US Expat Taxes for Americans Living in Austria – What You Need to Know
It has been estimated that there are 11,000 Americans living in Austria.
Living in Austria is an incredible experience for a variety of reasons, including the culture, the people, the architecture, the parks, and the skiing. As an American expatriate living in Austria though, what exactly do you need to know regarding filing US expat (and Austrian) taxes?
All US citizens and green card holders who earn a minimum of around $10,000 (or just $400 for self-employed individuals) anywhere in the world are required to file a US federal tax return and pay taxes to the IRS, regardless of where in the world they live or their income is generated.
The good news is if you are paying income tax in Austria, there are various exclusions and exemptions available to prevent you paying tax on the same income to the IRS too.
US taxes – what you need to know
If you earn over US$10,000 (or just $400 of self-employment income), wherever the income originates in the world you have to file IRS form 1040. While any US taxes due are still due by April 15th, expats get an automatic filing extension until June 15th, which can be extended further on request until October 15th.
If you have overseas assets worth over US$200,000 per person, excluding your home if it is owned in your own name, you also have to file form 8938 to declare them.
If you had a total of at least US$10,000 in one or more foreign bank and/or investment accounts at any time during the tax year, you also have to file FinCEN form 114, otherwise known as a Foreign Bank Account Report or FBAR.
“An Austrian resident individual is taxed on his/her worldwide income in Austria, however there may be an exemption according to double tax treaties.”
If you pay income tax in Austria, there are several exemptions that allow you to pay less or no US income tax on the same income to the IRS. The main one is the Foreign Earned Income Exclusion, which lets you exclude the first around US$100,000 of foreign earned income from US tax if you can prove that you are a Austrian resident, and the Foreign Tax Credit, which gives you a $1 tax credit for every dollar of tax you’ve paid in Austria. These exemptions can be combined if necessary. Remember though that even if you don’t owe any tax to the IRS, if your income is over US$10,000 (or $400 if you’re self-employed) you still have to file a federal return.
The US and Austrian governments share taxpayer info, and Austrian banks pass on US account holders’ account info to the IRS, so it’s not worth not filing or omitting anything on your return. The penalties for incorrect or incomplete filing for expats are steep to say the least.
If you’re a US citizen, green card holder, or US/Austrian dual citizen, and you have been living in Austria but you didn’t know you had to file a US tax return, don’t worry: there’s a program called the IRS Streamlined Procedure that allows you to catch up on your filing without paying any penalties. Don’t delay though, in case the IRS comes to you first.
Austrian taxes – what you need to know
If you spend at least 183 days in a year in Austria, or you have a residence there, or you have income in Austria, you are required to file an Austrian tax return. Austrian income tax rates are relatively high, with a scale from 0% to 55%. There is also a 25% capital gains tax.
The Austrian tax year is the same as the American, with tax returns are due by April 30th if filed on paper, or by June 30th if filed online. The Austrian tax authority is called the Ministry of Finance.
We strongly recommend that if you have any doubts or questions about your tax situation as a US expat living in Austria that you contact a US expat tax specialist.