Like Tree2Likes
  • 1 Post By Morrison
  • 1 Post By Morrison

Tax Issues for HK Resident Working in US for 6 Months

Closed Thread
  1. #1

    Join Date
    Jul 2012
    Posts
    21

    Tax Issues for HK Resident Working in US for 6 Months

    Hello GeoExpat.
    I am a US citizen working for a HK company and I have a HK work-visa and maintain residence here in HK. However, I have been living in the USA for about 6 months of the 2016 calendar year, and I plan to be in the US for about 7-8 months for the 2017 calendar year, doing work from my computer in my house.
    My company was initially fine with it, but now they are wondering if the US government will require them to pay US taxes. I think this is wrong, but the other issue is I sell international insurance. I still think this is okay, as I am selling international insurance through an international company, to international expats, and I am licensed to do so under the relevant HK regulatory body.

    I imagine there are a number of people in my situation, and from my research I simply need to pay US income tax as a self-employed employee because I'll be in the US more than 30 days per year.
    Are there any tax issues here that my company needs to be aware of? How long is too long to be in the US given my situation before any rules/regulations are being violated? I greatly appreciate any insight. Tough to find sources about this on the internet.



  2. #2

    Join Date
    Feb 2011
    Location
    Hong Kong
    Posts
    6,317

    US citizen always pays taxes. Very simple.

    If you live 183+ days in HK per US tax year, you can get a waiver of the first US$100k in income on the US tax bill, but you still pay for HK on all of your income.

    If less than 183 days, you pay full taxes in both HK and US.

    Days are counted as days present in US, vs not present. So you need to count. You can not use business trips or holiday to justify failing the test. It's very black and white.

    For your company it doesn't matter. It is your responsibility to report taxes to US. A HK company only reports salary to HK government, provided you are living/working out of the HK office.

    Most banks will share data on deposits to the US government, so if you have your salary deposited into a bank regularly, it will be reported to US and they will ask where the tax money is.


  3. #3

    Join Date
    Jul 2012
    Posts
    21

    I understand and know that I need to pay US taxes.

    My company's bosses aren't very knowledgeable US tax issues so are the under the impression that if I, as a US citizen, must pay US taxes then their company will also need to.

    From what I've read that's not the case.


  4. #4

    Join Date
    Feb 2011
    Location
    Hong Kong
    Posts
    6,317

    So you work for a HK located company remotely, while in the US? Or the HK company also has a US office?

    Self employed would require some flexibility in the US as far as how you perform your job roles. Also, you would need to pay social security and medicare plus taxes. US companies have to pay into social security and unemployment benefits, so that is probably what they are thinking about.


  5. #5

    Join Date
    Mar 2010
    Posts
    6,745

    US IRS has an office in Beijing, they are very communicative I have found

    shri likes this.

  6. #6

    Join Date
    Jul 2012
    Posts
    21

    Yes, I work remotely in the US for my HK company, let's say 6 months a year. Just answering emails from my house.

    I doubt I would need to contribute Medicare/social security?

    If there is some contribution needed though for that, at what point do you have to do it? Over 30 days? Over 6 months?

    I suppose this is something I should probably ask a tax accountant about.


  7. #7

    Join Date
    Mar 2010
    Posts
    6,745

    you should stop wish thinking and then familiarize with the concept of tax residency,
    then you can build your life around these parameters

    Last edited by Morrison; 24-09-2016 at 11:49 AM.
    shri likes this.

  8. #8

    Join Date
    Oct 2004
    Location
    Midlevels / USA (MD) / London
    Posts
    2,219

    Where you "work" for the purpose of taxes can generally, in layman terms be defined as "where your butt is sitting when doing the day-to-day things for which you get paid." If you are in the United States doing your day-to-day job, you are working in the United States and, thusly, covered by US tax law, employment law, anti-discrimination ordinances, Medicare and social security and unemployment (FICA) requirements, etc. There are some exceptions, like journalist and musicians and sportsman visiting but generally, if you are working in the USA, you are paying taxes in the USA.

    And not only you! Your employer too! US employers are required to make contributions to your social security and unemployment insurance, and as they are employing you in the United States they are required to file and pay these withholdings to the US government.

    Because, basically, think of this with some evil intent--what if every person in the world decided to live in a country and work "remotely" for the "home office" somewhere else? "I don't have to pay for the roads or the firetrucks or the schools or the courts or the street lights in this country because I pay taxes 'back home' where my bank account and employer is located. I'm just living in this country taking advantage of the roads and firetrucks and schools and courts and street lights..." Yea, it doesn't work like that.

    To help illustrate the point let me point out the tax situation faced by NFL, NBA and MLB athletes. Some of them have to file 20+ state income tax returns each year. Why? Because they play a game (and get paid) in different cities around the country, and for those days that they are in the state earning they have to pay state income tax to that state. The "jock tax" is based on the idea that they work in a state and have to pay taxes in a state. It's a bit messed up, but the mentality is such that the states often go after every dollar they can get.

    Basically, you really need to talk to an accountant about how to structure this. You can set up a US company to handle your withholding and FICA paperwork, or you can work as a "self-employed" contractor billing your company for your work while in the USA (thus releasing them of the tax and paperwork liability) but saddling you with the employer's share of taxes, i.e. the self-employment tax that comes out of your earnings.

    But your tax residency, and thus some liability, is going to be in the United States if that is where you are working.

    p.s. the exclusion of the first 100k of foreign income requires 330 days present in a foreign country (Physical Presence Test) or another test (Bona Fide Resident) test which you may likely not obtain if you are spending 6 months in the USA.