The US Citizen Challenge
Singapore has one of the most favorable tax regimes in the world. Unfortunately, as a US citizen, you don't get the full benefit.
The Reality
- Singapore: No capital gains tax, no dividend tax, low income tax rates
- US: Taxes citizens on worldwide income regardless of residence
- Result: You may still owe US tax on income that's tax-free in Singapore
Moving to Singapore does NOT reduce your US tax obligations. The US is one of only two countries (with Eritrea) that taxes citizens on worldwide income regardless of where they live.
The Good News
- Foreign Earned Income Exclusion (FEIE) can exclude ~$126,500 (2024)
- Foreign Tax Credit (FTC) prevents double taxation on most income
- US-Singapore Tax Treaty provides additional protections
- Proper planning can minimize overall tax burden
Singapore Tax Residency
Singapore taxes based on residence and source of income.
Tax Resident Definition
- Physically present in Singapore for 183+ days in a calendar year, OR
- Employed in Singapore continuously for 183+ days spanning two calendar years
- Work pass holders are generally tax residents
Tax Resident vs Non-Resident Rates
| Status | Tax Treatment |
|---|---|
| Tax Resident | Progressive rates 0-22% |
| Non-Resident | Flat 15% or resident rates, whichever is higher |
| Short-term (≤60 days) | Employment income exempt |
Singapore Personal Income Tax Rates
Singapore has low, progressive income tax rates with no tax on the first S$20,000.
| Chargeable Income (S$) | Rate | Cumulative Tax (S$) |
|---|---|---|
| 0 - 20,000 | 0% | 0 |
| 20,001 - 30,000 | 2% | 200 |
| 30,001 - 40,000 | 3.5% | 550 |
| 40,001 - 80,000 | 7% | 3,350 |
| 80,001 - 120,000 | 11.5% | 7,950 |
| 120,001 - 160,000 | 15% | 13,950 |
| 160,001 - 200,000 | 18% | 21,150 |
| 200,001 - 240,000 | 19% | 28,750 |
| 240,001 - 280,000 | 19.5% | 36,550 |
| 280,001 - 320,000 | 20% | 44,550 |
| 320,001 - 500,000 | 22% | 84,150 |
| 500,001 - 1,000,000 | 23% | 199,150 |
| Above 1,000,000 | 24% | - |
💡 No Additional Taxes: Singapore has no state/local income tax, no payroll tax for employees, no capital gains tax, and no inheritance tax.
US Tax Obligations
Filing Requirements
- Annual Form 1040 required regardless of where you live
- Deadline: June 15 (automatic extension for expats), October 15 with extension
- Report worldwide income including Singapore salary
Foreign Earned Income Exclusion (FEIE)
The main tool for reducing US tax on foreign earnings:
- 2024 exclusion: Up to $126,500 of foreign earned income
- Requirement: Pass Physical Presence Test (330 days abroad in 12-month period) OR Bona Fide Residence Test
- Form: File Form 2555 with tax return
- Limitation: Only covers "earned income" (salary, self-employment), not investment income
In addition to FEIE, you may exclude or deduct certain foreign housing costs above a base amount. Singapore's high rents make this valuable—consult a cross-border tax specialist.
Foreign Tax Credit (FTC)
- Credit for Singapore taxes paid against US tax liability
- Prevents double taxation on same income
- Can carry forward unused credits
- File Form 1116
FEIE vs FTC: Which to Use?
| Scenario | Better Choice |
|---|---|
| Income under FEIE limit | FEIE (simpler) |
| High income, high Singapore tax | FTC (more credits to use) |
| Significant investment income | FTC (FEIE doesn't cover investments) |
| Planning to return to US soon | FTC (FEIE has recapture rules) |
FBAR & FATCA Reporting
FBAR (FinCEN Form 114)
- Report foreign financial accounts if aggregate value exceeds $10,000 at any time
- Includes Singapore bank accounts, investment accounts, CPF
- Due April 15, automatic extension to October 15
- Filed electronically via FinCEN BSA E-Filing
- Penalties: Up to $100,000+ per violation for willful non-compliance
FATCA (Form 8938)
- Report specified foreign financial assets
- Higher thresholds than FBAR for expats:
- Single: $200,000 end of year or $300,000 any time
- Married filing jointly: $400,000 / $600,000
- Filed with tax return
FBAR and FATCA non-compliance carries severe penalties. Many Singapore banks report to IRS under FATCA. Don't assume they won't find out—file properly.
US-Singapore Tax Treaty
The treaty prevents double taxation and provides certain benefits.
Key Provisions
- Dividends: Maximum 15% withholding (often 0% from Singapore)
- Interest: Maximum 15% withholding
- Royalties: Maximum 10% withholding
- Capital gains: Generally taxed only in residence country
- Pensions: Taxed only in residence country
Treaty Limitations
- Does NOT exempt US citizens from US tax
- US savings clause preserves right to tax its citizens
- Mainly helps with withholding rates and sourcing rules
CPF (Central Provident Fund)
Singapore's mandatory retirement savings system—with complex US tax implications.
CPF Basics
- Mandatory for Singapore citizens and PRs
- Optional for foreigners (most don't contribute)
- Employee contribution: 20% of salary (for citizens/PRs)
- Employer contribution: 17% of salary
US Tax Treatment of CPF
IRS treatment of CPF is unclear. Some positions treat it as a grantor trust (taxable annually on earnings). Treaty position may allow deferral. Consult a specialist—this is a common audit issue.
- Employer contributions may be taxable income for US purposes
- Investment earnings may be taxable annually (vs. deferred in Singapore)
- FBAR and Form 8938 reporting likely required
- Form 3520/3520-A may be required (foreign trust reporting)
Capital Gains & Investment Income
Singapore Treatment
- No capital gains tax on investment profits
- No tax on dividends (already taxed at corporate level)
- No inheritance/estate tax
US Treatment
- Capital gains taxable (0-20% depending on income)
- Dividends taxable (qualified: 0-20%, ordinary: up to 37%)
- FEIE does NOT cover investment income
- FTC may help reduce US tax if Singapore taxes paid (usually none)
Because Singapore doesn't tax capital gains or dividends, you have no foreign tax to credit against US tax. You pay US tax on investment income with no offset.
Filing Deadlines Summary
| Form | Deadline | Extension |
|---|---|---|
| Form 1040 (expat) | June 15 | October 15 |
| FBAR | April 15 | October 15 (auto) |
| Form 8938 | With 1040 | With 1040 |
| Singapore (Form B/B1) | April 18 | - |
Practical Recommendations
Must-Do
- Work with a US-qualified CPA/EA experienced in expat taxation
- File FBAR and FATCA reports—penalties are severe
- Keep records of Singapore taxes paid (for FTC)
- Track physical presence days carefully for FEIE
Consider
- Whether FEIE or FTC is better for your situation
- State tax implications (some states tax former residents)
- CPF participation if you're a PR (complex US implications)
- Investment structure (avoid PFICs—non-US mutual funds)