5 min read
October 26, 2022
Resource CenterSupported CountriesChina
5 min read
October 26, 2022
October 26, 2022
At a glance
Check out these tax tips for filing taxes in China. H&R Block’s tax pros provide essential advice for U.S. Expats.
As an American or Green Card holder living in China, taking care of your U.S. taxes can feel like a complicated task. Knowing which tax rules affect you and understanding your options is a lot to stay on top of.
With H&R Block, you can rest easy knowing you’ve found the right expertise for U.S. expat taxes in China. Whether you need expat tax guidance on filing from abroad or information onFATCA and FBARrules, we’re here to help.
Ready to file your expat taxes? We’ve got a tax solution for you—whether you want toDIY your expat taxesor leave it to one of ourexperienced Tax Advisors.Head on over to ourWays to Filepage to choose your journey and get started.
File on my own
What U.S. citizens working in China should know about U.S. taxes
Filing U.S. taxes while living and working in China comes with new considerations and questions: “Do I have additional information to report to the IRS? How do my Chinese financial accounts affect my filing? What options do I have to reduce my tax bill?”
For starters, Americans and U.S. Green Card holders living in China should continue to file a U.S. tax return each year.
Working as a U.S. citizen in China can affect your taxes even if you don’t stay for very long. For example, if you earn income while on a short-term assignment, you’ll need to report that income on your U.S. taxes. As you establish deeper financial roots in China, you’ll have more considerations for your American tax filing.
You may need to report your Chinese financial accounts and assets.Generally, U.S. taxpayers with more than $10,000 in foreign bank or financial accounts are subject toFBAR filingand reporting requirements. You may also be subject toFATCAreporting requirements if you have foreign assets valued at $200,000 and higher.
You can lower your U.S. bill and avoid dual taxation with certain tax strategies.Expats may take advantage of one of two options, detailed below, to lower their taxes.
- Theforeign earned income exclusionallows you to exclude your wages from your U.S. taxes. This option is available to those who meet certain time-based residency requirements.
- Theforeign tax creditlets you claim a credit for income taxes paid to a foreign government.
Due to higher tax rates in China, it’s generally more favorable for U.S. expats in China to use the foreign tax credit to offset any taxes due in China. Your H&R Block tax advisor can confirm the best path for you.
Chinese tax filing considerations for American expats
As an American working in China, you may have to pay Chinese taxes.Here at H&R Block, we dedicate our expertise to U.S. taxes. If you have questions specific to your Chinese tax return, it’s best to speak to an expert on local Chinese taxes.Your Chinese taxes are based on your residency status.As an expat in China, you’re considered to be a if you have a home (domicile) there or you are in China for 183 or more days in a year.
- Residents are taxed annually on all income, regardless of where it’s earned.
- Nonresidents are taxed monthly on China-sourced income only.
The income tax rates range are different depending on the type of income.Income tax rates are roughly divided into three categories:
- Comprehensive income tax rateis taxed between 3% and 45%. Income categories include wages, self-employment income, author’s renumeration and royalties.
- Business income tax rateis also taxed between 3% and 45%. The business income category includes income from sole proprietorships, partnerships and privately owned businesses.
- Other personal income tax rateis taxed at a 20%. Income categories include interest, dividends, capital gains and rental income, income from the transfer of property, and incidental income.
Similar to taxes in the U.S., the percentage of tax that you pay increases as your income increases. Comparably, the Chinese tax rates are higher, meaning many American expats in China would pay more in tax locally than in the U.S.
With this in mind, it’s typically better for most U.S. taxpayers to use the foreign tax credit. One of our experienced tax advisors can confirm if this is the best choice for your situation.
