5 Common Errors Expats Could Make When Preparing IRS Return for US Taxation of Hong Kong Income


For most US citizen living in Hong Kong, life is running at their own condition and they are pretty well utilizing the best advantage of this financially developed country– at least till the point, they didn’t come close to US taxation of Hong Kong income filing date. Being an expat, you come under the obligation to pay your tax liabilities after understanding the US tax code which is quite a daunting task because you’re not a pro for this and this is why majority ends up filing an incorrect return.

Making any blunder on your tax return can cost you money; you may miss out on a larger refund than you claimed, may end up by paying more taxes than actual- plus interest and penalties are some of its unfortunate consequences. As complicated as preparing your Hong Kong, US tax return can be, it’s much better to take the time to avoid common pitfalls which many expats have made earlier. Before submitting your return to the tax authority, check your work against this list of common errors to avoid further complications as well as penalties.

  1. Submit incorrect personal details

Every year, this is the most common mistake IRS noticed and have to reject a large number of returns. This could lead to a delay in refunds. So, before filing be sure that you have entered the right details that belong to you like name, bank account number, address, etc. Also, for achieving the maximum exemption or more favorable tax rates don’t mislead the authority by filing incorrect filing status for your situation. For example, if you’re single, but to qualify for more favorable tax rates, you represent yourself as married could turn up against you, so beware.

  1. Failed to include certain income

There are certain incomes which many expats sometimes overlooked either intentionally or depend. These are the income which slips out of the mind of expats, like interest received on bank FD, income from the previous employer or from investments made in the name of spouse/children- all these are taxable income and should be recorded on your tax return form. You need to be very careful and at the same time stay transparent with your earned income.

  1. Failed to report exempt income

Exempted income’ is the income which is non-taxable, but need to be mentioned in the separate Annexure of ITR (Income Tax Return). These are the incomes like PPF (Public Provident Fund) interest, dividends, and the maturity of insurance policies or LTCG (Long Term Capital Gain) from equities. By making the entry of these incomes will reduce unnecessary action against you.

  1. Incorrect calculations of deduction and credits

Tax deductions like charitable donations you made out of your earned income, effectively reduce the amount of your taxable income. On the other hand, tax credits directly reduced your tax liabilities. Miscalculation of these two important numbers could result in overpaying to IRS, which only you could prevent by seeking the professional guidance of US Tax Service for Americans in Hong Kong who will take a detailed look over your financial situation and stands accurate to IRS filing returns expectations.

  1. Failed to enclose negative numbers in brackets

This is a huge blunder and can have serious consequences to bear. If you forgot to enclose negative amounts in brackets, IRS may consider it as positive numbers which will lead to the imposition of additional taxes.

Incorrect filing of US tax returns will lead to many consequences and troubles. If you’re not confident of preparing your tax returns it’s better to seek a professional US Tax Service in Hong Kong than bearing the consequences for your mistakes. Their experience will potentially reduce your chance of making any further mistakes.