How can you avoid double taxation when living abroad?

To avoid double taxation of U.S. sourced income, expats must pay U.S. tax and then claim foreign tax credits in the country they live in.

Do you have to pay US taxes if you live in another country Reddit?

Based on the current US tax laws, the only way to avoid filing a US tax return and paying US taxes abroad is to renounce US citizenship. So long as you are a US citizen or green card holder, you will be required to file a tax return annually and pay the associated taxes while living abroad.

How do taxes work when working overseas?

If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside.

How do taxes work as a dual citizen?

For individuals who are dual citizens of the U.S. and another country, the U.S. imposes taxes on its citizens for income earned anywhere in the world. If you are living in your country of dual residence that is not the U.S., you may owe taxes both to the U.S. government and to the country where the income was earned.

Why do Americans get taxed abroad?

The American worldwide tax duty is in effect since around 1860. There was a civil war going on at the time and many people tried to avoid conscription by fleeing abroad. In order to punish and discourage these people, a law was passed that would oblige Americans to pay taxes, even when they lived abroad.

Is there double taxation in Hong Kong?

For residents in Hong Kong which follows a territorial tax system, they do not suffer burdens of double taxation. Only income derived from Hong Kong is in charge of taxes while that of a source outside Hong Kong by local residents is not liable to taxes.

Do US citizens living in Hong Kong have to pay taxes?

For starters, Americans and U.S. Green Card holders living in Hong Kong should continue to file a U.S. tax return each year. Working as an American in Hong Kong can affect your taxes even if you don’t stay for very long.

Can I claim foreign earned income if I live in Hong Kong?

This option is available to those who meet certain time-based residency requirements. The foreign tax credit lets you claim a credit for income taxes paid to a foreign government. Due to lower tax rates in Hong Kong (see below), it’s generally more favorable for Americans living in Hong Kong to use the foreign earned income exclusion.

What are the tax advantages of Hong Kong?

One of the primary tax advantages of Hong Kong is territorial taxation. In a territorial tax system, income earned in the territory is taxable and income earned outside of the territory is generally not taxed. In short, this means that the IRD does not tax foreign income as long as taxes were paid in the foreign jurisdiction.