salary and tax in China

[venture160]

I am speaking with a potential employer in China, and I am wondering as a foreigner and citizen of the United States, how do I go about paying taxes?

Lets say for instance a company would offer me 20,000RMB a month for 13 months. IS that NET after taxes? I heard in China this is how things are done.

Also, I heard that under 70k as a US citizen you are exempt from paying taxes, is this true? I must have to give something to uncle sam.

Thanks your your help in advance.

[venture160]

i know there are people who work in china on this messageboard... any help would be appreciated.

venture160

[jak__]

I've had jobs where i didn't have to pay tax, and ones where I did.

[FSO]

As a USG employee, I have to pay all US taxes, state and federal. Wish I could be more help.

[wushijiao]

IS that NET after taxes?

I would doubt it. It is probably the before taxes rate. Although, keep in mind, taxes are really low in China and your employer should pay it directly, without you having to worry about it.

Also, I heard that under 70k as a US citizen you are exempt from paying taxes, is this true?

I couldn't say for sure, but I am pretty sure they got rid of that law.

American taxes are damn confusing. See:

http://www.irs.gov/faqs/faq13.html

http://www.irs.gov/taxtopics/tc854.html

[roddy]

I would expect salaries to be quoted gross unless specified, although obviously you'd want to check with the company. Might also be worth seeing what if any part of that can be treated as housing allowance / travel subsidy, etc, contingent on your providing proper receipts - that might reduce the amount of tax you pay a bit. Also, if 20,000RMB is a ball park figure and not one you've plucked out of the air, you could well be hard-pressed to spend it all - see if they can pay any part in foreign currency, or if they'll be able to give you the paperwork necessary to change it yourself, etc.

Roddy

[gato]

Some info on the foreign income exclusion for US citizens:

http://www.us.kpmg.com/microsite/ies/tfc/content/chapter2.htm

Foreign Earned Income Exclusion

A resident alien who has his or her tax home in a foreign country and who is physically present in a foreign country or several foreign countries for at least 330 full days during any period of 12 consecutive months may qualify to exclude up to USD 82,400 (for 2006, to be adjusted for inflation in subsequent years) of foreign earned income from his or her gross income.

In addition to (or in lieu of) the foreign earned income exclusion, qualifying resident aliens may elect to exclude from income, or in some cases to deduct from income, a housing cost amount based on the individual's actual housing expenses in the foreign country but limited to USD 11,536 (for 2006; to be adjusted for inflation in subsequent years (a higher amount is allowed in specified high-cost locations)).

A resident alien may also qualify for these foreign exclusions if he or she is a bona fide resident of a foreign country and if he or she is a citizen or national of a country with which the United States has an income tax treaty.

How to claim the exclusion:

http://www.irs.gov/publications/p54/ch04.html#d0e3823

Form 2555 and Form 2555-EZ

If you are claiming the foreign earned income exclusion only, you can use Form 2555. In some circumstances, you can use Form 2555-EZ to claim the foreign earned income exclusion. You must file one of these forms each year you are claiming the exclusion.

[venture160]

Thanks everyone for the input, this has been alot of help

[dan ni er]

Hi Mate

Thought it may be helpful to confirm what everyone has said - I'm a tax consultant. The salary they have offered will almost certainly be gross unless stated otherwise. In china you can deduct expenses such as housing, restaurant fapiao's etc against your gross monthly salary, which will reduce the salary upon which you are taxed.

I am not sure about how it works in the states, but in the UK provided you are non-resident for a certain amount of days you can register as non-resident and be exempt from tax. However, I seem to remember hearing that in the States you will still be required to submit an annual tax return - however - your china-earned income should be exempt from US tax.

Hope this helps

[mr.stinky]

USG? is that us guv'mint employee?

rules are strange and ever-changing, but when i was in the army stationed in germany,

i had to pay federal and state taxes. after gaining my freedom, and a DoD consulting

job, my pay was tax-free up to 70k. that was with a private company. i think if you

are an employee of any government office, you also pay taxes (unless you're

paul wolfie's girlfriend).