American running business in China...help please?

Question

Hi, I'm an American and planning on doing business in China. Could anyone give me some advises on filing tax with the IRS? I mean I will be living abroad, is it necessary to file income tax?

I would love to hear from someone with personal experience, but anything helps, I don't want to mess with the IRS, lol

Thanks

Answer 1

If you're planning to start a business you'll probably need a Chinese partner. While you're living and working in China, you'll have to pay tax in China. If you're paying tax in China, you shouldn't have to pay tax in the States too. I've lived in China for a while and I don't pay tax back home, but, I don't run my own business.  

Answer 2

Technically you are still required to pay taxes in the U.S. even if you live in China (as well as Chinese tax as mentioned in the above answer).  You are required to pay tax in China on any income which exceeds 4,000 RMB each month (it could be 4,500 RMB, I'm not sure).  The amount of tax you pay increases with the amount you make.  I believe that it tops out at 20%, but am not positive.  This is just income tax.  Running your own business brings up even more taxes, not to mention licensing.  

As far as U.S. taxes are concerned, you would be wise to consult an accountant.  I am not sure what the cut-off is, but if you make over a certain amount overseas you are still required to pay taxes in the U.S.  Here again, I don't know what that amount is.

Good luck.

Answer 3

if you will be living out of China that's not "doing business in China"

if, due to any kind of activity in China your income will be higher than 4800 yuan, you will have to pay tax, depending on the final sum

as a citizen of your country, you will pay tax if you are doing any kind of business... in case you are considered a jobless, then you can apply for a government help and get a little subsidy until your new job will be found

you can ask about it in Business -- Tax (here in yahoo answers)