Along with FATCA and FBAR reporting, below are the specific Chinese IRS tax issues our team of tax attorneys, CPAs, and tax preparers assist our clients with.
Common tax issues of our Chinese-American clients
- Closely held foreign corporations in China, Hong Kong, Singapore, where all parties might not be US persons.
- Investment in the US, especially real estate, where not all investors may be US persons
- Capital controls, and avoiding tax drag of lengthy capital gains while moving money out of China.
- EB-5 and other investment VISA holders — they often do not get the optimum tax advice before becoming a US person.
- Gifting money to adult children who are US persons living in the US.
- There is a US-China treaty on double-taxation. But like most, the savings clause can create instances of double taxation. It takes planning and using the correct deductions and credits to eliminate the risk of double taxation.
Are you a US person living in China?
The US taxes its citizens on a worldwide basis. So what you earn in China, even if it is taxed by the Chinese taxing authority, is subject to additional taxes by the IRS. This is true even if you have a “tax-free” account in China. However, you are entitled to a credit for taxes paid. In the alternative, there is a foreign income exclusion which will exempt a portion of your income from income taxes.
Are you a Chinese person living in the United States? (Visa/Substantial Presence Test)
If you are a Green Card holder you are subject to universal taxing jurisdiction on all your income, anywhere in the world. If you are a visa holder the rules are a bit more complicated about when universal taxing jurisdiction is triggered. EB-5 visa holders typically have a worldwide tax reporting requirement.
Foreign Earned Income Exclusion
Citizens and residents living and working outside the U.S. may be entitled to a foreign earned income exclusion that reduces taxable income. In addition, you may exclude housing expenses, but with limits. There are limits and special rules about who qualifies for the exclusion, and we can help you understand if you qualify.
Foreign Tax Credits
This is a non-refundable tax credit for income taxes paid to a foreign government as a result of foreign income tax withholdings. The foreign tax credit is available to anyone who either worked in a foreign country or has investment income from a foreign source. There are qualifying factors, and we can help you understand if you are eligible to tax advantage of this credit.
Offshore Voluntary Disclosure Programs
If you have made a mistake in previous IRS tax filings, or haven’t filed at all, we can help. We are the nation’s premier offshore disclosure firm. We have helped thousands of Chinese and others from around the globe properly disclose to the IRS. We can help you too. Click here to visit our Offshore Disclosure summary page.
If you would like to speak to us regarding any of these issues, contact us to schedule a consultation at 888-727-8796 or email firstname.lastname@example.org.