Hong Kong Tax Services
Be aware of the reporting requirements of the IRS and U.S. Department of the Treasury regarding your US expat taxes. Worldwide income must be reported regardless of where an expat lives or where the money was earned. In the event that taxes to a foreign government have already been paid, the IRS has tools in place to reduce the likelihood of double taxation, including:
-The foreign earned income exclusion, – allows qualifying expatriates to exclude $99,200 of their income on their US expat taxes,
-The foreign tax credit, – allows taxes for US expats to be reduced on your US tax return, dollar-for-dollar, based on what you have paid to a foreign tax authorities, and
-The foreign housing exclusion, – enables qualified expatriates to deduct qualified housing expenses that result from living overseas (such as rent, utilities, etc).
It should also be noted that assets expatriates hold overseas must be reported to both the IRS and the U.S. Department of the treasury if they are over certain thresholds. If an individual has had over $10,000 cumulative in business or personal accounts overseas, these accounts must be reported to the U.S. Department of the Treasury via the FBAR. Form 8938 must also be filed with your US tax return if the amount you hold overseas is over the (much higher) thresholds. If these requirements are confusing, please Contact Us
US-Hong Kong Tax Treaty
The US and Hong Kong do not have a tax treaty, which unfortunately means that double taxation can occur if you are a higher earning expatriate.
Foreign Income in Hong Kong
Hong Kong operates on a territorial taxation system, which basically means that income sourced from outside of Hong Kong does not get taxed by Hong Kong. Taxes for expats with income earned within Hong Kong are payable to the Inland Revenue Department.
Self-Employed Expat Tax Advice
The IRS has lower limits for US expat tax reporting requirements for the self-employed. If you have earned more than $400 from self-employment, you are required to file a US expat tax return. A simple piece of expat tax advice is to plan on filing a US expat tax return if you are self-employed. For your Hong Kong taxes, you will be taxed on income that is Hong Kong sourced, therefore, you will need to pay Hong Kong taxes on income earned within Hong Kong.
Hong Kong is a tax haven, meaning that it lacks many of the taxes in place in other jurisdictions, including a VAT, capital gains taxes, sales taxes or wealth taxes.