[Runpac]

Does anyone know if American citizens working in HK need to pay income tax to the IRS?

[shri]

http://www.irs.gov/businesses/small/...nal/index.html

Yes, for earnings over US$75K or US$80K (forget what the floor is)

[penguinsix]

The IRS has a package of material for overseas Americans. As American citizen, you have to pay US taxes no matter where you live on Earth. This is different from most other citizens of the world (which is why so many live in tax havens and whatnot).

I think the floor for paying is quite a bit lower, in the 20's or 30's. What Shri might be referring to is the overseas American "credit" for lack of a better word that is like $78,000. However, from what I've read of the law, you need to be overseas 1 year before that credit (and the overseas housing credit) takes effect.

The IRS pamphlet for overseas citizens is really helpful, if a bit legalistic. I'd recommend following that link and looking for it.

[Runpac]

Thanks for that. I guess that means most people don't need to pay because US$75K is quite a lot. Next question, how does the US IRS check up on how much income a US citizen earns overseas? What if a US citizen has a business in HK? I suppose it is quite hard to check up, right?

[berryplucker]

The US tries to poke its nose in all sorts of places. I believe many of the financial institutions in HK will not sell some investment products to US citizens because if they do they are required by the US authorities to give them full details if they (the financial institutions) want to keep their licences to operate in the US.

I would have thought that US$75K (including housing and other perqs) is probably well below average for US citizens in HK.

[penguinsix]

The 75k was on the chopping block about a year ago but a last minute effort saved it for expats. However, with the new election coming up, this credit has been mentioned by some as part of a "tax break to the wealthy" and "furthering the outsourcing effort" so I wouldn't say the future of this credit is very promising.

In response to "what does the IRS know about what goes on over here?" I believe you will have to pay HK taxes on your income (no?) and that tax you pay is a credit against the taxes you owe the US. I believe the US and HK IRS have a data sharing agreement, so while the IRS might not have agents in HK, the HK IRS probably does and they cooperate with the US so...

It's a slippery slope....

As for financial products to US, I know that in the UK for example, it's a real PAIN to get any financial products (bank accounts, trading accounts, UK credit cards) as a US citizen. It had to do with some tough money laundering laws in the UK (not the US). Not sure if HK follows simliar money-laundering provisions, but if they did that might be part of the reason why it is tough to get stuff here. Of course with 9-11, all sorts of new financial requirements are being placed on banks deailng with Americans, even tangentially.

[shri]

>> I believe many of the financial institutions in HK will not sell some investment products to US citizens

This is absolutely correct. You'd be surprised how many offshore banks refuse to deal with Americans (unless you happen to have millions and make it worth their time).

>> probably well below average for US citizens in HK.

Depends on who you meet and talk to. We've spoken to several folks, right out of college and looking for jobs.. many of them are first gen citizens.. or have HK permanent ID cards thanks to their parents.