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US Citizen living in HK needs tax advice
Posted by Douglas Lillico (517 days ago)
I am a US citizen living in HK. I left the US 2 years ago and have absolutely no financial or other ties to the states. All assets there are closed out as are properties and accounts. I need to know what the requirements are for taxes in this case. Not sure if I am still required to file if not above income cut off point. Any help would be great
(I am based in Hong Kong)
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Posted by jwm (517 days ago)
You still are legally responsable for paying FICA (ss Tax ) and federal income tax. That being said, you are also entilted to all the exemptions and exclusions as well.
I assume your being paid on a local package, which if you are, you still are required to file and pay FICA. If you don't, the day you do file when you eventually go back to the US, it will quickly trigger a red flag.
(I am based in Hong Kong)
Posted by Douglas Lillico (517 days ago)
Thanks, I really appreciate that. I doubt that I will ever move back to be honest but I do not want the headache either way. This tax situation in the states is crazy and I really have an issue with it.
I was even thinking of applying for Canadian citizenship as I think this is completely unfair and I cannot condone the policies there any longer as well...well, guess I will pay up.
(I am based in Hong Kong)
Posted by DBL (517 days ago)
If you have no assets in the US and make less than 80,000$us I am told that you are excluded from having to pay tax. I am not sure if this is true but would love to know about exemptions and any ways to cut back on them if possible...thanks
(I am based in Hong Kong)
Posted by jwm (514 days ago)
DBL... You are correct,you do not need to pay US federal taxes however, you still need to file a return AND you DO need to pay FICA no matter how little you make.
(I am based in Hong Kong)
Posted by DBL (513 days ago)
JWM,
Is this true even if you do not have any connections with the US and if so how can they possibly track this if I have no further US attachments? Also, how much is the FICA amount?
(I am based in Hong Kong)
Posted by arlina (513 days ago)
what does FICA stands for?
(I am based in Hong Kong)
Posted by jwm (513 days ago)
They cannot track your earnings here in HK if you do not report them, you will however send up a red flag if you all of a sudden stop filing federal returns, which is fine, if as you say you have no intention of returning to the US. It's just that if you ever do return, they will probally want to talk with you... I am attempting to sift through the IRS site to see if I can publish you a link that will better explain it.
FICA (stands for Federal Insurance contributions Act tax )is US social security tax, it's 6.2% of gross wages earned.
(I am based in Hong Kong)
Posted by jwm (513 days ago)
Oh one other thing DBL, they can track this in just about every country through the "Income Tax Treaty", Here is a link to that, just some light reading.
http://www.irs.gov/businesses/international/article/0,,id=96739,00.html
Sorry, don't mean to rain on your parade, but might be some useful information for you. If you are really concerned, check out one of the Tax preperation firms in the city, most will meet with you and answer a few questions free of charge.
(I am based in Hong Kong)
Posted by DBL (513 days ago)
JWM,
I really appreciate your information, it does not look that bad really, 6.5 is not a issue and I have several good accountants in the US that are very creative. I will check out the site and get back with you....thanks again.
(I am based in Hong Kong)
Posted by jwm (513 days ago)
Excellent, best of luck DBL.
(I am based in Hong Kong)
Posted by SWTFP (513 days ago)
Dear jwm:
We are a tax consulting firm specialized in U.S. taxation of foreign income and international transactions.
We are sorry to advise that your understanding of the social security tax requirement is not quite correct. If a U.S. taxpayer overseas remains on his employer's U.S. payroll, social security taxes will continue to be withheld from compensation, including the expatriate allowances and reimbursements that are included in taxable wages. If you are on a foreign payroll, you generally cannot continue to pay into the U.S. social system.
= = = = = = = = = = =
Brian Wong, US CPA
= = = = = = = = = = =
Southwest Tax & Financial Planning Limited
8/F., New York House
60 Connaught Road Central
Hong Kong
Tel: (852) 2575 5800
Fax: (852) 2523 6800
Email: swtfp@netvigator.com
Website: www.yp.com.hk/swtfp
(I am based in Hong Kong)
Posted by jwm (512 days ago)
Generally???