2022-2023 Chinese Income Tax Rates
For comprehensive income, individual income tax (IIT) is determined by the following equation:
(taxable income x tax rate) – quick deduction
Comprehensive Income Tax Rates
| Taxable income | Tax Rate | Quick Deduction |
| 0 – 36,000 | 3% | |
| 36,001 – 144,000 | 10% | 2,520 |
| 144,001 – 300,000 | 20% | 16,920 |
| 300,001 – 420,000 | 25% | 31,920 |
| 420,001 – 660,000 | 30% | 52,920 |
| 660,001 – 960,000 | 35% | 85,920 |
| 960,001 – | 45% | 181,920 |
Business Income Tax Rates
| Taxable income | Tax Rate |
| 0 – 30,000 | 5% |
| 30,001 – 90,000 | 10% |
| 90,001 – 300,000 | 20% |
| 300,001 – 500,000 | 30% |
| 500,001 – | 35% |
The tax filing year is similar to the U.S. tax year, but with a few differences.Chinese taxes follow a January to December tax year. Tax returns are due between March 1 and June 30.
How to file U.S. taxes from China
Need to file U.S. taxes from China? Here’show to file your U.S. expat taxes online:
- Head on over to ourWays to Filepage
- Pick your journey—in the driver’s seat with our online DIY tool or letting a Tax Advisor take the wheel.
- Once you’re through your chosen journey, you review your return and pay
- We file your return with the IRS
- You sit back knowing your taxes were done right
How H&R Block can help American expats in China
Are you a U.S. citizen living in China? H&R Block Expat Tax Services is here to help you get your U.S. taxes in order.With multiple ways to file, we’ve got a tax solution for you. Get started with our made-for-expatsonline expat tax servicestoday!
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I am a seasoned tax expert with an in-depth understanding of international taxation, particularly in the context of U.S. citizens and Green Card holders living abroad. My expertise spans various aspects of tax regulations, including expatriate taxation, Foreign Bank Account Report (FBAR) requirements, and Foreign Account Tax Compliance Act (FATCA) obligations. My knowledge extends to the complexities of filing U.S. taxes while residing in China, taking into account the unique considerations that American expatriates face in this specific jurisdiction.
The article you provided discusses essential tax tips for U.S. citizens and Green Card holders living in China. Let's break down the key concepts and provide additional insights:
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Tax Filing Obligations for U.S. Expats in China:
- Americans and Green Card holders in China are reminded to file a U.S. tax return annually, irrespective of the duration of their stay.
- Short-term assignments in China also require reporting of income earned on U.S. taxes.
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Reporting Chinese Financial Accounts:
- Individuals with over $10,000 in foreign bank or financial accounts need to comply with FBAR filing and reporting requirements.
- FATCA reporting obligations may apply if foreign assets exceed $200,000.
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Tax Strategies for U.S. Expats in China:
- Expatriates can utilize the foreign earned income exclusion to exclude wages from U.S. taxes, provided they meet residency requirements.
- The foreign tax credit allows the claiming of credits for income taxes paid to a foreign government.
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Chinese Tax Filing Considerations:
- U.S. citizens working in China may be subject to Chinese taxes based on their residency status.
- Residents are taxed annually on all income, while nonresidents are taxed monthly on China-sourced income.
- Chinese income tax rates vary for different categories, such as comprehensive income, business income, and other personal income.
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Comparison of Tax Rates:
- Chinese tax rates follow a progressive structure, similar to the U.S., with higher income attracting higher tax rates.
- The article notes that Chinese tax rates are generally higher than those in the U.S., prompting the consideration of the foreign tax credit for most American expats.
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Chinese Income Tax Rates (2022-2023):
- The provided table details the comprehensive income tax rates based on taxable income, with corresponding tax rates and quick deductions.
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Chinese Tax Filing Calendar:
- Chinese taxes operate on a January to December tax year, and tax returns are due between March 1 and June 30.
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How to File U.S. Taxes from China:
- The article suggests expats in China can file their U.S. taxes online through H&R Block, offering both DIY options and assistance from experienced Tax Advisors.
In conclusion, the information in the article provides a comprehensive guide for U.S. citizens and Green Card holders navigating the complexities of tax obligations while living and working in China. The emphasis on understanding both U.S. and Chinese tax implications showcases the need for expert guidance, and H&R Block is positioned as a reliable resource for addressing these intricate tax matters.
