Help! Telecommuting from HK to US? Legal?

kimberlynkeith · 14-09-2005, 09:39 PM

I know I'd need to consult a tax professional for the tax end of this, but I'm wondering if you can help me with the legality of this.

I am finishing up my medical transcription course right now. If my husband and I move to HK for his job, can I work over the internet for a job in the US?

How would this work legally? Would I be considered a US employee? Would I be taxed in the US or would HK want to tax my income?

Is this even legal? We would not be HK residents, right?

I just don't even know where to start with all of this and I need to know exactly what I'm asking the company to do for me before I approach them.

Thank you so much!

Kimberly

PDLM · 15-09-2005, 02:44 AM

I'm not sure about a lot of this, but one thing is clear, if your husband is employed in HK for more than 90 days then he will need an Employemnt Visa, you will need a Dependent Visa, and you will both be HK Residents with HK ID cards.

As a US citizen you are always liable to US tax, wherever you are in the world (only the US amongst major nations extends this burden to its citizens overseas). You should be able to get exemptions to avoid paying tax twice, but you will in principle be liable for HK tax on any employement undertaken in Hong Kong. (And as I understand it, it is your physical location when performing the work that matters.) Moreover, if you are employed in HK then in principle your employer has to sponsor you for an Employment visa in your own right.

Having said that you should be able to keep your head down and avoid a lot of the hassle.

kimberlynkeith · 15-09-2005, 03:54 AM

Color me confused.

So if the company is US-based, I'd still need to pay HK tax on the income? AND US tax?

We're talking a part-time, $20,000/year job, if that makes any difference.

Yes, I would be on a dependant visa.

Kimberly

discobay · 15-09-2005, 09:22 AM

My understanding is that you pay income tax to the HK IRD on income derived in HK. If your income is derived from elsewhere then that is not for the HK IRD to collect.

PDLM · 15-09-2005, 10:30 AM

The question is where you are employed - prima facie, if you are physically in Hong Kong when you do the work then I think you will be deemed to be employed in Hong Kong. The onus would be on you to prove otherwise.

Most countries tax based on the basis of place of employment. Only the US (and one or two other places) tax on the basis of citizenship.

It seems clear to me that you can't officially live in HK on a Dependent Visa and take any Employment while resident in Hong Kong.

discobay · 15-09-2005, 10:39 AM

Originally Posted by PDLM:

It seems clear to me that you can't officially live in HK on a Dependent Visa and take any Employment while resident in Hong Kong.

I'm not sure myself on this issue. How would a U.S. citizen be regarded (for tax purposes) if he was to continue working for his U.S. employer whilst on holiday here in HK?

KnowItAll · 15-09-2005, 11:03 AM

I'd talk to a US tax attorney.

Several people do their freelancing / consulting work for their US companies while here in Hong Kong and it gets pretty convoluted.

At this point, I'd suspect HK taxes might not be your biggest problem -- solve the US part of the problem.

There is a huge gray area as far as your situation is concerned... I'd send an email to [email protected] and ask them if they consider what you're doing as "employment in Hong Kong", they usually reply in a day or two at the most.

PDLM · 15-09-2005, 12:25 PM

Originally Posted by discobay:

I'm not sure myself on this issue. How would a U.S. citizen be regarded (for tax purposes) if he was to continue working for his U.S. employer whilst on holiday here in HK?

If they are on holiday here then they are not resident here. That seems pretty clear to me. HK tax only comes into play if you become resident here; for which there are a number of criteria, the backstop being that if you are physically in HK for 183 (I think) days or more in one tax year then you become de jure resident for HK tax purposes.

whong · 15-09-2005, 07:19 PM

Kimberly,

Ask your employer and see if you would get an W-2 or 1099 for your service. I doubt HKIRD would bother you if your company is issuing you an W-2/1099 because your income would be considered generating from US even though you are physically in HKG.

Given your projected salary is around $20,000 per year... your tax liability (US) should be at 15% bracket... if your income is considered foreign (HKG).... your tax liabilily in HKG should be less than 7%.

Anyway... double check with your company and see how your paycheck is being reported.

kimberlynkeith · 15-09-2005, 09:00 PM

Thanks everyone!

Yes, I get a 1099 for my employment. I am required to pay self-employment taxes in the US, so I assume that would stay the same in HK?

I really do need to sit down with a tax lawyer at some point. For now, I have emailed the above address!

Thanks guys! I'll let you know how this turns out