Some questions about being a US expat and taxes in Hong Kong

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  1. #1

    Some questions about being a US expat and taxes in Hong Kong

    Hey all. I am an American and will soon work in Hong Kong. Just wanted to ask some questions concerning taxes. When does the tax season start in Hong Kong? I believe here in the States that it starts on January 1st and ends on April 15th. What would the time frame be in Hong Kong? Moreover, would you happen to know how the taxing procedure for foreigners working in Hong Kong goes? For instance, if I earn less than a certain amount in Hong Kong, I don't have to declare it in the US, right? How about for my My salary is just going to be $19,000 HKD, so it's kinda low.

    Anyway, any advice would be greatly appreciated!


  2. #2

    Join Date
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    Don't have to declare it to the USA? It's not that easy.

    A few general things. US citizens and permanent residents (Green Cards) are liable for taxes on any income obtained anywhere in the world. You earn $1 US dollar, you are liable for the taxes on that $1 US dollar.

    Now, with the deductions and exemptions that are available to an average US tax filer, there is generally no taxes due for income under a certain amount. There is a very big exemption available to SOME US expats (note: not all) if they meet a specific test for living overseas or have been out of the country for 12 months or so. You also get exemptions or credits for certain taxes you pay to other governments. Please read the IRS guides and rules. This leads to the general principle "$0 in taxes owed, no need to file a tax return".

    However, every accountant I've ever met usually advises their clients, and especially those living overseas to file every year regardless of whether you owe anything or not. Get it on paper that you have no US tax liability for each year. It's good to have paper proof that you did file, not to find yourself in a situation in say three years where you need to produce your tax documents and say "I didn't have enough income" and have the person be like, "ok....yeah....sure..." Better to just get it on paper now.

    note: You will also need to declare any foreign bank accounts you hold if you have (at any one point) over $10,000 US in that account. You also need to declare any ownership interest in foreign companies if your percentage of control is greater than a certain percent.

    Please don't take this as definitive advice: review the IRS publication for expats:

    http://www.irs.gov/pub/irs-pdf/p54.pdf


  3. #3

    Hey, thanks for the response. Another question I have concerns the tax year. For instance, in the US their personal income tax year goes from January 1st to December 31st of the same year (ie January 1, 2012 to December 31, 2012, filing taxes on April 15th, 2013). However, when is the Hong Kong personal income tax year? When would I have to file those taxes in Hong Kong? Does it follow the same period of time as the government's fiscal financial year (April 1st to March 31st?)

    Thanks for any responses you can provide.


  4. #4

    Join Date
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    Hi Tien Long: The HK tax year is from April 1st to March 31st. I am not sure why you are so concerned with the taxable year between HK and US since your income is so low that you may not have to pay taxes in either countries. But let me clarify a little thing: filing return requirement and paying tax is 2 different issues. You may have sufficient income to file but not large enough to pay taxes due to deductions, etc. So, please don't confuse the 2 things. In fact, a lot of people thought if they have no taxes to pay, then they are not required to file - this is a mistake. In general, accountants would suggest you to file regardless you have taxes to pay. The reason is that once you file your tax return, the statute of limitation starts to run. This protects you from the IRS coming after you several years later. If you have to pay an accountant to prepare the returns, then so be it. This would give you a peace of mind. Your accountant fees will be a lot higher if you are being reviewd by the IRS. Hope this help.


  5. #5

    Join Date
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    And HK$19,000 is plenty to have to pay taxes in Hong Kong. If you are a single person with no dependants then the tax-free allowance is HK$108,000 per year. At HK$19,000 per month your annual tax bill would be $8,400.
    Salaries Tax Computation

    (It's also an unusually low salary for a job with an Employment Visa - I would be wary, as noted in your other thread.)

    Last edited by PDLM; 01-07-2011 at 01:58 PM.

  6. #6

    Again, thanks for this information, as well as the notes of concern. I apologize if my questions seem haphazard and out of the ordinary. Truth be told, I'm still relatively young and I don't have much experience in doing taxes as someone else usually helps me with them. Last year was the first time I ever filed my own taxes and a family member who was a tax lawyer basically did everything for me. So, yeah, on my own and still learning how things work. Hopefully, it won't end up with me in a Hong Kong prison.