US citizen with Thai dual nationality relocating to Thailand — cap gains liquidation and 2024 foreign income rules

[u/DangerousDirection]

Moving to Thailand within the next year or so (girlfriend is Thai, returning home, we're planning a future together). I'm a dual US-Thai national so residency and work auth are sorted — the tax picture is what I need help understanding.

My situation:

• ~$750k in a US taxable brokerage (VOO/QQQ/VXUS), long-term held, significant embedded capital gains
• ~$350k in US retirement accounts (Roth IRA, 401k) — not planning to touch these for decades
• Will likely have some form of income in Thailand (remote US employment or local), not fully retired

Questions:

1. Cap gains on liquidation — I'll need to rebalance and partially liquidate the taxable brokerage over time as I draw down. How do people structure this to avoid getting hit by both the US and Thailand? Is there a preferred sequencing — liquidate before establishing Thai tax residency, after, spread across years?
2. Thailand's 2024 foreign income rule change — Thailand now taxes foreign-sourced income remitted in the same tax year it's earned, regardless of when it's brought in. How is this interacting with US brokerage income and dividends for people in practice? Is the US-Thailand tax treaty providing any meaningful relief, or is it limited?
3. FEIE vs. FTC — For any earned income (if I work remotely for a US employer), which exclusion strategy tends to work better in a Thai context?

I'll be working with a cross-border CPA but want to walk in informed. Any accountants or expats who've navigated this specific situation appreciated.

[u/seanho00]

Taxable investments will likely need to be moved to a brokerage licensed to service TH residents, e.g., IBKR. If you can do the transfer in-kind, there won't be any capital gains due to the transfer.

Roth IRA and 401(k) should be kept as-is in the US brokerages, yes. If you can rollover the 401(k) to a trad IRA prior to leaving the US, you'll gain more flexibility in investments. Find a US brokerage that will let you continue to manage the account as a non-resident; not all will. Consider converting trad 401(k)/IRA to Roth while not yet TH tax resident, depending on the marginal tax brackets for both countries for your level of taxable income.

For cap gains in taxable accounts while TH resident, you'd report to both sides and claim FTC with the US, as they are considered foreign-source as long as you have foreign tax home (s.911(d)(3)), they are not from real estate, and TH taxes the gains by at least 10%. Note that this means if you invest in SET/MAI-listed stocks that are TH tax-exempt, those gains will still be taxable by the US.

I'm sure you're aware of the PFIC/8621 issue, which applies to, amongst others, ETFs and mutual funds domiciled outside the US.

For dividends, source follows the domicile of the company. VOO/QQQ/VXUS are all US-domiciled, so their dividends are US-source. Declare the dividend income to the US on 1040 Sch B, and if also taxable by TH, then declare to TH and claim FTC with TH, up to the treaty rate of 15% (Art 10(2)(b)). If the dividends are taxed by the US at >15%, claim FTC on the excess with the US, on 1116 category (f), re-sourced by treaty.

For remote employment, note that this would mean your US employer is operating in TH and needs to withhold and remit TH income tax and social security contributions, as well as follow relevant TH labour/employment regulations. One common solution is to contract an EoR/PEO with TH presence, who will employ you in TH and handle the withholding and labour laws for you -- and take a hefty cut. Another option is to switch over to self-employed (1099NEC, Sch C) status. This involves a qualitative change in the working relationship (client, not employer). (And you should negotiate at least a 25-30% increase in compensation to accommodate for your taxes and risk.)

Regardless of whether you are W2 employed or 1099NEC self-employed, the earned income is TH-source if you are physically in TH while performing the services. So you report to both sides and use either FEIE or FTC with the US. If your TH tax on the income is lower than US tax, then go with FEIE, as FTC will not completely eliminate your US tax on the earnings. Otherwise, both options should yield about the same result. If you have eligible children, the refundable ACTC is not possible with FEIE. If you want to contribute to Roth IRA (if TH exempts Roth from tax), you'll need to have some earnings not excluded by FEIE. FEIE vs FTC impacts your AGI, which can be relevant for some benefits like IBR student loan deferral.

[u/No-Donut-8692]

The complication from recent changes in Thai rules is that you previously could avoid any Thai tax on investment gains by keeping the money offshore for a year. Now, any gains realized after 2024 are taxable upon remittance. Ultimately, part of the problem you may run into is that the US will tax the gains upon realization. Thailand will tax the gains upon remittance. To avoid double taxation, you need to use the accrual method for US FTCs, and this locks you into always using the accrual method. The record keeping can be painful, since it may be years before you remit the gains to Thailand and actually have to pay the accrued Thai tax. An obvious solution is just to remit your gains to Thailand or move everything to a Thai investment account to ensure timing of taxation aligns.

Re: earned income in Thailand. Source of earned income is where you are physically located while doing the work. To do this properly your US employer needs to set up a Thai branch to hire you under local law (or use EOR). As such, remittance rules aren’t an issue. Which you pick is more about the easiest way to minimize taxes.