Localized package?

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  1. #11

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    My understanding is that permanent US Green Card holders (Resdient Aliens) are also liable to US "tax for life". See Tax for Green Card Holders and Publication 54 (2007), Tax Guide for U.S. Citizens and Resident Aliens Abroad

    Somebody should make more effort to warn people of this before they go to work in the US.

    Last edited by PDLM; 04-10-2008 at 11:45 AM.

  2. #12

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    My husband and I (and two kids) will be moving to HK in January. I appreciate all the info. you have all provided on this forum, especially concerning taxes (HK and US) and banking. We are Americans and will be required to pay both US and HK taxes but just found out that my husband's company will be paying our HK taxes for us and that we will only be responsible for our US taxes. They are also providing us with an accountant to handle our taxes while we are here - everything just seems too confusing to me. Of course, we haven't met with the accountant yet but from what I have been reading on this forum, we are only responsible to pay taxes for any amount past $80,000?

    With free housing (free utilities too), free medical, paying taxes only on amounts past $80,000 and a significant pay increase (the job is a promotion) as well as an additional cost of living adjustment - I think we should be financially better off here and save a lot of money. Does that seem right to all of you or am I missing something?

    Thanks for any feedback you can provide.


  3. #13

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    Quote Originally Posted by dctoki:
    We are Americans and will be required to pay both US and HK taxes but just found out that my husband's company will be paying our HK taxes for us and that we will only be responsible for our US taxes. They are also providing us with an accountant to handle our taxes while we are here - everything just seems too confusing to me. Of course, we haven't met with the accountant yet but from what I have been reading on this forum, we are only responsible to pay taxes for any amount past $80,000?
    It sounds to me like a "tax equalisation" or "hypotax" clause. The way I've seen that work is that you would have deductions made from pay for taxes as if you were still based in the US, the idea being that you would know what that means and could budget accordingly. In these cases you don't, in effect, get the $80,000 foreign earnings allowance. But this is a contractual matter between you and your employer not a tax issue (the company sorts out the taxes that are really due, which can get complicated if you are travelling a lot while living in HK - years ago when I was on a hypotax deal my company was paying taxes for me in three countries at the same time, but making deductions as if I was still in my home country.

    There will of course be a tax liability for the "free" housing and, possibly, for the medical insurance, so you would need to chaeck who is picking up the tax bill for that as well.

  4. #14

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    PDLM - thank you for your input. We definitely didn't take into consideration the taxes on the housing and medical and the 80,000 tax "credit" and will need to discuss more in depth with my husband's accountant that his company is providing us. You are right about the tax equilization clause, that is exactly what they will be doing so we won't be getting the credit on the first 80,000 US dollars he makes. My husband will have to travel quite a bit while we will be living here - I didn't even consider the complications with the taxes due for physically working in all these different countries. Just when I think that life is going to be looking pretty sweet in HK, I discover that I am not looking at everything. At least he got a big promotion and it is a considerable pay increase! I am just hoping we can save a lot of money while we are living here. We have always been big savers (because we have always lived quite modestly for our incomes) and was hoping we could save even more money while here.


  5. #15

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    The great thing about tax equalisation is that you don't have to worry about the "paying taxes in multiple countries" problem. That has no impact on the net income you will receive.

    The key questions seem to be how the housing and insurance will be treated for tax equalisation purposes - will they be counted as part of the package on which you will be hypothetically taxed (i.e. have deductions made from salary) as if you were getting those benefits in the US, or not?

    You may also need to consider your property in the US - are you keeping it? If you rent it out what will the tax implication of that be?

    Last edited by PDLM; 05-10-2008 at 09:00 PM.

  6. #16

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    the first year is most complicated, after that your budget is more solid, also the tax stuff isn't too complicated if they tell you in advance what you need just turn it in as it happens and let them handle it


  7. #17

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    Rebekah - thanks for your feedback.

    PDLM - You have raised some questions that will need some serious considerations and I will be sure to ask our accountant. I hope that the housing will not be taxed - that is a lot of money to be taxed! Ouch!

    We will keep our home here in the U.S. and have plans to rent it out. The U.S. market is horrible right now and we would stand to lose a lot of money. We also love where we live and want our home to come back to when everything is "said and done".

    Thanks for all the "incidentals" I have not considered!


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