Good news, you can usually avoid double taxation on income you earn in Hong Kong by claiming the foreign tax credit. According to IRS data, US taxpayers claimed over $40 billion in foreign tax credits last year. This guide shows you how to claim foreign tax credit with confidence, no guesswork—every step explained.

Key idea: The foreign tax credit offsets the US tax on income you already paid taxes on in Hong Kong, up to certain limits.

Understand the foreign tax credit

The foreign tax credit lets you reduce your US tax bill dollar for dollar by the amount of income tax you paid abroad. You’ll typically file Form 1116, unless you meet conditions to skip it (see “Elect without filing form 1116”). The IRS treats foreign levies on wages, dividends, interest, and royalties as creditable so long as they aren’t payment for a specific economic benefit. Unlike the foreign earned income exclusion, the credit applies to both earned and unearned income—learn more in our foreign tax credit vs deduction guide.

Check your eligibility

You can claim the credit if:

  • You’re a US citizen or resident alien living in Hong Kong
  • You paid or accrued income taxes to Hong Kong’s Inland Revenue Department
  • You didn’t exclude that same income under the foreign earned income or housing exclusions

Foreign social charges (for example, France’s CSG/CRDS) are also creditable after a 2019 agreement between the US and France—though that rarely applies in Hong Kong.

Gather required documents

We recommend you collect these records before you start:

  • Hong Kong tax returns (BIR60 or eTAX filings)
  • Forms IR56B, IR56F or other employer statements showing tax withheld
  • Statements for dividends, interest, royalties or other foreign income
  • Proof of any refunds or adjustments you received

Having clear documentation speeds up your claim and helps if the IRS asks for verification.

Complete your form

Elect without filing form 1116

In some simple cases you don’t need Form 1116. You can elect to claim the credit directly on Form 1040 if:

  • All your foreign source gross income is passive category income
  • Your total creditable foreign taxes are $300 or less ($600 if married filing jointly)
  • Income and taxes appear on a qualified payee statement

If you meet these rules, you skip the extra form and go straight to line 20 of Schedule 3.

Fill out form 1116

If you don’t qualify for the election, follow these steps:

  1. Choose your income category (passive, general, etc.)
  2. Enter your foreign gross income and the foreign taxes paid
  3. Calculate your limit using the IRS formula (see foreign tax credit calculation)
  4. Attach Form 1116 to your Form 1040

Form 1116 breaks your credits into separate categories—you can’t use a tax paid on passive income to offset general category income and vice versa.

Meet filing deadlines

  • Regular due date: April 15th
  • Automatic extension for expats: June 15th (no form needed)
  • Additional extension to file: October 15th (file Form 4868 by June 15th)

We suggest you file early, even if you’re waiting on final statements. That way you avoid penalties and get your refund sooner.

Plan unused credits

If your credit exceeds your US tax liability for the year, you can’t lose it:

  • Carry back one year to offset past US tax
  • Carry forward up to 10 years to reduce future tax

For details on timing and limits, see our guide on foreign tax credit carryover.

Quick recap and next step

  1. Confirm you qualify for the credit
  2. Gather Hong Kong tax returns and withholding statements
  3. Decide if you can elect without Form 1116
  4. Complete Form 1116 (or use Schedule 3 election)
  5. File by June 15th and keep records handy
  6. Plan any carrybacks or carryforwards

Choose one step and get started—you’ve got this. If you need support, American Pacific Tax specializes in expat returns. Visit us at https://americanpacifictax.com to connect with our team.

FAQs


  1. Can I claim credit for Hong Kong salaries tax?
    Yes, wages taxes imposed by the Hong Kong government generally qualify for the foreign tax credit. Keep your BIR60 and IR56 series forms as proof when you file.



  2. What happens if I also use the foreign earned income exclusion?
    You can’t take a credit for any income you exclude under the foreign earned income or housing exclusions. In that case, a deduction might serve you better—see our foreign tax credit vs deduction guide for a comparison.



  3. How long do I have to claim unused credits?
    You can carry unused foreign tax back one year and forward up to 10 years. For more on limits and timing, check our foreign tax credit carryover resource.