Moving to Hong Kong can feel exciting and a bit overwhelming, especially when you think about taxes. Hong Kong taxes employment income at progressive rates capped at 17%, often lower than many state-side brackets. Understanding U.S. expat tax implications in Hong Kong can help you avoid surprises on both sides of the Pacific.

At American Pacific Tax, we guide U.S. citizens through every step, from Hong Kong residency tests to claiming foreign tax credits back home (good news, this is easier than it sounds). With a clear plan, you’ll file local and federal returns without stress.

Understand Hong Kong residency

To know whether you owe salaries tax, you first meet one of these criteria:

  • Ordinarily reside in Hong Kong
  • Stay more than 180 days in a tax year
  • Spend over 300 days in Hong Kong across two consecutive years (one must be the current year)

Foreigners working fewer than 60 days in a tax year may qualify for the 60-day rule exemption. For a deeper dive into these tests, check out Hong Kong tax residency rules for U.S. expats.

Handle local tax return

Once you confirm residency, here’s what to know:

Taxable income

  • Cash emoluments (salary, bonus, gratuities)
  • Employer-provided accommodation benefit (4–10% of your other taxable income)

Exempt income

  • Foreign-sourced earnings
  • Non-cash benefits (unless convertible to cash or tied to education/travel)
  • Capital gains, dividends, interest

Mandatory Provident Fund (MPF)

  • You and your employer each contribute 5% of your monthly pay (capped at HK$1,500)
  • Contributions are tax-deductible locally

The Hong Kong tax year runs April 1 to March 31. You’ll usually have one month to file after the Inland Revenue Department issues your return (late filing can incur fines). To explore the full list of requirements, see Hong Kong tax filing requirements for U.S. expats.

As a U.S. citizen, you file Form 1040 each year even if no tax is due. Key steps include:

  1. Report worldwide income on Form 1040
  2. File FBAR if your foreign accounts exceed $10,000 (FinCEN Form 114)
  3. Submit Form 8938 for specified foreign assets above reporting thresholds
  4. Consider Form 2555 to exclude foreign earned income (if you qualify)

You get an automatic extension to June 16 when you live abroad, though any tax owed is still due by April 15. Don’t stress, these steps become routine once you’ve set up a checklist.

Maximize dual tax relief

You have tools to prevent double taxation:

  • Foreign tax credit (Form 1116) for Hong Kong taxes you pay
  • Foreign earned income exclusion (Form 2555), which can shelter up to $120,000 of your earnings (2025 limit)
  • Comparison table
Relief optionWhat it coversWhen to choose
Foreign tax credit (Form 1116)Taxes paid to Hong KongYour HK rate exceeds your U.S. rate
Foreign earned income exclusionUp to $120,000 of foreign earningsYour HK tax liability is low

If you fall under the 60-day rule and pay no HK salaries tax, the exclusion may be your best bet. For more on credits and deductions, visit U.S. expat tax credits in Hong Kong .

Quick recap and next step

  1. Confirm your Hong Kong residency status.
  2. File your local tax return (know what’s taxable and when to file).
  3. Submit your U.S. returns (Form 1040, FBAR, Form 8938).
  4. Claim the foreign tax credit or earned income exclusion.

Ready to simplify your dual-tax journey? Contact American Pacific Tax for a personalized roadmap to compliance and savings. You’ve got this.

Frequently asked questions

Do I have to report all my income to the IRS?
Yes, you must report worldwide income on Form 1040, though you can offset foreign taxes paid and exclude earned income under certain conditions.

How does the 60-day rule work?
If you work in Hong Kong fewer than 60 days in a tax year, you may be exempt from salaries tax locally, which can affect your choice between credits and exclusions on your U.S. return.

Are my MPF contributions tax-deductible in the U.S.?
Unfortunately, MPF contributions aren’t treated as tax-deferred by the IRS, so you report them as part of your gross income.