TAX ACCOUNTANTS & ADVISOR
Income from overseas work is also taxable:
With the rapid economic development of mainland China, more and more entrepreneurs come to the United States to set up companies. To open up the market, their children study in the United States. Most of these entrepreneurs are U.S. citizens or hold U.S. green cards. But they work overseas most of the time, pay local income tax, and live overseas for a long time, and may even work for a foreign company. Does he need to file a tax return? U.S. tax laws stipulate that every U.S. taxpayer must file a tax return for income earned from all over the world. As long as he is a citizen or permanent resident, he is a U.S. taxpayer, so even if he does not live in the U.S., he lives, works, and works in a foreign country. To do business and make money, it is the same to declare to the IRS.
There is a concession in the tax law called "Foreign Earned Income Exclusion". It may be that because of its name, many people have misunderstood that every U.S. taxpayer has a tax exempt amount for overseas income. In fact, the U.S. tax regulations require taxpayers to declare their worldwide income. There is no exemption for foreign income. This exemption is set for income earned by living overseas for a long time while working or doing business overseas. In 2011 The exemption amount for each person is $92,900. To qualify for this tax concession, one of two tests must be passed. The first item, called the "real residence" Bona Fide Residence) test (, mainly depends on the time you live abroad, the purpose of living abroad, and the closeness of your relationship with the local area. The second item is called The "Physical Presence" test requires you to stay overseas for at least 330 days in 12 consecutive months.
Another common misunderstanding is that taxpayers who meet the above qualifications do not need to file tax returns as long as their income does not exceed $92,900. In fact, they also have to file tax returns, but they have to fill in tax form No. 2555 to obtain this tax concession. For those who live overseas, the tax return period is two months later than the average person, that is, it is enough to send the tax return before June 15th. Do I need to pay social security taxes for living and working overseas? If you do something for a foreign company, you don't have to pay social security tax. In fact, it is more correct to say that you cannot pay social security tax, because even if you voluntarily pay social security tax, you can't do it. However, if the working organization is a US company or a branch of the US headquarters, the employer will have to deduct the social security tax when paying wages.
Overseas account declaration:
In recent years, mainland China has become more and more open. More and more people have immigrated to the United States and their children are studying in the United States. Although they are US citizens or hold US green cards, they work overseas most of the time and most of their assets remain overseas. Do overseas assets need to be declared? The total amount of financial accounts owned by Americans or green card holders overseas exceeds 10,000 US dollars. Even if these accounts do not generate any taxable income, they must be reported to the IRS. A common misunderstanding is that overseas accounts only need to be declared without paying taxes. If a US citizen or green card holder has a bank account, brokerage account, mutual fund, unit trust, and other financial accounts overseas, and the accumulated funds in these accounts exceed 10,000 Yuan, you must fill in the Foreign Bank and Financial Rights Form TDF90-22.1 (Reporter of Foreign bank and Financial Authority, FBAR).
Foreign financial accounts refer to accounts opened in the United States, Puerto Rico, the Northern Mariana Islands, and countries other than the U.S. Guam, Samoa and the Virgin Islands. According to the IRS, those who meet the requirements must declare before June 30. Since FBAR is different from the income tax declaration, it should not be sent to the IRS together with the personal income tax declaration, but should be mailed to the Ministry of Finance, and it is not possible to apply for deferred declaration. The main purpose of reporting foreign financial accounts is to prevent financial crimes. The Internal Revenue Service said that foreign financial institutions do not operate in the United States, so they do not have to report to the government like US financial institutions. Therefore, criminals will use financial accounts established in foreign countries to commit economic crimes, such as evading personal income tax or embezzling public funds, or providing funds for drug trafficking or terrorist activities.
The IRS stated that those who fail to declare foreign financial accounts will be subject to civil and criminal penalties. In October 2004, someone was fined 100,000 U.S. dollars or half of the assets in the account for deliberately violating the regulations on reporting foreign financial accounts and bookkeeping; and those who did not intend to violate this regulation may also be fined. Penalties of up to 10,000 U.S. dollars. If it is found that a foreign account is used to commit a crime, the person concerned will not only be fined, but may also face up to 5 years in prison.