HK Tax vs USA Tax

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  1. #1

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    HK Tax vs USA Tax

    so i've been trying to figure this out...

    i am an US citizen, and when i used to work part-time, i paid my income tax every year like everyone else.

    i just moved to Hong Kong recently, and am now working at my father's company. now this is where it gets complicated...i used to be a resident here from 1995 to 1997, complete with ID card and whatnot (while still keeping my US citizenship) - when i tried to get a SmartID this year, they told me that since i did not apply for an adult ID (i was 13 at the time in 1995), i would have to reapply for a resident ID (as opposed to a perma-resident one).

    now the question is, after i reapply and get my ID back, can i be hired as a HK resident or do i still have to apply for a work visa? and how would my taxes work out? i know i would have to pay HK tax no matter what...but how about the US tax? as far as US is concerned, i have no job and therefore, no income..

    so i guess the question is, what options do i have to end up paying for the least tax possible? i.e. taxed in HK and not taxed in US...

    thanks in advance =)

    bernard


  2. #2

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    As I understand it you can only avoid US tax by renouncing your US Citizenship and then waiting for 10 years.

    Living here for 2 years from 13 to 15 doesn't give you any right to permanent residence... Previously holding a HKID for a couple of years (presumably as a Dependent) doesn't bestow any rights once you have left.

    So you would appear to be just in the same position as any other expat coming here. You need to get an Employment Visa or similar (Investment maybe?) and then get a new adult HKID.

    This all assumes that you don't have some right to Right of Abode by descent


  3. #3

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    Green card?

    I heard that if you give up your green card then you no longer pay taxes. I'm Aussie so I dont know, just what Ive heard.


  4. #4

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    hmm, i did some research earlier...apparently i can have up to somewhere between 70k and 80k USD exempted as Foreign Earned Income, though i'd still have to file every year, and this is assuming that i get hired as an US citizen.

    http://www.irs.gov/taxtopics/tc853.html

    also, i talked to the people at the SmartID office, and they said that most likely i will be able to get my regular ID back, though i would need to live here for at least 7 years from now to establish permanent residence.

    so i guess i'll be going to the ID office sometime this week...bah, i hate this stuff.

    Last edited by emptystring; 23-05-2006 at 01:12 AM.

  5. #5

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    Quote Originally Posted by emptystring:
    hmm, i did some research earlier...apparently i can have up to somewhere between 70k and 80k USD exempted as Foreign Earned Income, though i'd still have to file every year, and this is assuming that i get hired as an US citizen.
    Citizenship is not something you can define in your employment contract! You are a US citizen unless and until you renounce that citizenship formally. There is a fairly tedious process to do this, and in any case you will be liable for US taxes for several years after you do so (this is, of course, un enforceable if you never want to visit the US again, but otherwise you don't have any choice in the matter).

    You will get a HKID if you get an Employment Visa. You haven't given us any information that would tell us that you are entitled to a HKID in the absence of Employment. You are no different from anyone else in this respect except that they may give you the same number as the HKID number you held several years ago since, presumably, they are unique.

  6. #6

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    ok, that cleared quite a bunch of things up =)

    so now let's say that i do end up with an employment visa and a HKID...

    how would i go about filing my taxes in the states? would i end up paying tax in both places? and is there any sort of exemption that i would qualify for? (like the Foreign Earned Income Exclusion thing on the IRS website)

    thanks in advance =)
    bernard


  7. #7

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    Empty,

    Like the previous people's suggestions, you would still be responsible to file your tax to IRS whether u r a greencard holder or US citizen. Unless you are waving your us passport away.

    What you can do is... since you would be working in your father's company, try to get a salary below 80,000 USD so that you would take advantage of the full exemption of US taxes. The rest...if u r making above 80,000.. you may have to settle with your father then. and the worst.. paying us taxes on income above 80,000 threshold.

    i think everybody knows the low tax rate here in HK... it's a no-brainer to pay taxes here.

    if u have more questions, you may pm me.


  8. #8

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    haha, 80k..my salary isn't even close to that =P

    but yeah, i think i have everything figured out...now i just have to go through forms like crazy +_+

    thanks for all the help =)
    - bernard