Greg Miller
For a decade or so, I spent part of my year in Chiang Mai, Thailand, the center of the ancient Lanna Kingdom, and a world apart from my hectic business life in the US. It was a wonderful sanctuary for me from the stressful life of living in America. In 2011, after selling my business and renting out my California house, I pulled up stakes and made Chiang Mai my permanent home. My goal is to also permanently change my lifestyle, living a more calm existence, eating better, becoming healthier, doing only highly worthwhile endeavors, and living a happier life.
And while I have not yet achieved everything on my agenda, I am headed down the right road to that end. I own a beautiful large house in a high-end gated community of fine homes in Chiang Mai at a fraction of the cost of my pretty much “regular” California house. I enjoy adventures everyday living in this exotic tropical paradise. I own a couple of small businesses in Thailand that generate a little income for me, and I am enjoying life.
Some of my American acquaintances back home question my plan; some see it as abandoning my duty as an American to stand up for what is wrong with the country and do something about it, to march, to protest, to get involved. One person even called me a “coward” for leaving the US. I remind these friends and critics that first and foremost, I am an American, and an Expat second. I continue to vote, continue to pay US taxes and occasionally get screwed by the US government, just like every other American.
There are the reporting requirements here for expats the same as everywhere else. Of course we have the FBAR reporting requirements, that many American expats gripe about and European expats (we are far outnumbered) laugh about. But compliance for me and people I know in Thailand has not been all that difficult. I have not heard of anyone (that is qualified to do so) having trouble opening up a bank account in Thailand because they were an American. A few rumors on local forums that banks in Singapore were giving Americans trouble, but nothing like that in the Land of Smiles. I have a few accounts at banks in Thailand, and have recently opened another account, and no one at the bank hinted at a problem because I was American. We do have to show our passports for ID, of course, just like everyone else here and perhaps the banks are all reporting to the US State Department about our accounts without telling us. But we don’t see any difficulties popping up (or at least any that have been brought to my attention).
The US government strongly encourages US citizens to report where they live in Thailand to the US embassy in Bangkok or the consulate office in Chiang Mai, but most Yanks I know do not do that because they don’t particularly want the US government to know where they are living.
One of my Oklahoma expat friends told me about an old bumper sticker the more conservative people used to put on their cars back home: “America – Love It or Leave It.” Well my buddy says, “OK, I left, now leave me alone dammit! ”
Of course, there are a myriad of rules and regulations by the Thai government that must be complied with in order to live in the country legally. An annual retirement visa or work visa or an educational visa requires some paperwork, proof from the police back home that you are not a wanted man, and completion of a very light duty form by a doctor. And a retirement visa requires you to have an amount of money in the bank (equivalent of about USD $26,000) or a monthly income of about USD $2000. A work permit requires you to have a legit job, and an educational visa requires you to attend a recognized school learning something, even it is just learning the Thai language.
On these annual visas, we are still required to report to Thai immigration every 90 days letting them know we are still here and our current address. But beyond that, Thailand does not bother expats all that much (if we stay out of trouble).
I have not seen a trend in Thailand of American renouncing their citizenship, maybe because Thailand has not made life too difficult for Americans living here. Of course, the same US tax rules that are applied to expats everywhere are applied here as well, but perhaps because few expats in Thailand make a whole lot of money, it does not seem to be such a big issue. Down in Singapore, an expat (and anyone) that is talented and savvy can make excellent money, and this would be an issue there. But here, especially in Northern Thailand, an income of under a $1000 USD a month still allows a pretty decent lifestyle, so it seem most expats don’t have the incentive (or the possibility) to make millions of dollars here.
Thailand, by the nature of its culture and religion is pretty much a laid back relaxed country. And my home town of Chiang Mai is the most relaxed of the Thai cities. It takes time for a wound-up American or Western European to get into the mode of this location and calm down in every aspect of their life. The good food here helps in the process.
Thailand is so different in this regard from all other Asian countries. China, Japan, Vietnam, Korea and in most other places in Asia, the pace can be as tough as it is anywhere in the West, but not here in Thailand. Life here must be sanuk, or fun, and the most common phrase in Thailand is Mai Pen Rai. That phrase means “it’s OK and doesn’t matter”. If the bus you have been waiting for an hour and half to arrive doesn’t come, Mai Pen Rai, smile and relax. If a car accident between two drivers happens, they will pop out of their car, smiling, Mai Pen Rai, and usually work it out calmly. No obscenities, no screaming, just a simple discussion to get the problem past them. Traffic in Bangkok is probably one of the worst in the world. Traffic jams are the norm. Traffic rules are only general guidelines. Despite that, when you sit in a Bangkok traffic, you might be amazed that there are no horns blaring, no drivers screaming, no single finger salutes. Most of the people in the cars accept the situation and relax. If it gets too much, maybe some of the passengers will just get out and walk. This “Thai Way” takes a lot of adjustment for me as a thirty year, aggressive American entrepreneur, but it can be done. And it is probably for the best.
