u.s. expat tax guide – singapore
Does the Foreign-Earned Income Exclusion reduce U.S. tax for expats?
Yes. If you are a US citizen or green card holder working in Singapore, you can often use the Foreign Earned Income Exclusion (FEIE) to shield a substantial part of your earnings from US taxation.
What is the Foreign-Earned Income Exclusion?
Foreign-earned income is money earned from working in another country. It does not include passive income such as investments or government payments.
What qualifies as Foreign-Earned Income?
- Salaries and wages paid by a foreign employer
- Self-employment income from work performed outside the US
- Bonuses, commissions, and professional fees
What does NOT count as Foreign-Earned Income?
- Passive income, including:
- Interest, dividends, and capital gains
- Rental income
- Royalties
- Government salaries: If you work for the US government abroad (military, embassy, etc.), your income does not qualify for the FEIE.
- Social Security and pension payments
How do I convert foreign currency for tax reporting?
- The IRS requires you to report all income in US dollars.
- You must use an IRS-approved exchange rate when converting foreign salaries into USD.
- The IRS does not provide official exchange rates but allows you to use any reasonable rate as long as you apply it consistently.
Are there special rules for self-employed expats?
Self-employment income qualifies, but self-employed expats must still pay US self-employment taxes (Social Security and Medicare).
What are the basic requirements to claim the FEIE in 2024?
To use the Foreign Earned Income Exclusion (FEIE) and reduce your US taxes, you must meet three basic rules:
- Your income must be earned in a foreign country
- Only earned income qualifies, including salaries, wages, freelance income, and self-employment earnings from work done in a foreign country.
- Income that does NOT qualify includes:
- Social Security payments
- Rental income
- Investment income (stocks, dividends, interest)
- Pension payments
- The maximum amount you can exclude in 2024 is $126,500.
- Your tax home must be outside the United States
- Your tax home is where you mainly work.
- If you work in Singapore and live there most of the time, your tax home is likely in Singapore.
- If you work remotely for a US company but live in Singapore, you may still be considered to have a US tax home, which can affect your ability to claim the FEIE.
- You must pass one of two residency tests
To qualify, you need to prove you are living abroad. There are two ways to do this:
Option 1: Physical Presence Test
- You must be physically present in a foreign country for at least 330 full days in a 12-month period.
- These 330 days do NOT have to be consecutive, but they must fall within the same tax year or overlapping years.
- Even a short trip to the US can reduce your qualifying days.
Option 2: Bona Fide Residence Test
- You must live in a foreign country for an entire tax year (January 1 to December 31).
- This test is based on your long-term commitment to staying abroad.
- The IRS may look at:
- Your work contract
- Whether you rent or own a home abroad
- Whether your family lives with you overseas
- If you pay foreign taxes and participate in local life (bank accounts, memberships, etc.)
- Unlike the 330-day rule, this test is more flexible—but if you leave before the end of the year, you won’t qualify.
Special Rules for Self-Employed Expats
- If you own a business abroad, you can still use the FEIE, but you must pay US self-employment taxes (Social Security and Medicare).
- You must also prove your tax home is outside the US.
What happens if I don’t meet the full-year requirement?
If you move abroad or return to the US mid-year, you might still qualify but need to prorate the exclusion based on the number of days you were eligible.
Do I need to stay in Singapore all 330 days to pass the Physical Presence Test?
Not necessarily. You only need to ensure you’re outside the US for at least 330 days in a rolling 12-month stretch.
If those days are spent in multiple countries, that’s fine, so long as you’re not in the US more than 35 days during that same period.
What happens if I earn more than US$126,500?
If your Singapore salary or self-employment income is US$150,000, for example, the FEIE would exclude the first US$126,500. You’d still have US$23,500 subject to US tax. However, you might be able to reduce that remaining amount using other provisions like the foreign housing exclusion or your standard deduction.
What is the Foreign Housing Exclusion and Deduction?
In addition to the FEIE, you may qualify for the Foreign Housing Exclusion or Deduction, which pertains to reasonable housing expenses incurred while living abroad.
- Foreign Housing Exclusion: For employees, this excludes housing expenses paid with employer-provided funds from your gross income.
- Foreign Housing Deduction: For self-employed individuals, this allows you to deduct housing expenses from your gross income.
Qualified housing expenses include rent, utilities (excluding telephone charges), and certain related expenses. For 2024, the base housing amount is US$20,240, and the maximum exclusion is US$37,950.
Can the Foreign Housing Exclusion help me exclude more of my income?
Yes. The foreign housing exclusion applies to certain housing expenses in Singapore, such as rent, basic utilities, and necessary repairs. If those costs exceed a base housing amount (typically 16% of the annual FEIE limit), you can exclude additional income on top of the FEIE.
The cap for high-cost locations—like Singapore—can be much higher than it would be in lower-cost areas, so you might exclude tens of thousands more, depending on how much you actually spend on housing.
Is it possible to exclude up to US$84,100 in housing on top of US$126,500?
Not quite.
The IRS issues a maximum allowance for housing, which may be around US$84,100 for 2024 in Singapore. You first subtract the base housing amount—about US$20,200 (16% of 126,500)—from your actual housing costs.