(I am based in Hong Kong)
Posted by Douglas Lillico (512 days ago)
So guys, do we or do we not pay the SS tax?
(I am based in Hong Kong)
Posted by jwm (512 days ago)
I am not a CPA as Brian is above, but when I read the IRS tax laws it seems clear to me that we do,even if you are not paid in USD. I am curious about the "Generally" comment though.
I am a US citizen and have been paid in both ways, i.e, on a local package paid in HK $$ and paid in USD, in both circumstances, my company did withhold FICA and substantiated that to me with documentation, so who the hell knows... Perhaps if I am wrong Southwest Tax can assist me in getting it back from uncle sam:)
(I am based in Hong Kong)
Posted by arlina (512 days ago)
Brian, saw your reply, I've been in HK since 88 never made more than 80K and was cut loose from FICA upon issuance of HK working Visa.
Have not filed since 88, have collected all FICA due under scheme that had been paid.
Changed jobs, now work for UK based company. Make more than 80K a year. Will need to file this year. Have all HK returns back to 88.
Any suggestions.
On a side note, trying to get adopted kids US permanent residency. Form requires that I submit last 3 years of tax returns. At this juncture I'm jsut going to submit HK returns. Any comments.
(I am based in Hong Kong)
Posted by SWTFP (511 days ago)
Dear jwm:
We wonder how you paid U.S. social security taxes when you were employed by a local entity (non-U.S. entity)? That is, what form did you use?
= = = = = = = = = = =
Brian Wong, US CPA
= = = = = = = = = = =
Southwest Tax & Financial Planning Limited
8/F., New York House
60 Connaught Road Central
Hong Kong
Tel: (852) 2575 5800
Fax: (852) 2523 6800
Email: swtfp@netvigator.com
Website: www.yp.com.hk/swtfp
(I am based in Hong Kong)
Posted by SWTFP (511 days ago)
Dear Arlina:
You must file all delinquent tax returns as the statue of limitations does not apply to delinquent tax returns. In other words, the IRS has the legal right to go after you anytime. This is per the Internal Revenue Code.
Having said that above, the IRS practice is to chase tax returns for the last 6 years. However, this is not per the Internal Revenue Code and is simply the IRS practice.
Finally, please be advised that Hong Kong tax returns are not acceptable documents to prove your financial status to sponsor any permanent residency application.
= = = = = = = = = = =
Brian Wong, US CPA
= = = = = = = = = = =
Southwest Tax & Financial Planning Limited
8/F., New York House
60 Connaught Road Central
Hong Kong
Tel: (852) 2575 5800
Fax: (852) 2523 6800
Email: swtfp@netvigator.com
Website: www.yp.com.hk/swtfp
(I am based in Hong Kong)
Posted by Douglas Lillico (511 days ago)
Brian,
I need an appointment to come see you and talk about some issues. Can you e-mail me directly at dlillico1@hotmail.com...thanks
(I am based in Hong Kong)
Posted by green (511 days ago)
Exemption From Social Security and Medicare Taxes
The United States may reach agreements with foreign countries to eliminate dual coverage and dual contributions (taxes) to social security systems for the same work. See Binational Social Security (Totalization) Agreements in chapter 2 under Social Security and Medicare Taxes. As a general rule, self-employed persons who are subject to dual taxation will only be covered by the social security system of the country where they reside. For more information on how any specific agreement affects self-employed persons, contact the United States Social Security Administration, as discussed under Binational Social Security (Totalization) Agreements in chapter 2.
If your self-employment earnings should be exempt from foreign social security tax and subject only to U.S. self-employment tax, you should request a certificate of coverage from the U.S. Social Security Administration, Office of International Programs. The certificate will establish your exemption from the foreign social security tax.
