Hong Kong expats face different tax obligations according to the rules of their home countries. So how does it work for US citizens? We get some details from MIKE WALLACE, CEO at Greenback, a company that provides United States tax return services for HK-based Americans.
As an American expat, do I have to pay tax in the US?
Yes, US citizens are required to file a United States tax return annually, regardless of where they live, due to the US’s citizenship-based taxation system.
What if I’m already paying tax in Hong Kong?
If that’s the case, you may be eligible for the Foreign Tax Credit or the Foreign Earned Income Exclusion, which can help reduce or eliminate double taxation. Additionally, since the US doesn’t have a tax treaty with Hong Kong, certain tax benefits may not automatically apply.
It’s advisable to consult a tax professional familiar with both US and Hong Kong tax laws to navigate any complexities and maximise your tax benefits.
What if I’ve lived here for years and not filed my tax?
You can catch up on your filings using programs like the IRS’s Streamlined Filing Compliance Procedures, which may help you avoid penalties.
Who are some typical clients of Greenback?
We assist American expats working abroad in industries like finance, tech and education; digital nomads; retirees; small business owners; and freelancers with US reporting requirements.
Do US citizens who retire in Hong Kong still have to pay United States tax?
Yes, US citizens must still file a United States tax return and report worldwide income, including retirement income. However, tax treaties and exclusions might reduce the tax burden. Additionally, the Foreign Tax Credit can help offset taxes paid to Hong Kong against your US tax liability.
It’s important to note that the Foreign Earned Income Exclusion generally does not apply to retirement income, so consulting a tax professional is advisable to explore all available options.
What impact might the recent US election have on tax concerns for HK-based expats moving forward?
Elections can influence tax policy changes, such as tax rates, FEIE thresholds or stricter reporting requirements. Expats should stay informed about potential reforms.
Are there other financial matters that Greenback can help HK-based expats with?
Yes, aside from tax return preparations and guidance on deductions, we assist with catching up past filings, reporting foreign assets (FBAR and FATCA), business tax filings for overseas LLCs or corporations, and tax planning for relocation or retirement abroad.
Tax benefits US expats may qualify for:
- Foreign Earned Income Exclusion (FEIE): This allows an exclusion of up to US$126,500 of foreign income earned annually (based on 2024 tax year figures).
- Foreign Tax Credit: Reduces US tax liability based on taxes paid to Hong Kong.
- Housing Deduction: An additional exclusion for housing costs.
Important tax filing dates for 2025!
- 15 April: Standard filing deadline
- 16 June: Automatic extension for expats.
- 15 October: Final deadline if you file for an extension
To schedule a United States tax return consultation or get a personalised quote for your tax filing needs, visit greenbacktaxservices.com.
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