# Income taxes



## Bulgakov

This question on income taxes is for Canadian lving all year long in Thailand but it could probably be answered by American by replacing the word "provincial" by "States". So if you live all year long in Thailand, you probably pay your federal taxes as usual but what happens to the provincial taxes? Since you don't live in Canada anymore, can you choose the lower provincial tax of the country or do you have to pay the provincial tax of the last procince you lived in or no provincial taxes?

Thanks,

Bulgakov


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## Bill29

Here is the US version of this. The US federal government does not tax any income under $91,600. If you are being paid by a US company you still have to pay social security and Medicare taxes but not US tax on $91,600. This is all dependent on the fact that you are out of the country for more than 335 days a year. Of course with the big O in office this is subject to change at anytime! As far as state tax, I would still be liable for Alabama taxes but I plan on moving to Florida before I leave for Thailand to avoid the state tax. Florida does not have state income tax. Hope this helps although the Canadian rules are probably much different.


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## Bevdeforges

Bill29 said:


> Here is the US version of this. The US federal government does not tax any income under $91,600. If you are being paid by a US company you still have to pay social security and Medicare taxes but not US tax on $91,600. This is all dependent on the fact that you are out of the country for more than 335 days a year. Of course with the big O in office this is subject to change at anytime! As far as state tax, I would still be liable for Alabama taxes but I plan on moving to Florida before I leave for Thailand to avoid the state tax. Florida does not have state income tax. Hope this helps although the Canadian rules are probably much different.


This information isn't exactly correct.

If you are resident overseas for an entire calendar year or establish a "physical presence" outside the US over a period of 12 consecutive months, you can make use of the overseas earned income exclusion when filing your US taxes. You MUST file in order to the claim the exclusion and it applies only to earned income (i.e. salary for the most part). You still have to declare all worldwide sources of income - and most "unearned" income (interest, dividends, rents, etc.) are likely to generate a US tax bill for you, though can usually be offset by credits for local taxes paid.

You may or may not have to pay social security and Medicare, depending on your precise status, no matter where your employer is based. Normally, you should only be paying social security and Medicare if you are on a limited term assignment overseas, with the intention of returning to the US at the end of the assignment.

As far as state tax is concerned, again it depends on your precise status. If you are considered resident in the state during your overseas stay, you may have to file as a state resident. If you have certain types of income coming from the state you used to live in, you may have to file as a non-resident. It varies quite a bit by state.

But if you are genuinely resident overseas, you don't normally have to file state income taxes. I would guess the same applies to a Canadian in this situation, but check with the Canadian national tax authority to find out what they consider "bona fide overseas residence."
Cheers,
Bev


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## Bill29

Thanks for further clarifying. I did leave the filing part out. My intention is to spend the entire 2010 tax year and beyond in Thailand. My employer is telling me I have to pay SS and Medicare even though it is not a temporary assignment - sounds like I should challenge them on this.


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## Bevdeforges

Bill29 said:


> Thanks for further clarifying. I did leave the filing part out. My intention is to spend the entire 2010 tax year and beyond in Thailand. My employer is telling me I have to pay SS and Medicare even though it is not a temporary assignment - sounds like I should challenge them on this.


Certainly I would if I were you. It may come down to what their status is in Thailand. If they don't take Social Security and Medicare for you, you should be enrolled in whatever sort of tax, retirement and whatever other "social insurances" a Thai worker would have taken.

OTOH, if you return to the US, it may be very handy to have had your payments to SS and Medicare continued in your absence.
Cheers,
Bev


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