Know about US Taxation of Hong Kong Income
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Expats are required to pay tax in Hong Kong
No matter where you live or work, as an American citizen, you are required to pay taxes. However, Hong Kong poses taxes on certain income generated there.
You need to report the income which you’ve earned or derived from Hong Kong- where you work, do business, or render service during trips of more than 60 days.
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Tax rates in Hong Kong
In a country like Hong Kong, US expat income is taxed at either a progressive rate on net chargeable income or a basic standard rate of 15% on net income.
Taxpayers are required to pay whichever the amount is low.
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Hong Kong US tax rules
Unlike the US taxation year, which starts from January 1 to December 31, the US taxation of Hong Kong income starts from April 1 to March 31.
You are again required to keep this date in mind and must file the tax within the deadline with the sound knowledge and expertise of Hong Kong US taxation professionals.
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There is no totalization agreement
Unfortunately, the United States has no tax treaty with Hong Kong, and that clearly means both the countries have no totalization agreement between them.
Now, you may ask how a tax treaty can help you even if both the country permits this agreement? Tax treaties help the US expat to avoid double taxation as well as mandatory contributions to security systems.
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Exclude income from Hong Kong US tax With the availability of provision called Foreign Earned Income Exclusion, or FEIE in short, US citizens are allowed to exclude up to $107,600 from taxes in the 2020 taxation year. However, to claim this exclusion, expats need to qualify for the Bona Fide Residency Test or the Physical Presence Test, that include:
Make your home overseas
Have to live there for continuous one entire tax year
Have no immediate purpose of returning to the US permanently
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