I hold both US and Taiwan citizenship. If i remotely work for a US company while physically in Taiwan, do I need to pay taxes to Taiwan on my American income? How would the Taiwanese government know about my US based income?
I believe you do have to declare income from any sources if you stay over 90 days. Whether or not you actually do that if your income is in USD going into a US bank…that is a another question.
@Bree might shed some light on this.
I’m considering permanently living in Taiwan so it will be greater than 90 days. I would love to live in Taiwan but if I’m getting double taxed then it’s not worth it.
Use the credit system when doing taxes. Talk to @Bree or an accountant familiar with US and international taxes.
Depending on your income, you can still be double taxed as a US persons anywhere. One of the annoying things of being a US expat.
Yeah, you do. This guide from PWC is pretty good, and the Income Tax Act is quite readable as well. You’d want to avoid the period between 90 days and 183 days, where you’d be taxed a flat 18% (or whatever it is) with no exemptions/deductions.
Whether they’d know if you don’t tell them is another issue - no comment on that.
No idea about the U.S.-specific stuff as it doesn’t apply to me. I imagine there are multiple threads on here about that if you use the search function, though.
I think you can use Foreign Earned Income Exclusion up to the first 108k and then anything above that you can use Foreign Tax Credit - so any taxes you paid to Taiwan can be reduced from what you might owe in taxes to the US, maybe even qualify for refund if using FEIE + FTC. Others might clarify better.
But the income is US based- it’s an American company paying me USD to my US bank account. Can i still qualify for the tax credit this way?
You really should talk to an accountant
Yes. After staying in Taiwan for more than 90 days, salary/contractor payments like that are considered Taiwan-sourced income. That’s because Tax residence in Taiwan, like most places in the world, is based on physical presence - citizenship doesn’t matter.
What matters is where you are physically located when the work is performed, not where your employer is.
The source of your earned income is the place where you perform the services for which you receive the income. Foreign earned income is income you receive for performing personal services in a foreign country. Where or how you are paid has no effect on the source of the income. For example, income you receive for work done in France 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 in New York City.
There is more to qualifying for the FEIE than that, so read the rules carefully or talk to an accountant.
As I understand it, if you’re earning the income from work you’re doing while in Taiwan (or anywhere else outside the US), it is foreign earned income and therefore the FEIE applies. It applies to the income I earn while working for a US-based company in Taiwan. My understanding is that it doesn’t apply to US State Department employees and other government workers, though (i.e. those working at AIT).
As someone else said above, however, you should definitely consult with a tax accountant. I am not one.
It depends though… Taiwan isn’t like the US so they really couldn’t care less. And Taiwan seems to be a heaven for tax evasion. I think legally you are supposed to though.
Though realistically as far as Taiwan is concerned you are either self employed or unemployed… and since you are a citizen it’s not like your residency is in jeopardy by not paying enough taxes. However realistically if you make a lot, like more than 500k a year, you should probably file it. This you’d need to get with an accountant as you’re basically self employed as far as the government is concerned.
If you really want to just game the system just say nothing, while applying for various types of government assistance, but if you’re having your income transferred to a bank, not cash payment, then that wouldn’t work.
There are potential tax implications for your company in the US as well. I would make sure you are communicating with them about your plans.