I am moving to Taiwan next year and have concerns about double taxation. Here are my specifics:
US citizen
1 W-2 salary (~ 150k USD) US employer with no Taiwan relationship
US investments (~100k USD capital gains, dividends, and distributions)
No plan to work for any local Taiwanese company
I plan to work remotely in Taiwan for a year or two, then retire early and live off my US investments until my pension kicks in.
My questions are:
1 - Based on my research using Google and other forum posts, the Foreign Tax Credit is the way to avoid double taxation on the same income. Is this correct? Also, can I expect most of the Taiwan taxes paid to be credited?
2 - For best results, should I file Taiwan taxes in May and enter the taxes paid as Foreign Tax credit in the US tax filing in October? I would need to file an extension and estimated taxes for the US by April 15th.
3 - Are there any financial incentives or reasons for me to stay in Taiwan for less than 183 days?
I appreciate any guidance or hearing about any experience you might have related to the above. Thank you.
There’s other threads that address this, but essentially:
If you are in Taiwan, your taxes will be according to W2 form and divided upon how many days in Taiwan. After they apply all deductions, they will give you the amount you need to pay. Once you pay that, you can file FTC form for taxes and have it deducted from US federal taxes.
The amount Taiwan taxes is ultimately up to how many days you are here. Less than 90 a year, then no taxes. 90 to 300 ish (I forget the exact # of days), then you are taxed based on US salary divided by how many days in Taiwan. If over the threshold for days in Taiwan, then whole salary gets taxed.
Another item to be aware of, if you are in Taiwan Dec 31, then deductions are not reduced by the number of days in Taiwan, so you may get slightly better tax deduction.
Personally I usually have business trip outside of Taiwan before April, so I go to tax office and pay early. That way I don’t need to file extension in US.
Of course you can go to tax office to ask questions and more definitive answers or accountant. But honestly, if it’s straight forward, the tax office is more than helpful and takes less than 15 minutes.
I plan to apply for the Gold Card. If that fails, then I might quit my day job and retire even earlier to enroll in Mandarin school for study based visa. I definitely want to to speak Mandarin while living in Taiwan long term. My last option will be a marriage ARC.
I am not familiar with possible tax implications for the company. Is this a serious concern?
Maybe, maybe not. It would be for the company I work for. I’d just have a chat with them about it first.
Also, I file my taxes here (Taipei) in late April most years to beat the crowds in May. I’ve never had to show proof of a trip. Perhaps earlier in April or in other cities they might require this? YMMV…