Send the request to the:
U.S. Social Security Administration
Office of International Programs
P.O. Box 17741
Baltimore, MD 21235-7741
I'm sure Brian knows, but I pulled this off the IRS.gov site as well. I would think, if it turns out you do need to pay Fica, and your income comes from an overseas employer, you may need to pay the full 15% like a self employed person.
Just a thought. I'm sure you'll get it worked out.
(I am based in Hong Kong)
Posted by krazykenny1 (499 days ago)
I am a U.S. citizen who studies and works part-time here in Hong Kong. I know my yearly salary is not even close to the $80K, but I have only been here for 8 months which means I don't think I fall uner the foreign income exclusion. I assume I still have to file my taxes?
(I am based in Hong Kong)
Posted by Goloh (488 days ago)
In addition to everything said above, and most Americans do know this, there is an obligation to report all interest earned on any bank accounts, or any income whatsoever no matter where it is received or derived unless the tax law specifically excludes it. So don't think just because a person makes less than $80K (and that figure has changed too, I believe) you don't have to file any tax report if you are also getting any bank interest. As for local (or local branches of foreign) banks not reporting to the USA, HAH!! You do not get a Form 1099 from local banks, but I have no doubt they would turn over the records of their customers' nationalities if ordered to do so.
Plus, Americans are forbidden by the major HK banks to do online share trading in the Hang Seng exchange; also forbidden to apply for IPOs; also forbidden to buy many if not all of the financial products/funds, except for time deposits, offered by the banks or investment advisors. Krazykenny is right: you have to file. If you're lucky, you just may not have to pay unless your income triggers the threshhold. One more thing: I had read, though never been faced with the situation, that the US Government checks whether or not you have filed tax returns when it is time to renew your passport. On that, I'm not 100% sure.
(I am based in Hong Kong)
Posted by Douglas Lillico (488 days ago)
Goloh....thanks for the info, great help...
(I am based in Hong Kong)
Posted by Aijin (part whatever) (472 days ago)
Brian helped me out a lot with my returns and is thoroughly recommended... and actually someone you can talk to and understands even the most obscure situations.
(I am based in Tokyo)
Posted by msnglnk (469 days ago)
i am a US citizen and i have been living china for years. every year i just complete a 1040ez claiming just enough income to get the maximum "earned income credit" (EIC). and i also complete and submit my states (mn) form so i can get the "working family credit".
all i do is on line 1 (gross income) of the 1040ez i fill in the amount of my gross income. but then i have to write the same numbers to the immediate left and highlight them. and then complete the form.
(I am based in Shanghai)
Posted by jwm (468 days ago)
You have up to 3 years to amend prior years tax returns. WIth an $80,000 US foregin income exclusion, it's well worth to look into it. It is also wwell worth a few bucks to hire a pro and not do the "EZ" form while living abroad. You are missing out on $$$ espically if you do not make a very high slaary...
The way you are doing your taxes now, you are just screwing yourself
(I am based in Hong Kong)
Posted by msnglnk (464 days ago)
i did contact a "tax pro". and the $80,000 you speak of is not a credit for income earners abroad. but it is a "tax break" or "exemption" one can claim on his/her income earned abroad.
(I am based in Shanghai)
Posted by jwm (464 days ago)
I was just trying to help you out. Clearly you are doing your taxes wrong. If you want to continue to do so... Have fun, over and out!!!!!
(I am based in Hong Kong)
Posted by msnglnk (463 days ago)
you have been helpful. i may be doing them wrong. i know one of the criteria to claim the eic is living in the US for most of the year. i have been coming here since '98 but have been living here since '04 but i spent most of '04 in usa. so my '04 filings are cosher. i may have to file ammendments for '05 & '06 and repay the irs for eic that was illgotten. i do have residence in US and i always submit my forms with my US address and my returns are direct deposited into my US financial institution account. so if i don't tell the irs i am living in china how are they gonna know?
i was really hoping what you were saying about the $80,000 was true.
(I am based in Shanghai)
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