How Working in Australia Impacts Your US Expat Taxes
American citizens are obligated to file US expat taxes with the federal government each year. In addition to the regular income tax return, you could also be required to file an informational return on your assets held in foreign bank accounts. While the US is one of the few governments that taxes the international income of its citizens and permanent residents, it does have provisions to protect us from double taxation. These include the Foreign Earned Income Exclusion, Foreign Tax Credit, and Foreign Housing Exclusion.
If you are an American living in Australia, you need to know how this will impact your US expat taxes. You will likely be required to file and pay taxes to the Australian Revenue Service. Living and working in Australia could alter your contributions to Social Security. It also may impact your eligibility for Old Age Security and the Canada Pension Plan. This short video will provide you with a glimpse of how being an American living in Australia will impact your US expat taxes. More detailed information can also be found in our Country-Specific Guide to Australia; click here to read it.
US Expat Taxes in Australia
Do I need to file taxes if I’m living in Australia?
Yes! US citizens are required to file and pay US expat taxes on worldwide income. It does not matter if you have already paid taxes in Australia. You still must file US expat taxes.
First, let’s start with your Australian filing requirements!
Australian tax year and due date
- Australia tax year - July 1 through June 30
- Australia tax due date - “Lodge” your tax return by October 31. If you are hiring a registered tax agent, you must hire them by this date.
- Remember: You must match your Aussie income and tax year to the tax year on your US expat taxes!
What rates can I expect in Australia as a resident?
Taxable income – Tax Rate
$0-$6,000 — Nil
$6,001 to $37,000 — 15 c for each $1 over $6,000
$37,001 to $80,000 — $4,650 plus 37 c for each $1 over $37,000
$80,001 to $180,000 — $17,550 plus 37 c for each $1 over $80,000
$180,001 and above — $54,550 plus 45 c for each $1 over $180,000
What rates can I expect as a non-resident?
Taxable income – Tax Rate
$0-$37,000 — 29 c for each $1
$37,001 to $80,000 — $10,730 plus 30 c for each $1 over $37,000
$80,001 to $180,000 — $23,630 plus 37 c for each $1 over $80,000
$180,001 and above — $60,630 plus 45 c for each $1 over $180,000
Australian Social Security
The US and Australia have a totalization agreement. What does that mean?
- If you pay Australian Social Security, you do not pay US Social Security.
- The same holds true for Australians living in the US.
- Self-employed individuals can choose which Social Security system they want to pay into.
What is “Superannuation”?
- It’s similar to a mandatory 401(k).
- Employers must pay 9% of employee base wages. Employee contributions are voluntary.
- Contributions are tax-deductible for Australian taxes, but are not deductible on US taxes.
- You must reach the correct age to access your Supperannuation fund.
Is foreign income taxed in Australia?
…are you a resident of Australia?
- If you are a resident, you must report and pay taxes on worldwide income. Like the United States, Australia has mechanisms in place to avoid dual taxation.
- Non-residents must only report Australia-sourced income.
Other taxes in Australia
- There is a goods and services tax (GST) in Australia.
- The tax is a flat rate of 10% on most consumer goods. There are some exclusions.
- Foreign business owners must register if there is more than $75,000 in receipts.
- Tourists are able to receive a refunded GST up to one month prior to leaving the country.
Now, let’s move on to your US filing requirements!
US expat tax year and due dates
Tax year – January 1 through December 31
- April 17, 2012 – although expats get an automatic extension until June 15, if you owe any taxes, interest accrues starting April 17.
- June 15, 2012 – the US expat tax due date. Unless you’ve filed for an extension, you must file your expat taxes by this date.
- June 30, 2012 – FBAR (Foreign Bank Account Reporting) form due to the US Department of Treasury.
- October 15, 2012 – last due date for US expat taxes (if you filed for an extension).
US expat tax obligations
The US requires you to report your worldwide income on your tax return. All income is subject to taxation. However, the US has a number of provisions to help prevent double taxation. These include:
- The Foreign Earned Income Exclusion, which allows you to exclude up to $92,900 of foreign-earned income from your US taxes,
- The Foreign Tax Credit, which allows you to offset the taxes you paid to Australia with your US expat taxes, dollar-for-dollar, and
- The Foreign Housing Exclusion, which allows you to exclude certain household expenses that occur as a result of your living abroad.
Understanding your Australian and US tax obligations is important.
Do you have questions? Contact an expert!
Greenback Expat Tax Services
We offer resources and services to help you:
- Learn more about how your US expat taxes are impacted when you live and work in Australia by reading our Country-Specific Guide to Australia.
- Discover more ideas on how to limit your tax liability by following Expatriate Tax Return Savings Tips on our website or by talking to one of our expat tax experts.
- File amended tax returns and forms easily, accurately, and in a timely manner.
If you have any more questions about your US expat taxes and their implications in Australia, or if you’d like to enlist our help in completing your returns, please contact us.