Living in Hong Kong gives you a low-tax base, but as a U.S. person you still face IRS filing requirements and extra reporting. Understanding the Hong Kong tax residency rules for U.S. expats is your first step to avoid penalties and double taxation. Good news, for 2025 you can exclude up to $130,000 of your Hong Kong earnings from U.S. taxable income with the Foreign Earned Income Exclusion, and you automatically get until June 15 to file your return (though any tax owed is due by April 15).
Key takeaway: by mastering both Hong Kong’s rules and U.S. deadlines, you can keep more of your income and steer clear of tax headaches.
Determine your Hong Kong tax status
Hong Kong taxes only income sourced within its territory, and employment earnings face a maximum salaries tax rate of 17 % (no capital gains or dividends tax). To know when this applies, check your residency:
- You “ordinarily reside” in Hong Kong.
- You stay over 180 days in one tax year.
- You spend more than 300 days here over two consecutive years (one being the relevant year).
If you meet any of these, you’re generally treated as a Hong Kong tax resident (see our detailed guide on Hong Kong tax residency and domicile rules). Residency affects which income you report locally and helps you plan contributions to the Mandatory Provident Fund (MPF).
File U.S. returns on time
Even abroad you must file a U.S. federal return each year. Here’s what you need to know:
Forms to use
1040 for your main return
2555 for the Foreign Earned Income Exclusion
1116 for the Foreign Tax Credit (if you choose it)
8938 under FATCA if your foreign assets exceed set thresholds
Key deadlines
Automatic extension to June 15 (you avoid late-filing penalties)
Taxes owed still due by April 15 (interest starts then)
If needed, file Form 4868 by June 15 for an October 15 extension
Don’t forget to file your Hong Kong return as well (learn more about local timing in our Hong Kong tax return deadlines for expats). Missing either deadline can lead to penalties and interest, so set reminders early.
Claim exclusions and credits
To avoid being taxed twice on the same income, use these tools:
| Feature | Foreign Earned Income Exclusion | Foreign Tax Credit |
|---|---|---|
| Purpose | Exclude up to $130,000 of income | Credit taxes paid to Hong Kong |
| Eligibility | Bona fide residence or physical presence test | Income taxes actually paid abroad |
| Carryover | N/A | Unused credit carries over one year |
- Foreign Housing Exclusion
- You may deduct or exclude certain housing costs (rent, utilities, parking) above a base amount.
- Strategy tip
- Compare savings: sometimes using a partial FEIE plus the Foreign Tax Credit (see U.S. expat tax credits in Hong Kong) nets the biggest benefit.
Good news, mixing these options can often eliminate almost all your U.S. tax on Hong Kong earnings, but review your numbers or work with a pro.
Stay compliant with foreign reporting
Beyond your return, you must report foreign accounts and assets to the U.S. government:
- FBAR (FinCEN Form 114)
- File if the total value of foreign accounts exceeds $10,000 at any time during the year.
- FATCA (IRS Form 8938)
- Report if your foreign financial assets meet certain thresholds (varies by filing status).
Both reports have an April 15 deadline with an automatic extension to October 15 (no separate form needed). Penalties can reach thousands of dollars per form, so track your balances and file diligently (for a deeper look, see our overview of Hong Kong tax compliance for americans).
Quick recap and next step
- Confirm your Hong Kong residency status.
- Mark April 15 and June 15 on your calendar for U.S. returns.
- Weigh the FEIE, housing exclusion, and Foreign Tax Credit.
- File FBAR and FATCA forms if you exceed thresholds.
Choose one area to tackle this week—whether it’s gathering MPF statements or mapping out your FEIE eligibility—and you’ll build momentum toward a smooth filing season. We’re here to help every step of the way at American Pacific Tax.
Frequently asked questions
What makes a U.S. expat a Hong Kong tax resident?
You’re a Hong Kong tax resident if you ordinarily reside here, stay over 180 days in one tax year, or spend more than 300 days over two consecutive years (one being the relevant tax year).
How do I file FBAR and FATCA forms?
File FBAR (FinCEN 114) through the Treasury’s BSA E-Filing system if your foreign account balance exceeds $10,000. Submit FATCA (IRS 8938) with your Form 1040 if your foreign assets cross IRS thresholds for your filing status.
Can I claim the Foreign Tax Credit if I use FEIE?
Yes, you can combine a partial FEIE with the Foreign Tax Credit. Run both calculations to see which mix lowers your overall U.S. tax bill the most.
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