# Income tax query for US



## vince123 (Feb 4, 2014)

Hi,

I am currently a resident of Singapore and am planning to work in USA from March 2014. I understand there is no double taxation treaty for salary /personal income between Singapore and US.I will be entering US on L1 visa which is valid for 3 years and expect to continue working in US for the 3 year period. Can you advise when my US tax residency status changes to resident alien? - Will that be in March/April when I start working or 183 days after my first work day. I also need a clarification regarding sale of property in Singapore. I use this property as my primary residence i.e. I am living in since last 4 years. Do I need to pay any capital gains tax on it if I sell it in profit ? Is this capital gain dependent on achieving US tax resident alien status?


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## DavidMcKeegan (Aug 27, 2012)

Hello Vince,

In most situations, you will be considered a resident alien after you have been in the US for 183 days. Once you are considered a resident, you will be taxed on your worldwide income (including any gains from the sale of your property). Fortunately, as the property is your personal residence, you can exclude the first 250K worth of gains (this number doubles if you are married).

Below I have included an example from the IRS (http://www.irs.gov/Individuals/International-Taxpayers/Alien-Residency-Examples) which I feel relates to your situation. It details how you will have to file for the three years you are in the US.

"r. Gerard de la Fontaine was a citizen and resident of France just prior to his arrival in the United States. He is an employee of a French corporation affiliated with a U.S. corporation. He arrived in the United States on 04-30-2010 on an L-1 visa to work for the affiliated U.S. corporation in Cleveland. He does not intend to leave the United States until 04-29-2013. Determine his residency starting date.

Solution:

Date of entry into United States: 04-30-2010
Nonexempt individual.
Begin counting 183 days at this date: 04-30-2010 (date of arrival)
Number of nonexempt days in United States during 2010: 246 days
Current year (2010) days in United States (246) × 1 = 246 days
Prior year (2009) days in United States (0) × 1/3 = 0 days
Second Prior year (2008) days in United States (0) × 1/6 = 0 days
Total = 246 days

Gerard passed the substantial presence test on: 10-29-2010 (the 183rd day after 04-29-2010). Gerard's residency starting date under I.R.C. § 7701(b) is 04-30-2010 (the first day he was present in United States during the calendar year in which he passed the substantial presence test).

What kind of federal income tax returns will Gerard file for 2010, 2011 and 2012?

2010:
Gerard will file a dual-status tax return as a dual-status alien.

2011:
Gerard will file Form 1040/1040A/1040EZ as a resident alien.

2012:
Gerard will file Form 1040/1040A/1040EZ as a resident alien."


Hope this helps!!


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## vince123 (Feb 4, 2014)

Thanks a lot David for the reply and the inputs.


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## DavidMcKeegan (Aug 27, 2012)

Happy to help, hope that clears things up a bit for you


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## BBCWatcher (Dec 28, 2012)

Singapore's real estate market is pretty crazy, and a $250,000 after costs gain is not an unusually high number here. Considering that, you may wish to sell your property before the gain on that sale would be subject to U.S. tax....

....Or don't sell it until you're well clear of U.S. income tax responsibility after you move back to Singapore. Either way.

Moot issue if your net gain is under the limit, but I thought I'd mention it.


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## vince123 (Feb 4, 2014)

Thanks BBCWatcher.
My realized gains will be less than $250000 as I kind of bought it in the final stages of the upmove itself.
I will try to sell it off before my Us tax residency status changes to resident alien, to keep things simple for myself.

I now understand that world wide income (including capital gains) will only be taxed in US after my status changes to resident alien which will be 183 days after I start working in US.



BBCWatcher said:


> Singapore's real estate market is pretty crazy, and a $250,000 after costs gain is not an unusually high number here. Considering that, you may wish to sell your property before the gain on that sale would be subject to U.S. tax....
> 
> ....Or don't sell it until you're well clear of U.S. income tax responsibility after you move back to Singapore. Either way.
> 
> Moot issue if your net gain is under the limit, but I thought I'd mention it.


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## BBCWatcher (Dec 28, 2012)

I'd read those home sale rules very carefully, though. But if you're below $250K in net gains (after costs) you should be clear.


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