Each year, thousands of Americans flock to Hong Kong, many of them to grab employment opportunities. Hong Kong is among the most popular destinations for American expats, but how does living here affect the US taxation of Hong Kong Income? Have you ever wondered about your US tax obligations while living in Hong Kong? If not, then you are not alone. Only half of US expats living in Hong Kong are filing US tax returns each year as per the guidelines of the IRS. And the remaining half stays there in confusion about their eligibility to file tax returns on Hong Kong earned income.

 To help you out, we have outlined some of the most important US tax considerations that you need to pay attention to while living in Hong Kong, so you know what affects the tax you pay and what are the forms you need to file to prove your eligibility for the tax deductions.

When you are required to file tax as an expat?

If you are a citizen or permanent or permanent resident of the United States, you are required to file a US expat tax with the federal government each year regardless of where you live in. In addition to filing income tax returns, you are also obligated to file returns on your assets held in foreign bank accounts. The USA is one of the few governments that taxes the overall income (including the income earned outside the borders, i.e. Hong Kong) of its citizens and permanent residents.

US Expat Tax Obligations

The country also accesses the special provision to protect the taxpayer from double taxation. You can lower your tax amount and avoid dual taxation provisions with certain tax strategies. With the expertise of Hong Kong US tax professional, you may take advantage of the following exemptions, including-

  • The Foreign Earned Income Exclusion (FEIE), which allows you to exclude a portion of your earned income from your US taxes.
  • The Foreign Tax Credit that allows you to lower your US tax liability on your remaining income by certain amounts paid to the foreign government.
  • Foreign Housing Exclusion, which allows you to emit certain housing expenses from your US expat tax return obligations. Such expenses include rent, utilities, household repairs, rental furniture, and accessories.

Do I need to file taxes if I have paid to the Hong Kong tax authority?

Yes, it doesn’t matter whether you have already paid taxes to Hong Kong you are still required to file a US expat tax before the deadline being a US citizen.

Is foreign earned income taxable in Hong Kong?

No, worldwide earned income is not taxable in Hong Kong. Expats will only be taxed on the salaries they are either paid in Hong Kong or earned for the services they render in Hong Kong.

Living in Hong Kong alone doesn’t exempt you from your US tax obligations. Keep in mind that because Hong Kong taxes are lower, you may owe more on US expat tax than expatriates living in higher taxation regions. Get the assistance of expert US expat tax professionals to understand your US expatriate tax obligations while living abroad.


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