# Taxation of US Ex-Pat income?



## MaxPower (Feb 1, 2011)

About to have a 3rd interview for a 1yr position in Hong Kong, at which time I expect to be offered the job.

I am new to this board and will read up on the locale. I searched for 'taxation' and didn't get any results.

Can any offer any input on how income for a US ex pat might be treated? I know Uncle Sam will want to get his hands on it, but will it be taxed in HK as well? I need to be able to judge what level of income I need for a possible move to make sense.


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## JWilliamson (May 31, 2010)

Hong Kong has many uncles and some will take you and they will show you his fish tank. JW


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## pontiac73 (Jun 27, 2010)

i am here on a 2 year assignment from the US...only a couple of months---so I have not had the pleasure of doing my 2010 taxes yet. My understanding is you will have to pay the same US tax rate you were paying back home. Less the HK taxes you pay while you are here. City and state taxes are different, you will have to consult a tax specialist for an explanation. E.g. I'm from NJ---consultant told me I had to sell my house a-n-d give up my NJ drivers license to get out of paying NJ state taxes...effectively giving up my NJ residency. There a a lot of tax implications---you should check every possibility. are you paying your own rent? if the company pays your rent while you're here---that is taxable as income.


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## Bevdeforges (Nov 16, 2007)

As a US citizen, you will always have to file a US tax return and are subject to US income taxes, no matter where in the world you live. Once you establish residence outside the US (it takes living overseas for a full year), though, you become eligible for the Overseas Earned Income Exclusion, which basically exempts your earned income (i.e. salary) from being taxed in the US - the first $90,000 or so, anyhow.

You generally pay tax on your salary to the country in which you're living and working. If you make more than the limit (it changes every year), you then take the Foreign Tax Credit for taxes paid against any tax liability on the excess.

Interest and investment income, rents and other "passive" income ("unearned income" according to the IRS) you wind up paying taxes on in the US. Most countries have some means of recognizing taxes paid elsewhere so you shouldn't be taxed twice on that income.
Cheers,
Bev


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## Bevdeforges (Nov 16, 2007)

pontiac73 said:


> i am here on a 2 year assignment from the US...only a couple of months---so I have not had the pleasure of doing my 2010 taxes yet. My understanding is you will have to pay the same US tax rate you were paying back home. Less the HK taxes you pay while you are here. City and state taxes are different, you will have to consult a tax specialist for an explanation. E.g. I'm from NJ---consultant told me I had to sell my house a-n-d give up my NJ drivers license to get out of paying NJ state taxes...effectively giving up my NJ residency. There a a lot of tax implications---you should check every possibility. are you paying your own rent? if the company pays your rent while you're here---that is taxable as income.


If you're not going to fulfill the requirements for the Overseas Earned Income Exclusion, then your salary will be taxed by the US, no question about it. It's also kind of doubtful you can get out of your State residency back home for just a few months, so their rules apply, too.
Cheers,
Bev


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## MaxPower (Feb 1, 2011)

Sounds like I have the worst of all worlds. I won't be there long enough to qualify for the credit AND I live in a state with an income tax. So, I will pay state tax, US tax, and HK tax. But I assume I will get some credit for taxes paid to another jurisdiction.


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## RichardScott (Feb 7, 2011)

MaxPower said:


> Sounds like I have the worst of all worlds. I won't be there long enough to qualify for the credit AND I live in a state with an income tax. So, I will pay state tax, US tax, and HK tax. But I assume I will get some credit for taxes paid to another jurisdiction.


Bummer. But you can still use the tax treaty to offset HK taxes vs US ones.


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