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| US taxes in Oz | |
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| Topic Started: Feb 20 2007, 07:29:32 AM (13,955 Views) | |
| TerritorianTori | Feb 20 2007, 07:29:32 AM Post #1 |
Dance to disco
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Just want to make sure everyone is aware that even if you have moved outside the US and are not making a US income, you are STILL required by law to file a US tax return every year for your worldwide income. This applies to all US citizens and permanent residents. Publication 54: Tax Guide for US Citizens and Resident Aliens Abroad http://www.irs.gov/publications/p54/index.html FAQ by US taxpayers living abroad http://www.irs.gov/faqs/faq13-7.html IRS Publication 593: Tax Highlights for US Citizens and Residents Going Abroad http://www.irs.gov/publications/p593/index.html Basic Tax Guide for Green Card Holders: Understanding Your U.S. Tax Obligations http://www.irs.gov/businesses/small/intern...=164371,00.html Please note: having to file a return in both countries *does not* necessarily mean you will pay taxes in both countries. |
 South Texas to the Northern Territory - since 2004 I'm a huge fan of... Angry Video Game Nerd | The Big Bang Theory | Doctor Who | Pet Shop Boys | Yanks Down Under ~ Americans living in Australia Avatar by Sketch Shop Boys | |
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| TerritorianTori | Mar 18 2007, 10:49:04 AM Post #2 |
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OK, here's a list of US tax preparers in Oz... not sure exactly what their rates are ('cause I've never used their services), but you can always just pop 'em an e-mail and ask.  Donna Shaw - she's an American living in Melbourne and has a MBA in US tax (or something like that). She's advertised for years on the AMSOC boards and has helped a lot of people there. Her email is dfshaw@bigpond.com Susan Rafferty - another American living in Melbourne who has her own expat tax business. srafferty1@aapt.net.au (03)9682-0630 Larry Fischel... I don't know him personally but one of our members (Susan) has used him and she says: "He has advertised his services on the AiA Yahoo List and has done my taxes this year. He comes highly recommended and his fee is appears similar to what I paid a tax accountant in the USA. I had my own web design business in the USA and the accounting side of things was a bit too much for me, he has helped get everything in order and current - even on the other side of the globe. He is very good at replying promptly and answering questions." Let Larry Do It Tax & Accounting Services Phone 301 270 3145 Fax 202 517 9163 (USA) Fax 31 20 524 8067 (Amsterdam) Fax 33 (0)1 72 70 44 20 (Paris) http://www.letlarrydoit.com And finally, here's the page on the US Consulate site listing US tax preparers. They have listings for NSW, ACT, SA, and VIC. http://canberra.usembassy.gov/consular/acs/money/taxconsultants.html Edited by TerritorianTori, Feb 9 2010, 05:03:21 PM.
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South Texas to the Northern Territory - since 2004 I'm a huge fan of... Angry Video Game Nerd | The Big Bang Theory | Doctor Who | Pet Shop Boys | Yanks Down Under ~ Americans living in Australia Avatar by Sketch Shop Boys | |
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| MinnMelb | Jul 11 2007, 10:26:56 AM Post #3 |
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Yacker
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Awesome info above! I had followed up with one of the contacts you listed, I will edit the post to include any relevant findings if that's cool. One of the most striking aspects is that you can't deduct the interest on your home, but you can do "negative gearing" for rental properties. Bizarre! "Tax in Australia is quite different from American tax. Firstly, you don’t file with your spouse. Everyone files a separate return, but needs to state their spouse’s income within the return (this is used for Medicare purposes) and there is no state income tax." "If you and your spouse earn over $100k per year, you will both pay an additional 1.5% tax for Medicare unless you buy private health insurance. It is really worth buying private health insurance as the public system here is getting more and more crowded and you get attended to quicker with private health cover." " There really aren’t too many offsets against your income that you can take. You can deduct work related expenses from your taxable income, but if the expenses are over $300, then be certain that you have all your documentation. The ATO is cracking down on these types of expenses as people have been a bit too “greedy” in this regard. It’s quite different than the US. Basically, if you make money, be prepared to give a part of it to the ATO. " |
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| TerritorianTori | Oct 5 2007, 01:20:10 AM Post #4 |
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Here's another one I found on the AMSOC site: Expatriate Tax Associates 1 Grove Street BirchGrove Sydney NSW 2041 Phone +61 2 9555 5663 Fax +61 2 9810 0557 http://www.extax.com.au |
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South Texas to the Northern Territory - since 2004 I'm a huge fan of... Angry Video Game Nerd | The Big Bang Theory | Doctor Who | Pet Shop Boys | Yanks Down Under ~ Americans living in Australia Avatar by Sketch Shop Boys | |
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| trix | Oct 5 2007, 10:27:32 AM Post #5 |
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True Blue Mate
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Just an fyi on something I found out today, which was helpful. Typically, if you file taxes and your spouse is a non-citizen/non-resident you still have to obtain a US tax file number for them...but only if you are filing 'married filing jointly'. |
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| TerritorianTori | Dec 21 2007, 10:27:25 AM Post #6 |
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Dance to disco
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I've split off the conversation begun by oznick into a new thread, which you can find here: http://yanksdownunder.net/index.php?showtopic=1494 |
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South Texas to the Northern Territory - since 2004 I'm a huge fan of... Angry Video Game Nerd | The Big Bang Theory | Doctor Who | Pet Shop Boys | Yanks Down Under ~ Americans living in Australia Avatar by Sketch Shop Boys | |
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| Silver | Jan 11 2008, 09:13:11 AM Post #7 |
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True Blue Mate
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Any alternatives to people who can't afford "Larry's" fees?