Whatever remains can be excluded, subject to the maximum limit.
For example, if you spent US$50,000 on housing (rent and utilities), you subtract roughly US$20,200 to get US$29,800. That extra US$29,800 can be excluded in addition to the US$126,500 from the FEIE.
How does this work if I earn, say, US$150,000 and spend US$50,000 on housing?
- FEIE: US$126,500 excluded.
- Housing Exclusion: US$50,000 minus base (about US$20,200) = US$29,800.
You could exclude a total of US$126,500 + US$29,800 = US$156,300.
Since your salary is US$150,000, you end up excluding it all. Your US taxable income on those wages becomes zero.
What if my income Is really high, like US$200,000 or more?
Even if you max out both the FEIE and housing exclusion, you may have leftover income that is still taxable. For instance, you might exclude the FEIE limit of US$126,500 plus another US$60,000 in housing (depending on your actual costs and the IRS cap), which adds up to US$186,500. If you earn US$200,000, the remaining US$13,500 could still be taxed.
However, you can also apply your standard deduction (US$14,600 for single filers in 2024, or more if you file jointly) to further reduce that amount. It’s possible for many people to shrink their US tax bill to zero—or close to it—when living in a high-cost city like Singapore.
Should you use the Foreign Tax Credit or the Foreign Earned Income Exclusion?
Deciding between the Foreign Tax Credit (FTC) and the FEIE depends on your specific circumstances:
- Foreign Tax Credit: Offsets US tax liability based on taxes paid to a foreign country. Beneficial if you’re paying higher foreign taxes.
- Foreign Earned Income Exclusion: Excludes a portion of your foreign-earned income from US taxation. Useful if you’re in a low-tax country.
In some cases, a combination of both may provide the greatest tax benefit. Consulting with a tax advisor can help determine the optimal strategy for your situation.
Let a tax professional help determine whether the FTC or FEIE is better suited to your tax situation.
What about the tax I already paid to Singapore?
If you have income that isn’t excluded by the FEIE or housing exclusion, you can often claim a foreign tax credit (FTC) for the money you’ve paid to Singapore’s tax authorities. This credit offsets your US tax on the same income, preventing you from being taxed twice.
Usually, you wouldn’t apply both the FEIE and the FTC to the exact same portion of income. Instead, many US expats in Singapore exclude as much income as possible, then use the credit to cover any leftover amount that remains taxable.
What are the most common mistakes when claiming the Foreign-Earned Income Exclusion?
- Thinking you automatically qualify just because you live abroad
- Simply living overseas isn’t enough—you must pass one of the residency tests every year.
- Not counting travel days correctly
-
- To pass the 330-day rule, you must be in a foreign country for full 24-hour days.
- Travel days to and from the US do NOT count—so if you visit the US often, your qualifying days may fall short.
- Claiming the FEIE on income that doesn’t qualify
-
- Only earned income can be excluded.
- Investment earnings, rental income, Social Security, and pensions are still taxable in the US.
- Filling out Form 2555 incorrectly
-
- Form 2555 is required to claim the FEIE.
- Common mistakes include:
- Wrong travel dates
- Incorrect residency test selection
- Not properly calculating the exclusion amount
- Giving up the FEIE without realizing the consequences
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- If you choose not to use the FEIE one year, the IRS won’t let you use it again for five years unless you get special approval.
- This is important for expats who switch between the Foreign Tax Credit (FTC) and the FEIE.
- Forgetting about state taxes
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- Some US states still tax you as if you never left.
- States like California, New York, and Virginia are strict about taxing expats.
- Missing deadlines
-
- The normal tax deadline is April 15.
- Expats get an automatic extension until June 15, but if you owe taxes, you still have to pay by April 15 to avoid interest.
Can you get an extension or prorate the FEIE?
Yes. If you don’t meet the full requirements or need more time to file, you have options.
- Getting More Time to File Your Taxes
- Automatic Two-Month Extension: Expats automatically get until June 15 to file. No forms are needed.
- Requesting an Extension to October 15: If you need even more time, file Form 4868 to get an extra four months.
- Delaying Until You Qualify for the FEIE: If you need more time to meet the 330-day rule, file Form 2350 to delay your tax return until you qualify.
Example:
- You moved to Singapore in August 2023.
- You will reach 330 full days abroad in August 2024.
- If you file Form 2350, you can delay filing your 2023 tax return until you qualify for the FEIE.
- Prorating the FEIE if You Were Abroad for Part of the Year
If you don’t qualify for the full year, you can still claim part of the exclusion based on the number of days you were abroad.
Is my US tax guaranteed to be zero?
Not always. Each situation is different.
Some people don’t meet the 330-day rule, or their housing costs aren’t high enough to offset remaining wages above the FEIE threshold. Others might have additional sources of income like capital gains or investment returns that aren’t covered by exclusions.
Even so, many Singapore-based US expats end up owing little or nothing to the IRS once they combine the FEIE, housing exclusion, standard deduction, and foreign tax credits.
Ankurita Lala, an IRS Enrolled Agent with 6 years of expat tax experience, specializes in helping individuals and entrepreneurs navigate the complexities of foreign business ownership. *Schedule a consultation with Ankurita today.
*30-minutes US$247.
