# Tax questions for US citizens living in HK filing US federal tax



## sergeilavrov (Aug 7, 2012)

1. 
Is there double income taxation relief agreement between HK and US? I am not able to find one. 

2. 
Say I make 125K USD in HK, do I pay federal tax on the basis of 125k - 95k (foreign income exclusion) = 30K ?

Bear in mind that I already around 125K*12% = 15K to the HK inland revenue department.

3. 
Can I deduct my monthly rent from my income? My annual rent is 30K USD.

Thanks!


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## Bevdeforges (Nov 16, 2007)

If you look in the back of Publication 54, there is a list of countries with tax treaties with the US. Hong Kong isn't specifically listed, but the PRC is and chances are that would be the one these days.

As far as your question #2 goes, the answer is "sort of." It depends on what you have as far as other income, and what sorts of deductions you can muster up. You do have to apportion your deductions between the part of the total income you exclude vs. "what's left" - and then, to take your example, you don't just look up the tax table amount on the remaining $30K. You have to take the tax on the whole magilla and subtract the tax on the part you are excluding. (Publication 54 explains the exact calculation - my explanation is simplified.)

And, the fact that you already pay 12% to the HK tax people means that you get at least something of a foreign tax credit (form 1116) against your US tax liability - though again, you have to apportion your overall HK tax bill in the bit you excluded and the bit that's "left over."

As far as deducting your monthly rent, see the instructions (again Pub 54 is probably your best guide) for the Housing Allowance (calculated on the "long form" 2555). Certain housing costs are covered by the housing allowance. It has been a while since I last went through the process, but you should definitely check out the instructions.
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

To summarize, you should have little or no U.S. tax liability if those amounts are accurate.


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