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| trix | Jan 11 2008, 10:24:53 AM Post #8 |
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True Blue Mate
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Do it yourself;) By the way, what is up with this 330 day thing: http://www.irs.gov/faqs/faq13.html |
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| TerritorianTori | Jan 11 2008, 11:32:42 AM Post #9 |
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If your taxes aren't too complicated, you could do it yourself. Just be sure to read all of the documentation in the 1st post... you can find the forms and such online. If you're totally lost as to where to begin, feel free to send me a PM and I'll try to help.
Sorry, not sure what you mean... ? What part of it don't you understand? |
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South Texas to the Northern Territory - since 2004 I'm a huge fan of... Angry Video Game Nerd | The Big Bang Theory | Doctor Who | Pet Shop Boys | Yanks Down Under ~ Americans living in Australia Avatar by Sketch Shop Boys | |
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| trix | Jan 11 2008, 12:23:45 PM Post #10 |
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True Blue Mate
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Well, if I'm reading it correctly it means that if you work less than 330 days outside of the country (i.e. you don't work at all in the US, btu have only been out of the US/worked in a foreign country, say, 90 days), you may be double taxed, in which case glad I left the States last March! It's not so much that I don't understand it as that it does not make practical sense to me....and I have never heard anyone mention this before. |
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| TerritorianTori | Jan 11 2008, 03:56:31 PM Post #11 |
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Not necessarily. Being physically present outside the US for 330 days is just one way to qualify to use the foreign-earned income exclusion - you can also claim it by being a bona-fide overseas resident for at least 1 calendar year. But the 330 day physical presence test is pretty easy if you live overseas, because it's counted in any 12-month period before you file your tax return... so, for example, I left the US in August 2004. I waited until around July 2005 to file my tax return (got an extension for being an overseas taxpayer), and was able to claim the 330-day physical presence. In the following years, I claimed it based on being a bona-fide resident of Australia. But even if you can't meet the 330-day test OR the bona-fide residence test, and you can't use the foreign-earned income exclusion, that still doesn't necessarily mean you'll get double-taxed. You still have the option to take a tax credit for any taxes you paid on that income to the foreign country. ETA... just want to add the disclaimer that I haven't done taxes or studied the tax code in years now, so please don't take anything I say as "advice". Please read Publication 54 linked at the top for more info, and always consult a professional if you're not sure! :cheers: |
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South Texas to the Northern Territory - since 2004 I'm a huge fan of... Angry Video Game Nerd | The Big Bang Theory | Doctor Who | Pet Shop Boys | Yanks Down Under ~ Americans living in Australia Avatar by Sketch Shop Boys | |
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| SanDiablo | Jan 11 2008, 05:03:06 PM Post #12 |
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True Blue Mate
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I reckon it is designed to make sure people don't earn a heap of money while they are on vacation then simply claim an exclusion. Or to prevent people from hopping over the border every December 15th and pretending to have a foreign residence. The exclusion is meant to help protect people who are truly living abroad, so there has to be some sort of definition of what it means to be living abroad . Hence the bona fide residence or physical presence test. Unless you are earning huge amounts of money, the amount of tax you pay to Australia will most likely offset the tax you owe to the US. It's not designed with the intention of double taxation - indeed, the tax treatys are meant to avoid double taxation. Note that these tests aren't the same for individual states. While California really screws you on the income scale, our accountant was able to "move us out of the country" last year (we left the US at 11:00 pm on December 31!!), which saved us a heap of tax last year! If you will be overseas for a long time, could be worth it to "move" to Texas or Nevada before you go! |
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| trix | Jan 12 2008, 10:42:26 AM Post #13 |
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True Blue Mate
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Well, I left the US in March last year (Mar 1 actually) and had been there Jan & Feb, but didn't work (for 16 mos before this I was in the UK), so I haven't been gone 330 days during the tax year but worked in the US none of this time. I'll look over everything but I can't see that I would have to pay the US any tax on what I have earned in Australia & New Zealand. I would imagine the 330 days mean from Jan->Jan? |
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| TerritorianTori | Jan 12 2008, 11:27:00 AM Post #14 |
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As I said, the 330 days can be counted in any 12 month period before you file your taxes, doesn't have to be the actual financial year... so for you, it would be March 07 to March 08. ETA... might make more sense if you look at Form 2555 (the one you file to claim the foreign-earned income exclusion). On Part III, which you fill out if you're claiming the exemption via 330 days' physical presence, question 16 asks you to nominate the 12 month period you're claiming for... q. 17 and 18 ask more details about where and how long: http://www.irs.gov/pub/irs-pdf/f2555.pdf |
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South Texas to the Northern Territory - since 2004 I'm a huge fan of... Angry Video Game Nerd | The Big Bang Theory | Doctor Who | Pet Shop Boys | Yanks Down Under ~ Americans living in Australia Avatar by Sketch Shop Boys | |
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| Silver | Jan 12 2008, 12:00:16 PM Post #15 |
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True Blue Mate
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Thank you for the offer. :ta: Unfortunately, I think I do qualify as complicated. I don't work in Oz, but I do volunteer (if that makes a difference). I do work from home, but it's for a company in the States. And they aren't my employers...they're more like my publishers. (I write for websites.) I don't make a steady amount each month. I don't get pay slips. But I'm also not my own business (something I was asked about). I do have student loan and medical debt, which I have been paying off which the American bank account I have. (I don't know if the debt makes a difference, but I know the bank account does.) So... Yeah... :help: |
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| TerritorianTori | Jan 12 2008, 03:47:43 PM Post #16 |
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Sending you a PM, Silver.
