Hong Kong Based American Pilots

[Aviates01]

Hello everyone, I am just curious if there are any American pilots reading this thread that could give me some advice as to how to possibly avoid American income tax while being based in Hong Kong or at least reduce the amount I must pay to the government. I have read into the topic and am under the impresion that I must pay the difference between the American tax rate and the Hong Kong tax rate, but am just curious if there is any way to avoid the American taxes as much as possible.

Any advice, tips, or tricks would be much appreciated.

Cheers

[Harbour Dweller]

Top tip: Ask a professional tax advisor rather than a pilot

[Aviates01]

Thanks for the advice. Just trying to get some insight beforehand.

[ETOPS240]

I could be wrong, but my understanding is as follows:

Looking at your location, it isn't something you need to be immediately worried about. You're on the right lines, except that you aren't required to pay US taxes until your income is > US$92000, or thereabouts.

Whatever that amount is, you'll have to pay US taxes over and above it, and yes, it's the difference between HK and US taxes, so long as there is a dual-taxation treaty in place. It's a VERY hot topic within the IRS right now, so I'd be a fool to even try to advise trying to play tricks with it.

Hope this helps.

[Sir KDM Lowe]

Not sure if this is the sort of thing to discuss on an open forum with a "stranger". May I suggest a PM to make two way contact and then meet the adviser in person. I'm sure a professional colleague in the "same boat" would be more than happy to help. Just my thoughts and not meant as a criticism. Good luck.

[ETOPS240]

I certainly agree with you. There are no doubt plenty of folk in the same boat in Hong Kong. They'll be able to perhaps recommend accountants familiar in that area.

The rules, however, are publicly available and quite explicit. The accountant can perhaps take some of the sting out of it..

[boxjockey]

In the first few years you will pay little if any US tax, only paying to HKG. Try searching "foreign earned income credit", or just go on to the IRS website and look it up. Everything is there for you, no tricks needed.

[tx_dfw]

I would suggest you get professional advice. You should note that you are able to exclude the full amount only if all of your income is earned in a Foreign Country. If you are doing flights to NA, the time over INTL water is taxable.

Here is a link

U.S. Citizens Performing Services in Foreign and International Airspace (http://www.irs.gov/businesses/article/0,,id=208715,00.html)

[SweepTheLeg]

From your profile it looks like you are a cadet. In that case you won't be making enough for a long long time before you have to pay U.S. tax. Besides the foreign income exclusion you can take your normal deductions on top of that. At your crappy pay, you won't hit that until you are doing your command.

Uncle Sam designed the tax thinking you would only go overseas for a job that pays a respectable amount. Just stating the facts...

[ETOPS240]

"Uncle Sam designed the tax thinking you would only go overseas for a job that pays a respectable amount. Just stating the facts..."

You may be right, although it's probably more about Uncle Sam's greed. We digress.

It may be worth pointing out that given an apparent 10k housing allowance on top of basic salary, in the US, that is quite literally 5 times what this chap would be earning at a good number of US regionals. All of which also require 1000+ hours, commuting, the worst rostering in the industry, and extremely high likelihood of being made redundant.

Not that you've denied it in any way, but your tone was fairly berating.

[ETOPS240]

Change the record, mate.

[Captain Dart]

OK, so the 'apparent' 10 K housing allowance' is a lot of cash to a US commuter pilot. But put that in the context of what housing actually costs in Hong Kong; some internet research will reveal some rather nasty surprises.

The fact that you are asking about tax dodges also indicates that you may be worried how you would make ends meet. Do your research and your sums very, very carefully. And don't start bitching to me in the cruise at two in the morning about what a bad deal you got...don't make your problem my problem.

[airplaneridesrfun]

If you seriously plan to commute to the US, do more research. First of all, a ticket on CX is not free. Secondly, the airlines that will allow you to jumpseat on them are few and far between - and rightfully so, because CX will not allow jumpseaters from other airlines to ride on CX. Further more, if you are a CX pilot and want to "jumpseat" on a CX flight, you still have to pay the economy ID90 fare, fuel surcharge, and tax, etc.... Don't even think about Jumpseating on the freighter - it is not allowed. If you live in Dallas or Miami then getting home will be very difficult; even though there are freighters that fly there with plenty of empty seats every day.

Finally, be prepared to be stuck as an SO for 5 years, not flying an airplane, and dealing with the increasing number of pompous personalities at CX. 5 years of SO is 15 -20 % of your working life - that is a long time to not fly an airplane!!!! .... and if someone tells you that your upgrade will be quick, and you can take a base whenever you want to in the US - you are being lied to.

[ETOPS240]

I do believe he wasn't planning on commuting, given his need to ask about tax. However, due to Uncle Sam's comical greed, he will still have US-bound tax implications.

15-20% of a career not flying a plane does sound like a long time, until you compare it to the 15-20% of a career an American pilot will find on furlough from a minimum wage job, with incredibly unfavourable odds of ever getting to a decent outfit (the decent outfits being SWA, FedEx and UPS).

[Basil]

the increasing number of pompous personalities at CX
Small point: they do exist in most airlines and they ain't all in the LHS.
Whether the degree or percentage is greater in CX, I couldn't possibly comment ;)