Debunking the claims: Income earned in Singapore is not taxable in the U.S
A taxpayer classified as a US person, encompassing individuals such as US Citizens, Legal Permanent Residents, or Foreign Nationals meeting the Substantial Presence Test, is subject to worldwide taxation. In the context of Singapore, this taxation extends to income generated within the country, even if such income may be tax-free according to Singapore's tax regulations.
Scottz Lip - The Snipe Investor
2/14/20242 min read
Are Foreign Dividends Taxable in the U.S.?
Yes, from a baseline perspective, foreign dividend income earned by a U.S. Person is taxable by the United States. That is because U.S. Taxpayers are taxed on their worldwide income, which includes passive income such as dividends, interest, and capital gains earnings.
No Tax-Exempt in a Foreign Country for US residents
Not all countries tax dividend income, or if they do, it is taxed at a very reduced tax rate — and only in certain situations. For example, there are some countries such as Singapore or Hong Kong, where dividend income is typically tax-free. Unfortunately, from the IRS’ perspective, the IRS does not care if the money is non-taxable dividend income in a foreign country. For example, even though the dividend income you earn in Hong Kong is not taxable in Hong Kong, it must be included on your US tax returns. If you earn foreign dividend income in a country in which you pay U.S. Tax, you are entitled to a Foreign Tax Credit. Otherwise, the income is combined with your other worldwide income — to determine your progressive tax rate on your US tax return.
Read more: Substantial Presence Test | Internal Revenue Service (irs.gov)
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