Surprisingly, I’m aware of almost every point you made on US tax and reporting options, except the part on FBAR requirement being waived for 6013(g) elections.

In our case this election isn’t worth it given her total income at present exceeds FEIE. However this election may be worth considering in retirement (if we retire outside the US), as NRA spousal benefits from Social Security are normally taxed at 25.5%.

The joint annuity sounds interesting but complicated. I will need to look into that.

We did title our home in her name alone, for tax reasons. Years ago I attended the first (and probably the only) IRS tax seminar ever held here, it was at the American Club (no membership required to attend). It was here that it was confirmed to me by a leading US expat tax prep firm (who attended in support of the IRS) that renting from a spouse and claiming FHE is permissible. It was kind of fun to watch because the IRS wasn’t able to answer many of the more complex questions.

OK, that one was just off the top of my head and at least half joking. Wow.

I haven't searched thoroughly, but (surprise!) I haven't found anything that specifically prohibits your paying rent to your nonresident alien spouse and then applying the rent toward the Foreign Housing Exclusion. How much rent? Well, assuming you can do this at all, you're probably reasonably safe taking the fair market rent of the housing (what it would ordinarily rent for on the open market), dividing by the total number of occupants, multiplying by the number of occupants included in your tax return (e.g. Head of Household with two U.S. citizen children living with you would be 3), then using that pro-rata rent number. And with literal, free and clear, matching monthly rental payments on record to her personal account.

If you want to get particularly aggressive -- not a recommendation! -- you/she might be able to structure it as a serviced apartment and use serviced apartment comparables, as long as she's paying for/paid for all the furnishings and so forth. Then she's renting the furnishings to you (in pro-rata share), which you pay for as part of the rent.

Can you claim the Home Office Deduction as well? If it applies, possibly partially (not fully). Double wow.

I'm pretty uncomfortable with any of these arrangements absent a thorough search of the IRS's private letter rulings and such, but if you've done your homework already, great, hats off.

Normally I do try to validate anything I hear from a tax expert with specific pieces of the tax code. But, sometimes you can’t always find a explicit green light.

Many years ago I had been contributing to an IRA and excluding all my income using FEIE without realizing that it was a no-no. After weeks of searching and sleepless nights (looking at penalties that would wipe out my IRA) I finally found a solution on this one lesser known expat tax filing website. Change the FEIE to physical presence and shift the 12 month period outside the tax year just enough to include sufficient income to legalize the IRA contributions. I then proceeded to file many, many years worth of amended returns (beyond what is normally allowed). Fortunately they were all accepted and my IRA was spared! I didn’t hide the reason for filing the amended returns either, I put it right on the form “changing foreign earned income exclusion to include sufficient income for IRA contribution.”

Here again, no specific green light to say one can choose which test for FEIE but there is also nothing that says you can’t.

Overall, the lady from the IRS gave us the impression that if we are filing a return at all, we are already at the head of the class! And, she also made it seem like showing due diligence, i.e. that we have at least made an effort to file correctly matters more than getting everything 100% correct.

Okay yup understand what you mean! Let me check on the necessary details first before I make any changes or movement to the plans


Actually just wanted to bring this back up. Didn't quite understand how the Classic and Elite rider works. So assuming 2 scenarios

Scenario A:
Total bill - 30k
Deductible - $2,500
Co-pay (5%) - $1,500

If classic, you pay: $3k
If elite, you pay: $1,500

Scenario B:
Total bill - 30k
Deductible - $3,000
Co-pay (5%) - $1,500

If classic, you pay: $3k
If elite, you pau: $1,500

Scenario C:
Total bill - 2k
Deductible - $2,500
Co-pay (5%) - 100

If classic, you pay: $2k
If elite, you pay: $500

Are my scenarios right? Not really sure how they work so pardon me if I get it terribly wrong

In Scenario C with Elite you'd pay $100. That's the only error I see in your scenarios.

Note that with both riders the maximum you pay is $3,000 per policy year. The only difference is that Elite is more aggressive in covering the amount below $3,000, which of course you pay for with a higher premium for Elite.

"Pay" here means from cash, employer-provided medical insurance(*), and/or MediSave, if the expense is MediSave eligible (almost always true). Also, the overall annual limit per policy year still applies. If you blow through that limit, you're on your own.

(*) Yes, you can file claims with both carriers if you have employer-provided medical insurance, as long as you inform both carriers so that they can coordinate. For example, if you've got an employer-provided insurance plan that pays 75% of the first $10,000 per year and you also have a Great Eastern SupremeHealth plan with the Classic rider, then your employer-provided plan will end up dropping your $3,000 per year cap down to $750 per year. To some extent you're duplicating coverage, though, since your employer-provided plan (in this example) is willing to cover even more.

