visa or immigration status for his Filipina wife to USA. You might want to review recent posts or search? You might be able to help them out with your professional experience and expertise? Just a thought....:shades:

Edited by Tommy T.
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10 hours ago, OnMyWay said:

Remaining in the Philippines for X amount of time has no impact on your U.S. income taxes.  I have been in the Philippines for 7+ years now and still pay my U.S. taxes every year.

That's not true, and if your income is wages and salaries (ie not retirement or US government income) you didn't have to pay that tax on income up to $105,000
 

Quote

The foreign earned income exclusion are based on foreign earned income. For this purpose, foreign earned income is income you receive for services you perform in a foreign country in a period during which your tax home is in a foreign country. Where or how you are paid has no effect on the source of the income. - https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-what-is-foreign-earned-income

Meaning, if you live in the Philippines, and you get a salary (from anywhere), that's considered working in a foreign country, and that income (wherever it's from) can be excluded: https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion

 

 

 

 

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@Shady

Remaining in the Philippines for X amount of time has no impact on your U.S. income taxes.  I have been in the Philippines for 7+ years now and still pay my U.S. taxes every year.

That's not true, and if your income is wages and salaries (ie not retirement or US government income) you didn't have to pay that tax on income up to $105,000

I'm not following you.  He started out talking about a retirement visa so I assume he is retiring.  Then he said later that he may work part time in the Philippines as a U.S. Immigration attorney. My statement about "time spent in the Philippines" doesn't seem to link to your reply.

The foreign earned income exclusion are based on foreign earned income. For this purpose, foreign earned income is income you receive for services you perform in a foreign country in a period during which your tax home is in a foreign country. Where or how you are paid has no effect on the source of the income. - https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-what-is-foreign-earned-income

Meaning, if you live in the Philippines, and you get a salary (from anywhere), that's considered working in a foreign country, and that income (wherever it's from) can be excluded: https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion

Still not sure what this has to do with "time spent in the Philippines".  Your "tax home" is not really judged by "time spent".  I worked in Germany for 4 years and my tax home was Germany, so the above foreign income exclusion applied to me.  My abode was in Germany.  

His situation is still a bit vague to me.  If he wants to work in the Philippines, he has to have an appropriate visa.  If he wants to work as an attorney, that is another can of worms.  His statement "We plan to remain in the Philippines enough every year to qualify for no US income tax" may be referring to determining "tax home", but I don't think "tax home" is directly related to "time spent".  He seems to indicate he will go back and forth during the year, which makes his "abode" a gray area.   Perhaps there is a rule that says if you maintain two "abodes",  there is a "time spent" rule, but I don't see it.  Tax home is explained here. 

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-tax-home-in-foreign-country

 

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34 minutes ago, OnMyWay said:

I'm not following you. 

You said you paid US Income taxes while living in the Philippines, and I'm saying unless it was a pension/US government income, you didn't have to pay income tax, because the IRS says you don't have to pay tax on regular wages and salaries up to $105,000: 

Quote

For example, income you receive for work done in Austria is income  from  a  foreign  source  even  if  the  income  is  paid  directly  to  your  bank  account  in the United States and your employer is located in New York City

Regarding OP's question:

14 hours ago, Maxheadspace said:

If I opt for the retirement visa in the Philippines, will my retirement income from the US be subject to tax?

Retirement income is always taxed. Regular income isn't, there is a question about your visa status on the IRS FEIE Form here - https://www.irs.gov/pub/irs-pdf/f2555.pdf - but it only relates to the Bona Fide Residence Test. If you choose the Physical Presence Test, which  states you must be physically present in a foreign country or countries for at least 330 full days during a 12-month period, visa status isn't relevant.

Edited by Shady
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47 minutes ago, Shady said:

You said you paid US Income taxes while living in the Philippines, and I'm saying unless it was a pension/US government income, you didn't have to pay income tax, because the IRS says you don't have to pay tax on regular wages and salaries up to $105,000: 

Ok, I understand where you were going.  Most of us don't have wages and salaries if we are retired.  My income is from Social Security, withdrawals from Traditional IRA and U.S. investments, so it is all taxed.  And a rental house too, but that is now sold, and I have to pay CG tax on that this year.

 

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3 hours ago, OnMyWay said:

Ok, I understand where you were going.  Most of us don't have wages and salaries if we are retired. 

Usually, but OP said

18 hours ago, Maxheadspace said:

 I do plan to do some part time work

That, or any other similar type of self-employment/business income would be tax free if he stays in the Philippines. Which makes complete sense, if you aren't living in the US and you're still working, you shouldn't have to pay income tax to the US.

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