Tax Refund - For 800k Baht Visa Basis

[Bob]

This information only relates to those who have Thai bank accounts where the bank withholds taxes on interest payments (i.e., it likely applies to all that base their retirement visa on keeping 800k baht in a Thai bank). 

 

Anyway, I obviously noted that the the bank, when it pays interest, withholds 15% of the interest and sends that off to the lovely Thai government.  I actually guessed that there probably was some way (hire an accountant or something) to get all or some of it back but didn't bother with it.  Now I know how it works.

 

Presuming you have no other Thai tax liabilities (meaning you don't have other income in Thailand), you can get a full refund of the 15% withheld.  You need to apply at your local Thai tax/revenue office between January 1 and March 31 and you can (at least the first time you do it) claim a refund for the prior 3 years.  I'm told you can actually apply for the refund at other times of the year but they charge you a fine or something for doing it outside the January through March time period.

 

To do this, I'm told you probably need the help of a Thai friend to read and fill out the form (Hor 10) at the local revenue office as the form is only in Thai.  You also need to have a letter from your bank stating how much interest was paid for the applicable year as well as how much was withheld for taxes.  I just got the bank letters for 2011 and 2012 at my bank (SCB - and they immediately knew what I was looking for so it's obvious other people do this on occasion) and I'll get the 2013 letter at the end of the year so I can go file the refund forms in January of 2014.  I'm also told that you need a copy of your passport photo page and current visa and you also need a copy of your bank passbook (i.e., don't toss out your old bankbooks if you're going to seek a refund for the prior 3 years!).

 

I'll advise how the procedure goes when I physically apply for the refund this coming January.  And I'd note that we're not talking huge numbers (although I do see those weasels do owe me for a little over 6,000 baht for 2012 alone - and that ought to pay for a few beers....).

 

[source of my information was a falang friend who knew about the procedure and I verified his info by checking a few posts on Thai Visa].

[billyhouston]

Much appreciated. Better we should have it than they.

[mahjongguy]

- Thai banks do not withhold tax on checking accounts, only on fixed accounts.

- For Americans, all Thai bank interest is taxable but any amount withheld by TH can be claimed as Foreign Tax paid. 

 

So, an American doesn't need to bother reclaiming the withheld amount.

[Guest fountainhall]

With respect, I had only a resident's checking account with HSBC in Thailand for many years and tax was deducted.

[Bob]

- Thai banks do not withhold tax on checking accounts, only on fixed accounts.

- For Americans, all Thai bank interest is taxable but any amount withheld by TH can be claimed as Foreign Tax paid. 

 

So, an American doesn't need to bother reclaiming the withheld amount.

 

Huh? Help me out as I'm confused.  What falangs have a checking account here?  I don't. I have two accounts - just a normal savings account which pays somewhat lousy interest (and which I dip into and out of regularly, either by use of the ATM debit card at a store, use of the ATM at an ATM machine, or by formal withdrawal in the bank itself) and another savings account which happens (because I chose that one versus a 7-month one) to be somewhat like a 2-year cd (but which I can pull out.....with loss of some interest....any time I want).

 

As to reporting interest earned in a Thai bank on your US income tax return, yes, we're supposed to do that and I do.  And, yes, we can obtain in most circumstances credit for foreign taxes paid.  That's cool....but the point of the thread was to make sure those who earned significant interest over here knew that they likely could get back the interest percentage withheld by the thai bank/government. And, I suppose when I get the refund of the tax withheld, I may have to report that back on my US return for the tax year I received the refund (given I obtained the foreign tax credit paid in prior years). 

[Bob]

So, an American doesn't need to bother reclaiming the withheld amount.

 

Although somewhat beyond the scope of the original post, nobody had to reclaim anything.  But getting the withheld interest back is worth a hell of a lot more than what the foreign tax credit saved me.

[mahjongguy]

My apologies for saying "checking" when I meant to say "savings".

 

FH - I refer you to this article: http://www.taxrates.cc/html/0909-thailand-withholding.html

It indicates that withholding on savings accounts will kick in when the interest exceeds 20,000 baht. I had forgotten that, but I also suspect that few ex-pats would keep such a large amount (~ 2.5 mil baht) in an account paying such poor interest.

 

Bob - You said "getting the withheld interest back is worth a hell of a lot more than what the foreign tax credit saved me.".

I'm trying to think that through. Let's say I'm in a 15% tax bracket. If I earn 10,000 baht in Thai interest then I report that to the IRS along with the fact that Thailand kept 1,500 which I did not recover. Won't that save me the equivalent of 1,500 baht on my US taxes? After all, it is a tax credit, not a mere income deduction.

[Bob]

Sorry, mahjongguy, I probably can't figure out your tax status, savings, or whatever (and/or I'm too lazy to try).  I'm retired, receive social security and other income from assets in the states, still have some significant deductions back in the states (property taxes for one), and I essentially pay zero income taxes to the federals or the State of Michigan (and that's with reporting the 30,000 - 50,000 baht interest earned over here annually).  So, tax credit or not, I essentially pay nothing (at least directly to the feds or state for income taxes).

 

So....and, again, it's not that big a deal but I can get back 6,200 baht withheld for 2012 alone and, given it costs only a little time and hassle to get it, I'll go for it. Even if I have to report that on my US tax return, it won't mean much at all for me (I'll essentially get a couple of hundred dollars I wasn't counting on and still pay little or no income taxes to the feds and state).  I posted the information for those who might be in a similar situation (which, frankly, ought to be just about everyone who keeps 800k or more in a Thai account to maintain a retirement visa).

 

Some are not aware of the fairly decent interest you can earn in a Thai bank.  I set up a two-year deal (with SCB) back in 2010 that paid a higher  interest rate every 6 months (the last 6 month time period paid interest at the rate of 5% per annum).  That changed a bit this past October when I set it up again for another two years at a fixed rate of 3.75% per annum.  Nothing too exciting but it isn't bad when compared to the horrible rates paid by US banks. 

[mahjongguy]

"Some are not aware of the fairly decent interest you can earn in a Thai bank. [snip] Nothing too exciting but it isn't bad when compared to the horrible rates paid by US banks."

 

For sure, and for that reason I've been keeping a bit more cash over here than I really need quick access to.

 

And I agree that if you are not American or if you are not in a 15% or higher tax bracket that it would indeed be beneficial to put in a claim for the withheld interest. Thanks for the detailed report on the simplicity of doing so.

[baobao]

I'll advise how the procedure goes when I physically apply for the refund this coming January.  And I'd note that we're not talking huge numbers (although I do see those weasels do owe me for a little over 6,000 baht for 2012 alone - and that ought to pay for a few beers...).

That's enough of a refund that others you socialize with ought to be buying YOU a beer if they do as well with this info!