Thank you, BBCWatcher, for your advice!:)

Hi BBC, I'm beginning to wonder whether this idea of disability income insurance is a good one. Would appreciate your thoughts on this.

Disability income insurance is connected, as the name indicates, to an income. It is tied to employment and not passive sources of income. But what if one were to become disabled at a time one is on the verge of retirement, or already retired? This insurance pays out nothing or very little. I would wager that most factors that are going to adversely affect one’s condition such that it also affects employability for any substantial period of time are going to happen at older ages when income earning potential or actual income are both low. Early onset of dementia happens around the age of 80, I am not sure what most people's income around that age will be. But in any case it is well after the age of 65, which DII does not cover if I understand it correctly.

The one thing I can think of with a direct impact on employability which is not a critical illness is a stroke – it is an acute event. But it turns out that most critical illness insurance policies cover stroke as well. Most other catastrophic events that are going to affect employability are likely to be injury/accident-related, and many PA policies cover TPD as well and if one is judged to have one of those severe conditions or consequences - usually the result of an accident - then the TPD pays out a lumpsum.

‘Disability’ defined in the DII can certainly be temporary or permanent, but I fear that there are far too many restrictions. What if there was a slow progression of an illness that required leaving one's job or being fired, and then it later resulted in a disability affecting employability. If one was unemployed at the time of the disability, the DII is likely to balk at the idea of a payout. Aviva for example requires being employed at the time of the disability.

Examples of two other things that will result in time away from work are cancer and heart ailments – specifically a heart attack. Most people with these return to work certainly in the short- or medium-term, except in the case of advanced stage cancer where they simply can no longer continue to work. But a critical illness plan would cover this. DII requires a waiting time and starts payouts after 6 months. If I am simply unable to return to work after 6 months, the last thing I would want to have is for my family to be chasing an insurance company for a monthly income with regular evaluations of my condition to be deemed eligible for the disability insurance. It would be demeaning, frustrating, and a hassle. I would rather be able to submit medical reports to the insurance company at the outset against (an early?) critical illness insurance policy.

My concern is that I don't fully understand what is going to cause one to spend time away from the workforce that is not related to a critical illness, accident or injury, specifically for upwards of 6 months and at an age when one was otherwise gainfully employed in a low-risk occupation.

Finally, having a critical illness includes many costs that are not directly related to hospitalization or even the post-hospitalization OPD expenses that a good medical insurance policy purchased separately should cover for a reasonable period of time. More often than not, it involves caregivers who may need to step out of the workforce entirely or spend less time overall, or move to part-time, non-steady sources of income. It may mean that children need to or want to fly back from abroad often to check in oneself. It may involve dipping into one’s nest egg to cover other sundry expenses such as renovating one’s home – heck, even just the bathroom – to better manage one’s condition. Does DII cover the loss of income for a caregiver as well? I am guessing it does not.

Edit: I also want to add that getting doctors in Singapore to certify that one is completely unable to work >6 months because of the underlying condition is no easy feat. It goes fundamentally against the idea of a productive, contributive member of society. A clinical diagnosis of early-stage/late-stage etc. on the other hand is a clinical diagnosis based on markers and algorithms.

That's right. Disability Income Insurance replaces lost income from work due to disability.

That's correct. If you suffer from severe dementia at age 80, you've lost your mind (as it were) but not any income from work. You're not working at age 80, or at least that's not your plan, is it?

DII also doesn't pay anything to dependents after you die. Life insurance does that.

OK, but which CI and PA policies pay 75% of you salary until age 65? That can be millions (plural) of dollars, quite often. And do they pay for vertigo, severe headaches, loss of hearing due to an infection (for example).... and the myriad other reasons you might be unable to work? CI and PA policies only pay anything if you experience a particular event on the policy lists, and that's it. And can you get a couple million on CI and PA policies?

That's Aviva (evidently). Don't buy Aviva's DII if you don't like that policy term.

So would your emergency reserve funds and your hospitalization insurance (Integrated Shield). If you want even more for a temporary absence from work, sure, you can buy policies that pay something. But that's not the biggest disaster here. The biggest disaster here is not being able to work for years, decades, or the rest of your life. DII defends against that.

You'd rather they not file a claim, have total loss of income, and suffer through that? All insurance policies require you to file a claim to collect. That's just how it goes.

CI is generally claimable only once, by the way. Is that a good feature? No, obviously not.

If you like, but where are your millions? Not being able to work for the rest of your life is really terribly bad. What's your plan then?