On my own blog, I relate how I am making my adjustment, and try to give advise to others that may be considering a life in our little Kingdom, and if you have an interest, I hope you will visit it: An American Expat in Chiang Mai. I welcome any questions about life for an American living in Thailand
Very nice and interesting post. Thanks.
Hi, Glad you like Thailand. You seem rather comfortable with US requirements. But You said you have a few small business in Thailand. Are you comfortable filing USA tax returns for them? And in case asked by the IRS are you prepared to show your Thai tax returns which should closely match your US 1040?
Can you handle the USA tax returns for your Thai business or will you need to hire a US account?
Hu
*
Comfortable filing IRS tax forms? Never have been, but I do whatever it takes to be compliant. I don’t like the IRS giving me problems — few people do — and over several years in business, I have learned to do it what takes to keep them off my back, and that sometimes means paying more than I think I should. I have a CPA in the US that prepares my returns — actually I have a B.A. in business & accounting, but would never consider doing my taxes by myself. That’s my way. And our small businesses are wrapped into a Thai corporation that has a Thai accountant doing our bookkeeping tasks here. Actually I am not personally earning enough income in Thailand to trigger the required tax payment in the US from those earnings. I appreciate your concern for my handling of my finances for the reporting to the tax man, but I got it handled.
Do I like this situation? Hell no, and I wish it were different. All of my business life in the US, and still here in Thailand to certain degree, it seems that some “authority” has his hands in my pocket, taking a portion of my meager treasure from my hard work.
Nice. Welcome & thanks for your post. Always good to get a perspective from someone in “complain but comply” mode (as JustMe calls it) for balance, since most of the rest of us are always pounding on the drums for everyone to dump US citizenship ASAP.
If you don’t mind me asking a “personal question”, are you treating your Thai corporation as a disregarded entity for U.S. tax purposes and filing Form 8858, or does your accountant slog through Form 5471 every year?
“I left now leave me alone!” – haha, very nice.
“I own a beautiful large house in a high-end gated community of fine homes”
Frankly, I find this off-putting. If everything is so great there, then why do you have to fence yourself off from the riff-raff?
To Eric: You are quickly getting over my head, as I do not know the details of forms filed with the IRS. I do rely on others that have my trust to do this. One important factor, however, is that as an American citizen, I am only allowed a minority interest in the Thai corporation (less than 50%). My wife of many years is a Thai-American, that still holds a Thai ID, plus we have her adult children from a previous marriage that are Thai, and actually run the businesses on a day-to-day basis, and together they own the majority of the business. I do not get paid a salary (because honestly I don’t work), but have a share in monthly profit which is not a huge amount of money (but enough for me to live well here in Chiang Mai).
I think if I were to dump US citizenship, it could be for other reasons besides tyranny from the IRS. But at this stage of my life, I don’t see me doing that (but we have seen that situations can change quickly….so maybe I will be of a different mind not too far distant in the future).
To Confederate H: I am sorry you see a gated community as off-putting. I don’t imagine myself in some sort of elitist way for sure. But in a real third world country, there are dramatic differences in the income levels of people, and gated residential high end communities are quite common. The people in my community like the idea of having a place where there are no shops and food carts planted on the sidewalks, and it is quiet and serene. There is crime, for sure, in Thailand, but there is no crime in our gated community. Sure, I wish everybody could have a home at this level, but the reality is that we are very lucky in having the resources to live this way, and most people in the world do not have that. I am sorry that the world is not as rich as I would like it to be. My main activity in life here in Thailand is working with poor families — primarily poor kids — including refugees from Burma, who have to be just about on the lowest rung of the economic ladder in the world. I am very sympathetic to their plight and do try to make a difference, but I do like going home to my very quiet community, Incidentally, this community is not small, with about 350 homes. Homes are quite nice, and unfortunately unaffordable for most Thai people, but very cheap for an American expat.
*@expatchaingmai,
Of course you know that if you or your wife own more than 10% of the shares in this corporation this must be disclosed to US Govt.
Since your not working, than your income from this corporation is unearned income and does not qualify for the “foreign income exemption exclusion”
See how complicated it really is to comply and not pay a fortune in accounting services.
Thanks Hu. I do rely on a CPA back in the US to keep my compliant, and yes, I pay too much for accounting services (this is a terrible tax in of itself — the “accountant fee” tax). I often thought the accountants in the US must lobby the regulators a lot to keep making the IRS rules so complex that they can have a nice guaranteed income. Kind of like the dentists with their fluoride in the water scam.
