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choudoufu
Joined: 25 May 2010
Posts: 3325
Location: Mao-berry, PRC
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 Posted: Wed Apr 25, 2012 1:42 pm Post subject: |
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| isitts wrote: |
| 1. Get the residency certificate from the IRS. |
how? what certificate? what form? do i need something from
the embassy (like the certificate of singleness) if the irs does
not provide any kind of residency certificate? |
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wangdaning
Joined: 22 Jan 2008
Posts: 3154
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| Posted: Wed Apr 25, 2012 10:17 pm Post subject: |
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| isitts wrote: |
| wangdaning wrote: |
| Some things to note. Make sure you are a resident of the US. Also, be aware that if you get out of the Chinese taxes on this you must pay taxes to your country of residence. It is meant to avoid double taxation, not to make zero taxation. In my case, if I were to pay US taxes on my income, I would pay more than I do here. |
Not if you pass the physical presence test on form 2555 (foreign earned income exemption). |
If you get out on the physical presence test you are not applicable to be a resident of the state and thus must pay taxes to China. |
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naturegirl321
Joined: 04 May 2003
Posts: 9041
Location: home sweet home
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| Posted: Wed Apr 25, 2012 11:55 pm Post subject: |
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| isitts wrote: |
| wangdaning wrote: |
| Some things to note. Make sure you are a resident of the US. Also, be aware that if you get out of the Chinese taxes on this you must pay taxes to your country of residence. It is meant to avoid double taxation, not to make zero taxation. In my case, if I were to pay US taxes on my income, I would pay more than I do here. |
Not if you pass the physical presence test on form 2555 (foreign earned income exemption). |
Exactly. I got out of both Korean and US taxes: legally, due to the PPT. |
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wangdaning
Joined: 22 Jan 2008
Posts: 3154
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| Posted: Thu Apr 26, 2012 12:24 am Post subject: |
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| All I can say is hope you never get audited. |
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naturegirl321
Joined: 04 May 2003
Posts: 9041
Location: home sweet home
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| Posted: Thu Apr 26, 2012 12:40 am Post subject: |
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| wangdaning wrote: |
| If you get out on the physical presence test you are not applicable to be a resident of the state and thus must pay taxes to China. |
I will get out of Chinese taxes by being a tax resident in a country other than China (for me that's Korea). You don't just have to be a US resident to get out of Chinese taxes.
I get out of US taxes by the PPT.
Where's the confusion?
Last edited by naturegirl321 on Thu Apr 26, 2012 12:43 am; edited 1 time in total |
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naturegirl321
Joined: 04 May 2003
Posts: 9041
Location: home sweet home
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| Posted: Thu Apr 26, 2012 12:46 am Post subject: |
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| choudoufu wrote: |
| isitts wrote: |
| 1. Get the residency certificate from the IRS. |
how? what certificate? what form? do i need something from
the embassy (like the certificate of singleness) if the irs does
not provide any kind of residency certificate? |
If you're American you can fill out the 8802. |
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wangdaning
Joined: 22 Jan 2008
Posts: 3154
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| Posted: Thu Apr 26, 2012 12:59 am Post subject: |
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| naturegirl321 wrote: |
| wangdaning wrote: |
| If you get out on the physical presence test you are not applicable to be a resident of the state and thus must pay taxes to China. |
I will get out of Chinese taxes by being a tax resident in a country other than China (for me that's Korea). You don't just have to be a US resident to get out of Chinese taxes.
I get out of US taxes by the PPT.
Where's the confusion? |
I am confused because you have said you are not a tax resident of Korea (or for others other countries). You avoid tax by claiming not to be a tax resident, then avoid again by claiming exemption for being a tax resident? |
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naturegirl321
Joined: 04 May 2003
Posts: 9041
Location: home sweet home
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| Posted: Thu Apr 26, 2012 1:11 am Post subject: |
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| wangdaning wrote: |
| I am confused because you have said you are not a tax resident of Korea (or for others other countries). You avoid tax by claiming not to be a tax resident, then avoid again by claiming exemption for being a tax resident? |
I wasn't a tax resident of Korea from March 1, 2010 to Feb 29, 2012. I am NOW a tax resident of Korea  Hope that makes sense.
