Is it difficult to take money out of China?

Good evening everyone :).

I am thinking about moving to and teaching in Beijing. My plan would be to start working at a school there and try and collect some private tutoring on the side. I would try to slowly build up some online private students and maybe after 2 years, leave China and continue teaching online. I am in the brainstorming phase and have 2 questions.

1. If my employer is legit and has paid taxes and if I pay taxes on my private tutoring income, is it easy for me to send the money to my American bank account? It is important I can send money monthly.

2. As my ultimate goal is to collect online private students, is there a way to accept payment from students in a way that will go directly into my US bank account (i.e. PayPal)?

Thanks guys.

Thank your for this detailed question.

As an American, you need to understand that the IRS has placed a great burden on you and you will have to pay both American and Chinese taxes. No other nation on the planet has this burden. So, in comparison with other non-American expats your taxation burden will be 2x to 4x greater than your coworkers. This will seriously cut down on your standard of living.

Bank Account

Now, if you are an American, and are working under Chinese law, you will work under a Z-visa. That will allow you to have a Chinese bank account. As such, it is possible that the IRS can monitor your financial situations through a "pass through", and penalize accordingly whenever the payment amounts (from the school) do not match the bank deposits. Yikes!

But, not to worry, as there are ways around this.

Reducing Tax Burden to Uncle Sam

Many Americans simply do not report their overseas income to the IRS. Why bother, they (themselves)  are not worth the time and effort, they argue. You can go this route, and I have yet to hear of anyone penalized for it.

There are other things you can do, however, if you want to report, but keep your tax burden low. For instance, you can obtain a Chinese girlfriend and have the school pay her part of your salary so that your salary falls "under the radar threshold". This is frowned upon, of course, but it is a common enough practice. Say you earn 15,000 RMB. The school might pay your 1000 RMB and your girlfriend 14,000 RMB. Your taxes would be insignificant, and so small that you could get away with not even filing American taxes (as you would fall under the minimum tax burden).

Under the Table Income

As far as "under the table" activities. These are illegal.

However, it is true that they are common enough. Keep in mind that home school tutoring should ALWAYS be paid in cash or "red envelope" via WECHAT. You want to keep the paper trail to a minimum in regards to the American IRS authorities.

It's not that you are intending to do anything illegal, it's just that the laws are so numerous and inclusive that it is easy to be substantively harmed in the process.

Transfer of Funds to the USA

Transference of funds to the USA is simple enough. You can [1] perform a wire transfer, [2] use Western Union, or [3] put the money on a United States debit card account. There are many posts on this forum on how to do this. You can perform a search in the search box at the top of the page.

What to watch out for

The problem is NOT China. The problem is the United States, and as a person who was aggressively audited by Uncle Sam, I will advise you never to consider yourself innocent.

In the eyes of the IRS you are guilty of tax evasion simply because you left the country.

Many of my expat friends never have this problem, so those that come from the UK, or Australia would never experience these kinds of hassles or fear of imprisonment from their respective nations.


In Summary

I do not advise breaking either USA or Chinese law. I do advise that the ways to accomplish all of your goals are obtainable, and not as difficult as you might fear. In short, what you are proposing is realistic and doable.

A Kind word for consideration

You are planning ahead. Good for you. However, you need to stop thinking like an American. I do not mean to be insulting, but you are actually thinking like an American would. That laws are laws, and punishments are punishments, and legal documents are unbreakable. China is a very flexible nation. You might be surprised at the number of workarounds that would make your life easier and better.

Once you do all the paperwork and arrive in China, start doing things the Chinese way. Everything else will fall into place. Best regards and good luck.

In China there's a limit of $50000 per year per person converting from RMB to your own currency so watch out for that.

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