US Federal and NY Tax questions

[blenny100]

So I've scoured this site, the IRS site, and used the search to come up with what I think explains the tax situation for someone coming from New York. Would be great to get input on my simple example. Also, can anyone recommend a nice tax guy that wouldn’t mind spending a hour or two with me just to make sure I’ve got it right – obviously, I would pay him.

I’ve made some assumptions to keep it simple (all numbers in USD, 2005 tax rates for married filling jointly).

Annual salary: 100,000
Annual housing allowance: 30,000
Annual bonus: 20,000

HK tax: 150,000 * 16% = 24,000 (payable the following year)

US tax:

Exclude $82,000 of income (150,000 - 82,000 = 68,000).
US Federal tax on 68,000 = $11,658.75 plus 28% of the amount over $59,975 = 13,906

*Minus*

HK tax paid on 68,000 = 10,880. Leaving a total of 3,026 payable to the IRS.

Does this make sense, or am I off? Also, what happens to NY State tax? Do I still pay non-resident tax even though I am abroad?

Thanks! I am trying not to make a huge mistake before transferring.

[runnergal]

I actually came in here trying to find out about US tax too.

So is it right that if you don't earn over $82,000US in HK you don't have pay any US income tax?

Do you still actually have to file a tax return?

[panda05]

You wont pay 16% in HK since there are some allowences. Go to http://www.ird.gov.hk/eng/ese/st_com..._07/stcfrm.htm to compute your HK Tax. Moreover, you not only have to pay income taxes, but also taxes which HK does not charge, such as dividends or capital gains taxes. If you get a housing allowance you also have to pay US taxes on parts of it.

[MisterTanaka]

Also, can anyone recommend a nice tax guy that wouldn’t mind spending a hour or two with me just to make sure I’ve got it right – obviously, I would pay him.

Your idea of hiring somebody to help you through this is a good idea, because the situation is more complex than you think.

-You can't both take a credit for the whole amount you pay to Hong Kong AND exclude all of the income from your U.S. tax return. As nice as that would be, the IRS would consider it double-dipping.

-There are different permutations on how to handle the housing allowance, depending whether you're self-employed or an employee. I'm in the process of learning more about housing allowances in order to do my taxes this fall, but it's more complex than salary + housing + bonus - foreign income exclusion = taxable income.

-Don't assume you can avoid New York state taxes just because you don't live there. I don't know how NY handles this, but Maryland (where I sometimes live) courts have held that Maryland taxpayers can't give up Maryland residency without becoming a resident of another state.

-In your calculations, you've forgotten your standard or itemized deduction, plus your personal exemption(s). Together, these will reduce your taxable income by at least $8,200, depending on your marital situation and whether or not you have kids.

You don't say where you are, but I would guess that there would be a good CPA or Enrolled Agent nearby who could help you with the U.S. questions, after learning more about you. Interview any likely candidates and make sure they have experience doing returns for people who live overseas. I've been doing tax returns professionally for five years now (all in the U.S.) and am an enrolled agent, but I would not (yet) pay me to do my return. I'm working on remedying that, though. :-)

Good luck!

[applefan]

I actually came in here trying to find out about US tax too.

So is it right that if you don't earn over $82,000US in HK you don't have pay any US income tax?

Do you still actually have to file a tax return?

Yes, you will still need to file a return.