Americans Living in Australia – Filing a US Expat Tax Return Explained
Bright!Tax has partnered with Godiva Tax Services to offer a one stop shop US/Australian tax filing solution for US Expats living in Australia. Please contact us for further information.
Americans living in Australia, or thinking about moving to Australia, have plenty of reasons to be happy: it’s a land of beautiful landscapes, interesting wildlife, and beaches, it has a relaxed culture, and it’s full of friendly people.
With the US dollar currently strong, it’s a good time to move to Australia, so read on to find out what you need to know about filing your US expat tax return as an expatriate American living in Australia.
All US citizens and green card holders living abroad are required to file a US federal tax return every year reporting their worldwide income. So if you’re American and you live in Australia and work for a Australian company, or if you’re living in Australia and freelancing (as a Digital Nomad perhaps), you still have to file a US return declaring your worldwide income. In theory, you’re liable to pay US taxes on it too, however in practice most people don’t end up paying US tax as they claim either the Foreign Earned Income Exclusion (which excludes up to around $100,000 of foreign earned income from US tax liability), and/or the Foreign Tax Credit, which allows you to claim a dollar tax credit for every US dollar equivalent of tax paid in another country. Which to claim will depend on your personal circumstances; both need to be actively claimed though.
Filing Dates for Expats
While any tax you may owe to the IRS still has to be paid by April 15th, expats get a filing extension until June 15th, with a further extension available upon request to October 15th. The reason for this extra time to file is that there’s often more to file as an expat.
“In fact, if money were no object, U.S. travelers would choose to visit Australia over almost every other country on Earth, according to TripAdvisor’s most recent TripBarometer study.”
– The Huffington Post
Extra Filing Requirements for Expats
American expatriates have to declare any overseas assets worth over $200,000 per person (excluding their home) using form 8938. If you have an aggregate total of over $10,000 in one or split between several foreign bank or investment accounts at any time during a tax year meanwhile, you are required to file an FBAR (foreign bank account report) declaring the account details and balances. If you have been living in Australia for a while but weren’t aware of your US filing requirements, don’t worry though, as there’s an IRS program that lets you catch up on your back taxes without paying penalties (which can be harsh if the IRS finds you first) called the Streamlined Procedure.
What about Australian Taxes?
The Australian tax year runs from July 1st to June 30th. Australian tax returns should be filed to the Australia Tax Office (ATO) by October 31st. You can find information about Australian income tax rates here.
Need some help?
Expat tax requirements are more complex compared with Americans living in the US, and they also potentially need to be filed as well as a Australian tax return. We recommend that for your US expatriate taxes you consult an expat tax specialist who will ensure that you employ the right strategies and claim the right exemptions to minimize your US tax liability with respect to your individual situation.