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South Texas to the Northern Territory - since 2004 I'm a huge fan of... Angry Video Game Nerd | The Big Bang Theory | Doctor Who | Pet Shop Boys | Yanks Down Under ~ Americans living in Australia Avatar by Sketch Shop Boys | |
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| Silver | Jan 12 2008, 05:30:46 PM Post #17 |
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True Blue Mate
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Much appreciated! |
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| trix | Feb 5 2008, 12:45:50 PM Post #18 |
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True Blue Mate
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Could someone who has done their taxes as an expat previously give us a quick list of which forms most of us will have to do. For example, I know I need to do the 1040 (or can you still do the 1040EZ?) and 2555EZ. Is it either the 2555 or the 1116 correct? |
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| nomadbb | Mar 3 2008, 04:15:59 PM Post #19 |
True Blue Mate
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I had posted this under "Introduce Yourself", but it's really more applicable here.
You won't necessarily get double-taxed on a traditional IRA, but there's something called the FIF (foreign investment fund) tax on unrealized gains to consider. This would apply to Roths as well, but there's a pretty long list of exceptions on the ATO site, plus with Roths, you can always withdraw your principal and just leave the gains without incurring an early termination penalty. Employer-sponsored 401K's are generally safe until you start drawing the funds, at which point you'll end up paying the tax of the highest country (Australia) with credit for the US tax. What really bugs me is the US treatment of the Australian Super, especially with the new changes that let you draw it tax free after age 60. The US will STILL tax you in spite of this, so in a sense it is double taxation. It's very frustrating!
Here are some links that I've come across in my travels (warning, some are long and somewhat depressing): http://www.taxalmanac.org/index.php/Discus...ng_in_Australia http://www.exfin.com/pension-transfers-US.php http://www.nteu.org.au/policy/current/offshore/returning http://law.ato.gov.au/atolaw/view.htm?doci...ID2007182/00001 I've got more too, but I think this sums it up pretty well. Oh, and then there's the WEP (windfall elimination provision), which reduces your Social Security when you also have an Australian Super. Brent |
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| nomadbb | Mar 3 2008, 04:44:09 PM Post #20 |
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True Blue Mate
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As an add-on to my previous post, Audra gave me the name of an expat tax specialist, who I spoke with for over 1/2 hr to confirm my findings above (or hopefully find a way around them). Bottom line is that there's no way to avoid US taxation on your super after age 60, even though it's now tax free in Australia. The US doesn't recognize it as a social security equivalent, only the age pension, so the social security agreement doesn't apply. The gains in your super are not attributed to you personally, so the only issue arises when you start taking distributions, at which point the US will want their cut, just as any other foreign distribution. The trick is to make the different US and Australia tax seasons work for you. By taking distributions so that they span two different US tax years, you may be able to reduce your taxable income to a lower bracket compared to taking a larger distribution in a single year. Double Taxation Alert Regarding IRAs, he suggested the easiest approach is to just suck up the 10% penalty and cash out. Otherwise, from the time you become a permanent resident, all new unrealized gains will be taxed by Australia in the year earned. You'll also be taxed when you start taking distributions after age 59 1/2. There's virtually no way to claim a credit since there's no US tax on unrealized gains. If you do cash out, you can take advantage of the non-concessional contribution to fund your super, as long as it's done within 6 months of becoming a permanent resident. Mutual funds held in the US could also be subject to FIF rules, although there's a long list of exclusions on the ATO website. As long as your total investment is under $50,000 or you have no more than 5% of a fund in non-USA foreign investments, you should be able to avoid this. If you choose to hold other US investments, the higher Australian tax will always win out, so there should be no additional US tax owed. Brent |
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