I took the 2 year now tax break and now I have to pay taxes. Since I'm now a tax resident of a country that's not China, I'm entitled to the 3 year no tax in China.
So I avoided (past) tax for two years through the agreement and now I pay (present) taxes here in Asia. Though for this whole time I have still paid taxes to the US on my SE income.
Last edited by naturegirl321 on Thu Apr 26, 2012 2:02 am; edited 1 time in total |
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wangdaning
Joined: 22 Jan 2008
Posts: 3154
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| Posted: Thu Apr 26, 2012 1:51 am Post subject: |
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If you avoid the tax in China based on the agreement, then you owe the agreeing state money.
*If one is audited by the US, they must show tax receipts from foreign nations to support their exemptions.
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Statement to Foreign Authorities
You will not be considered a bona fide resident of a foreign country if you have submitted a statement to the foreign country that you are not a resident of that country, and the foreign government has determined that you are not subject to their tax laws as a resident. |
It is called tax fraud, and can get you in a heap of trouble. |
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Javelin of Radiance
Joined: 01 Jul 2009
Posts: 1187
Location: The West
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| Posted: Thu Apr 26, 2012 2:01 am Post subject: |
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I'm having a hard time believing its legal to opt out of paying taxes ANYWHERE. No-one I know here has been able to avoid Chinese taxes (low as they are). Paying nothing anywhere sounds great but somethings missing in this conversation.
Last edited by Javelin of Radiance on Thu Apr 26, 2012 2:03 am; edited 1 time in total |
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naturegirl321
Joined: 04 May 2003
Posts: 9041
Location: home sweet home
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| Posted: Thu Apr 26, 2012 2:02 am Post subject: |
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| wangdaning wrote: |
If you avoid the tax in China based on the agreement, then you owe the agreeing state money.
*If one is audited by the US, they must show tax receipts from foreign nations to support their exemptions.
| Quote: |
Statement to Foreign Authorities
You will not be considered a bona fide resident of a foreign country if you have submitted a statement to the foreign country that you are not a resident of that country, and the foreign government has determined that you are not subject to their tax laws as a resident. |
It is called tax fraud, and can get you in a heap of trouble. |
It's not tax fraud. You're reading half the info. There are two ways to qualify
1. Bona fide resident
2. PPT
Since I told the Korean govt that I wasn't a Korean tax resident and had SE income, I couldn't file the 2555EZ. I had to file the 2555 long form. And I still qualified for the FEIE due to reason number 2: PPT. Read the examples in Pub 54.
I hired an expat tax accountant this year. I qualify for PPT status. He's been doing takes for 25 years. I'm sure he knows what he's doing.
And again, not tax fraud. If I had filed according to reason number 1: bona fide resident, then yes, fraud. Filing according to PPT: completely legal.
As of March 1, 2012, I am now a tax resident of Korea, so I can and will be entitled to the three years of no taxes in China. |
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Javelin of Radiance
Joined: 01 Jul 2009
Posts: 1187
Location: The West
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| Posted: Thu Apr 26, 2012 2:04 am Post subject: |
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| Let us know how it works out then. |
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naturegirl321
Joined: 04 May 2003
Posts: 9041
Location: home sweet home
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| Posted: Thu Apr 26, 2012 2:07 am Post subject: |
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| Javelin of Radiance wrote: |
| I'm having a hard time believing its legal to opt out of paying taxes ANYWHERE. No-one I know here has been able to avoid Chinese taxes (low as they are). Paying nothing anywhere sounds great but somethings missing in this conversation. |
Are you American? Read Pub 54 and take a look at the 2555 EZ and long form.
I know a handful of people who have gotten out of Chinese taxes due to the agreement. And most weren't working in their home country before they went to China. And still got out of Chinese taxes. |
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naturegirl321
Joined: 04 May 2003
Posts: 9041
Location: home sweet home
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| Posted: Thu Apr 26, 2012 2:07 am Post subject: |
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| Javelin of Radiance wrote: |
| Let us know how it works out then. |
Give me a year and I will |
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Javelin of Radiance
Joined: 01 Jul 2009
Posts: 1187
Location: The West
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| Posted: Thu Apr 26, 2012 2:34 am Post subject: |
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| naturegirl321 wrote: |
| Are you American? |
Earthling. I declare myself exempt of all taxes. Working so far. |
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