US Tax FAQ for Australian Expats

If you are an Australian expat in the U.S., it is vital that you are knowledgeable about how your U.S. expat tax return will be affected by living abroad. Although we don’t currently prepare US tax returns on behalf of our Australian clients living and working in USA, we’ve compiled a list of some of the frequently asked questions that come across our desks – so take a look at our US tax FAQ for Australian expats below:

Q: What taxes am I required to file?

A: You are probably aware that all green card holders and U.S. citizens are required to file a U.S. federal tax return and pay taxes to the IRS. They include federal income tax return, state income tax return, and local income tax return. This is regardless of where you live at the time. The good thing is that there are various privileges and exclusions available to stop you from paying tax on the same income to the IRS too if you are paying income tax in Australia.

You are required to file form 1040 if your earnings are over $400 for self-employed individuals and $10,000 if you are employed. You need to file form 8938 declaring foreign assets worth over $200,000 per person. Furthermore, at any time during the tax year, you are required to file FinCEN form 114 if you have more than a total of US$ 10,000 in one or more foreign bank accounts.

If you file your Australian tax return, numerous mechanisms allow you to avoid paying tax on the same income to the IRS too.

Q: What is the U.S. tax year?

A: Taxes owed are supposed to be submitted by April 15th. However, expats usually have an automatic extension until June 15th. Note that if you have taxes owing, you may have to pay interest for that period.

Q: Can I receive a foreign earned income exclusion?

A: If you can show that you are an Australian resident, it potentially lets you exclude the first US$100,000 of foreign earned income from U.S. tax.

Q: What is foreign tax credit?

A: This gives you a dollar tax credit for every dollar of tax you have already paid in Australia. Remember you still have to file your taxes with the IRS even when you do not owe any tax in the U.S. The penalties for tax evasion for expats are harsh.

In case you have any questions or doubts about your tax filing status as an Australian expat living in the U.S., you can contact us at Expat Tax Services for clarification.