What is the American tax for US residents living in Hong Kong?

If you are an expatriate American residing and earning for living in Hong Kong, then you must be yearning to know and understand the American tax for US residents living Hong Kong, its rules, and obligations that are applicable to you.

Just like every country, America also has its own tax structure, especially for expats. Most US expats do not owe US expat tax return. The government has put several vital deductions, exclusions, and credits in place to ensure that the individual is not subject to double taxation on the same income. Most of the expats are able to offset all of their foreign earned income under various restrictions and concessions levied by the government. 

Hong Kong is one such country; that allures many individuals from all across the globe. The higher-earning and great career progression are some of the vital reasons that rope in so many professionals to expat life in the city. The good quality of life, salubrious weather, good career opportunities, and safety has made many US Citizens to decide to earn their living in Hong Kong and that's why tax filing for us citizens living abroad is important.

 

What is taxes for US citizens living in Hong Kong?

 

Hong Kong has its own preferential expat taxes treatment for US citizens living in Hong Kong; which will benefit the US expatriate tax return of the individual expat. In fact, for most of the US expats, the treatments will reduce your US taxes to zero. 

Below are some of those preferential tax benefits for the US expat in the country:

1. If you are an American resident and residing in the US, you are required to file US returns for all the years that you are residing. However, when it comes to US expat tax in Hong Kong; you may qualify to minimize your US taxable income up to a number of your foreign earnings; that is adjusted annually for inflation. Also, you can deduct certain foreign housing amounts; which is known as foreign earned income exclusion.

 

2. When it comes to American tax for US residents in Hong Kong, most of the expatriates worry about the weapon of double taxation, i.e. paying the taxes in two different countries- the U.S. and Hong Kong for the same income. However by claiming of foreign credit via Form 1116, expat can reduce taxable income and double taxation. However any foreign income cannot be fully offset via foreign earned income exclusion, housing exclusion or housing deduction, foreign tax credit paid, or accrued can be used as deduction or credit on US tax return. It is the choice of the taxpayers whether they want to deduct the taxes as an itemized deduction on Schedule A or claim a credit against tax. In most cases, it is beneficial to take foreign income taxes as a tax credit.

 

How to file American taxes in Hong Kong?

Filing the taxes in Hong Kong as an expat, requires the following of certain steps. It is advisable to take help and guidance of professional American taxes specialist in Hong Kong to help you in transpiring the procedure:

1. First and foremost step is to register online and finish off the tax organizer.

2. The service provider will assign you the right advisor for your tax work

3. The tax experts, who are tax attorneys, CPAs and enrolled agents help you in filing your taxes

4. Pay the tax and review the return

5. Lastly, your tax return will be filed with IRS. If IRS calls for audit or questions certain aspects, the professional tax specialists of US expats will help you out with support and proper answers.


Facts about Hong Kong

• Hong Kong is one of the world's most heavily populated destinations.
  
  
• American Tax for US Citizen Living in Hong Kong.
   
• Hong Kong is home to the world's second-highest number of billionaires.
  
  
• Hong Kong is the 10th-largest exporter and 9th-largest importer in the world.
  
  
• Hong Kong is the city with one of the world's largest per capita revenues.