USA tax brief for Australian expats

USA tax brief for Australian expats

It is important for Australians moving to the USA for work-related purposes to understand their tax obligations to avoid stressful encounters with tax authorities in the future. In this USA tax brief for Australian expats, we shed light on the tax obligations of Australians working in the USA.

Firstly, if you are an Australian expat, it is essential to find out which country you are a tax resident of.

A tax resident of Australia is an Australian resident who is eligible to pay taxes on all their global income (income from all sources). Moving abroad, say to the USA, does not mean that you are no longer a tax resident of Australia.

The Australian Tax office (ATO) uses various tests and measures to determine if an individual is a tax resident of Australia or not; for example, if you have lived overseas for more than two years or if you have obtained a permanent address overseas.

Similarly, in the USA, US foreign nationals with permanent residence immigrant Visas in addition to those that have been in the USA for over 183 days are regarded as resident aliens. Just as US citizens, a resident alien is liable to pay tax on their global income (income from all sources). However, non-resident aliens in the USA are taxed only on their income sourced in the USA.

So, will I be taxed both in the USA and Australia?

This question is best answered by the Australia-USA Tax Treaty. This treaty between the two countries helps avoid double taxation in both countries.

(a) In case one is considered as an Australian resident for Australian tax purposes (under Australian law), and a US resident for US Tax purposes (under US law), the tax treaty provides a guide to ensure that they are a tax resident of one country. This means they only pay tax for one country.

(b) Besides, the treaty allocates taxing rights over certain categories of income between the two countries should you be earning from both of them.

All in all, if you are an Australian expat you must find out if you are a resident alien or non-resident alien in the USA. Secondly, you must exploit the Australian-US Tax Treaty to avoid double taxation.

Need a little more help? Speak to us at Expat Tax Services today. We are experts in handling expat tax returns Australia wide – and beyond.

Shane Macfarlane CA
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Comments 6

  1. My husband receives his Aussie superannuation pension retirement benefits that is taxed in AUS. He is a US tax resident. Should that income be included in our US return?

    1. Post

      Hi Lindsey,

      Thanks for your message. I highly recommend that you book some time with our senior tax team to discuss your husband’s individual circumstances, because the answer to your question is it depends! Presuming that you and your husband file ‘Married filing jointly’, typically, the answer is “yes it should be included in your US return”, however it depends upon exactly what type of superannuation pension your husband is receiving.

      If the pension received by your husband is a pension paid from a public superannuation fund, then, it typically should be included in your US return. If a government pension, it is typically exempt from tax in your US return. If a social security pension (e.g. old age pension), it is not typically required to be included in your US return.

      Understanding exactly the type of pension that your husband receives is critical, as is understanding your husband’s other circumstances, pertaining to his residency stats, not just for US tax purposes, but for Australian tax purposes, and just as importantly, understanding his residency status (solely) for treaty purposes, as all these issues will have a bearing on the issue.



  2. I’m an Aussie who is tax resident in the USA – No worries so far. But now I’m returning to work Down Under, still employed in the USA until 10th January….. Clearly I need to submit Taxes to the Australian Government, but what about the IRS in the USA for these 10 days of the new American tax year?

    1. Hi Leslie,

      If you are earning income in the US from 1 January to 10th January you are likely to be required to lodge a US tax return.

      There are many things to consider as part of your move back to Australia for both your Australian and US taxes. I would recommend that you contact a US tax specialist who can help you cover off on all of your US tax obligations when you leave. Here is a link to a website of a firm in the US who will be able to assist you with your US obligations.

      If you have questions in relation to your Australian taxes do not hesitate to get in contact.



    1. Post

      Hi Jennifer,

      Thanks for your message. Unfortunately we don’t do US taxes. Instead we do Australian taxes for a huge number of Aussies who are currently living and working in the United States. However, although we focus on the Australian side of things, we do work hand in hand with a US based firm (run by an Aussie) who are essentially the reciprocal of our firm – they look after a large number of Aussies (many of whom are our clients) but from a US tax perspective.

      Between the two firms, both of which are totally independent from one another, we’re able to collaborate and coordinate the preparation of returns effectively (and cost effectively too for that matter) for our clients.

      If you’re interested in learning more, we’d be more than happy to have a chat with you sometime about your needs and how we can help sometime soon. Just contact us via our contact us page and we’ll be in touch to book something in for you.



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