Working and living overseas is an adventure that Americans utilize with open arms. There are an estimated 8.3 million Americans lived abroad- immersing themselves in a new culture while earning a good amount. But one obligation shared by US citizens is the requirement to file and pay Hong Kong US tax, regardless of domicile. For the fact, the United States is the only nation that taxes its overseas citizens, even if they are paying taxes to some other countries. Therefore, if you are an expat, especially an American citizen living abroad- it becomes mandatory for you to stay always updated and aware of the income tax laws as well as norms which will impose over your earning for the accounting year so that you can efficiently minimize its impact.
Perhaps half of the population (Americans) living in Hong Kong or overseas, don’t know the need to file their tax return. But
US Income Tax Return Need To Be Filed- Must
US citizens who have earned income from any source standing in an obligatory position to file a Hong Kong US taxes return, even if they live across US borders. The only exception is for a citizen whose income is below statutory filing limits. Failing to file an obliged return may result in the imposition of significant civil and possible criminal charges.
Tips To Reduce Income Tax Liability
The liability to pay tax is inescapable; however, there are certain legal provisions in the law through which, it becomes easy for you to reduce the taxes. Before moving to Hong Kong or any land, astute citizens must follow the below mentioned tips to minimize their tax liability:
- Hire an experienced tax consultant– In the very first step, you need to take the throughout guidance of a tax pro because you can excel in marketing profile or even promoting the brand but excellence over computing right taxation value is quite a questionable concern. After all, American tax consulting Hong Kong advisorsare tax professionals who always stay updated with the IRS Tax code which keeps changing every year. Since they have obtained different certifications in order to provide right tax guidance, including financial advice, they can guide you year-round so you can make smarter monetary decisions. This, in turn, ensures that, when the time is due, you get a higher tax return.In every possible way, your decision to hire a pro-tax consultant can come up with the gateway of great benefits for you in the long run.
- Reduce your Tax liability With Foreign Earned Income-This is the best way an expat can reduce his tax liability while using the provision of FEIE (Foreign Earned Income Exclusion). You might also be able to exclude certain housing expenses, such as rent and utilities, by qualifying yourself to make a claim under this provision.
- File for an extension if you need more time– If you miss the opportunity to qualify the FEIE provision to avail the substantial tax benefits, don’t lose hope so early. Still, you will have the chance to qualify in the near future. All you have to do is apply for an extension or file the required form, which buys you even more time.