Sure, all true, even inconvenient and somewhat costly. Now what about not being able to work for the rest of your life?

It covers not having zero income for the rest of your life, with monthly benefits that you can use for any/all purposes, including caregiver expenses!

You might be making a reasonable argument in favor of adding something atop DII. But you're making terrible arguments if you're trying to suggest you can handle the risks without it, if you're like most early to mid-career working adults.

I'll ask again: what's your plan to handle loss of income for the rest of your life? That's the risk we're dealing with here, the inability to work due to disability. It'd be an absolute f***ing disaster, especially in Singapore, no question. So what's your plan to defend against that risk?

Hello BBCWatcher,

Long time reader of the thread, really appreciate the insights you provide.
If you don't mind I have a question on how to choose domiciliation for bond ETFs. Lets say I'm interested in exposure to long duration US treasuries.
Should I pick TLT listed in the US or IDTL in London? Indifferent?
I guess my question is do I have to be careful of tax implications like for equity ETFs for which irish domiciled ETFs have a edge for withholding tax? FWIW I'm a Singapore tax resident.

Thank you.

That's a trick question. ;) You probably wouldn't choose TLT since it's not the low cost leader in its segment. SPTL looks like the current winner...for U.S. persons.

For non-U.S. persons you'd probably pick DTLA, the accumulating version of IDTL, unless you have a good reason to want distributions. I don't think there's a lower cost alternative at present.

What matters most is whether you're a U.S. person or not. If you're not a U.S. person then you'd (most probably) pay 30% dividend withholding tax on SPTL, plus it'd be subject to U.S. estate tax.

....But why do you want to invest in a long U.S. Treasury bond fund at all?

On edit: LUTR has a 0.15% expense ratio, 5 basis points lower than DTLA/IDLT. It's a distributing fund, so it directly competes with IDLT. But it's a tiny fund, so you'd be relying more heavily on market makers. I think DTLA/IDLT is probably the best you can do overall.

Thank you for the swift answer, TLT seems to have better liquidity but you're right it's not the cost leader at all. I am not a US person so DTLA it is then.
So I am considering allocating a bit to DTLA to feel better on risk off days and current expectations of further easing seem low to me? Not a very high conviction.
What would be your view on US rates?

Great! Understand now. Thanks much! :)

I'm new to investing and looking for a platform to start. I'm eyeing some stocks in the US as well as SG and would probably like to invest in funds too.

Is there any platform you guys recommend where the fees are acceptable when putting in a small amount of money on a monthly schedule? We're talking medium to long-term investments.

What’s “small amount” in this case?

Here's a gentle reminder for those of you who must file U.S. tax returns and/or U.S. financial reports for 2018: the extended filing deadline is October 15, 2019. That deadline is generally the deadline for the IRS (and for U.S. FinCEN) to receive your returns/reports. If you are mailing a paper tax return via Singpost, for example, an October 15th "foreign" postmark isn't good enough.

If you are pressing right up against the filing deadline, cannot electronically file, and you aren't going to fly personally to Hawaii (for example) to get your tax return postmarked by the U.S. Postal Service on October 15th, then you can use an IRS approved private delivery service, including a specific, approved class of service with that carrier. Get written proof of the mailing date with the private carrier, and keep that proof in your personal financial records.

If that's still not good enough, try to get at least any required financial reports filed on time, such as FinCEN Form 114. (FinCEN Form 114 has to be filed electronically anyway.) The IRS might charge you a late filing penalty unless you have good cause for relief, but the late filing penalty isn't too terrible.

OK, so what if you're a U.S. person and you "forgot" to file your U.S. tax and financial reports for years, or you have never filed them? Maybe you were born in the United States, and you weren't (or aren't?) aware that practically everyone born in the United States, including its territorial waters and airspace, automatically acquires U.S. citizenship at birth. (The only practical exception: children of accredited foreign diplomats.) Or maybe you are the son or daughter of a U.S. citizen, and (subject to certain rules) you acquired U.S. citizenship at birth that way as a matter of legal fact. Or maybe you are, or were, a long-term U.S. Permanent Resident and didn't realize that you're still subject to the U.S. tax and financial reporting system, even if you've given up or lost your U.S. permanent residence. Fortunately, there's a reasonable path to get back into good graces with the IRS and with the U.S. Treasury more generally. Try to get that done and dusted as soon as you reasonably can.

U.S. tax status is super enduring in legal operation, so if you want to exit the U.S. tax and financial reporting system you must take action with U.S. government authorities to do so. However, that's a topic for another day and only if anyone is particularly interested.