I Live in Thailand and Work Remotely for a US Company. Here Is What My Tax Return Actually Looks Like.
Kree has a W-2. She works remotely for an American company, mostly at night, because that is when her colleagues are awake. She has a US bank account. She files a US tax return using her parents' address in Ohio.
She also lives in Thailand, trains Muay Thai six mornings a week, and has been there for two years on a Destination Thailand Visa sponsored by her gym. Everything she needs fits in one of three tote bags and a scooter helmet.
Is her tax situation complicated? Most of it is cleaner than she thinks. Two things are costing her money right now, and she has not noticed either of them.
The story pauses here. Here is what the law actually says.
What Her US Tax Return Actually Looks Like
Her W-2 income is fully subject to US federal income tax under IRC Section 61 regardless of where she lives. She does not have a foreign bank account, so she has no FBAR obligation and no Form 8938 requirement. From a compliance perspective, this part of her situation is clean.
The FEIE: Better Than Most W-2 Employees Expect
Income is sourced where the services are performed, not where the employer sits (IRC Section 862(a)(3)). Kree does her work in Thailand. Her employer being American does not change that. If she meets the Physical Presence Test, 330 full days outside the US in any 12-month period (IRC Section 911(d)(1)), her wages qualify for the Foreign Earned Income Exclusion. Two years on the island almost certainly satisfies it.
There is also Form 673, which almost nobody knows about. It lets an employee who expects to qualify for the exclusion tell their employer to stop withholding federal income tax on the excluded portion. Without it, an employer withholds all year and the employee waits until April to get their own money back. Using Form 673 requires telling your employer where you live.
The Part the Exclusion Does Not Touch
FICA. When a US employer employs a US citizen, Social Security and Medicare are withheld on those wages regardless of where in the world the work is performed (IRC Sections 3101 and 3121). That is 7.65% from her paycheck, and the exclusion does nothing about it. Thailand has no US totalization agreement, so there is no relief available.
The Thing She Has Not Told Her Employer
Her employer does not know she lives in Thailand. This was not a scheme. It happened by drift, and it creates real risks: wrong withholding, mismatched documents, and the larger employment risk of losing a job for violating remote work policies. None of this is unfixable. All of it gets harder the longer it runs.
Bottom Line
A US citizen working remotely in Thailand for an American employer owes US federal income tax on all wages (IRC Section 61). If she meets the Physical Presence Test (330 full days, IRC Section 911), her wages qualify for the FEIE and her federal income tax can be near zero. FICA is still withheld regardless of the exclusion. There is no US-Thailand totalization agreement. Form 673 stops employer over-withholding on excluded income but requires disclosing location. The state on her W-2 determines state tax liability. Find your plan at taxjet.co.
Filed under
Expat Basics
Renee Mizrahi, EA, CFE
Our founder spent twenty years in U.S. tax practice. But something shifted when her daughters began living abroad permanently: Nepal, Cambodia, Thailand, Israel, France, and a long list of places she has genuinely lost track of.
Kree and the people in her life are fictional characters created to make real tax situations easier to understand. The law in every post is accurate. Nothing here is advice for your specific situation.
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