Moving to Australia adds a second tax system rather than replacing the first one. If you're a US citizen or resident alien, the IRS generally expects you to keep filing on your worldwide income while you live abroad. Australia's tax year also runs on a different calendar, so set up your records before you leave rather than reconstructing them later.
How to do it
- Check you're in scope. This applies to US citizens and to resident aliens for US tax purposes. If you're neither, your position depends on the IRS's residency rules.
- Line up a preparer with Australian experience. Whether to use the foreign earned income exclusion or the foreign tax credit is a choice you make by filing, and it interacts with the tax you'll pay in Australia.
- Diarise June 15. That's the automatic extended due date for a calendar-year return when you live overseas. Interest on unpaid tax still runs from April 15, and Form 4868 extends filing to October 15.
- Expect an FBAR. Australian bank and other financial accounts count as foreign accounts. If they add up to more than $10,000 at any time in the calendar year, file FinCEN Form 114 through the BSA E-Filing System.
- Ask whether Form 8938 applies. It's a separate report of specified foreign financial assets, filed with your return.
- Track two tax years. Australia's runs from 1 July to 30 June and the US year follows the calendar, so keep monthly records of income and account balances from the start.
- Close off your state. Ask your state's tax agency what it needs from you to end your residency there.
- Get advice before touching a 401(k) or IRA. A withdrawal or rollover can be treated differently by each country.
Common mistakes
- Treating Australian tax withheld from your pay as the end of the matter.
- Leaving the FBAR out because the accounts earned nothing taxable.
- Reconstructing a year of records across two different tax years after the fact.
See IRS: US citizens and resident aliens abroad and FinCEN: report foreign bank and financial accounts. This is general information, not tax advice.
Frequently asked questions
- Is my US return due on April 15 if I live in Australia?
- Living overseas gives you an automatic 2-month extension to June 15 for a calendar-year return, but interest on unpaid tax runs from April 15.
- Do I need an FBAR for an Australian savings account?
- If your foreign financial accounts add up to more than $10,000 at any time in the calendar year, yes. It doesn't matter whether the accounts produced taxable income.