U.S. Tax Laws for Singaporean Students

The thousands of students from Singapore studying in the United States must be aware of the complex U.S. international tax laws or risk facing severe penalties. There are considerations for current Singaporean students as well as for those who decide to remain in the U.S. after their studies are complete.

As Hone Maxwell Associate Jared Garfield recently wrote in an article for The Law Society of Singapore’s Law Gazette, there are two types of taxation Singaporean students in the U.S. must know about:

  • Income tax, which applies to earnings like salary and dividends.
  • Transfer tax, which includes estate and gift taxes.

The tax treatment varies based on citizenship and residency status. It’s crucial for non-U.S. citizens without permanent residency to understand these laws, especially if they plan to stay in the U.S. after their studies are complete.

U.S. income tax is applied differently depending on a person’s residency status or a substantial presence test to determine if someone has spent enough time in the U.S. to qualify to be taxed as a U.S. person. Most international students will likely not be taxed as a U.S. person under these parameters. They may, however, be subject to taxation as nonresident aliens. Salaries, bank interest, scholarships and other types of income could fall under this category.

For transfer tax purposes, a U.S. person includes U.S. citizens or anyone domiciled in the U.S. at the time they make a gift or at their death. Domicile in the U.S. is established if a person resides in the U.S. with the intention to stay indefinitely, even if the residence period is brief. If a Singaporean comes to the U.S. to study with plans to return to Singapore or relocate to another country post-study, they are not considered a U.S. person for transfer tax purposes. Conversely, if a Singaporean student decides to remain in the U.S. indefinitely after their studies, they qualify as a U.S. person for transfer tax purposes. Simply being in the U.S. does not constitute domicile unless there is a clear intention to stay indefinitely.

There are a lot of considerations involved in determining a Singaporean student’s tax obligations when they are studying in the U.S. Because failure to comply with U.S. tax requirements could lead to fines or penalties, it’s best to work with an international tax law attorney who is well versed in the considerations and correct actions to take.

Disclaimer: Hone Maxwell LLP articles and blogs are not intended as legal advice. Additional facts, facts specific to your situation or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.

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