@greg, You make me want to move to Thailand. Thanks very much for this contribution.
All of the compliance complexities aside, I just enjoyed reading about life in Thailand. Thanks Greg.
I have been to Chaing Mai and it is a wonderful, bustling university town. We spent a fantastic few days there before going to Ko Tao. We had an exceptional meal at the beautiful Rachamankha Hotel, one of our favourite memories of Thailand and visited many temples including the one on Mount Suthep. I understand that the Chaing Mai is becoming known as a wine making region. Maybe I could live there after all 🙂
ExpatChiangMai –
Welcome to Brock. As a person sensitive to genre and in love with gamut, the addition of travelogue to the repertoire enriches. Also a nice item for the folk that choke on satire and derivatives, which is probably my personal fave genre.
I do rely on others that have my trust to do this.
Wow! Best of luck to you! My crystal ball sees in your future much of what Just Me has extensively laid out as DRUDGERY. Perhaps with a modicum of fear and anxiety. Again, welcome to Brock. Heh heh.
@Greg Miller
Thanks for your contribution to balancing some of our hyperbole here. LOL
A very good read.
We all come to these problems of IRS tax compliance from different perspectives and levels of income and complexity.
I did learn, that the International CPA that I employed in Seattle to help me file my returns was, not so good! I now tend to depend on my own drudgery (with its corresponding loss of LCUs) rather than depend “in trust “on someone else. As Moby has pointed out, it can lead you astray. Without your own due diligence, you might be surprised with discoveries of inadvertent non compliance.
You want to avoid situations where you are stuck in arguments with the IRS on their views of willful vs non willful activity and penalties. Both now have significant impacts on the non wary! I keep joking that the day is coming when not having http://www.irs.gov/ as your browser home page, you are going to be considered guilty of “willful blindness” if you run afoul of some overlooked compliance requirement. 🙂
Good luck to you. It sounds lovely, and while I thought I had found my idyllic location in New Zealand, the IRS does have a way of ruining your day, if you allow them. I am still in the Comply, Complain and Warn mode, and have changed my residency back to the States for multiple reasons. Mostly family, but tax complexity and double taxation played into the decision.
Each person has to decide how much complexity and penalty risk they are able to tolerate. his doesn’t just apply to Expats. After listening to my friend describe all the compliance and reporting hoops he has to jump through as a VP of Government Affairs for a major Corporation , where in DC he is considered a lobbyist, I do recognize that with each life choice, there is a “rent”. to pay. He has learned to live with the “rent” as a lobbyist, and as an Expat, you have to decide if the US Citizenship reporting regime “rent” is worth the overseas benefit. For some it is not, so they are renouncing. For you, it sounds like it is, and who am I to criticize that decision.
I would encourage you to not ignore what has been happening in the US related to offshore tax evasion crack down. Hopefully, the unintended consequences will not find its way to you in Chiang Mai! There. That is the W of my CCW position. 🙂
All the best, and please do comment here more. We all tend to get worked up at times in a reinforcing loop, so I appreciate the balancing views and opinions.
*@ExpatChiangMai
“But compliance for me and people I know in Thailand has not been all that difficult”
Interesting. I contrast that with the statement that you trust others to file the correct IRS forms on your behalf. A lot of us have been caught out this way. You think you are compliant, right up until the day that you discover that you are not. According to your situation you will have a 5471 filing requirement. And not all accountants recognise the need to file one. I had to specifically point the form out to my tax practitioner before it dawned on them that they needed to file one on my behalf. I suspect that you are not compliant; in which case… welcome to our reality.
@uxscanada
You crack me up, heh heh!
@Greg Miller, re gated communities.
I have never been to Asia, I moved to Europe and raised my family here almost 30 years ago and haven’t had the time and budget to travel to Asia. I have traveled through eastern europe and some Arab countries, and I can well understand the need for a gated community in a poorer country.
I know that Marc Faber also calls Chang Ma home and I have no doubt that it is a great place. But I am also a bit of a prepper, so if I were to pack up and move I would want to have a certain degree of confidence of my being welcome in a country during a depression at best, in world war at worst. The history of how Europeans (whites) ended up in Asia during WWII is not really encouraging on this front. Shanghai was great for the westerners until the Japanese arrived, and the story repeated itself across asia.
And this is why I would be concerned about living in a gated community in a remote region of a foreign land inhabited by people of a different race: you would be sitting ducks for the first angry mob. I have always heard about how happy and cheerful the Thais are, but that is exactly what they said about Cambodia before Pol Pot.