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Saturday, April 13, 2024

How You Can Determine Your Residency Status as A US Expat in Singapore for Tax Purposes?

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For many people, living in a well-developed country like Singapore is the fulfillment of a lifelong dream. However, living outside the resident country requires planning and detailed knowledge of tax implications. If you are a US expat in Singapore, your overall income is subject to tax by the authority. In addition, you will also have a tax liability in your state of residence. However, your tax liability majorly depends on two terms:

  • If you are maintaining a residence in your home state
  • Or, you have established your residency overseas.

Determining your residence being a US expat is not an easy task and this is where it will become ideal for expats in Singapore to take the help of professional US tax experts to determine your legal residency status and its tax consequences in the eye of tax law.

Determining Residency Status for Filing State Tax

Doesn’t matter where the US citizens have established their residency, they are required to file a federal tax return. This is so because federal income tax is based on citizenship, not where you call your home. As opposed to this law, state income USA tax in Singapore works differently. For US expatriates, their eligibility to file a state tax return is determined by three main factors.

  • You have established a legitimate foreign domicile, which means you are living as your legal domicile for tax purposes.
  • Maintain an abode in your home state
  • Earning foreign income sourced in your home state

Below-mentioned is the detailed information about the residency status of US expats in Singapore so you can stay compliant with US taxation in Singapore obligations.

Understanding the term ‘domicile residency’

Domicile is the legal and taxable residence status of a tax payer. If you are a US citizen, you will require legal evidence and document to prove that you established your domicile overseas. Such proof may include having a house contract or lease in your name in a foreign location. In addition to these proofs, you can also provide evidence that you have signed up as a resident of that location with the local authorities.

However, a temporary international driver’s license can’t be shown as evidence for establishing your domicile whereas a permanent driver’s license from the country could be used as proof of domicile status.

Abode for Residency Tax Purposes

An ‘abode’ for tax purposes is a permanent layout where you could live all year. To maintain it, you do not have to live in an abode, neither owns a property; even a rental property can also qualify as an abode. Thus, if you have an abode in any state, you will owe state income American tax in Singapore as defined in the tax rules, even for a sublet apartment or property.

State Income and residency

If your earned income is sourced in the United States, you will be liable to pay state income tax. In terms of ‘earned income’, the actual source of income is where you performed the service. For instance, if you work for a US-based company in Singapore or any other country, your income will be considered to be sourced from a foreign country. Unearned income, on the other hand, will depend on where the bank account exists, like interest.

With this aspect, rental income will be considered sourced from the location where the property is situated. For detailed knowledge, get in touch with an expert of US tax return in Singapore to understand how your income and domicile residence status affects your tab liability obligations.


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