tax liability question for income earned in China

I am a US citizen considering an employment offer to work in China for a foreign (Dutch) company. I would receive 100% of my salary in chinese RMB currency, no salary would be paid in USD. I expect to pay about 30% in various taxes to the Chinese govt. Can anybody give me some insight about how does the US determine my tax liability for my income? Do I get "double taxed" on the same income, or does the IRS have some formula such as I would normally owe 35% tax on so since I already have paid 30% to China, then I only need to pay the difference of 5% to the US? Also I am aware of the Foreign Earned Income Exclusion for people who maintain a physical presence outside of the US. This will apply to me, and actually I expect to be able to declare my tax home (bona fide residence) to be in China. So when we look at the threshold of the first 80k of income being excludable, is this from my pre-tax income or income received after paying chinese taxes? Any replies (or suggestions for further reading) will be appreciated. - Raleigh
Reply to
raleigh2715
If you meet the requirements (and it sounds like you probably will) you would qualify for the foreign earned income exclusion. You would report your gross salary (before Chinese taxes) and then take the exclusion. If you cannot exclude all of your Chinese income, you could claim a credit for the Chinese taxes paid on that portion of your income that is not excluded. The rules relating to foreign income can appear to be relatively simple but actually applying them to a real situation is not always easy. Particularly in the first year or two, the computations can be quite complex. It is not usually a "do-it-yourself" project. I strongly recommend that you consult a professional who is experienced in expat tax matters. Lanny K. Williams, CPA Nawarat, Williams & Co., Ltd. Income Tax Services for Expatriate Americans
Reply to
L K Williams

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