[tx75070]

I have been going back and forth working between my HK office and US office for the past year. In Jan. I am officially moving to HK and spending 100% of my time here. My employer will give me the choice to take my check either in the US or HK. Seeing that HK has more favorable tax rate, initially it would seem to make more sense to take my check in HK. However, will I still have pay US tax of any kind? I plan on moving back in a few years, so will there be any taxes to pay at that point? Does anyone have experience or advise in this?

[KnowItAll]

Here's an introductory article from the IRS to help you get started.

http://www.irs.gov/faqs/faq13.html

I am a U.S. citizen working for a U.S. firm in a foreign country. Is any part of my wages or expenses tax deductible?

U.S. citizens are taxed on their worldwide income, no matter where they work. Some taxpayers may qualify for the foreign earned income exclusion, foreign housing exclusion, or foreign housing deduction, if their tax home is in a foreign country and they were either a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or were physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months. If the taxpayer is temporarily away from his or her tax home in the United States on business (less than a year), the taxpayer may qualify to deduct away from home expenses (for travel, meals, and lodging ) but would not qualify for the foreign earned income exclusion.

And that is just the begining.

Very strongly advise you to have a tax accountant review your individual case before making decisions.

[tx75070]

Thanks KnowItAll. I looks like there is quite a lot to take into consideration. I probably will have to seek professional help as this is definitely not my area of expertise.

[bo__bo]

if what knowitall said is true, no matter where u receive ur chq u r liable for U.S. tax...but for hk salaries tax, it is imposed on all income arising in or derived from Hong Kong from an office or employment or any pension.
Inland Revenue Department (IRD) would look at ur place of employment e.g. place of negotiating ur employment contract, place receiving ur salary (e.g. money go to ur U.S. account or local account) and the 'residence' of the employer. Despite of the above factors, IRD would adopt totality of facts.

hope it helps

[AnotherAmerican]

My father works in Switzerland and faces the same issue. This is how he explained it to me:

Say, for example, the income tax in "State - X" is 35%. And the income tax in Switzerland is, say, 30%. Then you pay 30% to Switzerland, and 5% to the US.

I have no college degree on this, and virtually no experience in the working world that is affected by income tax, so I'm most likely mixing something up.

[KnowItAll]

Nothing is simple when the IRS is involved.

http://www.irs.gov/taxtopics/tc853.html

If you are a United States citizen or a resident alien who lives and works abroad, you may qualify to exclude all or part of your foreign salary or wages, or amounts received as compensation for personal services rendered from your income. If you are a United States citizen with a tax home in a foreign country and you meet the bona fide residence test or physical presence test, you may exclude up to $80,000 for the year 2004 and thereafter. Resident aliens of the United States with a tax home in a foreign country may be eligible for the exclusion if they meet the physical presence test, or if they are citizens or nationals of a country with which the United States has an income tax treaty with an applicable nondiscrimination clause, and they meet the bona fide residence test. Specific guidelines for these two tests are covered in Topic 854. The maximum annual exclusion is prorated on a daily basis if there is any part of the year that you do not qualify under either test.

Go figure ...

Unlike Hong Kong, I *strongly* recommend that individuals should not attempt to figure out the US tax code without help from an accountant who knows the international part of the code.

[emperorau]

US taxes are too complicated. That's why I"m a Canadian hehehe... Once you claim as a non-resident, the only taxes you pay is the money in your bank. 50% of the interest earned is taxed. If you have stocks in Canada, it is also taxed too. But heck it is much more easier than trying to understand the US tax system.

If you a small, the IRS may not look at deeply. They prefer to catch the big ones though. But anyways, get a tax consultant and pay him to do the job for you instead. Although HK belongs to China, their may not be a tax treaty for HK and US. Their should be a tax treaty beween US and China though if you work in China that is.

Just help the fellow but the drinks on tx75070 then.

Their must be Americans in this site who are working in HK though that have face this already.

Do you have any properties or huge bank accounts in the US still?

Do you have MPF? Once you retire and get out money from your MPF then you will be taxed then as well. Maybe not in HK in the US, you will be tax. I'm not certain but I think the IRS will be looking at that part too.

[tx75070]

I will still keep my house in the US, which I will continue making payments on. Of course, I will keep my retirement accounts sitting over there in addition to a small savings account.

No, I do not have MPF as I am currently taking my check from the US. I would like to avoid MPF (if I move payroll to HK) if possible as I figure I will be living in HK for only 3 years max.

Yes, drinks definitely on me if an American has faced this before and can offer some advice that would put more money in my pocket. That's only fair.

[KnowItAll]

Spend your beer money on a tax accountant. There are WAY too many variables and the auditors / men in black do not take "dude I read it on the internet" as a valid excuse for breaking "the law".

[tx75070]

Thanks KnowItAll. Actually already in contact with a tax accountant. I am just curious to see what other folks have done.